§ 180.5 Member-to-member settlement procedures.

A contract market may establish a procedure for compulsory settlement of claims or grievances or disputes which do not involve customers. If adopted, the procedure shall be independent of, and shall not interfere with or delay the resolution of, customers' claims or grievances submitted for resolution under the procedure established pursuant to the Act. Such a procedure shall provide procedural safeguards which must include, at a minimum, fair and equitable procedures conforming to those set forth in § 180.2 of this part, except that the election of the mixed panel and the prohibition of appeal to any entity within the contract market, contained in § 180.2 (a) and (f) of this part, respectively, need not be required.

(Secs. 5a(11) and 8a(5) of the Commodity Exchange Act, as amended, 7 U.S.C. 7a(11) and 12a(5) (1976), as amended by the Futures Trading Act of 1978, Pub. L. 95-405, 11, 92 Stat. 870 (1978); secs. 5(a)(11), 17(b)(10) and 8a(5) of the Commodity Exchange Act, as amended, 7 U.S.C. 7a(11), 21(b)(10) and 12a(5))

[45 FR 47137, July 14, 1980. Redesignated at 48 FR 22143, May 17, 1983]

For purposes of this part:

(a) "Account class" means each of the following types of customer accounts which must be recognized as a separate class of account by the trustee: futures accounts, foreign futures accounts, leverage accounts, commodity option accounts and delivery accounts as defined in § 190.05(a)(2): Provided, however, That to the extent that the equity balance, as defined in § 190.07, of a customer in a commodity option, as defined in § 1.3(hh) of this chapter, may be commingled with the equity balance of such customer in any domestic commodity futures contract pursuant to regulations under the Act, the aggregate shall be treated for purposes of this part as being held in a futures account.

(b) “Allowed net equity” means the amount calculated as allowed net equity in accordance with § 190.07(a).

(c) "Bankruptcy Code" means, except as the context of the regulations in this part otherwise requires, those provisions of the Bankruptcy Reform Act of 1978, as amended from time to time, relating to ordinary bankruptcies (Chapters 1 through 5) and to liquidations (Chapter 7 with the exception of Subchapter III), together with the Federal rules of bankruptcy procedure relating thereto.

(d) "Business day" means weekdays, not including Federal holidays.

(e) "Clearing organization” shall have the same meaning as that set forth in section 761(2) of the Bankruptcy Code and shall include any organization which clears commodity options which are traded on or subject to the rules of a contract market or a board of trade.

(f) "Commodity broker" means any person who is registered or required to register as a futures commission merchant under the Act including a person registered or required to be registered as such under Parts 32 and 33 of this chapter, and a "commodity options dealer," "foreign futures commission merchant," "clearing organization," and "leverage transaction merchant" with respect to which there is a "customer" as those terms are defined in this section.

(g) “Commodity contract” shall have the same meaning, subject to paragraph (nn) of this section, as that set forth in section 761(4) of the Bankruptcy Code.

(h) "Commodity options dealer" shall have the same meaning as that set forth in section 761(6) of the Bankruptcy Code.

(i) "Court" means the bankruptcy court having jurisdiction over the debtor's estate.

(j) "Cover" shall have the same meaning as that set forth in § 1.17(j) of this chapter.

(k) "Customer" shall have the same meaning as that set forth in section 761(9) of the Bankruptcy Code.

(1) "Customer claim of record" means a customer claim which is determinable solely by reference to the records of the debtor.

(m) "Customer class" means each of the following two classes of customers which must be recognized by the trustee: public customers and non-public customers.

(n) "Customer property," "customer estate" are used interchangeably to mean the property subject to pro rata distribution in a commodity broker bankruptcy which is entitled to the priority set forth in section 766(h) of the Bankruptcy Code and includes certain cash, securities, and other property as set forth in § 190.08(a).

(0) "Dealer option" means an option granted, offered or sold pursuant to section 4c(d) of the Act and the Commission's regulations thereunder.

