cfr_sections
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89 rows where part_number = 38 and title_number = 17 sorted by section_id
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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 17:17:1.0.1.1.31.1.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.1 Scope. | CFTC | [71 FR 1964, Jan. 12, 2006, as amended at 77 FR 36697, June 19, 2012] | The provisions of this part 38 shall apply to every board of trade that has been designated or is applying to become designated as a contract market under Sections 5 and 6 of the Act. Provided, however, nothing in this provision affects the eligibility of designated contract markets to operate under the provisions of parts 37 or 49 of this chapter. | ||||
| 17:17:1.0.1.1.31.1.7.10 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.10 Reporting of swaps traded on a designated contract market. | CFTC | [77 FR 36700, June 19, 2012] | With respect to swaps traded on and/or pursuant to the rules of a designated contract market, each designated contract market must maintain and report specified swap data as provided under parts 43 and 45 of this chapter. | ||||
| 17:17:1.0.1.1.31.1.7.11 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.11 Trade execution compliance schedule. | CFTC | [78 FR 33630, June 4, 2013] | (a) A swap transaction shall be subject to the requirements of section 2(h)(8) of the Act upon the later of: (1) The applicable deadline established under the compliance schedule provided under § 50.25(b) of this chapter; or (2) Thirty days after the available-to-trade determination submission or certification for that swap is, respectively, deemed approved under § 40.5 of this chapter or deemed certified under § 40.6 of this chapter. (b) Nothing in this section shall prohibit any counterparty from complying voluntarily with the requirements of section 2(h)(8) of the Act sooner than as provided in paragraph (a) of this section. | ||||
| 17:17:1.0.1.1.31.1.7.12 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.12 Process for a designated contract market to make a swap available to trade. | CFTC | [78 FR 33631, June 4, 2013] | (a)(1) Required submission. A designated contract market that makes a swap available to trade in accordance with paragraph (b) of this section, shall submit to the Commission its determination with respect to such swap as a rule, as that term is defined by § 40.1 of this chapter, pursuant to the procedures under part 40 of this chapter. (2) Listing requirement. A designated contract market that makes a swap available to trade must demonstrate that it lists or offers that swap for trading on its trading system or platform. (b) Factors to consider. To make a swap available to trade, for purposes of section 2(h)(8) of the Act, a designated contract market shall consider, as appropriate, the following factors with respect to such swap: (1) Whether there are ready and willing buyers and sellers; (2) The frequency or size of transactions; (3) The trading volume; (4) The number and types of market participants; (5) The bid/ask spread; or (6) The usual number of resting firm or indicative bids and offers. (c) Applicability. (1) Upon a determination that a swap is available to trade on any designated contract market or swap execution facility pursuant to part 40 of this chapter, all other designated contract markets and swap execution facilities shall comply with the requirements of section 2(h)(8)(A) of the Act in listing or offering such swap for trading. (d) Removal —(1) Determination. The Commission may issue a determination that a swap is no longer available to trade upon determining that no swap execution facility or designated contract market lists such swap for trading. (2) Delegation of Authority. (i) The Commission hereby delegates, until it orders otherwise, to the Director of the Division of Market Oversight or such other employee or employees as the Director may designate from time to time, the authority to issue a determination that a swap is no longer available to trade. (ii) The Director may submit to the Commission for its consideration any matter that has been delegated in this s… | ||||
| 17:17:1.0.1.1.31.1.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.2 Exempt provisions. | CFTC | [77 FR 66343, Nov. 2, 2012] | A designated contract market, the designated contract market's operator and transactions traded on or through a designated contract market under section 5 of the Act shall comply with all applicable regulations under Title 17 of the Code of Federal Regulations, except for the requirements of § 1.39(b), § 1.44, § 1.53, § 1.54, § 1.59(b) and (c), § 1.62, § 1.63(a) and (b) and (d) through (f), § 1.64, § 1.69, part 8, § 100.1, § 155.2, and part 156. | ||||
| 17:17:1.0.1.1.31.1.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.3 Procedures for designation. | CFTC | [77 FR 36697, June 19, 2012] | (a) Application procedures. (1) A board of trade seeking designation as a contract market must file electronically, in a format and manner specified by the Secretary of the Commission, the Form DCM provided in appendix A of this part, with the Secretary of the Commission at its Washington, DC headquarters at submissions@cftc.gov and the Division of Market Oversight at DMOSubmissions@cftc.gov. The Commission will review the application for designation as a contract market pursuant to the 180-day timeframe and procedures specified in section 6(a) of the Act. The Commission shall approve or deny the application or, if deemed appropriate, designate the applicant as a contract market subject to conditions. (2) The application must include information sufficient to demonstrate compliance with the core principles specified in section 5(d) of the Act. Form DCM consists of instructions, general questions and a list of exhibits (documents, information and evidence) required by the Commission in order to determine whether an applicant is able to comply with the core principles. An application will not be considered to be materially complete unless the applicant has submitted, at a minimum, the exhibits required in Form DCM. If the application is not materially complete, the Commission shall notify the applicant that the application will not be deemed to have been submitted for purposes of starting the 180-day review period set forth in paragraph (a)(1) of this section. (3) The applicant must identify with particularity any information in the application that will be subject to a request for confidential treatment pursuant to § 145.9 of this chapter. (4) Section 40.8 of this chapter sets forth those sections of the application that will be made publicly available, notwithstanding a request for confidential treatment pursuant to § 145.9 of this chapter. (5) If any information contained in the application or in any exhibit is or becomes inaccurate for any reason, an amendment to the application or a submission filed … | ||||
| 17:17:1.0.1.1.31.1.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.4 Procedures for listing products and implementing contract market rules. | CFTC | [66 FR 42277, Aug. 10, 2001, as amended at 67 FR 62878, Oct. 9, 2002; 77 FR 36698, June 19, 2012] | (a) Request for Commission approval of rules and products. (1) An applicant for designation, or a designated contract market, may request that the Commission approve under section 5c(c) of the Act, any or all of its rules and contract terms and conditions, and subsequent amendments thereto, prior to their implementation or, notwithstanding the provisions of section 5c(c)(4) of the Act, at any time thereafter, under the procedures of § 40.3 or § 40.5 of this chapter, as applicable. A designated contract market may label a future, swap or options product in its rules as “Listed for trading pursuant to Commission approval,” if the future, swap or options product and its terms or conditions have been approved by the Commission, and it may label as “Approved by the Commission” only those rules that have been so approved. (2) Notwithstanding the timeline under §§ 40.3(c) and 40.5(c) of this chapter, the operating rules, and terms and conditions of futures, swaps and option products that have been submitted for Commission approval at the same time as an application for contract market designation or an application under § 38.3(b) of this part to reinstate the designation of a dormant designated contract market, as defined in § 40.1 of this chapter, or while one of the foregoing is pending, will be deemed approved by the Commission no earlier than when the facility is deemed to be designated or reinstated. (b) Self-certification of rules and products. Rules of a designated contract market and subsequent amendments thereto, including both operational rules and the terms or conditions of futures, swaps and option products listed for trading on the facility, not voluntarily submitted for prior Commission approval pursuant to paragraph (a) of this section, must be submitted to the Commission with a certification that the rule, rule amendment or futures, swap or options product complies with the Act or rules thereunder pursuant to the procedures of § 40.6 of this chapter, as applicable. Provided, however, any rule or ru… | ||||
