not competitively executed, including transfer trades or office trades, or trades involving the exchange of futures for cash commodities or the exchange of futures in connection with cash commodity transactions, shall identify and mark by appropriate symbol or designation all such transactions or contracts and all orders, records, and memoranda pertaining thereto.

[18 F.R. 176, Jan. 19, 1963, as amended at 31 F.R. 5054, Mar. 29, 1966]

§ 1.39

Simultaneous buying and selling orders of different principals; execution of, for and between principals. (a) Conditions and requirements. A member of a contract market who shall have in hand at the same time both buying and selling orders of different principals for the same commodity for future delivery in the same delivery month may execute such orders for and directly between such principals at the market price, if, in conformity with written rules of such contract market which have been submitted to and not disapproved by the Secretary of Agriculture:

(1) When trading is conducted in a trading pit or ring, such orders are first offered openly and competitively by open outcry in such trading pit or ring (i) by both bidding and offering at the same price, and neither such bid nor offer is accepted, or (ii) by bidding and offering to a point where such offer is higher than such bid by not more than the minimum permissible price fluctuation applicable to such commodity on such contract market, and neither such bid nor offer is accepted; or

(2) When in nonpit trading, bids and offers are posted on a board, such member (i) pursuant to such buying order posts a bid on the board and, incident to the execution of such selling order, accepts such bid and all other bids posted at prices equal to or higher than the bid posted by him, or (ii) pursuant to such selling order posts an offer on the board and, incident to the execution of such buying order, accepts such offer and all other offers posted at prices equal to or lower than the offer posted by him;

(3) Such member executes such orders in the presence of an official representative of such contract market designated to observe such transactions and, by appropriate descriptive words or symbol, clearly identifies all such transactions on his trading card or other similar record, made at the time of execution, and notes

66-035 0-67

thereon the exact time of execution and promptly presents said record to such official representative for verification and initialing;

(4) Such contract market keeps a record in permanent form of each such transaction showing the date, price, quantity, kind of commodity, delivery month, by whom executed, and the exact time of execution; and

(5) Neither the futures commission merchant receiving nor the member executing such orders has any interest therein, directly or indirectly, except as a fiduciary.

(b) Not deemed filling orders by offset nor cross trades. The execution of orders in compliance with the conditions set forth in this section will not be deemed to constitute the filling of orders by offset within the meaning of paragraph (D) of section 4b, nor to constitute cross trades within the meaning of paragraph (A) of section 4c, of the Commodity Exchange Act.

(Secs. 4b, 4c, 49 Stat. 1493, 1494; 7. U.S.C. 6b, 6c) [13 F.R. 7834, Dec. 18, 1948, as amended at 24 F.R. 1288, Feb. 19, 1959; 27 F.R. 12673, Dec. 21, 1962; 28 F.R. 314, Jan. 11, 1963]

MISCELLANEOUS

§ 1.40 Crop, market information letters, reports; copies required.

Each futures commission merchant and each member of a contract market shall, upon request, furnish or cause to be furnished to the Commodity Exchange Authority a true copy of any letter, circular, telegram, or report published or given general circulation by such futures commission merchant or member which concerns crop or market information or conditions that affect or tend to affect the price of any commodity, and the true source of or authority for the information contained therein.

§ 1.41

Contract market rules, regulations; filing of copies.

Each contract market shall promptly furnish to the Commodity Exchange Authority copies of all bylaws, rules, regulations, and resolutions made or issued by it or by the governing board thereof, or by any committee or clearing organization thereof, and of all changes and proposed changes therein, and shall notify the Commodity Exchange Authority promptly of all changes in its membership. Three copies of all such material shall be furnished to the Act Administrator, United States Department of

Agriculture, Washington 25, D.C., and one copy shall be furnished to the supervisor in charge of the field office of the Commodity Exchange Authority having local jurisdiction with respect to such contract market.

