ment): "The Commodity Futures Trading Commission has not reviewed this Disclosure Document and has not determined whether it is accurate or complete."

(b) A copy of the Disclosure Document and all subsequent amendments required by this section must be delivered to the Commission at its Washington, D.C. office (Att.: Office of the Chief Counsel, Division of Trading and Markets, C.F.T.C., 2033 K Street, NW., Washington, D.C. 20581) within seven business days of the date it is first given to a prospective client.

(c) If the commodity trading advisor knows or has reason to know that the Disclosure Document is materially inaccurate or incomplete, it must amend the Document to correct that defect and furnish the amendment or a corrected Document to each client within five business days of the date upon which the commodity trading advisor first knows or has reason to know of the defect.

(d) This section does not relieve a commodity trading advisor of any obligation under the Act or the regulations thereunder.

(e) As used in this section, the term control refers to agreements whereby the commodity trading advisor (1) is authorized to cause transactions to be effected for a client without the client's specific authorization or (2) guides the client's commodity interest trading by means of a systematic advisory program that recommends specific transactions.

[44 FR 1928, Jan. 8, 1979; 44 FR 3706, Jan. 18, 1979]

§ 4.32 Recordkeeping.

Each commodity trading advisor registered or required to be registered under the Act must make and keep the following books and records in an accurate, current and orderly manner at its main business and in accordance with § 1.31:

(a) The name and address of each client and subscriber.

(b) A copy of each report, letter, circular, memorandum, publication, writing, advertisement or other literature or advisory document distributed or caused to be distributed by the commodity trading advisor to any existing

or prospective client or subscriber, showing the date of distribution if not otherwise shown on the document.

(c) An itemized daily record of each commodity interest transaction of the commodity trading advisor and each principal thereof, showing the date, price, quantity, commodity interest, delivery or expiration month, person for whom the transaction was effected, the futures commission merchant carrying the account, and whether the commodity interest was purchased or sold. This record must be in the form of a journal of original entry or other equivalent record.

(d) Each monthly statement furnished to the commodity trading advisor and each principal thereof by a futures commission merchant.

(e) A list or other record of all commodity interest accounts of clients controlled by the commodity trading advisor and of all transactions effected therefor.

(f) All powers of attorney and other documents, or copies thereof, granting control over a commodity interest account to the commodity trading advi

Subpart A-General Provisions

$7.1 Scope of rules.

This part sets forth contract market rules altered or supplemented by the Commission pursuant to Section 8a(7) of the Act.

Subpart B-Chicago Mercantile Exchange Rules

$7.100 Rule 3202(A).

Rule 3202(A) of the Chicago Mercantile Exchange governing trading months and hours in the contract market's 13-Week United States Treasury Bill futures contract is altered and shall hereby provide as follows:

Futures contracts shall be scheduled for trading during such hours and delivery in such months as may be determined by the Board of Governors, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of Section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted thereunder.

87.101 Rule 3602(A).

Rule 3602(A) of the Chicago Mercantile Exchange governing trading months and hours in the One-Year United States Treasury Bill futures contract is altered and shall provide as follows:

Futures contracts shall be scheduled for trading during such hours and delivery in such months as may be determined by the Board of Governors, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of Section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted

thereunder.

Subpart C-Board of Trade of the City of Chicago Rules

§ 7.200 Rule 1805.01.

Rule 1805.01 of the Board of Trade of the City of Chicago governing months traded in the Long-Term (20year) United States Treasury Bond futures contract is altered and shall provide as follows:

Trading in long-term U.S. Treasury bonds may be scheduled for trading in such months as determined by the Financial Instruments Committee or the Board, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of Section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted thereunder.

Sec.

8.27 Violations of rules regarding decorum, submission of records or other similar activities.

8.28 Final decision.

Subpart D-[Reserved]

AUTHORITY: Secs. 5a, 8a(5) and 8c of the Act, 7 U.S.C. 7a, 12a(5) and 12c (1976).

SOURCE: 43 FR 41950, Sept. 19, 1978, unless otherwise noted.

Subpart A-General Provisions

§ 8.01 Scope of rules.

