
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 7USC1a]

 
                          TITLE 7--AGRICULTURE
 
                     CHAPTER 1--COMMODITY EXCHANGES
 
Sec. 1a. Definitions

    As used in this chapter:

                   (1) Alternative trading system

        The term ``alternative trading system'' means an organization, 
    association, or group of persons that--
            (A) is registered as a broker or dealer pursuant to section 
        15(b) of the Securities Exchange Act of 1934 [15 U.S.C. 78o(b)] 
        (except paragraph (11) thereof);
            (B) performs the functions commonly performed by an exchange 
        (as defined in section 3(a)(1) of the Securities Exchange Act of 
        1934 [15 U.S.C. 78c(a)(1)]);
            (C) does not--
                (i) set rules governing the conduct of subscribers other 
            than the conduct of such subscribers' trading on the 
            alternative trading system; or
                (ii) discipline subscribers other than by exclusion from 
            trading; and

            (D) is exempt from the definition of the term ``exchange'' 
        under such section 3(a)(1) [15 U.S.C. 78c(a)(1)] by rule or 
        regulation of the Securities and Exchange Commission on terms 
        that require compliance with regulations of its trading 
        functions.

                         (2) Board of trade

        The term ``board of trade'' means any organized exchange or 
    other trading facility.

                           (3) Commission

        The term ``Commission'' means the Commodity Futures Trading 
    Commission established under section 2(a)(2) of this title.

                            (4) Commodity

        The term ``commodity'' means wheat, cotton, rice, corn, oats, 
    barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs, 
    Solanum tuberosum (Irish potatoes), wool, wool tops, fats and oils 
    (including lard, tallow, cottonseed oil, peanut oil, soybean oil, 
    and all other fats and oils), cottonseed meal, cottonseed, peanuts, 
    soybeans, soybean meal, livestock, livestock products, and frozen 
    concentrated orange juice, and all other goods and articles, except 
    onions as provided in section 13-1 of this title, and all services, 
    rights, and interests in which contracts for future delivery are 
    presently or in the future dealt in.

                     (5) Commodity pool operator

        The term ``commodity pool operator'' means any person engaged in 
    a business that is of the nature of an investment trust, syndicate, 
    or similar form of enterprise, and who, in connection therewith, 
    solicits, accepts, or receives from others, funds, securities, or 
    property, either directly or through capital contributions, the sale 
    of stock or other forms of securities, or otherwise, for the purpose 
    of trading in any commodity for future delivery on or subject to the 
    rules of any contract market or derivatives transaction execution 
    facility, except that the term does not include such persons not 
    within the intent of the definition of the term as the Commission 
    may specify by rule, regulation, or order.

                    (6) Commodity trading advisor

        (A) In general

            Except as otherwise provided in this paragraph, the term 
        ``commodity trading advisor'' means any person who--
                (i) for compensation or profit, engages in the business 
            of advising others, either directly or through publications, 
            writings, or electronic media, as to the value of or the 
            advisability of trading in--
                    (I) any contract of sale of a commodity for future 
                delivery made or to be made on or subject to the rules 
                of a contract market or derivatives transaction 
                execution facility;
                    (II) any commodity option authorized under section 
                6c of this title; or
                    (III) any leverage transaction authorized under 
                section 23 of this title; or

                (ii) for compensation or profit, and as part of a 
            regular business, issues or promulgates analyses or reports 
            concerning any of the activities referred to in clause (i).

        (B) Exclusions

            Subject to subparagraph (C), the term ``commodity trading 
        advisor'' does not include--
                (i) any bank or trust company or any person acting as an 
            employee thereof;
                (ii) any news reporter, news columnist, or news editor 
            of the print or electronic media, or any lawyer, accountant, 
            or teacher;
                (iii) any floor broker or futures commission merchant;
                (iv) the publisher or producer of any print or 
            electronic data of general and regular dissemination, 
            including its employees;
                (v) the fiduciary of any defined benefit plan that is 
            subject to the Employee Retirement Income Security Act of 
            1974 (29 U.S.C. 1001 et seq.);
                (vi) any contract market or derivatives transaction 
            execution facility; and
                (vii) such other persons not within the intent of this 
            paragraph as the Commission may specify by rule, regulation, 
            or order.

        (C) Incidental services

            Subparagraph (B) shall apply only if the furnishing of such 
        services by persons referred to in subparagraph (B) is solely 
        incidental to the conduct of their business or profession.