(Sec. 5a, 49 Stat. 1497; 7 U.S.C. 7a)

§ 1.42 Delivery notice; filing of copy.

Each contract market shall furnish or cause to be furnished promptly to the Commodity Exchange Authority a copy of each notice of delivery issued by any member thereof covering the delivery of any commodity on a futures contract made on or subject to the rules of such contract market, and shall also furnish or cause to be furnished promptly to the Commodity Exchange Authority a record of all endorsements of the original notice of delivery shown in the order in which such endorsements were made.

MISCELLANEOUS

§ 1.43 Information required concerning warehouses.

Each contract market shall file with the Commodity Exchange Authority a list of all warehouses in which or out of which commodities are deliverable in satisfaction of futures contracts made on or subject to the rules of such contract market, which list shall show the name, location, and storage capacity of each such warehouse, together with the name and business address of the operator thereof. The Commodity Exchange Authority shall be kept currently advised of all changes affecting such information. Each contract market shall require the operator of each such warehouse to furnish, upon call by the Act Administrator, a schedule of storage charges, handling charges, and the annual fire insurance rate applicable to such warehouse. (Sec. 5a, 49 Stat. 1497; 7 U.S.C. 7a) [30 F.R. 2258, Feb. 19, 1965]

§ 1.44 Warehouse records, reports; visitation of premises.

Each contract market shall require the operators of warehouses whose receipts are deliverable in satisfaction of commodity futures contracts made on or subject to the rules of such contract market:

(a) To keep records showing the stocks of each commodity traded in for future delivery on such contract market, in store in such warehouses by kinds, by classes, and by grades, if stored under conditions

requiring such designation or identification, and including also lots and parcels stored specially or separately or in specially leased warehouse space;

(b) Upon call from the Commodity Exchange Authority, to report the stocks of commodities in such warehouses and to furnish information concerning stocks of each commodity traded in for future delivery on such contract market about to be transferred or in process of being transferred, or otherwise moved into or out of such warehouses, as well as any other information concerning commodities stored in such warehouses and which are or may be available for delivery on futures contracts; and

(c) To permit visitation of the premises and inspection of the books and records of such warehouses by duly authorized representatives of the United States Department of Agriculture or the Department of Justice, and to keep all books, records, papers, and memoranda relating to the storage and warehousing of commodities in such warehouses for a period of 5 years from the date thereof. (Sec. 5a, 49 Stat. 1497; 7 U.S.C. 7a)

§ 1.45 Delivery of commodities

con

forming to United States standards. Each contract market shall require that all contracts of sale of any commodity for future delivery on or subject to the rules of such contract market shall provide for the delivery thereunder of commodities of grades conforming to United States standards if such standards shall have been officially promulgated. In the event of a change in United States standards, all contracts made on and after the effective date of such change shall be made on the basis of the standards as changed: Provided, That this shall not be construed to prevent the closing of trades made prior to the effective date of such change.

(Sec. 5a, 49 Stat. 1498; 7 U.S.C. 7a)

§ 1.46 Application and closing out of offsetting long and short positions.

(a) Application of purchases and sales. Any futures commission merchant who, on or subject to the rules of a contract market:

(1) Shall purchase any commodity for future delivery for the account of any customer (other than the "Customers' Account" of another futures commission merchant) when the account of such

customer at the time of such purchase has a short position in the same future of the same commodity on the same market, or

(2) Shall sell any commodity for future delivery for the account of any customer (other than the "Customers' Account" of another futures commission merchant) when the account of such customer at the time of such sale has a long position in the same future of the same commodity on the same market, shall on the same day apply such purchase or sale against such previously held short or long position, as the case may be, and shall promptly furnish such customer a purchase and sale statement, or account sale, showing the financial result of the transactions involved.