(p) "Debtor" means an individual, association, partnership, corporation, or trust with respect to which a proceeding is commenced under Subchapter IV of Chapter 7 of the Bankruptcy Code.

(q) "Equity" means the amount calculated as equity in accordance with § 190.07(b)(1).

(r) "Filing date" means the date a petition commencing a proceeding under the Bankruptcy Code is filed.

(s) "Final net equity determination date" means the latest of

(1) The day immediately following the day on which all commodity contracts held by or for the account of customers of the debtor have been

transferred, liquidated or satisfied by exercise or delivery,

(2) The day immediately following the day on which all property other than commodity contracts held for the account of customers has been transferred, returned or liquidated,

(3) The bar date for filing customer proofs of claim, or

(4) The day following the disposition of all disputed claims.

(t) "Foreign future" shall have the same meaning as that set forth in section 761(11) of the Bankruptcy Code.

(u) "Foreign futures commission merchant" shall have the same meaning as that set forth in section 761(12) of the Bankruptcy Code.

(v) "Funded balance" means the amount calculated as funded balance in accordance with § 190.07(c).

(w) "House account" means any commodity account owned by the debtor.

(x) "In-the-money amount” means: (1) With respect to a call option, the amount by which the value of the physical commodity or the contract for sale of a commodity for future delivery which is the subject of the option exceeds the strike price of the option; and

(2) With respect to a put option, the amount by which the value of the physical commodity or the contract for sale of a commodity for future delivery which is the subject of the option is exceeded by the strike price of the option.

(y) "Joint account" means any commodity account held by more than one person and includes any account of a commodity pool which is not a legal entity.

(z) "Leverage transaction merchant" shall have the same meaning as that set forth in section 761(14) of the Bankruptcy Code.

(aa) "Net equity” means the amount calculated as net equity in accordance with § 190.07(b).

(bb) "Non-public customer" means any person enumerated in § 1.3(y) or in § 31.4(e) of this chapter, who is defined as a customer under paragraph (k) of this section.

(cc) "Open commodity contract” means a commodity contract which has been established in fact and which

has not expired, been redeemed, been fulfilled by delivery or exercise, or been offset by another commodity contract.

(dd) "Order for relief" means the filing of the petition in bankruptcy in a voluntary case and the adjudication of bankruptcy in an involuntary case.

(ee) "Premium" means the amount agreed upon between the purchaser and seller, or their agents, for the purchase or sale of a commodity option. (ff) "Primary liquidation date" means the first business day immediately following the day on which all commodity contracts have been liquidated or transferred which are not being held open for later transfer in accordance with § 190.03.

(gg) "Principal contract" means a contract which is not traded on a board of trade, and includes leverage contracts and dealer options, but does not include transactions executed off the floor of a board of trade pursuant to rules approved by the Commission or rules which the board of trade is required to enforce, or pursuant to rules of a board of trade located outside the United States, its territories or possessions.

(hh) "Public customer" means any person defined as a customer under paragraph (k) of this section except a non-public customer.

(ii) "Security" shall have the same meaning as that set forth in section 101(36) of the Bankruptcy Code.

(jj) "Short term obligation" means any security, note, or other obligation with a duration or maturity date of 180 days or less.

(kk) "Specifically identifiable property" means:

(1) With respect to the following property received, acquired, or held by or for the account of the debtor from or for the account of a customer to margin, guarantee or secure an open commodity contract:

(i) Any security which as of the filing date is:

(A) Held for the account of a customer;

(B) Registered in such customer's name;

(C) Not transferable by delivery; and (D) Not a short term obligation; or

(ii) Any warehouse receipt, bill of lading or other document of title which as of the filing date:

(A) Can be identified on the books and records of the debtor as held for the account of a particular customer; and

(B) Is not in bearer form and is not otherwise transferable by delivery.