| 17:17:1.0.1.1.31.1.7.5 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.5 Information relating to contract market compliance. | CFTC | [77 FR 36698, June 19, 2012] | (a) Requests for information. Upon request by the Commission, a designated contract market must file with the Commission information related to its business as a designated contract market, including information relating to data entry and trade details, in the form and manner and within the time specified by the Commission in its request. (b) Demonstration of compliance. Upon request by the Commission, a designated contract market must file with the Commission a written demonstration, containing supporting data, information and documents, in the form and manner and within the time specified by the Commission, that the designated contract market is in compliance with one or more core principles as specified in the request, or that is requested by the Commission to show that the designated contract market satisfies its obligations under the Act. (c) Equity interest transfers —(1) Equity interest transfer notification. A designated contract market shall file with the Commission a notification of each transaction that the designated contract market enters into involving the transfer of ten percent or more of the equity interest in the designated contract market. (2) Timing of Notification. The equity transfer notice described in paragraph (1) shall be filed electronically with the Secretary of the Commission at its Washington, DC headquarters at submissions@cftc.gov and the Division of Market Oversight at DMOSubmissions@cftc.gov, at the earliest possible time but in no event later than the open of business ten business days following the date upon which the designated contract market enters into a firm obligation to transfer the equity interest. (3) Rule filing. Notwithstanding the foregoing, any aspect of an equity interest transfer described in paragraph (c)(1) of this section that necessitates the filing of a rule as defined in part 40 of this chapter shall comply with the requirements of 5c(c) of the Act and part 40 of this chapter, and all other applicable Commission regulations. (d) Delegat… | ||||
| 17:17:1.0.1.1.31.1.7.6 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.6 Enforceability. | CFTC | An agreement, contract or transaction entered into on or pursuant to the rules of a designated contract market shall not be void, voidable, subject to rescission or otherwise invalidated or rendered unenforceable as a result of: (a) A violation by the designated contract market of the provisions of section 5 of the Act or this part 38; or (b) Any Commission proceeding to alter or supplement a rule, term or condition under section 8a(7) of the Act, to declare an emergency under section 8a(9) of the Act, or any other proceeding the effect of which is to alter, supplement, or require a designated contract market to adopt a specific term or condition, trading rule or procedure, or to take or refrain from taking a specific action. | |||||
| 17:17:1.0.1.1.31.1.7.7 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.7 Prohibited use of data collected for regulatory purposes. | CFTC | [77 FR 36699, June 19, 2012] | A designated contract market may not use for business or marketing purposes any proprietary data or personal information it collects or receives, from or on behalf of any person, for the purpose of fulfilling its regulatory obligations; provided however, that a designated contract market may use such data or information for business or marketing purposes if the person from whom it collects or receives such data or information clearly consents to the designated contract market's use of such data or information in such manner. A designated contract market, where necessary, for regulatory purposes, may share such data or information with one or more designated contract markets or swap execution facilities registered with the Commission. A designated contract market may not condition access to its trading facility on a market participant's consent to the use of proprietary data or personal information for business or marketing purposes. | ||||
| 17:17:1.0.1.1.31.1.7.8 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.8 Listing of swaps on a designated contract market. | CFTC | [77 FR 36699, June 19, 2012] | (a) A designated contract market that lists for the first time a swap contract for trading on its contract market must, either prior to or at the time of such listing, file with the Commission a written demonstration detailing how the designated contract market is addressing its self-regulatory obligations and is fulfilling its statutory and regulatory obligations with respect to swap transactions. (b)(1) Prior to listing swaps for trading on or through a designated contract market, each designated contract market must obtain from the Commission a unique, alphanumeric code assigned to the designated contract market by the Commission for the purpose of identifying the designated contract market with respect to unique swap identifier creation. (2) Each designated contract market must generate and assign a unique swap identifier at, or as soon as technologically practicable following, the time of execution of the swap, in a manner consistent with the requirements of part 45. | ||||
| 17:17:1.0.1.1.31.1.7.9 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | A | Subpart A—General Provisions | § 38.9 Boards of trade operating both a designated contract market and a swap execution facility. | CFTC | [77 FR 36699, June 19, 2012] | (a) A board of trade that operates a designated contract market and that intends to also operate a swap execution facility must separately register, pursuant to the swap execution facility registration requirements set forth in part 37 of this chapter, and on an ongoing basis, comply with the core principles under section 5h of the Act, and the swap execution facility rules under part 37 of this chapter. (b) A board of trade that operates both a designated contract market and a swap execution facility, and that uses the same electronic trade execution system for executing and trading swaps that it uses in its capacity as a designated contract market, must clearly identify to market participants for each swap whether the execution or trading of such swap is taking place on the designated contract market or on the swap execution facility. | ||||
| 17:17:1.0.1.1.31.10.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | J | Subpart J—Execution of Transactions | § 38.500 Core Principle 9. | CFTC | The board of trade shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading in the centralized market of the board of trade. The rules of the board of trade may authorize, for bona fide business purposes: (a) Transfer trades or office trades; (b) An exchange of: (1) Futures in connection with a cash commodity transaction; (2) Futures for cash commodities; or (3) Futures for swaps; or (c) A futures commission merchant, acting as principal or agent, to enter into or confirm the execution of a contract for the purchase or sale of a commodity for future delivery if the contract is reported, recorded, or cleared in accordance with the rules of the contract market or a derivatives clearing organization. | |||||
| 17:17:1.0.1.1.31.11.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | K | Subpart K—Trade Information | § 38.550 Core Principle 10. | CFTC | The board of trade shall maintain rules and procedures to provide for the recording and safe storage of all identifying trade information in a manner that enables the contract market to use the information: (a) To assist in the prevention of customer and market abuses; and (b) To provide evidence of any violations of the rules of the contract market. | |||||
| 17:17:1.0.1.1.31.11.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | K | Subpart K—Trade Information | § 38.551 Audit trail required. | CFTC | A designated contract market must capture and retain all audit trail data necessary to detect, investigate, and prevent customer and market abuses. Such data must be sufficient to reconstruct all transactions within a reasonable period of time and to provide evidence of any violations of the rules of the designated contract market. An acceptable audit trail must also permit the designated contract market to track a customer order from the time of receipt through fill, allocation, or other disposition, and must include both order and trade data. | |||||