(b) Close-out against oldest open position. In all instances wherein the short or long position in such customer's account immediately prior to such offsetting purchase or sale is greater than the quantity purchased or sold, the futures commission merchant shall apply such offsetting purchase or sale to the oldest portion of the previously held short or long position: Except, that upon specific instructions from the customer the offsetting transaction shall be applied as specified by the customer without regard to the date of acquisition of the previously held position. Such instructions may also be accepted from any person who, by power of attorney or otherwise, actually directs trading in the customer's account unless the person directing the trading is the futures commission merchant (including any partner thereof), or is an officer, employee, or agent of the futures commission merchant.

(c) In-and-out trades; day trades. Notwithstanding the provisions of paragraphs (a) and (b) of this section, this section shall not be deemed to require the application of purchases or sales closed out during the same day (commonly known as "in-and-out trades" or "day trades") against short or long positions carried forward from a prior date.

(d) Exceptions. The provisions of this section shall not apply to:

(1) Purchases or sales of job lots against positions in round lots, nor to purchases or sales of round lots against positions in job lots, on markets where

round lots and job lots are cleared separately;

(2) Purchases or sales constituting "bona fide hedging transactions" as defined in section 4a (3) of the Commodity Exchange Act; nor

(3) Sales during a delivery period for the purpose of making delivery during such delivery period if such sales are accompanied by instructions to make delivery thereon, together with warehouse receipts or other documents necessary to effectuate such delivery.

(Sec. 5, 42 Stat. 1000, secs. 4g, 49 Stat. 1496; 7 U.S.C. 7, 6g) [13 F.R. 7834, Dec. 18, 1948, as amended at 31 F.R. 4590, Mar. 18, 1966] § 1.48 Hedging anticipated requirements for processing or manufacturing under section 4a (3) (C) of the Commodity Exchange Act.

(a) Form and manner of reporting. Any person who desires to avail himself of the provisions of section 4a (3) (C) of the Commodity Exchange Act, and to acquire a long futures position in any commodity with respect to which trading and position limits established by the Commodity Exchange Commission, pursuant to section 4a of the act, shall be then in effect, shall, at least ten days prior to acquiring any position in excess of any such limit, file with the Commodity Exchange Authority, United States Department of Agriculture, Washington, D.C. 20250, a statement showing such person's unfilled anticiapted requirements for processing or manufacturing for a specified operating period not in excess of one year. Such statement shall set forth in detail such person's unfilled anticipated requirements and explain the method of determination thereof, and shall include, but not be limited to, the following information:

(1) Annual requirements of such commodity for processing or manufacturing for the three fiscal years next preceding;

(2) Anticipated requirements of such commodity for processing or manufacturing for a specified operating period not in excess of one year;

(3) Inventory and forward purchases of such commodity, including quantity in process of manufacture and finished goods and byproducts (in terms of such commodity);

(4) Anticipated unfilled requirements of such commodity for processing or

manufacturing for a specified period not in excess of one year.

(b) Supplemental reports. Whenever such person's anticipated requirements as set forth in paragraph (a) (2) of this section or any statement supplemental thereto shall change, such person shall immediately file with the Commodity Exchange Authority a supplemental statement reporting and explaining such change. Such person shall also file with the Commodity Exchange Authority, at least once each year, a statement setting forth the information described in paragraph (a) of this section.

(c) Purchases and liquidation. All purchases of any commodity for future delivery pursuant to the provisions of section 4a (3) (C) of the act shall be made and liquidated in an orderly manner and in accordance with sound commercial practice. No such purchase shall be made or liquidated in a manner calculated to cause sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity.