(2) With respect to open commodity contracts, and except as otherwise provided in paragraph (kk)(7) of this section, any such contract which:

(i) As of the filing date is identified on the books and records of the debtor as held for the account of a particular customer;

(ii) Is a bona fide hedging position or transaction as defined in §1.3(z) of this chapter or is a commodity option transaction which has been determined by the contract market to be economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise pursuant to rules which have been adopted in accordance with the requirements of §1.61(b) of this chapter and approved by the Commission pursuant to section 5a(12) of the Commodity Exchange Act; and

(iii) Is in an account designated in the accounting records of the debtor as a hedging account in accordance with § 190.04(e)(1).

(3) With respect to warehouse receipts, bills of lading or other documents of title, or physical commodities received, acquired, or held by or for the account of the debtor for the purpose of making or taking delivery or exercise from or for the account of a customer, any such document of title or commodity which as of the entry of the order for relief can be identified on the books and records of the debtor as received from or for the account of a particular customer as held specifically for the purpose of delivery or exercise.

(4) Any cash or other property deposited prior to the entry of the order for relief to pay for the taking of physical delivery on a long futures contract or for payment of the strike price upon exercise of a short put or a long call option contract on a physical commodity, which cannot be settled in cash, in excess of the amount neces

sary to margin such commodity contract prior to the notice date or exercise date, which cash or other property is identified on the books and records of the debtor as received from or for the account of a particular customer on or after three busines days before the first notice date or three business days before the exercise date specifically for the purpose of payment of the notice price upon taking delivery or the strike price upon exercise, respectively, and such customer takes delivery or exercises the option in accordance with the applicable contract market rules.

(5) The cash price tendered for any property deposited prior to the entry of the order for relief to make physical delivery on a short futures contract or for exercise of a long put or a short call option contract on a physical commodity, which cannot be settled in cash, to the extent it exceeds the amount necessary to margin such contract prior to the notice date or exercise date, which property is identified on the books and records of the debtor as received from or for the account of a particular customer on or after three business days before the first notice date or three business days before the exercise date specifically for the purpose of a delivery or exercise, respectively, and such customer makes delivery or exercises the option in accordance with the applicable contract market rules.

paragraph

(6) Notwithstanding (kk)(1) of this section, fully paid, nonexempt securities identified on the books and records of the debtor as held by the debtor for or on behalf of the commodity account of a particular customer for which, according to such books and records as of the filing date, no open commodity contracts were held in the same capacity.

(7) Open commodity contracts transferred in accordance with the provisions of § 190.06.

(8) Except as is otherwise specified in this paragraph (kk), no customer property may be treated as specifically identifiable property.

(11) "Strike price" means the price per unit multiplied by the total number of units at which a person may purchase or sell the physical com

modity or the contract of sale of a commodity for future delivery which is the subject of a commodity option.

(mm) "Trustee" means, as appropriate, the trustee in bankruptcy apointed to administer the debtor's estate and any interim or successor trustee.

(nn) "Leverage contract" shall have the same meaning as that set forth in § 31.4(w) of this chapter.

(Secs. 2(a), 4c, 4d, 4g, 5, 5a, 8a, 15, 19 and 20 of the Commodity Exchange Act, as amended by the Futures Trading Act of 1982, Pub. L. 97-444, 96 Stat. 2294 (1983), 7 U.S.C. 2 and 4a, 6c, 6d, 6g, 7, 7a, 12a, 19, 23 and 24 (1976 & Supp. V. 1981 and Pub. L. 97-444); secs. 761-766 of the Bankruptcy Reform Act of 1978, as amended by the Bankruptcy Act Amendments, Pub. L. 97-222, 96 Stat. 235 (1982), 11 U.S.C. 761-766 (Supp. V. 1981 as amended by Pub. L. 97-222))

[48 FR 8739, Mar. 1, 1983; 48 FR 15122 and 15123, Apr. 7, 1983, as amended at 48 FR 28980, June 24, 1983; 49 FR 5541, Feb. 13, 1984, 50 FR 34617, Sept. 6, 1985]

$ 190.02 Operation of the debtor's estate subsequent to the filing date and prior to the primary liquidation date. Subsequent to the filing date and prior to the primary liquidation date, the debtor's estate shall be operated as follows:

(a) Notices to the Commission and Designated Self-Regulatory Organizations (1) General. Each commodity broker which files a petition in bankruptcy shall, at or before the time of such filing, and each commodity broker against which such a petition is filed shall, as soon as possible, but no later than one business day after the receipt of notice of such filing, notify the Commission and such broker's designated self-regulatory organization in accordance with § 190.10(a) of the filing date, the court in which the proceeding has been filed, and the docket number assigned to that proceeding by the court.