| 17:17:1.0.1.1.31.11.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | K | Subpart K—Trade Information | § 38.552 Elements of an acceptable audit trail program. | CFTC | (a) Original source documents. A designated contract market's audit trail must include original source documents. Original source documents include unalterable, sequentially identified records on which trade execution information is originally recorded, whether recorded manually or electronically. Records for customer orders (whether filled, unfilled, or cancelled, each of which shall be retained or electronically captured) must reflect the terms of the order, an account identifier that relates back to the account(s) owner(s), and the time of order entry. For open-outcry trades, the time of report of execution of the order shall also be captured. (b) Transaction history database. A designated contract market's audit trail program must include an electronic transaction history database. An adequate transaction history database includes a history of all trades executed via open outcry or via entry into an electronic trading system, and all orders entered into an electronic trading system, including all order modifications and cancellations. An adequate transaction history database also includes: (1) All data that are input into the trade entry or matching system for the transaction to match and clear; (2) The customer type indicator code; (3) Timing and sequencing data adequate to reconstruct trading; and (4) Identification of each account to which fills are allocated. (c) Electronic analysis capability. A designated contract market's audit trail program must include electronic analysis capability with respect to all audit trail data in the transaction history database. Such electronic analysis capability must ensure that the designated contract market has the ability to reconstruct trading and identify possible trading violations with respect to both customer and market abuse. (d) Safe storage capability. A designated contract market's audit trail program must include the capability to safely store all audit trail data retained in its transaction history database. Such safe storage capability must i… | |||||
| 17:17:1.0.1.1.31.11.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | K | Subpart K—Trade Information | § 38.553 Enforcement of audit trail requirements. | CFTC | (a) Annual audit trail and recordkeeping reviews. A designated contract market must enforce its audit trail and recordkeeping requirements through at least annual reviews of all members and persons and firms subject to designated contract market recordkeeping rules to verify their compliance with the contract market's audit trail and recordkeeping requirements. Such reviews must include, but are not limited to, the following: (1) For electronic trading, audit trail and recordkeeping reviews must include reviews of randomly selected samples of front-end audit trail data for order routing systems; a review of the process by which user identifications are assigned and user identification records are maintained; a review of usage patterns associated with user identifications to monitor for violations of user identification rules; and reviews of account numbers and customer type indicator codes in trade records to test for accuracy and improper use. (2) For open outcry trading, audit trail and recordkeeping reviews must include reviews of members' and market participants' compliance with the designated contract market's trade timing, order ticket, and trading card requirements. (b) Enforcement program required. A designated contract market must establish a program for effective enforcement of its audit trail and recordkeeping requirements for both electronic and open-outcry trading, as applicable. An effective program must identify members and persons and firms subject to designated contract market recordkeeping rules that have failed to maintain high levels of compliance with such requirements, and levy meaningful sanctions when deficiencies are found. Sanctions must be sufficient to deter recidivist behavior. No more than one warning letter may be issued to the same person or entity found to have committed the same rule violation within a rolling twelve month period. | |||||
| 17:17:1.0.1.1.31.12.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.600 Core Principle 11. | CFTC | The board of trade shall establish and enforce: (a) Rules and procedures for ensuring the financial integrity of transactions entered into on or through the facilities of the contract market (including the clearance and settlement of the transactions with a derivatives clearing organization); and (b) Rules to ensure: (1) The financial integrity of any: (i) Futures commission merchant, and (ii) Introducing broker; and (2) The protection of customer funds. | |||||
| 17:17:1.0.1.1.31.12.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.601 Mandatory clearing. | CFTC | [77 FR 36700, June 19, 2012, as amended at 77 FR 37803, June 25, 2012] | (a) Transactions executed on or through the designated contract market must be cleared through a Commission-registered derivatives clearing organization, in accordance with the provisions of part 39 of this chapter. Notwithstanding the foregoing, transactions in security futures products executed on or through the designated contract market may alternatively be cleared through a clearing agency, registered pursuant to section 17A of the Securities Exchange Act of 1934. (b) A designated contract market must coordinate with each derivatives clearing organization to which it submits transactions for clearing, in the development of rules and procedures to facilitate prompt and efficient transaction processing in accordance with the requirements of § 39.12(b)(7) of this chapter. | ||||
| 17:17:1.0.1.1.31.12.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.602 General financial integrity. | CFTC | A designated contract market must provide for the financial integrity of its transactions by establishing and maintaining appropriate minimum financial standards for its members and non-intermediated market participants. | |||||
| 17:17:1.0.1.1.31.12.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.603 Protection of customer funds. | CFTC | A designated contract market must have rules concerning the protection of customer funds. These rules shall address appropriate minimum financial standards for intermediaries, the segregation of customer and proprietary funds, the custody of customer funds, the investment standards for customer funds, intermediary default procedures and related recordkeeping. A designated contract market must review the default rules and procedures of the derivatives clearing organization that clears for such designated contract market to wind down operations, transfer customers, or otherwise protect customers in the event of a default of a clearing member or the derivatives clearing organization. | |||||
| 17:17:1.0.1.1.31.12.7.5 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.604 Financial surveillance. | CFTC | A designated contract market must monitor members' compliance with the designated contract market's minimum financial standards and, therefore, must routinely receive and promptly review financial and related information from its members, as well as continuously monitor the positions of members and their customers. A designated contract market must have rules that prescribe minimum capital requirements for member futures commission merchants and introducing brokers. A designated contract market must: (a) Continually survey the obligations of each futures commission merchant created by the positions of its customers; (b) As appropriate, compare those obligations to the financial resources of the futures commission merchant; and (c) Take appropriate steps to use this information to protect customer funds. | |||||
| 17:17:1.0.1.1.31.12.7.6 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.605 Requirements for financial surveillance program. | CFTC | A designated contract market's financial surveillance program for futures commission merchants, retail foreign exchange dealers, and introducing brokers must comply with the requirements of § 1.52 of this chapter to assess the compliance of such entities with applicable contract market rules and Commission regulations. | |||||
| 17:17:1.0.1.1.31.12.7.7 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.606 Financial regulatory services provided by a third party. | CFTC | A designated contract market may comply with the requirements of § 38.604 (Financial Surveillance) and § 38.605 (Requirements for Financial Surveillance Program) of this part through the regulatory services of a registered futures association or a registered entity (collectively, “regulatory service provider”), as such terms are defined under the Act. A designated contract market must ensure that its regulatory service provider has the capacity and resources necessary to provide timely and effective regulatory services, including adequate staff and appropriate surveillance systems. A designated contract market will at all times remain responsible for compliance with its obligations under the Act and Commission regulations, and for the regulatory service provider's performance on its behalf. Regulatory services must be provided under a written agreement with a regulatory services provider that shall specifically document the services to be performed as well as the capacity and resources of the regulatory service provider with respect to the services to be performed. | |||||
| 17:17:1.0.1.1.31.12.7.8 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | L | Subpart L—Financial Integrity of Transactions | § 38.607 Direct access. | CFTC | A designated contract market that permits direct electronic access by customers ( i.e. , allowing customers of futures commission merchants to enter orders directly into a designated contract market's trade matching system for execution) must have in place effective systems and controls reasonably designed to facilitate the FCM's management of financial risk, such as automated pre-trade controls that enable member futures commission merchants to implement appropriate financial risk limits. A designated contract market must implement and enforce rules requiring the member futures commission merchants to use the provided systems and controls. | |||||