This part sets forth the standards to be followed by an exchange in establishing procedures for investigating and adjudicating possible rule violations within the disciplinary jurisdiction of the exchange, for taking summary action in member responsibility cases and in cases involving violations of rules regarding decorum, submission of records or other similar activities, and for adjudicating membership denial determinations. Nothing in this part shall be construed to prohibit an exchange from adopting additional rules and practices not inconsistent with those set forth herein.

§ 8.02 Implementing exchange rules.

(a) Each exchange shall submit to the Commission for its approval rules implementing the following regulations: §§ 8.11, 8.13, 8.15, 8.17, 8.18 and 8.20 of Subpart B and §§ 8.26 and 8.28 of Subpart C. Any such rule not previously submitted to the Commission shall not be put into effect prior to Commission approval.

(b) An exchange may adopt rules implementing any or all of the following regulations: §§ 8.10, 8.16 and 8.19 of Subpart B and § 8.27 of Subpart C. Each rule so adopted and not previously submitted to the Commission shall be submitted to the Commission for its approval and shall not be put into effect prior to Commission approval. § 8.03

Definitions.

For purposes of this part:

(a) "Board of appeals" means that body provided for in § 8.19.

(b) "Charge" or "charges" means any charge or charges contained in the notice of charges.

(c) "Disciplinary committee” means that body or bodies provided for in § 8.08.

(d) "Disciplinary procedure" means the rules of an exchange governing the investigation and adjudication of possible rule violations and the imposition of appropriate penalties under Subpart B of this part.

(e) "Enforcement staff" means that body provided for in § 8.05.

(f)) "Exchange” means any board of trade which has been designated as a contract market for one or more commodities pursuant to section 5 of the Act.

(g) "Investigation report" means the report required by § 8.07.

(h) "Notice of charges" means the notice required by § 8.11.

(i) "Penalty" means any restriction, limitation, censure, fine, expulsion, suspension, revocation, reprimand, cease and desist order, sanction or any other disciplinary action for any amount or of any definite or indefinite period imposed upon any person within the disciplinary jurisdiction of an exchange upon a finding by the disciplinary committee that a violation has been committed or pursuant to the terms of a settlement agreement.

(j) “Person(s) within the jurisdiction of an exchange" means any exchange employee, staff member or official, any member or person with membership privileges or any person employed by or affiliated with a member or person with membership privileges, including any agent or associated person, and any other person under the supervision or control of the exchange or of any member.

(k) "Record of the proceeding" means all testimony, exhibits, papers and records produced at or filed in a disciplinary or summary proceeding or served on a respondent or an exchange.

(1) "Respondent" means any person named in a notice of charges who has been served with such notice or who is the subject of a summary action.

(m) "Rule(s) of an exchange" means any constitutional provision, article of incorporation, bylaw, rule, regulation, resolution, interpretation, stated policy or instrument corresponding thereto.

(n) "Violation" means any violation within the disciplinary jurisdiction of the exchange.

Subpart B-Disciplinary Procedure

$8.05 Enforcement staff.

(a) Each exchange shall establish an adequate enforcement staff which shall be authorized by the exchange to initiate and conduct investigations, to prepare reports incident to such investigations and to prosecute possible rule violations within the disciplinary jurisdiction of the exchange. The enforcement staff shall consist of employees of the exchange and/or persons hired on a contract basis. It may not include either members of the exchange or persons whose interests conflict with enforcement duties. When carrying out any responsibility under this Part 8 or any rule adopted pursuant thereto, a member of the enforcement staff may not operate under the direction or control of any person or persons with trading privileges.

of

(b) Each exchange is responsible for assuring the effective and diligent enforcement of all rules within its disciplinary jurisdiction, regardless whether its enforcement staff consists of employees or persons hired on a contract basis.

§8.06 Investigations.

(a) Each exchange shall establish and maintain a disciplinary procedure which requires the enforcement staff of the exchange to conduct investigations of possible rule violations within the disciplinary jurisdiction of the exchange. Such an investigation shall be commenced:

(1) Upon the receipt of a request from the Commission, its Executive Director or his delegee, or

(2) Upon the discovery or receipt of information by the exchange which, in the judgment of the enforcement staff, indicates a possible basis for finding that a violation has occurred or will occur.

