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U.S. Code as of:
01/03/05
Section 6f. Registration and financial requirements; risk assessment
(a) Registration of futures commission merchants, introducing
brokers, and floor brokers and traders
(1) Any person desiring to register as a futures commission
merchant, introducing broker, floor broker, or floor trader
hereunder shall be registered upon application to the Commission.
The application shall be made in such form and manner as prescribed
by the Commission, giving such information and facts as the
Commission may deem necessary concerning the business in which the
applicant is or will be engaged, including in the case of an
application of a futures commission merchant or an introducing
broker, the names and addresses of the managers of all branch
offices, and the names of such officers and partners, if a
partnership, and of such officers, directors, and stockholders, if
a corporation, as the Commission may direct. Such person, when
registered hereunder, shall likewise continue to report and furnish
to the Commission the above-mentioned information and such other
information pertaining to such person's business as the Commission
may require. Each registration shall expire on December 31 of the
year for which issued or at such other time, not less than one year
from the date of issuance, as the Commission may by rule,
regulation, or order prescribe, and shall be renewed upon
application therefor unless the registration has been suspended
(and the period of such suspension has not expired) or revoked
pursuant to the provisions of this chapter.
(2) Notwithstanding paragraph (1), and except as provided in
paragraph (3), any broker or dealer that is registered with the
Securities and Exchange Commission shall be registered as a futures
commission merchant or introducing broker, as applicable, if -
(A) the broker or dealer limits its solicitation of orders,
acceptance of orders, or execution of orders, or placing of
orders on behalf of others involving any contracts of sale of any
commodity for future delivery, on or subject to the rules of any
contract market or registered derivatives transaction execution
facility to security futures products;
(B) the broker or dealer files written notice with the
Commission in such form as the Commission, by rule, may prescribe
containing such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or
for the protection of investors;
(C) the registration of the broker or dealer is not suspended
pursuant to an order of the Securities and Exchange Commission;
and
(D) the broker or dealer is a member of a national securities
association registered pursuant to section 78o-3(a) of title 15.
The registration shall be effective contemporaneously with the
submission of notice, in written or electronic form, to the
Commission.
(3) A floor broker or floor trader shall be exempt from the
registration requirements of section 6e of this title and paragraph
(1) of this subsection if -
(A) the floor broker or floor trader is a broker or dealer
registered with the Securities and Exchange Commission;
(B) the floor broker or floor trader limits its solicitation of
orders, acceptance of orders, or execution of orders, or placing
of orders on behalf of others involving any contracts of sale of
any commodity for future delivery, on or subject to the rules of
any contract market to security futures products; and
(C) the registration of the floor broker or floor trader is not
suspended pursuant to an order of the Securities and Exchange
Commission.
(4)(A) A broker or dealer that is registered as a futures
commission merchant or introducing broker pursuant to paragraph
(2), or that is a floor broker or floor trader exempt from
registration pursuant to paragraph (3), shall be exempt from the
following provisions of this chapter and the rules thereunder:
(i) Subsections (b), (d), (e), and (g) of section 6c of this
title.
(ii) Sections 6d, 6e, and 6h of this title.
(iii) Subsections (b) and (c) of this section.
(iv) Section 6j of this title.
(v) Section 6k(1) of this title.
(vi) Section 6p (!1) of this title.
(vii) Section 13a-2 of this title.
(viii) Subsections (d) and (g) of section 12 of this title.
(ix) Section 20 of this title.
(B)(i) Except as provided in clause (ii) of this subparagraph,
but notwithstanding any other provision of this chapter, the
Commission, by rule, regulation, or order, may conditionally or
unconditionally exempt any broker or dealer subject to the
registration requirement of paragraph (2), or any broker or dealer
exempt from registration pursuant to paragraph (3), from any
provision of this chapter or of any rule or regulation thereunder,
to the extent the exemption is necessary or appropriate in the
public interest and is consistent with the protection of investors.