| 17:17:1.0.1.1.31.13.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | M | Subpart M—Protection of Markets and Market Participants | § 38.650 Core Principle 12. | CFTC | The board of trade shall establish and enforce rules: (a) To protect markets and market participants from abusive practices committed by any party, including abusive practices committed by a party acting as an agent for a participant; and (b) To promote fair and equitable trading on the contract market. | |||||
| 17:17:1.0.1.1.31.13.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | M | Subpart M—Protection of Markets and Market Participants | § 38.651 Protection of markets and market participants. | CFTC | A designated contract market must have and enforce rules that are designed to promote fair and equitable trading and to protect the market and market participants from abusive practices including fraudulent, noncompetitive or unfair actions, committed by any party. The designated contract market must have methods and resources appropriate to the nature of the trading system and the structure of the market to detect trade practice and market abuses and to discipline such behavior, in accordance with Core Principles 2 and 4, and the associated regulations in subparts C and E of this part, respectively. The designated contract market also must provide a competitive, open and efficient market and mechanism for executing transactions in accordance with Core Principle 9 and the associated regulations under subpart J of this part. | |||||
| 17:17:1.0.1.1.31.14.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.700 Core Principle 13. | CFTC | The board of trade shall establish and enforce disciplinary procedures that authorize the board of trade to discipline, suspend, or expel members or market participants that violate the rules of the board of trade, or similar methods for performing the same functions, including delegation of the functions to third parties. | |||||
| 17:17:1.0.1.1.31.14.7.10 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.709 Final decisions. | CFTC | Each designated contract market must establish rules setting forth when a decision rendered pursuant to this section will become the final decision of such designated contract market. | |||||
| 17:17:1.0.1.1.31.14.7.11 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.710 Disciplinary sanctions. | CFTC | All disciplinary sanctions imposed by a designated contract market or its disciplinary panels must be commensurate with the violations committed and must be clearly sufficient to deter recidivism or similar violations by other market participants. All disciplinary sanctions, including sanctions imposed pursuant to an accepted settlement offer, must take into account the respondent's disciplinary history. In the event of demonstrated customer harm, any disciplinary sanction must also include full customer restitution, except where the amount of restitution, or to whom it should be provided, cannot be reasonably determined. | |||||
| 17:17:1.0.1.1.31.14.7.12 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.711 Warning letters. | CFTC | Where a rule violation is found to have occurred, no more than one warning letter may be issued per rolling 12-month period for the same violation. | |||||
| 17:17:1.0.1.1.31.14.7.13 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.712 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.700 of this part. | |||||
| 17:17:1.0.1.1.31.14.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.701 Enforcement staff. | CFTC | A designated contract market must establish and maintain sufficient enforcement staff and resources to effectively and promptly prosecute possible rule violations within the disciplinary jurisdiction of the contract market. A designated contract market must also monitor the size and workload of its enforcement staff annually, and ensure that its enforcement resources and staff are at appropriate levels. The enforcement staff may not include either members of the designated contract market or persons whose interests conflict with their enforcement duties. A member of the enforcement staff may not operate under the direction or control of any person or persons with trading privileges at the contract market. A designated contract market's enforcement staff may operate as part of the designated contract market's compliance department. | |||||
| 17:17:1.0.1.1.31.14.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.702 Disciplinary panels. | CFTC | A designated contract market must establish one or more disciplinary panels that are authorized to fulfill their obligations under the rules of this subpart. Disciplinary panels must meet the composition requirements of part 40 of this chapter, and must not include any members of the designated contract market's compliance staff or any person involved in adjudicating any other stage of the same proceeding. | |||||
| 17:17:1.0.1.1.31.14.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.703 Notice of charges. | CFTC | If compliance staff authorized by a designated contract market or a designated contract market disciplinary panel determines that a reasonable basis exists for finding a violation and that adjudication is warranted, it must direct that the person or entity alleged to have committed the violation be served with a notice of charges and must proceed in accordance with the rules of this section. A notice of charges must adequately state the acts, conduct, or practices in which the respondent is alleged to have engaged; state the rule, or rules, alleged to have been violated (or about to be violated); and prescribe the period within which a hearing on the charges may be requested. The notice must also advise that the charged respondent is entitled, upon request, to a hearing on the charges. | |||||
| 17:17:1.0.1.1.31.14.7.5 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.704 Right to representation. | CFTC | Upon being served with a notice of charges, a respondent must have the right to be represented by legal counsel or any other representative of its choosing in all succeeding stages of the disciplinary process, except any member of the designated contract market's board of directors or disciplinary panel, any employee of the designated contract market, or any person substantially related to the underlying investigations, such as material witness or respondent. | |||||
| 17:17:1.0.1.1.31.14.7.6 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.705 Answer to charges. | CFTC | A respondent must be given a reasonable period of time to file an answer to a notice of charges. The rules of a designated contract market governing the requirements and timeliness of a respondent's answer to charges must be fair, equitable, and publicly available. | |||||
| 17:17:1.0.1.1.31.14.7.7 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.706 Denial of charges and right to hearing. | CFTC | In every instance where a respondent has requested a hearing on a charge that is denied, or on a sanction set by the disciplinary panel, the respondent must be given an opportunity for a hearing in accordance with the requirements of § 38.707 of this part. | |||||
| 17:17:1.0.1.1.31.14.7.8 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.707 Hearings. | CFTC | (a) A designated contract market must adopt rules that provide for the following minimum requirements for any hearing conducted pursuant to a notice of charges: (1) The hearing must be fair, must be conducted before members of the disciplinary panel, and must be promptly convened after reasonable notice to the respondent. The formal rules of evidence need not apply; nevertheless, the procedures for the hearing may not be so informal as to deny a fair hearing. No member of the disciplinary panel for the matter may have a financial, personal, or other direct interest in the matter under consideration. (2) In advance of the hearing, the respondent must be entitled to examine all books, documents, or other evidence in the possession or under the control of the designated contract market. The designated contract market may withhold documents that are privileged or constitute attorney work product, documents that were prepared by an employee of the designated contract market but will not be offered in evidence in the disciplinary proceedings, documents that may disclose a technique or guideline used in examinations, investigations, or enforcements proceedings, and documents that disclose the identity of a confidential source. (3) The designated contract market's enforcement and compliance staffs must be parties to the hearing, and the enforcement staff must present their case on those charges and sanctions that are the subject of the hearing. (4) The respondent must be entitled to appear personally at the hearing, must be entitled to cross-examine any persons appearing as witnesses at the hearing, and must be entitled to call witnesses and to present such evidence as may be relevant to the charges. (5) The designated contract market must require persons within its jurisdiction who are called as witnesses to participate in the hearing and to produce evidence. It must make reasonable efforts to secure the presence of all other persons called as witnesses whose testimony would be relevant. (6) If the respondent has … | |||||