[21 F.R. 6913, Sept. 13, 1956]

NOTE: The reporting requirements of this regulation have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

§ 1.49 Denial of trading privileges; suspension or revocation of registration; employment in similar capacity. (a) Denial of trading privileges: During the effective period of any order of the Secretary of Agriculture denying trading privileges on contract markets to any person for a violation of the Commodity Exchange Act or the regulations thereunder involving cheating or fraud or manipulation or attempted manipulation of the price of any commodity in interstate commerce or for future delivery on or subject to the rules of a contract market, no futures commission merchant or member of a contract market shall knowingly employ such person in any capicity which involves the solicitation, acceptance, or execution of orders for the purchase or sale of any commodity for future delivery on or subject to the rules of a contract market, the execution of which would be prohibited by such order of the Secretary of Agriculture if made for the account of such person.

(b) Suspension or revocation of registration: During the effective period of any order of the Secretary of Agriculture suspending or revoking the registration of any person as a futures commission merchant or floor broker for a violation of the Commodity Exchange Act or the regulations thereunder involving cheating or fraud or manipulation or attempted manipulation of the price of any commodity in interstate commerce or for future delivery on or subject to the rules of a contract market, no futures commission merchant or member of a contract market shall knowingly employ such person in any capacity which involves the solicitation, acceptance, or execution of orders for the purchase or sale of any commodity for future delivery on or subject to the rules of a contract market.

(c) The words "solicitation, acceptance, or execution of orders" as used in this section shall not include such functions as are customarily performed by a person employed by a futures commission merchant or member of a contract market as mail clerk, telephone clerk, messenger, or bookkeeper, or in a similar capacity, incident to the recording and transmitting of orders which are solicited, accepted, and executed by other persons.

(Secs. 4g, 6b, 49 Stat. 1491, as amended; 7 U.S.C. 6g, 9) [24 F.R. 8141, Oct. 8, 1959]

15.02 15.03 15.04

Reporting forms.

Quantities fixed for reporting.

Different types of futures contracts in the same commodity.

AUTHORITY: The provisions of this Part 15 issued under sec. 8a, 49 Stat. 1500, as amended; 7 U.S.C. 12a, unless otherwise noted.

SOURCE: The provisions of this Part 15 appear at 26 F.R. 2968, Apr. 7, 1961; 26 F.R. 3069, Apr. 11, 1961, unless otherwise noted. § 15.00 Definitions.

As used in Parts 15 to 20 of this chapter:

(a) "Foreign broker" means any person located outside of the United States or its territories who carries an account

in commodity futures on any contract market for any other person.

(b) "Reportable position" means any open contract position in any one future of any commodity on any one contract market, which equals or exceeds the quantity fixed in § 15.03 for reporting purposes for the particular commodity.

(c) "Special Account" means any commodity futures account in which there is a reportable position.

(d) "Cash" or "spot", when used in connection with any commodity, refers to the actual commodity as distinguished from a futures contract in such commodity on a contract market.

§ 15.01 Persons required to report.

Pursuant to the provisions of the Commodity Exchange Act, the following persons shall file reports with the Commodity Exchange Authority with respect to such commodities, on such forms, at such time, and in accordance with such directions as are hereinafter set forth:

(a) Clearing members of contract markets—as specified in Part 16 of this chapter.

(b) Futures commission merchants and foreign brokers-as specified in Part 17 of this chapter.

(c) Traders who hold or control open contracts which equal or exceed the quantity fixed for reporting in § 15.03, as specified in Part 18 of this chapter.

(d) Merchants, processors, and dealers in certain commodities who hold or control open contracts in such commodities which equal or exceed the quantity fixed for reporting in § 15.03, as specified on Part 19 of this chapter. A merchant, processor, or dealer who is also a trader is, in addition, subject to Part 18 of this chapter.

(e) Members of contract markets, as specified in Part 20 of this chapter. (Sec. 5, 42 Stat. 1000, secs. 4g, 41, 49 Stat. 1496, as amended; 7 U.S.C. 7, 6g, 61)

§ 15.02 Reporting forms.

Reporting forms are identified by number as to the commodity and class of person reporting. The initial digit or digits of the form number identify the commodity, and the two final digits or series identify the class of person reporting. All reports shall be prepared in accordance with instructions appearing