(ii) The Commission shall, by rule or regulation, determine the
procedures under which an exemptive order under this section shall
be granted and may, in its sole discretion, decline to entertain
any application for an order of exemption under this section.
(C)(i) A broker or dealer that is registered as a futures
commission merchant or introducing broker pursuant to paragraph (2)
or an associated person thereof, or that is a floor broker or floor
trader exempt from registration pursuant to paragraph (3), shall
not be required to become a member of any futures association
registered under section 21 of this title.
(ii) No futures association registered under section 21 of this
title shall limit its members from carrying an account, accepting
an order, or transacting business with a broker or dealer that is
registered as a futures commission merchant or introducing broker
pursuant to paragraph (2) or an associated person thereof, or that
is a floor broker or floor trader exempt from registration pursuant
to paragraph (3).
(b) Financial requirements for futures commission merchants and
introducing brokers
Notwithstanding any other provisions of this chapter, no person
desiring to register as futures commission merchant or as
introducing broker shall be so registered unless he meets such
minimum financial requirements as the Commission may by regulation
prescribe as necessary to insure his meeting his obligation as a
registrant, and each person so registered shall at all times
continue to meet such prescribed minimum financial requirements:
Provided, That such minimum financial requirements will be
considered met if the applicant for registration or registrant is a
member of a contract market or derivatives transaction execution
facility and conforms to minimum financial standards and related
reporting requirements set by such contract market or derivatives
transaction execution facility in its bylaws, rules, regulations,
or resolutions and approved by the Commission as adequate to
effectuate the purposes of this subsection.
(c) Risk assessment for holding company systems
(1) As used in this subsection:
(i) The term "affiliated person" means any person directly or
indirectly controlling, controlled by, or under common control
with a futures commission merchant, as the Commission, by rule or
regulation, may determine will effectuate the purposes of this
subsection.
(ii) The term "Federal banking agency" shall have the same
meaning as the term "appropriate Federal banking agency" in
section 1813(q) of title 12.
(2)(A) Each registered futures commission merchant shall obtain
such information and make and keep such records as the Commission,
by rule or regulation, prescribes concerning the registered futures
commission merchant's policies, procedures, or systems for
monitoring and controlling financial and operational risks to it
resulting from the activities of any of its affiliated persons,
other than a natural person.
(B) The records required under subparagraph (A) shall describe,
in the aggregate, each of the futures and other financial
activities conducted by, and the customary sources of capital and
funding of, those of its affiliated persons whose business
activities are reasonably likely to have a material impact on the
financial or operational condition of the futures commission
merchant, including its adjusted net capital, its liquidity, or its
ability to conduct or finance its operations.
(C) The Commission, by rule or regulation, may require summary
reports of such information to be filed by the futures commission
merchant with the Commission no more frequently than quarterly.
(3)(A),(!2) If, as a result of adverse market conditions or based
on reports provided to the Commission pursuant to paragraph (2) or
other available information, the Commission reasonably concludes
that the Commission has concerns regarding the financial or
operational condition of any registered futures commission
merchant, the Commission may require the futures commission
merchant to make reports concerning the futures and other financial
activities of any of such person's affiliated persons, other than a
natural person, whose business activities are reasonably likely to
have a material impact on the financial or operational condition of
the futures commission merchant.
(B) The Commission, in requiring reports pursuant to this
paragraph, shall specify the information required, the period for
which it is required, the time and date on which the information
must be furnished, and whether the information is to be furnished
directly to the Commission or to a contract market or derivatives
transaction execution facility or other self-regulatory
organization with primary responsibility for examining the
registered futures commission merchant's financial and operational
condition.
(4)(A) in (!3) developing and implementing reporting requirements
pursuant to paragraph (2) with respect to affiliated persons
subject to examination by or reporting requirements of a Federal
banking agency, the Commission shall consult with and consider the
views of each such Federal banking agency. If a Federal banking
agency comments in writing on a proposed rule of the Commission
under this subsection that has been published for comment, the
Commission shall respond in writing to the written comment before
adopting the proposed rule. The Commission shall, at the request of
the Federal banking agency, publish the comment and response in the
Federal Register at the time of publishing the adopted rule.