        (D) Advisors

            The Commission, by rule or regulation, may include within 
        the term ``commodity trading advisor'', any person advising as 
        to the value of commodities or issuing reports or analyses 
        concerning commodities if the Commission determines that the 
        rule or regulation will effectuate the purposes of this 
        paragraph.

                        (7) Contract of sale

        The term ``contract of sale'' includes sales, agreements of 
    sale, and agreements to sell.

              (8) Cooperative association of producers

        The term ``cooperative association of producers'' means any 
    cooperative association, corporate, or otherwise, not less than 75 
    percent in good faith owned or controlled, directly or indirectly, 
    by producers of agricultural products and otherwise complying with 
    sections 291 and 292 of this title, including any organization 
    acting for a group of such associations and owned or controlled by 
    such associations, except that business done for or with the United 
    States, or any agency thereof, shall not be considered either member 
    or nonmember business in determining the compliance of any such 
    association with this chapter.

                (9) Derivatives clearing organization

        (A) In general

            The term ``derivatives clearing organization'' means a 
        clearinghouse, clearing association, clearing corporation, or 
        similar entity, facility, system, or organization that, with 
        respect to an agreement, contract, or transaction--
                (i) enables each party to the agreement, contract, or 
            transaction to substitute, through novation or otherwise, 
            the credit of the derivatives clearing organization for the 
            credit of the parties;
                (ii) arranges or provides, on a multilateral basis, for 
            the settlement or netting of obligations resulting from such 
            agreements, contracts, or transactions executed by 
            participants in the derivatives clearing organization; or
                (iii) otherwise provides clearing services or 
            arrangements that mutualize or transfer among participants 
            in the derivatives clearing organization the credit risk 
            arising from such agreements, contracts, or transactions 
            executed by the participants.

        (B) Exclusions

            The term ``derivatives clearing organization'' does not 
        include an entity, facility, system, or organization solely 
        because it arranges or provides for--
                (i) settlement, netting, or novation of obligations 
            resulting from agreements, contracts, or transactions, on a 
            bilateral basis and without a central counterparty;
                (ii) settlement or netting of cash payments through an 
            interbank payment system; or
                (iii) settlement, netting, or novation of obligations 
            resulting from a sale of a commodity in a transaction in the 
            spot market for the commodity.

                  (10) Electronic trading facility

        The term ``electronic trading facility'' means a trading 
    facility that--
            (A) operates by means of an electronic or telecommunications 
        network; and
            (B) maintains an automated audit trail of bids, offers, and 
        the matching of orders or the execution of transactions on the 
        facility.

                   (11) Eligible commercial entity

        The term ``eligible commercial entity'' means, with respect to 
    an agreement, contract or transaction in a commodity--
            (A) an eligible contract participant described in clause 
        (i), (ii), (v), (vii), (viii), or (ix) of paragraph (12)(A) 
        that, in connection with its business--
                (i) has a demonstrable ability, directly or through 
            separate contractual arrangements, to make or take delivery 
            of the underlying commodity;
                (ii) incurs risks, in addition to price risk, related to 
            the commodity; or
                (iii) is a dealer that regularly provides risk 
            management or hedging services to, or engages in market-
            making activities with, the foregoing entities involving 
            transactions to purchase or sell the commodity or derivative 
            agreements, contracts, or transactions in the commodity;

            (B) an eligible contract participant, other than a natural 
        person or an instrumentality, department, or agency of a State 
        or local governmental entity, that--
                (i) regularly enters into transactions to purchase or 
            sell the commodity or derivative agreements, contracts, or 
            transactions in the commodity; and
                (ii) either--
                    (I) in the case of a collective investment vehicle 
                whose participants include persons other than--
                        (aa) qualified eligible persons, as defined in 
                    Commission rule 4.7(a) (17 CFR 4.7(a));
                        (bb) accredited investors, as defined in 
                    Regulation D of the Securities and Exchange 
                    Commission under the Securities Act of 1933 [15 
                    U.S.C. 77a et seq.] (17 CFR 230.501(a)), with total 
                    assets of $2,000,000; or
                        (cc) qualified purchasers, as defined in section 
                    2(a)(51)(A) of the Investment Company Act of 1940 
                    [15 U.S.C. 80a-2(a)(51)(A)];

             in each case as in effect on December 21, 2000, has, or is 
                   one of a group of vehicles under common control or 
                 management having in the aggregate, $1,000,000,000 in 
                                    total assets; or

                    (II) in the case of other persons, has, or is one of 
                a group of persons under common control or management 
                having in the aggregate, $100,000,000 in total assets; 
                or

            (C) such other persons as the Commission shall determine 
        appropriate and shall designate by rule, regulation, or order.