(b) Each enforcement staff investigation shall be completed within four months, unless there exists significant reason to extend it beyond such period. If for any reason the enforcement staff closes an investigation

(b) If after conducting an investigation the enforcement staff has determined that no reasonable basis exists for finding a violation, it shall prepare a written report including the reason the investigation was initiated, a summary of the complaint, if any, the relevant facts, the enforcement staff's conclusions and, if applicable, any recommendation that the disciplinary committee issue a warning letter in accordance with paragraph (c) of this section. The report shall become part of the investigation file which thereafter may be closed.

(c) In addition to the action required to be taken under either paragraph (a) or (b) of this section, the rules of an exchange may authorize the enforcement staff to issue a warning letter to a person under investigation or to recommend that the disciplinary committee issue such a letter. A warning letter issued in accordance with this section is not a penalty or an indication that a finding of a violation has been made. A copy of such warning letter issued by the enforcement staff shall be included in the investigation report required by paragraph (a) or (b) of this section.

§ 8.08 Disciplinary committee.

Each exchange shall establish one or more disciplinary committees which shall be authorized by the exchange to

determine whether violations have been committed, to accept offers of settlement and to set and impose appropriate penalties. Each such disciplinary committee shall consist of one or more members of the exchange or persons on the staff of the exchange; however, persons on the enforcement staff may not serve on a disciplinary committee.

§ 8.09 Review of investigation report.

The disciplinary committee shall promptly review each investigation report. In the event the disciplinary committee determines that additional investigation or evidence is needed, it shall promptly direct the enforcement staff to conduct its investigation further. Within a reasonable period of time not to exceed 30 days after the receipt of a completed investigation report, the disciplinary committee shall take one of the following actions:

(a) If the disciplinary committee determines that no reasonable basis exists for finding a violation or that prosecution is otherwise unwarranted, it may direct that no further action be taken. Such determination must be in writing and contain a brief statement setting forth the reasons therefor.

(b) If the disciplinary committee determines that a reasonable basis exists for finding a violation which should be adjudicated, it shall direct that the person alleged to have committed the violation be served with a notice of charges and shall proceed in accordance with the rules of this subpart.

§ 8.10 Predetermined penalties.

An exchange may adopt rules which set specific maximum penalties for particular violations. If the rules of an exchange establish predetermined penalties, the disciplinary committee shall have discretion in each case whether to employ the predetermined penalty. If the predetermined penalty is employed, it shall be stated in the notice of charges. In such case, after a hearing on a denied charge where a respondent is found to have committed the violation charged, the disciplinary committee shall impose the predetermined penalty or an appropriate lesser penalty.

§ 8.11 Notice of charges.

The notice of charges shall:

(a) State the acts, practices, or conduct in which the person is alleged to have engaged;

(b) State the rule alleged to have been violated (or about to be violated); (c) State the predetermined penalty, if any;

(d) Prescribe the period within which a hearing on the charges may be requested;

(e) Advise the person charged that: (1) He is entitled, upon request, to a hearing on the charges;

(2) If the rules of the exchange so provide, failure to request a hearing within the period prescribed in the notice, except for good cause, shall be deemed a waiver of the right to a hearing; and

(3) If the rules of the exchange so provide, failure in an answer to deny expressly a charge shall be deemed to be an admission of such charge.

§ 8.12 Right to representation.

Upon being served with a notice of charges the respondent shall have the right to be represented by legal counsel or any other representative of his choosing in all succeeding stages of the disciplinary proceeding.

§ 8.13 Answer to charges.

The respondent shall be given a reasonable period of time to file an answer to the charges. The rules of an exchange may provide that:

(a) The answer must be in writing and include a statement that the respondent admits, denies or does not have and is unable to obtain sufficient information to admit or deny each allegation. A statement of a lack of sufficient information shall have the effect of a denial of an allegation.

(b) Failure to file an answer on a timely basis shall be deemed an admission of all allegations contained in the notice of charges.

(c) Failure in an answer to deny expressly a charge shall be deemed to be an admission of such charge.