| 17:17:1.0.1.1.31.14.7.9 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | N | Subpart N—Disciplinary Procedures | § 38.708 Decisions. | CFTC | Promptly following a hearing conducted in accordance with § 38.707 of this part, the disciplinary panel must render a written decision based upon the weight of the evidence contained in the record of the proceeding and must provide a copy to the respondent. The decision must include: (a) The notice of charges or a summary of the charges; (b) The answer, if any, or a summary of the answer; (c) A summary of the evidence produced at the hearing or, where appropriate, incorporation by reference of the investigation report; (d) A statement of findings and conclusions with respect to each charge, and a complete explanation of the evidentiary and other basis for such findings and conclusions with respect to each charge; (e) An indication of each specific rule that the respondent was found to have violated; and (f) A declaration of all sanctions imposed against the respondent, including the basis for such sanctions and the effective date of such sanctions. | |||||
| 17:17:1.0.1.1.31.15.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | O | Subpart O—Dispute Resolution | § 38.750 Core Principle 14. | CFTC | The board of trade shall establish and enforce rules regarding, and provide facilities for alternative dispute resolution as appropriate for, market participants and any market intermediaries. | |||||
| 17:17:1.0.1.1.31.15.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | O | Subpart O—Dispute Resolution | § 38.751 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.750 of this part. | |||||
| 17:17:1.0.1.1.31.16.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | P | Subpart P—Governance Fitness Standards | § 38.800 Core Principle 15. | CFTC | The board of trade shall establish and enforce appropriate fitness standards for directors, members of any disciplinary committee, members of the contract market, and any other person with direct access to the facility (including any party affiliated with any person described in this paragraph). | |||||
| 17:17:1.0.1.1.31.16.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | P | Subpart P—Governance Fitness Standards | § 38.801 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.800 of this part. | |||||
| 17:17:1.0.1.1.31.17.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | Q | Subpart Q—Conflicts of Interest | § 38.850 Core Principle 16. | CFTC | The board of trade shall establish and enforce rules: (a) To minimize conflicts of interest in the decision-making process of the contract market; and (b) To establish a process for resolving conflicts of interest described in paragraph (a) of this section. | |||||
| 17:17:1.0.1.1.31.17.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | Q | Subpart Q—Conflicts of Interest | § 38.851 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and/or acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.850 of this part. | |||||
| 17:17:1.0.1.1.31.18.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | R | Subpart R—Composition of Governing Boards of Contract Markets | § 38.900 Core Principle 17. | CFTC | The governance arrangements of the board of trade shall be designed to permit consideration of the views of market participants. | |||||
| 17:17:1.0.1.1.31.19.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | S | Subpart S—Recordkeeping | § 38.950 Core Principle 18. | CFTC | The board of trade shall maintain records of all activities relating to the business of the contract market: (a) In a form and manner that is acceptable to the Commission; and (b) For a period of at least 5 years. | |||||
| 17:17:1.0.1.1.31.19.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | S | Subpart S—Recordkeeping | § 38.951 Additional sources for compliance. | CFTC | A designated contract market must maintain such records, including trade records and investigatory and disciplinary files, in accordance with the requirements of § 1.31 of this chapter, and in accordance with part 45 of this chapter, if applicable. | |||||
| 17:17:1.0.1.1.31.2.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | B | Subpart B—Designation as Contract Market | § 38.100 Core Principle 1. | CFTC | (a) In general. To be designated, and maintain a designation, as a contract market, a board of trade shall comply with: (1) Any core principle described in section 5(d) of the Act, and (2) Any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5) of the Act. (b) Reasonable discretion of the contract market. Unless otherwise determined by the Commission by rule or regulation, a board of trade described in paragraph (a) of this section shall have reasonable discretion in establishing the manner in which the board of trade complies with the core principles described in this subsection. | |||||
| 17:17:1.0.1.1.31.20.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | T | Subpart T—Antitrust Considerations | § 38.1000 Core Principle 19. | CFTC | Unless necessary or appropriate to achieve the purposes of this Act, the board of trade shall not: (a) Adopt any rule or taking any action that results in any unreasonable restraint of trade; or (b) Impose any material anticompetitive burden on trading on the contract market. | |||||
| 17:17:1.0.1.1.31.20.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | T | Subpart T—Antitrust Considerations | § 38.1001 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.1000 of this part. | |||||
| 17:17:1.0.1.1.31.21.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | U | Subpart U—System Safeguards | § 38.1050 Core Principle 20. | CFTC | Each designated contract market shall: (a) Establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated systems, that are reliable, secure, and have adequate scalable capacity; (b) Establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for the timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the board of trade; and (c) Periodically conduct tests to verify that backup resources are sufficient to ensure continued order processing and trade matching, transmission of matched orders to a designated clearing organization for clearing, price reporting, market surveillance, and maintenance of a comprehensive and accurate audit trail. | |||||
| 17:17:1.0.1.1.31.21.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | U | Subpart U—System Safeguards | § 38.1051 General requirements. | CFTC | [77 FR 36700, June 19, 2012, as amended at 81 FR 64312, Sept. 19, 2016; 82 FR 45434, Sept. 29, 2017] | (a) A designated contract market's program of risk analysis and oversight with respect to its operations and automated systems shall address each of the following categories of risk analysis and oversight: (1) Enterprise risk management and governance. This category includes, but is not limited to: Assessment, mitigation, and monitoring of security and technology risk; security and technology capital planning and investment; board of directors and management oversight of technology and security; information technology audit and controls assessments; remediation of deficiencies; and any other elements of enterprise risk management and governance included in generally accepted best practices. (2) Information security. This category includes, but is not limited to, controls relating to: Access to systems and data (including least privilege, separation of duties, account monitoring and control); user and device identification and authentication; security awareness training; audit log maintenance, monitoring, and analysis; media protection; personnel security and screening; automated system and communications protection (including network port control, boundary defenses, encryption); system and information integrity (including malware defenses, software integrity monitoring); vulnerability management; penetration testing; security incident response and management; and any other elements of information security included in generally accepted best practices. (3) Business continuity-disaster recovery planning and resources. This category includes, but is not limited to: Regular, periodic testing and review of business continuity-disaster recovery capabilities, the controls and capabilities described in paragraphs (c), (d), (j), and (k) of this section; and any other elements of business continuity-disaster recovery planning and resources included in generally accepted best practices. (4) Capacity and performance planning. This category includes, but is not limited to: Controls for monitoring the designated co… | ||||
| 17:17:1.0.1.1.31.22.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | V | Subpart V—Financial Resources | § 38.1100 Core Principle 21. | CFTC | (a) In General. The board of trade shall have adequate financial, operational, and managerial resources to discharge each responsibility of the board of trade. (b) Determination of adequacy. The financial resources of the board of trade shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the contract market to cover the operating costs of the contract market for a 1-year period, as calculated on a rolling basis. | |||||