                 (12) Eligible contract participant

        The term ``eligible contract participant'' means--
            (A) acting for its own account--
                (i) a financial institution;
                (ii) an insurance company that is regulated by a State, 
            or that is regulated by a foreign government and is subject 
            to comparable regulation as determined by the Commission, 
            including a regulated subsidiary or affiliate of such an 
            insurance company;
                (iii) an investment company subject to regulation under 
            the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) 
            or a foreign person performing a similar role or function 
            subject as such to foreign regulation (regardless of whether 
            each investor in the investment company or the foreign 
            person is itself an eligible contract participant);
                (iv) a commodity pool that--
                    (I) has total assets exceeding $5,000,000; and
                    (II) is formed and operated by a person subject to 
                regulation under this chapter or a foreign person 
                performing a similar role or function subject as such to 
                foreign regulation (regardless of whether each investor 
                in the commodity pool or the foreign person is itself an 
                eligible contract participant);

                (v) a corporation, partnership, proprietorship, 
            organization, trust, or other entity--
                    (I) that has total assets exceeding $10,000,000;
                    (II) the obligations of which under an agreement, 
                contract, or transaction are guaranteed or otherwise 
                supported by a letter of credit or keepwell, support, or 
                other agreement by an entity described in subclause (I), 
                in clause (i), (ii), (iii), (iv), or (vii), or in 
                subparagraph (C); or
                    (III) that--
                        (aa) has a net worth exceeding $1,000,000; and
                        (bb) enters into an agreement, contract, or 
                    transaction in connection with the conduct of the 
                    entity's business or to manage the risk associated 
                    with an asset or liability owned or incurred or 
                    reasonably likely to be owned or incurred by the 
                    entity in the conduct of the entity's business;

                (vi) an employee benefit plan subject to the Employee 
            Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
            seq.), a governmental employee benefit plan, or a foreign 
            person performing a similar role or function subject as such 
            to foreign regulation--
                    (I) that has total assets exceeding $5,000,000; or
                    (II) the investment decisions of which are made by--
                        (aa) an investment adviser or commodity trading 
                    advisor subject to regulation under the Investment 
                    Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
                    this chapter;
                        (bb) a foreign person performing a similar role 
                    or function subject as such to foreign regulation;
                        (cc) a financial institution; or
                        (dd) an insurance company described in clause 
                    (ii), or a regulated subsidiary or affiliate of such 
                    an insurance company;

                (vii)(I) a governmental entity (including the United 
            States, a State, or a foreign government) or political 
            subdivision of a governmental entity;
                (II) a multinational or supranational government entity; 
            or
                (III) an instrumentality, agency, or department of an 
            entity described in subclause (I) or (II);

          except that such term does not include an entity, 
            instrumentality, agency, or department referred to in 
            subclause (I) or (III) of this clause unless (aa) the 
            entity, instrumentality, agency, or department is a person 
            described in clause (i), (ii), or (iii) of paragraph (11)(A) 
            of this section; (bb) the entity, instrumentality, agency, 
            or department owns and invests on a discretionary basis 
            $25,000,000 or more in investments; or (cc) the agreement, 
            contract, or transaction is offered by, and entered into 
            with, an entity that is listed in any of subclauses (I) 
            through (VI) of section 2(c)(2)(B)(ii) of this title;
                (viii)(I) a broker or dealer subject to regulation under 
            the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
            or a foreign person performing a similar role or function 
            subject as such to foreign regulation, except that, if the 
            broker or dealer or foreign person is a natural person or 
            proprietorship, the broker or dealer or foreign person shall 
            not be considered to be an eligible contract participant 
            unless the broker or dealer or foreign person also meets the 
            requirements of clause (v) or (xi);
                (II) an associated person of a registered broker or 
            dealer concerning the financial or securities activities of 
            which the registered person makes and keeps records under 
            section 15C(b) or 17(h) of the Securities Exchange Act of 
            1934 (15 U.S.C. 78o-5(b), 78q(h));
                (III) an investment bank holding company (as defined in 
            section 17(i) of the Securities Exchange Act of 1934 (15 
            U.S.C. 78q(i)); \1\
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    \1\ So in original. The semicolon probably should be preceded by an 
additional closing parenthesis.
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                (ix) a futures commission merchant subject to regulation 
            under this chapter or a foreign person performing a similar 
            role or function subject as such to foreign regulation, 
            except that, if the futures commission merchant or foreign 
            person is a natural person or proprietorship, the futures 
            commission merchant or foreign person shall not be 
            considered to be an eligible contract participant unless the 
            futures commission merchant or foreign person also meets the 
            requirements of clause (v) or (xi);
                (x) a floor broker or floor trader subject to regulation 
            under this chapter in connection with any transaction that 
            takes place on or through the facilities of a registered 
            entity or an exempt board of trade, or any affiliate 
            thereof, on which such person regularly trades; or
                (xi) an individual who has total assets in an amount in 
            excess of--
                    (I) $10,000,000; or
                    (II) $5,000,000 and who enters into the agreement, 
                contract, or transaction in order to manage the risk 
                associated with an asset owned or liability incurred, or 
                reasonably likely to be owned or incurred, by the 
                individual;