(B)(i) Except as provided in clause (ii), a registered futures
commission merchant shall be considered to have compiled (!4) with
a recordkeeping or reporting requirement adopted pursuant to
paragraph (2) concerning an affiliated person that is subject to
examination by, or reporting requirements of, a Federal banking
agency if the futures commission merchant utilizes for the
recordkeeping or reporting requirement copies of reports filed by
the affiliated person with the Federal banking agency pursuant to
section 161 of title 12, section 9 of the Federal Reserve Act (12
U.S.C. 321 et seq.), section 1817(a) of title 12, section 1467a(b)
of title 12, or section 1844 of title 12.
(ii) The Commission may, by rule adopted pursuant to paragraph
(2), require any futures commission merchant filing the reports
with the Commission to obtain, maintain, or report supplemental
information if the Commission makes an explicit finding that the
supplemental information is necessary to inform the Commission
regarding potential risks to the futures commission merchant. Prior
to requiring any such supplemental information, the Commission
shall first request the Federal banking agency to expand its
reporting requirements to include the information.
(5) Prior to making a request pursuant to paragraph (3) for
information with respect to an affiliated person that is subject to
examination by or reporting requirements of a Federal banking
agency, the Commission shall -
(A) notify the agency of the information required with respect
to the affiliated person; and
(B) consult with the agency to determine whether the
information required is available from the agency and for other
purposes, unless the Commission determines that any delay
resulting from the consultation would be inconsistent with
ensuring the financial and operational condition of the futures
commission merchant or the stability or integrity of the futures
markets.
(6) Nothing in this subsection shall be construed to permit the
Commission to require any futures commission merchant to obtain,
maintain, or furnish any examination report of any Federal banking
agency or any supervisory recommendations or analysis contained in
the report.
(7) No information provided to or obtained by the Commission from
any Federal banking agency pursuant to a request under paragraph
(5) regarding any affiliated person that is subject to examination
by or reporting requirements of a Federal banking agency may be
disclosed to any other person (other than as provided in section 12
of this title or section 12a(6) of this title), without the prior
written approval of the Federal banking agency.
(8) The Commission shall notify a Federal banking agency of any
concerns of the Commission regarding significant financial or
operational risks resulting from the activities of any futures
commission merchant to any affiliated person thereof that is
subject to examination by or reporting requirements of the Federal
banking agency.
(9) The Commission, by rule, regulation, or order, may exempt any
person or class of persons under such terms and conditions and for
such periods as the Commission shall provide in the rule,
regulation, or order, from this subsection and the rules and
regulations issued under this subsection. In granting the
exemption, the Commission shall consider, among other factors -
(A) whether information of the type required under this
subsection is available from a supervisory agency (as defined in
section 3401(7) of title 12), a State insurance commission or
similar State agency, the Securities and Exchange Commission, or
a similar foreign regulator;
(B) the primary business of any affiliated person;
(C) the nature and extent of domestic or foreign regulation of
the affiliated person's activities;
(D) the nature and extent of the registered futures commission
merchant's commodity futures and options activities; and
(E) with respect to the registered futures commission merchant
and its affiliated persons, on a consolidated basis, the amount
and proportion of assets devoted to, and revenues derived from
activities in the United States futures markets.
(10) Information required to be provided pursuant to this
subsection shall be subject to section 12 of this title. Except as
specifically provided in section 12 of this title and
notwithstanding any other provision of law, the Commission shall
not be compelled to disclose any information required to be
reported under this subsection, or any information supplied to the
Commission by any domestic or foreign regulatory agency that
relates to the financial or operational condition of any affiliated
person of a registered futures commission merchant.
(11) Nothing in paragraphs (1) through (10) shall be construed to
supersede or to limit in any way the authority or powers of the
Commission pursuant to any other provision of this chapter or
regulations issued under this chapter.
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