| 17:17:1.0.1.1.31.22.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | V | Subpart V—Financial Resources | § 38.1101 General requirements. | CFTC | (a) General rule. (1) A designated contract market must maintain financial resources sufficient to enable it to perform its functions in compliance with the core principles set forth in section 5 of the Act and regulations thereunder. (2) Financial resources shall be considered sufficient if their value is at least equal to a total amount that would enable the designated contract market, or applicant for designation as such, to cover its operating costs for a period of at least one year, calculated on a rolling basis. (3) An entity that is registered with the Commission as both a designated contract market and a derivatives clearing organization also shall comply with the financial resource requirements of § 39.11 of this chapter, demonstrating that it has sufficient financial resources to operate the single, combined entity as both a designated contract market and a derivatives clearing organization. In lieu of filing separate quarterly reports under paragraph (a)(2) of this section and § 39.11(f) of this chapter, such entity shall file single quarterly reports in accordance with § 39.11. (b) Types of financial resources. Financial resources available to satisfy the requirements of paragraph (a) of this section may include: (1) The designated contract market's own capital, calculated in accordance with U.S. generally accepted accounting principles; and (2) Any other financial resource deemed acceptable by the Commission. (c) Computation of financial resource requirement. A designated contract market must, on a quarterly basis, based upon its fiscal year, make a reasonable calculation of its projected operating costs over a 12-month period in order to determine the amount needed to meet the requirements of paragraph (a) of this section. The designated contract market shall have reasonable discretion in determining the methodology used to compute such projected operating costs. The Commission may review the methodology and require changes as appropriate. (d) Valuation of financial resources. At appr… | |||||
| 17:17:1.0.1.1.31.23.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | W | Subpart W—Diversity of Board of Directors | § 38.1150 Core Principle 22. | CFTC | The board of trade, if a publicly traded company, shall endeavor to recruit individuals to serve on the board of directors and the other decision-making bodies (as determined by the Commission) of the board of trade from among, and to have the composition of the bodies reflect, a broad and culturally diverse pool of qualified candidates. | |||||
| 17:17:1.0.1.1.31.24.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | X | Subpart X—Securities and Exchange Commission | § 38.1200 Core Principle 23. | CFTC | The board of trade shall keep any such records relating to swaps defined in section 1a(47)(A)(v) of the Act open to inspection and examination by the Securities and Exchange Commission. | |||||
| 17:17:1.0.1.1.31.24.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | X | Subpart X—Securities and Exchange Commission | § 38.1201 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and/or acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.1200 of this part. | |||||
| 17:17:1.0.1.1.31.3.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.150 Core Principle 2. | CFTC | (a) In general. The board of trade shall establish, monitor, and enforce compliance with the rules of the contract market, including: (1) Access requirements; (2) The terms and conditions of any contracts to be traded on the contract market; and (3) Rules prohibiting abusive trade practices on the contract market. (b) Capacity of contract market. The board of trade shall have the capacity to detect, investigate, and apply appropriate sanctions to any person that violates any rule of the contract market. (c) Requirement of rules. The rules of the contract market shall provide the board of trade with the ability and authority to obtain any necessary information to perform any function described in this section, including the capacity to carry out such international information-sharing agreements, as the Commission may require. | |||||
| 17:17:1.0.1.1.31.3.7.10 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.159 Ability to obtain information. | CFTC | A designated contract market must have the ability and authority to obtain any necessary information to perform any function required under this subpart C of the Commission's regulations, including the capacity to carry out international information-sharing agreements as the Commission may require. Appropriate information-sharing agreements can be established with other designated contract markets and swap execution facilities, or the Commission can act in conjunction with the designated contract market to carry out such information sharing. | |||||
| 17:17:1.0.1.1.31.3.7.11 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.160 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.150 of this part. | |||||
| 17:17:1.0.1.1.31.3.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.151 Access requirements. | CFTC | (a) Jurisdiction. Prior to granting any member or market participant access to its markets, a designated contract market must require that the member or market participant consent to its jurisdiction. (b) Impartial access by members, persons with trading privileges and independent software vendors. A designated contract market must provide its members, persons with trading privileges, and independent software vendors with impartial access to its markets and services, including: (1) Access criteria that are impartial, transparent, and applied in a non-discriminatory manner; and (2) Comparable fee structures for members, persons with trading privileges and independent software vendors receiving equal access to, or services from, the designated contract market. (c) Limitations on access. A designated contract market must establish and impartially enforce rules governing denials, suspensions, and revocations of a member's and a person with trading privileges' access privileges to the designated contract market, including when such actions are part of a disciplinary or emergency action by the designated contract market. | |||||
| 17:17:1.0.1.1.31.3.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.152 Abusive trading practices prohibited. | CFTC | A designated contract market must prohibit abusive trading practices on its markets by members and market participants. Designated contract markets that permit intermediation must prohibit customer-related abuses including, but not limited to, trading ahead of customer orders, trading against customer orders, accommodation trading, and improper cross trading. Specific trading practices that must be prohibited by all designated contract markets include front-running, wash trading, pre-arranged trading (except for certain transactions specifically permitted under part 38 of this chapter), fraudulent trading, money passes, and any other trading practices that a designated contract market deems to be abusive. In addition, a designated contract market also must prohibit any other manipulative or disruptive trading practices prohibited by the Act or by the Commission pursuant to Commission regulation. | |||||
| 17:17:1.0.1.1.31.3.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.153 Capacity to detect and investigate rule violations. | CFTC | A designated contract market must have arrangements and resources for effective enforcement of its rules. Such arrangements must include the authority to collect information and documents on both a routine and non-routine basis, including the authority to examine books and records kept by the designated contract market's members and by persons under investigation. A designated contract market's arrangements and resources must also facilitate the direct supervision of the market and the analysis of data collected to determine whether a rule violation occurred. | |||||
| 17:17:1.0.1.1.31.3.7.5 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.154 Regulatory services provided by a third party. | CFTC | (a) Use of third-party provider permitted. A designated contract market may choose to utilize a registered futures association or another registered entity, as such terms are defined under the Act, (collectively, “regulatory service provider”), for the provision of services to assist in complying with the core principles, as approved by the Commission. Any designated contract market that chooses to utilize a regulatory service provider must ensure that its regulatory service provider has the capacity and resources necessary to provide timely and effective regulatory services, including adequate staff and automated surveillance systems. A designated contract market will at all times remain responsible for the performance of any regulatory services received, for compliance with the designated contract market's obligations under the Act and Commission regulations, and for the regulatory service provider's performance on its behalf. (b) Duty to supervise third party. A designated contract market that elects to utilize a regulatory service provider must retain sufficient compliance staff to supervise the quality and effectiveness of the services provided on its behalf. Compliance staff of the designated contract market must hold regular meetings with the regulatory service provider to discuss ongoing investigations, trading patterns, market participants, and any other matters of regulatory concern. A designated contract market also must conduct periodic reviews of the adequacy and effectiveness of services provided on its behalf. Such reviews must be documented carefully and made available to the Commission upon request. (c) Regulatory decisions required from the designated contract market. A designated contract market that elects to utilize a regulatory service provider must retain exclusive authority in decisions involving the cancellation of trades, the issuance of disciplinary charges against members or market participants, and the denials of access to the trading platform for disciplinary reasons. A desig… | |||||