            (B)(i) a person described in clause (i), (ii), (iv), (v), 
        (viii), (ix), or (x) of subparagraph (A) or in subparagraph (C), 
        acting as broker or performing an equivalent agency function on 
        behalf of another person described in subparagraph (A) or (C); 
        or
            (ii) an investment adviser subject to regulation under the 
        Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.], a 
        commodity trading advisor subject to regulation under this 
        chapter, a foreign person performing a similar role or function 
        subject as such to foreign regulation, or a person described in 
        clause (i), (ii), (iv), (v), (viii), (ix), or (x) of 
        subparagraph (A) or in subparagraph (C), in any such case acting 
        as investment manager or fiduciary (but excluding a person 
        acting as broker or performing an equivalent agency function) 
        for another person described in subparagraph (A) or (C) and who 
        is authorized by such person to commit such person to the 
        transaction; or
            (C) any other person that the Commission determines to be 
        eligible in light of the financial or other qualifications of 
        the person.

                       (13) Excluded commodity

        The term ``excluded commodity'' means--
            (i) an interest rate, exchange rate, currency, security, 
        security index, credit risk or measure, debt or equity 
        instrument, index or measure of inflation, or other 
        macroeconomic index or measure;
            (ii) any other rate, differential, index, or measure of 
        economic or commercial risk, return, or value that is--
                (I) not based in substantial part on the value of a 
            narrow group of commodities not described in clause (i); or
                (II) based solely on one or more commodities that have 
            no cash market;

            (iii) any economic or commercial index based on prices, 
        rates, values, or levels that are not within the control of any 
        party to the relevant contract, agreement, or transaction; or
            (iv) an occurrence, extent of an occurrence, or contingency 
        (other than a change in the price, rate, value, or level of a 
        commodity not described in clause (i)) that is--
                (I) beyond the control of the parties to the relevant 
            contract, agreement, or transaction; and
                (II) associated with a financial, commercial, or 
            economic consequence.

                        (14) Exempt commodity

        The term ``exempt commodity'' means a commodity that is not an 
    excluded commodity or an agricultural commodity.

                     (15) Financial institution

        The term ``financial institution'' means--
            (A) a corporation operating under the fifth undesignated 
        paragraph of section 25 of the Federal Reserve Act (12 U.S.C. 
        603), commonly known as ``an agreement corporation'';
            (B) a corporation organized under section 25A of the Federal 
        Reserve Act (12 U.S.C. 611 et seq.), commonly known as an ``Edge 
        Act corporation'';
            (C) an institution that is regulated by the Farm Credit 
        Administration;
            (D) a Federal credit union or State credit union (as defined 
        in section 1752 of title 12);
            (E) a depository institution (as defined in section 1813 of 
        title 12);
            (F) a foreign bank or a branch or agency of a foreign bank 
        (each as defined in section 3101 of title 12);
            (G) any financial holding company (as defined in section 
        1841 of title 12);
            (H) a trust company; or
            (I) a similarly regulated subsidiary or affiliate of an 
        entity described in any of subparagraphs (A) through (H).