(2) Of transfers under section 764(b) of the Bankruptcy Code. As soon as possible, but in no event later than the close of business on the third business day after the order for relief, the trustee, the applicable self-regulatory organization, or the commodity broker must notify the Commission in accordance with § 190.10(a) whether such

entity or organization intends to transfer or to apply to transfer open commodity contracts on behalf of the commodity broker in accordance with section 764(b) of the Bankruptcy Code and § 190.06 (e) or (f).

(b) Notices to customers-(1) Specifically identifiable property other than commodity contracts. The trustee must use its best efforts to promptly, but in no event later than two business days after entry of the order for relief, commence to publish in a daily newspaper or newspapers of general circulation approved by the court serving the location of each branch office of the commodity broker, for two consecutive days a notice to customers stating that all specifically identifiable property of customers other than open commodity contracts which has not otherwise been liquidated will be liquidated commencing on the fifth business day after the second publication date if the customer has not instructed the trustee in writing on or before the close of business on the fourth business day after the second publication date to return such property pursuant to the terms for distribution of specifically identifiable property contained in § 190.08(d)(1) and, on the tenth business day after such second publication date, if such property has not been returned in accordance with such terms on or prior to that date. Such notice must describe specifically identifiable property in accordance with the definition in this part and must specify the terms upon which that property may be returned. Publication of the form of notice set forth in the appendix to this part will constitute sufficient notice for purposes of this paragraph (b)(1).

(2) Request for instructions regarding transfer of open commodity contracts. The trustee must use its best efforts to request promptly, but in no event later than two business days after entry of an order for relief, customer instructions concerning the transfer or liquidation of the specifically identifiable open commodity contracts, if any, not required to be liquidated under paragraph (f)(1) of this section. The request for customer instructions required by this paragraph (b)(2) must state that the trustee is re

quired to liquidate any such commodity contract for which transfer instructions have not been received on or before the close of business on the fifth business day after entry of the order for relief, and any such commodity contract for which instructions have been received which has not been transferred in accordance with § 190.08(d)(2) on or before the close of business on the tenth business day after entry of the order for relief. A form of notice is set forth in the appendix to this part.

(3) Involuntary cases. Prior to entry of an order for relief, and upon leave of the court, the trustee appointed in an involuntary proceeding may notify customers of the commencement of such proceeding and may request customer instructions with respect to the return, liquidation or transfer of specifically identifiable property, including open commodity contracts.

(4) Notice of bankruptcy and request for proof of customer claim. The trustee must promptly notify each customer of record in writing that an order for relief has been entered and must instruct each such customer to file a proof of customer claim containing the information specified in paragraph (d) of this section. Such notice may be given separately from the notices required by paragraphs (b) (1) and (3) of this section.

(c) Disposition of customer instructions in the event of a transfer pursuant to section 764(b) of the Bankruptcy Code. If the debtor's open commodity contracts have been, or are to be, transferred in accordance with section 764(b) of the Bankruptcy Code and § 190.06, customer instructions previously received by the trustee with respect to open commodity contracts, or with respect to specifically identifiable property which is to be transferred with such contracts, shall be transmitted to the transferee of such contracts or property who shall comply therewith to the extent practicable.

(d) Proof of customer claim. The trustee shall cause the proof of customer claim form referred to in paragraph (b)(4) of this section to set forth the bar date for its filing and to request that customers provide, to the extent reasonably possible, informa