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U.S. Code as of:
01/03/05
Section 6a. Excessive speculation
(a) Burden on interstate commerce; trading or position limits
Excessive speculation in any commodity under contracts of sale of
such commodity for future delivery made on or subject to the rules
of contract markets or derivatives transaction execution facilities
causing sudden or unreasonable fluctuations or unwarranted changes
in the price of such commodity, is an undue and unnecessary burden
on interstate commerce in such commodity. For the purpose of
diminishing, eliminating, or preventing such burden, the Commission
shall, from time to time, after due notice and opportunity for
hearing, by rule, regulation, or order, proclaim and fix such
limits on the amounts of trading which may be done or positions
which may be held by any person under contracts of sale of such
commodity for future delivery on or subject to the rules of any
contract market or derivatives transaction execution facility as
the Commission finds are necessary to diminish, eliminate, or
prevent such burden. In determining whether any person has exceeded
such limits, the positions held and trading done by any persons
directly or indirectly controlled by such person shall be included
with the positions held and trading done by such person; and
further, such limits upon positions and trading shall apply to
positions held by, and trading done by, two or more persons acting
pursuant to an expressed or implied agreement or understanding, the
same as if the positions were held by, or the trading were done by,
a single person. Nothing in this section shall be construed to
prohibit the Commission from fixing different trading or position
limits for different commodities, markets, futures, or delivery
months, or for different number of days remaining until the last
day of trading in a contract, or different trading limits for
buying and selling operations, or different limits for the purposes
of paragraphs (1) and (2) of subsection (b) of this section, or
from exempting transactions normally known to the trade as
"spreads" or "straddles" or "arbitrage" or from fixing limits
applying to such transactions or positions different from limits
fixed for other transactions or positions. The word "arbitrage" in
domestic markets shall be defined to mean the same as "spread" or
"straddle". The Commission is authorized to define the term
"international arbitrage".
(b) Prohibition on trading or positions in excess of limits fixed
by Commission
The Commission shall, in such rule, regulation, or order, fix a
reasonable time (not to exceed ten days) after the promulgation of
the rule, regulation, or order; after which, and until such rule,
regulation, or order is suspended, modified, or revoked, it shall
be unlawful for any person -
(1) directly or indirectly to buy or sell, or agree to buy or
sell, under contracts of sale of such commodity for future
delivery on or subject to the rules of the contract market or
markets, or derivatives transaction execution facility or
facilities, to which the rule, regulation, or order applies, any
amount of such commodity during any one business day in excess of
any trading limit fixed for one business day by the Commission in
such rule, regulation, or order for or with respect to such
commodity; or
(2) directly or indirectly to hold or control a net long or a
net short position in any commodity for future delivery on or
subject to the rules of any contract market or derivatives
transaction execution facility in excess of any position limit
fixed by the Commission for or with respect to such commodity:
Provided, That such position limit shall not apply to a position
acquired in good faith prior to the effective date of such rule,
regulation, or order.
(c) Applicability to bona fide hedging transactions or positions
No rule, regulation, or order issued under subsection (a) of this
section shall apply to transactions or positions which are shown to
be bona fide hedging transactions or positions as such terms shall
be defined by the Commission by rule, regulation, or order
consistent with the purposes of this chapter. Such terms may be
defined to permit producers, purchasers, sellers, middlemen, and
users of a commodity or a product derived therefrom to hedge their
legitimate anticipated business needs for that period of time into
the future for which an appropriate futures contract is open and
available on an exchange. To determine the adequacy of this chapter
and the powers of the Commission acting thereunder to prevent
unwarranted price pressures by large hedgers, the Commission shall
monitor and analyze the trading activities of the largest hedgers,
as determined by the Commission, operating in the cattle, hog, or
pork belly markets and shall report its findings and
recommendations to the Senate Committee on Agriculture, Nutrition,
and Forestry and the House Committee on Agriculture in its annual
reports for at least two years following January 11, 1983.
(d) Persons subject to regulation; applicability to transactions
made by or on behalf of United States
This section shall apply to a person that is registered as a
futures commission merchant, an introducing broker, or a floor
broker under authority of this chapter only to the extent that
transactions made by such person are made on behalf of or for the
account or benefit of such person. This section shall not apply to
transactions made by, or on behalf of, or at the direction of, the
United States, or a duly authorized agency thereof.
(e) Rulemaking power and penalties for violation
Nothing in this section shall prohibit or impair the adoption by
any contract market, derivatives transaction execution facility, or
by any other board of trade licensed, designated, or registered by
the Commission of any bylaw, rule, regulation, or resolution fixing
limits on the amount of trading which may be done or positions
which may be held by any person under contracts of sale of any
commodity for future delivery traded on or subject to the rules of
such contract market or derivatives transaction execution facility,
or under options on such contracts or commodities traded on or
subject to the rules of such contract market, derivatives
transaction execution facility, or such board of trade: Provided,
That if the Commission shall have fixed limits under this section
for any contract or under section 6c of this title for any
commodity option, then the limits fixed by the bylaws, rules,
regulations, and resolutions adopted by such contract market,
derivatives transaction execution facility, or such board of trade
shall not be higher than the limits fixed by the Commission. It
shall be a violation of this chapter for any person to violate any
bylaw, rule, regulation, or resolution of any contract market,
derivatives transaction execution facility, or other board of trade
licensed, designated, or registered by the Commission fixing limits
on the amount of trading which may be done or positions which may
be held by any person under contracts of sale of any commodity for
future delivery or under options on such contracts or commodities,
if such bylaw, rule, regulation, or resolution has been approved by
the Commission: Provided, That the provisions of section 13(c) (!1)
of this title shall apply only to those who knowingly violate such
limits.
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