                          (16) Floor broker

        The term ``floor broker'' means any person who, in or 
    surrounding any pit, ring, post, or other place provided by a 
    contract market or derivatives transaction execution facility for 
    the meeting of persons similarly engaged, shall purchase or sell for 
    any other person any commodity for future delivery on or subject to 
    the rules of any contract market or derivatives transaction 
    execution facility.

                          (17) Floor trader

        The term ``floor trader'' means any person who, in or 
    surrounding any pit, ring, post, or other place provided by a 
    contract market or derivatives transaction execution facility for 
    the meeting of persons similarly engaged, purchases, or sells solely 
    for such person's own account, any commodity for future delivery on 
    or subject to the rules of any contract market or derivatives 
    transaction execution facility.

                   (18) Foreign futures authority

        The term ``foreign futures authority'' means any foreign 
    government, or any department, agency, governmental body, or 
    regulatory organization empowered by a foreign government to 
    administer or enforce a law, rule, or regulation as it relates to a 
    futures or options matter, or any department or agency of a 
    political subdivision of a foreign government empowered to 
    administer or enforce a law, rule, or regulation as it relates to a 
    futures or options matter.

                        (19) Future delivery

        The term ``future delivery'' does not include any sale of any 
    cash commodity for deferred shipment or delivery.

                  (20) Futures commission merchant

        The term ``futures commission merchant'' means an individual, 
    association, partnership, corporation, or trust that--
            (A) is engaged in soliciting or in accepting orders for the 
        purchase or sale of any commodity for future delivery on or 
        subject to the rules of any contract market or derivatives 
        transaction execution facility; and
            (B) in or in connection with such solicitation or acceptance 
        of orders, accepts any money, securities, or property (or 
        extends credit in lieu thereof) to margin, guarantee, or secure 
        any trades or contracts that result or may result therefrom.

                       (21) Hybrid instrument

        The term ``hybrid instrument'' means a security having one or 
    more payments indexed to the value, level, or rate of, or providing 
    for the delivery of, one or more commodities.

                      (22) Interstate commerce

        The term ``interstate commerce'' means commerce--
            (A) between any State, territory, or possession, or the 
        District of Columbia, and any place outside thereof; or
            (B) between points within the same state,\2\ territory, or 
        possession, or the District of Columbia, but through any place 
        outside thereof, or within any territory or possession, or the 
        District of Columbia.
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    \2\ So in original. Probably should be capitalized.
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                       (23) Introducing broker

        The term ``introducing broker'' means any person (except an 
    individual who elects to be and is registered as an associated 
    person of a futures commission merchant) engaged in soliciting or in 
    accepting orders for the purchase or sale of any commodity for 
    future delivery on or subject to the rules of any contract market or 
    derivatives transaction execution facility who does not accept any 
    money, securities, or property (or extend credit in lieu thereof) to 
    margin, guarantee, or secure any trades or contracts that result or 
    may result therefrom.

    (24) Member of a registered entity; member of a derivatives 
                       transaction execution facility

        The term ``member'' means, with respect to a registered entity 
    or derivatives transaction execution facility, an individual, 
    association, partnership, corporation, or trust--
            (A) owning or holding membership in, or admitted to 
        membership representation on, the registered entity or 
        derivatives transaction execution facility; or
            (B) having trading privileges on the registered entity or 
        derivatives transaction execution facility.

    A participant in an alternative trading system that is designated as 
    a contract market pursuant to section 7b-1 of this title is deemed a 
    member of the contract market for purposes of transactions in 
    security futures products through the contract market.

                  (25) Narrow-based security index

        (A) The term ``narrow-based security index'' means an index--
            (i) that has 9 or fewer component securities;
            (ii) in which a component security comprises more than 30 
        percent of the index's weighting;
            (iii) in which the five highest weighted component 
        securities in the aggregate comprise more than 60 percent of the 
        index's weighting; or
            (iv) in which the lowest weighted component securities 
        comprising, in the aggregate, 25 percent of the index's 
        weighting have an aggregate dollar value of average daily 
        trading volume of less than $50,000,000 (or in the case of an 
        index with 15 or more component securities, $30,000,000), except 
        that if there are two or more securities with equal weighting 
        that could be included in the calculation of the lowest weighted 
        component securities comprising, in the aggregate, 25 percent of 
        the index's weighting, such securities shall be ranked from 
        lowest to highest dollar value of average daily trading volume 
        and shall be included in the calculation based on their ranking 
        starting with the lowest ranked security.