| 17:17:1.0.1.1.31.3.7.6 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.155 Compliance staff and resources. | CFTC | (a) Sufficient compliance staff. A designated contract market must establish and maintain sufficient compliance department resources and staff to ensure that it can conduct effective audit trail reviews, trade practice surveillance, market surveillance, and real-time market monitoring. The designated contract market's compliance staff also must be sufficient to address unusual market or trading events as they arise, and to conduct and complete investigations in a timely manner, as set forth in § 38.158(b) of this part. (b) Ongoing monitoring of compliance staff resources. A designated contract market must monitor the size and workload of its compliance staff annually, and ensure that its compliance resources and staff are at appropriate levels. In determining the appropriate level of compliance resources and staff, the designated contract market should consider trading volume increases, the number of new products or contracts to be listed for trading, any new responsibilities to be assigned to compliance staff, the results of any internal review demonstrating that work is not completed in an effective or timely manner, and any other factors suggesting the need for increased resources and staff. | |||||
| 17:17:1.0.1.1.31.3.7.7 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.156 Automated trade surveillance system. | CFTC | A designated contract market must maintain an automated trade surveillance system capable of detecting and investigating potential trade practice violations. The automated system must load and process daily orders and trades no later than 24 hours after the completion of the trading day. In addition, the automated trade surveillance system must have the capability to detect and flag specific trade execution patterns and trade anomalies; compute, retain, and compare trading statistics; compute trade gains, losses, and futures-equivalent positions; reconstruct the sequence of market activity; perform market analyses; and support system users to perform in-depth analyses and ad hoc queries of trade-related data. | |||||
| 17:17:1.0.1.1.31.3.7.8 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.157 Real-time market monitoring. | CFTC | A designated contract market must conduct real-time market monitoring of all trading activity on its electronic trading platform(s) to identify disorderly trading and any market or system anomalies. A designated contract market must have the authority to adjust trade prices or cancel trades when necessary to mitigate market disrupting events caused by malfunctions in its electronic trading platform(s) or errors in orders submitted by members and market participants. Any trade price adjustments or trade cancellations must be transparent to the market and subject to standards that are clear, fair, and publicly available. | |||||
| 17:17:1.0.1.1.31.3.7.9 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | C | Subpart C—Compliance With Rules | § 38.158 Investigations and investigation reports. | CFTC | (a) Procedures. A designated contract market must establish and maintain procedures that require its compliance staff to conduct investigations of possible rule violations. An investigation must be commenced upon the receipt of a request from Commission staff or upon the discovery or receipt of information by the designated contract market that indicates a reasonable basis for finding that a violation may have occurred or will occur. (b) Timeliness. Each compliance staff investigation must be completed in a timely manner. Absent mitigating factors, a timely manner is no later than 12 months after the date that an investigation is opened. Mitigating factors that may reasonably justify an investigation taking longer than 12 months to complete include the complexity of the investigation, the number of firms or individuals involved as potential wrongdoers, the number of potential violations to be investigated, and the volume of documents and data to be examined and analyzed by compliance staff. (c) Investigation reports when a reasonable basis exists for finding a violation. Compliance staff must submit a written investigation report for disciplinary action in every instance in which compliance staff determines from surveillance or from an investigation that a reasonable basis exists for finding a rule violation. The investigation report must include the reason the investigation was initiated; a summary of the complaint, if any; the relevant facts; compliance staff's analysis and conclusions; and a recommendation as to whether disciplinary action should be pursued. (d) Investigation reports when no reasonable basis exists for finding a violation. If after conducting an investigation, compliance staff determines that no reasonable basis exists for finding a violation, it must prepare a written report including the reason(s) the investigation was initiated; a summary of the complaint, if any; the relevant facts; and compliance staff's analysis and conclusions. (e) Warning letters. No more than one warning… | |||||
| 17:17:1.0.1.1.31.4.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | D | Subpart D—Contracts Not Readily Subject to Manipulation | § 38.200 Core Principle 3. | CFTC | The board of trade shall list on the contract market only contracts that are not readily susceptible to manipulation. | |||||
| 17:17:1.0.1.1.31.4.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | D | Subpart D—Contracts Not Readily Subject to Manipulation | § 38.201 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance in appendix C of this part to demonstrate to the Commission compliance with the requirements of § 38.200 of this part. | |||||
| 17:17:1.0.1.1.31.5.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.250 Core Principle 4. | CFTC | The board of trade shall have the capacity and responsibility to prevent manipulation, price distortion, and disruptions of the delivery or cash-settlement process through market surveillance, compliance, and enforcement practices and procedures, including: (a) Methods for conducting real-time monitoring of trading; and (b) Comprehensive and accurate trade reconstructions. | |||||
| 17:17:1.0.1.1.31.5.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.251 General requirements. | CFTC | [77 FR 36700, June 19, 2012, as amended at 86 FR 2071, Jan. 11, 2021] | A designated contract market must: (a) Collect and evaluate data on individual traders' market activity on an ongoing basis in order to detect and prevent manipulation, price distortions and, where possible, disruptions of the physical-delivery or cash-settlement process; (b) Monitor and evaluate general market data in order to detect and prevent manipulative activity that would result in the failure of the market price to reflect the normal forces of supply and demand; (c) Demonstrate an effective program for conducting real-time monitoring of market conditions, price movements and volumes, in order to detect abnormalities and, when necessary, make a good-faith effort to resolve conditions that are, or threaten to be, disruptive to the market; and (d) Demonstrate the ability to comprehensively and accurately reconstruct daily trading activity for the purposes of detecting trading abuses and violations of exchange-set position limits, including those that may have occurred intraday. (e) Adopt and implement rules governing market participants subject to its jurisdiction to prevent, detect, and mitigate market disruptions or system anomalies associated with electronic trading; (f) Subject all electronic orders to exchange-based pre-trade risk controls to prevent, detect, and mitigate market disruptions or system anomalies associated with electronic trading; and (g) Promptly notify Commission staff of any significant market disruptions on its electronic trading platform(s) and provide timely information on the causes and remediation. | ||||