        (B) Notwithstanding subparagraph (A), an index is not a narrow-
    based security index if--
            (i)(I) it has at least 9 component securities;
            (II) no component security comprises more than 30 percent of 
        the index's weighting; and
            (III) each component security is--
                (aa) registered pursuant to section 12 of the Securities 
            Exchange Act of 1934 [15 U.S.C. 78l];
                (bb) one of 750 securities with the largest market 
            capitalization; and
                (cc) one of 675 securities with the largest dollar value 
            of average daily trading volume;

            (ii) a board of trade was designated as a contract market by 
        the Commodity Futures Trading Commission with respect to a 
        contract of sale for future delivery on the index, before 
        December 21, 2000;
            (iii)(I) a contract of sale for future delivery on the index 
        traded on a designated contract market or registered derivatives 
        transaction execution facility for at least 30 days as a 
        contract of sale for future delivery on an index that was not a 
        narrow-based security index; and
            (II) it has been a narrow-based security index for no more 
        than 45 business days over 3 consecutive calendar months;
            (iv) a contract of sale for future delivery on the index is 
        traded on or subject to the rules of a foreign board of trade 
        and meets such requirements as are jointly established by rule 
        or regulation by the Commission and the Securities and Exchange 
        Commission;
            (v) no more than 18 months have passed since December 21, 
        2000, and--
                (I) it is traded on or subject to the rules of a foreign 
            board of trade;
                (II) the offer and sale in the United States of a 
            contract of sale for future delivery on the index was 
            authorized before December 21, 2000; and
                (III) the conditions of such authorization continue to 
            be met; or

            (vi) a contract of sale for future delivery on the index is 
        traded on or subject to the rules of a board of trade and meets 
        such requirements as are jointly established by rule, 
        regulation, or order by the Commission and the Securities and 
        Exchange Commission.

        (C) Within 1 year after December 21, 2000, the Commission and 
    the Securities and Exchange Commission jointly shall adopt rules or 
    regulations that set forth the requirements under subparagraph 
    (B)(iv).
        (D) An index that is a narrow-based security index solely 
    because it was a narrow-based security index for more than 45 
    business days over 3 consecutive calendar months pursuant to clause 
    (iii) of subparagraph (B) shall not be a narrow-based security index 
    for the 3 following calendar months.
        (E) For purposes of subparagraphs (A) and (B)--
            (i) the dollar value of average daily trading volume and the 
        market capitalization shall be calculated as of the preceding 6 
        full calendar months; and
            (ii) the Commission and the Securities and Exchange 
        Commission shall, by rule or regulation, jointly specify the 
        method to be used to determine market capitalization and dollar 
        value of average daily trading volume.

                             (26) Option

        The term ``option'' means an agreement, contract, or transaction 
    that is of the character of, or is commonly known to the trade as, 
    an ``option'', ``privilege'', ``indemnity'', ``bid'', ``offer'', 
    ``put'', ``call'', ``advance guaranty'', or ``decline guaranty''.

                       (27) Organized exchange

        The term ``organized exchange'' means a trading facility that--
            (A) permits trading--
                (i) by or on behalf of a person that is not an eligible 
            contract participant; or
                (ii) by persons other than on a principal-to-principal 
            basis; or

            (B) has adopted (directly or through another nongovernmental 
        entity) rules that--
                (i) govern the conduct of participants, other than rules 
            that govern the submission of orders or execution of 
            transactions on the trading facility; and
                (ii) include disciplinary sanctions other than the 
            exclusion of participants from trading.

                             (28) Person

        The term ``person'' imports the plural or singular, and includes 
    individuals, associations, partnerships, corporations, and trusts.

                       (29) Registered entity

        The term ``registered entity'' means--
            (A) a board of trade designated as a contract market under 
        section 7 of this title;
            (B) a derivatives transaction execution facility registered 
        under section 7a of this title;
            (C) a derivatives clearing organization registered under 
        section 7a-1 of this title; and
            (D) a board of trade designated as a contract market under 
        section 7b-1 of this title.

                            (30) Security

        The term ``security'' means a security as defined in section 
    2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or 
    section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 
    78c(a)(10)).

                        (31) Security future

        The term ``security future'' means a contract of sale for future 
    delivery of a single security or of a narrow-based security index, 
    including any interest therein or based on the value thereof, except 
    an exempted security under section 3(a)(12) of the Securities 
    Exchange Act of 1934 [15 U.S.C. 78c(a)(12)] as in effect on January 
    11, 1983 (other than any municipal security as defined in section 
    3(a)(29) of the Securities Exchange Act of 1934 [15 U.S.C. 
    78c(a)(29)] as in effect on January 11, 1983). The term ``security 
    future'' does not include any agreement, contract, or transaction 
    excluded from this chapter under section 2(c), 2(d), 2(f), or 2(g) 
    of this title (as in effect on December 21, 2000) or sections 27 to 
    27f of this title.

                    (32) Security futures product

        The term ``security futures product'' means a security future or 
    any put, call, straddle, option, or privilege on any security 
    future.

                        (33) Trading facility

        (A) In general

            The term ``trading facility'' means a person or group of 
        persons that constitutes, maintains, or provides a physical or 
        electronic facility or system in which multiple participants 
        have the ability to execute or trade agreements, contracts, or 
        transactions by accepting bids and offers made by other 
        participants that are open to multiple participants in the 
        facility or system.

        (B) Exclusions

            The term ``trading facility'' does not include--
                (i) a person or group of persons solely because the 
            person or group of persons constitutes, maintains, or 
            provides an electronic facility or system that enables 
            participants to negotiate the terms of and enter into 
            bilateral transactions as a result of communications 
            exchanged by the parties and not from interaction of 
            multiple bids and multiple offers within a predetermined, 
            nondiscretionary automated trade matching and execution 
            algorithm;
                (ii) a government securities dealer or government 
            securities broker, to the extent that the dealer or broker 
            executes or trades agreements, contracts, or transactions in 
            government securities, or assists persons in communicating 
            about, negotiating, entering into, executing, or trading an 
            agreement, contract, or transaction in government securities 
            (as the terms ``government securities dealer'', ``government 
            securities broker'', and ``government securities'' are 
            defined in section 3(a) of the Securities Exchange Act of 
            1934 (15 U.S.C. 78c(a))); or
                (iii) facilities on which bids and offers, and 
            acceptances of bids and offers effected on the facility, are 
            not binding.

          Any person, group of persons, dealer, broker, or facility 
        described in clause (i) or (ii) is excluded from the meaning of 
        the term ``trading facility'' for the purposes of this chapter 
        without any prior specific approval, certification, or other 
        action by the Commission.

        (C) Special rule

            A person or group of persons that would not otherwise 
        constitute a trading facility shall not be considered to be a 
        trading facility solely as a result of the submission to a 
        derivatives clearing organization of transactions executed on or 
        through the person or group of persons.

(Sept. 21, 1922, ch. 369, Sec. 1a, as added Pub. L. 102-546, title IV, 
Sec. 404(a), Oct. 28, 1992, 106 Stat. 3625; amended Pub. L. 106-554, 
Sec. 1(a)(5) [title I, Secs. 101, 123(a)(1)], Dec. 21, 2000, 114 Stat. 
2763, 2763A-366, 2763A-405.)

                       References in Text

    The Employee Retirement Income Security Act of 1974, referred to in 
pars. (6)(B)(v) and (12)(A)(vi), is Pub. L. 93-406, Sept. 2, 1974, 88 
Stat. 829, as amended, which is classified principally to chapter 18 
(Sec. 1001 et seq.) of Title 29, Labor. For complete classification of 
this Act to the Code, see Short Title note set out under section 1001 of 
Title 29 and Tables.
    The Securities Act of 1933, referred to in par. (11)(B)(ii)(I)(bb), 
is title I of act May 27, 1933, ch. 38, 48 Stat. 74, as amended, which 
is classified generally to subchapter I (Sec. 77a et seq.) of chapter 2A 
of Title 15, Commerce and Trade. For complete classification of this Act 
to the Code, see section 77a of Title 15 and Tables.
    The Investment Company Act of 1940, referred to in par. 
(12)(A)(iii), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as 
amended, which is classified generally to subchapter I (Sec. 80a-1 et 
seq.) of chapter 2D of Title 15, Commerce and Trade. For complete 
classification of this Act to the Code, see section 80a-51 of Title 15 
and Tables.
    The Investment Advisers Act of 1940, referred to in par. 
(12)(A)(vi)(II)(aa), (B)(ii), is title II of act Aug. 22, 1940, ch. 686, 
54 Stat. 847, as amended, which is classified generally to subchapter II 
(Sec. 80b-1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For 
complete classification of this Act to the Code, see section 80b-20 of 
Title 15 and Tables.
    The Securities Exchange Act of 1934, referred to in par. 
(12)(A)(viii)(I), is act June 6, 1934, ch. 404, 48 Stat. 881, as 
amended, which is classified principally to chapter 2B (Sec. 78a et 
seq.) of Title 15, Commerce and Trade. For complete classification of 
this Act to the Code, see section 78a of Title 15 and Tables.
    Section 25A of the Federal Reserve Act, referred to in par. (15)(B), 
popularly known as the Edge Act, is classified to subchapter II 
(Sec. 611 et seq.) of chapter 6 of Title 12, Banks and Banking. For 
complete classification of this Act to the Code, see Short Title note 
set out under section 611 of Title 12 and Tables.