| 17:17:1.0.1.1.31.5.7.3 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.252 Additional requirements for physical-delivery contracts. | CFTC | For physical-delivery contracts, the designated contract market must demonstrate that it: (a) Monitors a contract's terms and conditions as they relate to the underlying commodity market and to the convergence between the contract price and the price of the underlying commodity and show a good-faith effort to resolve conditions that are interfering with convergence; and (b) Monitors the supply of the commodity and its adequacy to satisfy the delivery requirements and make a good-faith effort to resolve conditions that threaten the adequacy of supplies or the delivery process. | |||||
| 17:17:1.0.1.1.31.5.7.4 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.253 Additional requirements for cash-settled contracts. | CFTC | (a) For cash-settled contracts, the designated contract market must demonstrate that it: (1) Monitors the pricing of the index to which the contract will be settled; and (2) Monitors the continued appropriateness of the methodology for deriving the index and makes a good-faith effort to resolve conditions, including amending contract terms where necessary, where there is a threat of market manipulation, disruptions, or distortions. (b) If a contract listed on a designated contract market is settled by reference to the price of a contract or commodity traded in another venue, including a price or index derived from prices on another designated contract market, the designated contract market must have rules or agreements that allow the designated contract market access to information on the activities of its traders in the reference market. | |||||
| 17:17:1.0.1.1.31.5.7.5 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.254 Ability to obtain information. | CFTC | (a) The designated contract market must have rules that require traders in its contracts to keep records of their trading, including records of their activity in the underlying commodity and related derivatives markets, and make such records available, upon request, to the designated contract market. (b) A designated contract market with participants trading through intermediaries must either use a comprehensive large-trader reporting system (LTRS) or be able to demonstrate that it can obtain position data from other sources in order to conduct an effective surveillance program. | |||||
| 17:17:1.0.1.1.31.5.7.6 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.255 Risk controls for trading. | CFTC | The designated contract market must establish and maintain risk control mechanisms to prevent and reduce the potential risk of price distortions and market disruptions, including, but not limited to, market restrictions that pause or halt trading in market conditions prescribed by the designated contract market. | |||||
| 17:17:1.0.1.1.31.5.7.7 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.256 Trade reconstruction. | CFTC | The designated contract market must have the ability to comprehensively and accurately reconstruct all trading on its trading facility. All audit-trail data and reconstructions must be made available to the Commission in a form, manner, and time that is acceptable to the Commission. | |||||
| 17:17:1.0.1.1.31.5.7.8 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.257 Regulatory service provider. | CFTC | A designated contract market must comply with the regulations in this subpart through a dedicated regulatory department, or by delegation of that function to a registered futures association or a registered entity (collectively, “regulatory service provider”), as such terms are defined in the Act and over which the designated contract market has supervisory authority. | |||||
| 17:17:1.0.1.1.31.5.7.9 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | E | Subpart E—Prevention of Market Disruption | § 38.258 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.250 of this part. | |||||
| 17:17:1.0.1.1.31.6.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | F | Subpart F—Position Limitations or Accountability | § 38.300 Core Principle 5. | CFTC | To reduce the potential threat of market manipulation or congestion (especially during trading in the delivery month), the board of trade shall adopt for each contract of the board of trade, as is necessary and appropriate, position limitations or position accountability for speculators. For any contract that is subject to a position limitation established by the Commission, pursuant to section 4a(a), the board of trade shall set the position limitation of the board of trade at a level not higher than the position limitation established by the Commission. | |||||
| 17:17:1.0.1.1.31.6.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | F | Subpart F—Position Limitations or Accountability | § 38.301 Position limitations and accountability. | CFTC | A designated contract market must meet the requirements of parts 150 and 151 of this chapter, as applicable. | |||||
| 17:17:1.0.1.1.31.7.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | G | Subpart G—Emergency Authority | § 38.350 Core Principle 6. | CFTC | The board of trade, in consultation or cooperation with the Commission, shall adopt rules to provide for the exercise of emergency authority, as is necessary and appropriate, including the authority: (a) To liquidate or transfer open positions in any contract; (b) To suspend or curtail trading in any contract; and (c) To require market participants in any contract to meet special margin requirements. | |||||
| 17:17:1.0.1.1.31.7.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | G | Subpart G—Emergency Authority | § 38.351 Additional sources for compliance. | CFTC | Applicants and designated contract markets may refer to the guidance and/or acceptable practices in appendix B of this part to demonstrate to the Commission compliance with the requirements of § 38.350. | |||||
| 17:17:1.0.1.1.31.8.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | H | Subpart H—Availability of General Information | § 38.400 Core Principle 7. | CFTC | The board of trade shall make available to market authorities, market participants, and the public accurate information concerning: (a) The terms and conditions of the contracts of the contract market; and (b)(1) The rules, regulations and mechanisms for executing transactions on or through the facilities of the contract market, and (2) The rules and specifications describing the operation of the contract market's: (i) Electronic matching platform, or (ii) Trade execution facility. | |||||
| 17:17:1.0.1.1.31.8.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | H | Subpart H—Availability of General Information | § 38.401 General requirements. | CFTC | (a) General. (1) A designated contract market must have procedures, arrangements and resources for disclosing to the Commission, market participants and the public accurate information pertaining to: (i) Contract terms and conditions; (ii) Rules and regulations pertaining to the trading mechanisms; and (iii) Rules and specifications pertaining to operation of the electronic matching platform or trade execution facility. (2) Through the procedures, arrangements and resources required in paragraph (a) of this section, the designated contract market must ensure public dissemination of information pertaining to new product listings, new rules, rule amendments or other changes to previously-disclosed information, in accordance with the timeline provided in paragraph (c) of this section. (3) A designated contract market shall meet the requirements of this paragraph (a), by placing the information described in this paragraph (a) on the designated contract market's Web site within the time prescribed in paragraph (c) of this section. (b) Accuracy requirement. With respect to any communication with the Commission, and any information required to be transmitted or made available to market participants and the public, including on its Web site or otherwise, a designated contract market must provide information that it believes, to the best of its knowledge, is accurate and complete, and must not omit material information. (c) Notice of regulatory submissions. (1) A designated contract market, in making available on its Web site information pertaining to new product listings, new rules, rule amendments or other changes to previously-disclosed information, must place such information and submissions on its Web site concurrent with the filing of such information or submissions with the Secretary of the Commission. (2) To the extent that a designated contract market requests confidential treatment of any information filed with the Secretary of the Commission, the designated contract market must post on its Web sit… | |||||
| 17:17:1.0.1.1.31.9.7.1 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | I | Subpart I—Daily Publication of Trading Information | § 38.450 Core Principle 8. | CFTC | The board of trade shall make public daily information on settlement prices, volume, open interest, and opening and closing ranges for actively traded contracts on the contract market. | |||||
| 17:17:1.0.1.1.31.9.7.2 | 17 | Commodity and Securities Exchanges | I | 38 | PART 38—DESIGNATED CONTRACT MARKETS | I | Subpart I—Daily Publication of Trading Information | § 38.451 Reporting of trade information. | CFTC | A designated contract market must meet the reporting requirements set forth in part 16 of this chapter. |
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