                               Amendments

    2000--Par. (1). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(2)], added par. (1). Former par. (1) redesignated (2).
    Par. (2). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(3)], 
added par. (2) and struck out heading and text of former par. (2). Text 
read as follows: ``The term `board of trade' means any exchange or 
association, whether incorporated or unincorporated, of persons who are 
engaged in the business of buying or selling any commodity or receiving 
the same for sale on consignment.''
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (1) as (2). Former par. (2) redesignated (3).
    Pars. (3), (4). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(1)], redesignated pars. (2) and (3) as (3) and (4), 
respectively. Former par. (4) redesignated (5).
    Par. (5). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market''.
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (4) as (5). Former par. (5) redesignated (6).
    Par. (6). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market'' in subpars. (A)(i)(I) and (B)(vi).
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (5) as (6). Former par. (6) redesignated (7).
    Pars. (7), (8). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(1)], redesignated pars. (6) and (7) as (7) and (8), 
respectively. Former par. (8) redesignated (16).
    Pars. (9) to (15). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(4)], added pars. (9) to (15). Former pars. (9) to (12) and (13) 
to (15) redesignated (17) to (20) and (22) to (24), respectively.
    Par. (16). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market'' in two places.
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (8) as (16). Former par. (16) redesignated (28).
    Par. (17). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market'' in two places.
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (9) as (17).
    Pars. (18), (19). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(1)], redesignated pars. (10) and (11) as (18) and (19), 
respectively.
    Par. (20). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], 
redesignated par. (12) as (20).
    Par. (20)(A). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market''.
    Par. (21). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(5)], 
added par. (21).
    Par. (22). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], 
redesignated par. (13) as (22).
    Par. (23). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(A)], inserted ``or derivatives transaction execution 
facility'' after ``contract market''.
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (14) as (23).
    Par. (24). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 123(a)(1)(B)], substituted ``registered entity'' for ``contract 
market'' wherever appearing in heading and text and inserted concluding 
provisions.
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(6)], added par. 
(24) and struck out heading and text of former par. (24). Text read as 
follows: ``The term `member of a contract market' means an individual, 
association, partnership, corporation, or trust owning or holding 
membership in, or admitted to membership representation on, a contract 
market or given members' trading privileges thereon.''
    Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], redesignated 
par. (15) as (24).
    Pars. (25) to (27). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(6)], added pars. (25) to (27).
    Par. (28). Pub. L. 106-554, Sec. 1(a)(5) [title I, Sec. 101(1)], 
redesignated par. (16) as (28).
    Pars. (29) to (33). Pub. L. 106-554, Sec. 1(a)(5) [title I, 
Sec. 101(7)], added pars. (29) to (33).


                             Effective Date

    Section 403 of Pub. L. 102-546 provided that: ``Except as otherwise 
specifically provided in this Act [enacting this section and section 12e 
of this title, amending sections 2, 2a, 4, 4a, 6 to 6c, 6e to 6g, 6j, 
6p, 7 to 9a, 10a, 12, 12a, 12c, 13 to 13c, 15, 16, 18, 19, 21, and 25 of 
this title, repealing section 26 of this title, enacting provisions set 
out as notes under sections 1a, 4a, 6c, 6e, 6j, 6p, 7a, 13, 16a, 21, and 
22 of this title, and repealing provisions set out as a note under 
section 4a of this title], this Act and the amendments made by this Act 
shall become effective on the date of enactment of this Act [Oct. 28, 
1992].''

                  Section Referred to in Other Sections

    This section is referred to in sections 2, 6m, 6o-1, 7, 7a, 7a-1, 
7a-2, 27, 27b of this title; title 15 section 78f.
