C.F.R. » Title 17 » CHAPTER I—COMMODITY FUTURES TRADING COMMISSION › PART 1—GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT

17 C.F.R. § 1.38

Execution of transactions

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(a) Competitive execution required; exceptions. All purchases and sales of any commodity for future delivery, and of any commodity option, on or subject to the rules of a contract market shall be executed openly and competitively by open outcry or posting of bids and offers or by other equally open and competitive methods, in the trading pit or ring or similar place provided by the contract market, during the regular hours prescribed by the contract market for trading in such commodity or commodity option: Provided, however, That this requirement shall not apply to transactions which are executed non-competitively in accordance with written rules of the contract market which have been submitted to and approved by the Commission, specifically providing for the non-competitive execution of such transactions.

(b) Noncompetitive trades; exchange of futures, etc.; requirements. Every person handling, executing, clearing, or carrying trades, transactions or positions which are 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.

(Approved by the Office of Management and Budget under control numbers 3038-0007 and 3038-0022) [46 FR 54523, Nov. 3, 1981, as amended at 46 FR 63035, Dec. 30, 1981]
Notes of Decisions
Cited in 14 cases, 1965–2020 · leading case: Katz v. Comm'r, 90 T.C. 1130 (Tax Ct. 1988).
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Katz v. Comm'r, 90 T.C. 1130 (Tax Ct. 1988). · cites it 6× “Buckwalter, was charged by the CFTC and ultimately was found to have violated 7 U.S.C. sec. 6c(a) and 17 C.F.R. sec. 1.38 by executing trades that were wash sales and accommodation trades and by causing non-bona fide prices to be reported to the NYMEX.”
Ryder Energy Distrib. Corp. v. Merrill Lynch Commodities Inc., E.F. Hutton & Co., Inc., & New York Mercantile Exch., 748 F.2d 774 (2d Cir. 1984). · cites it 2× “§ 6c(a); 17 C.F.R. § 1.38 . However, EFPs conducted in accordance with the rules of an exchange are exempt from the prohibition contained in section 4c(a).”
Perlin v. Comm'r, 86 T.C. 388 (Tax Ct. 1986). · cites it 4× “Because the trades are executed by open outcry, everyone trading in that particular trading pit is supposed to have the opportunity to take the trade.”
Merrill Lynch Futures Inc. v. Kelly, 585 F. Supp. 1245 (S.D.N.Y. 1984). · cites it 2× “17 C.F.R. § 1.38 (1983). If, as is alleged, defendants conspired to trade away from the ring, they violated both 7 U.”
Terence J. Horn & Jean Horn v. Comm'r of Internal Revenue, Comm'r of Internal Revenue v. Terence J. Horn & Jean Horn, 968 F.2d 1229 (D.C. Cir. 1992). “26, 1991) (issuing complaint for “prearranged trading” and citing as controlling regulation 17 C.F.R. § 1.38 , which requires all trades to be made competitively within the trading floor ring).”
De Martino v. Comm'r, 51 T.C.M. 1278 (Tax Ct. 1986). · cites it 4× “The Commodity Futures Trading Commission ("CFTC") regulations provide that, with limited exceptions, 11 all trading must be executed by competitive open outcry bidding in the trading ring on the floor of the exchange. 17 C.”
Commodity Exch., Inc. v. Commodity Futures Trading Comm'n, 543 F. Supp. 1340 (S.D.N.Y. 1982). · cites it 2× “17 C.F.R. § 1.38 (1981). Rule 1.38 provides in part: (a) Competitive execution required: exceptions.”
Wayne I. Elliott, Francis Maritote, J. Brian Schaer & Jonathan A. Sion v. Commodity Futures Trading Comm'n, 202 F.3d 926 (7th Cir. 2000). “17 C.F.R. § 1.38 (a). Believing that a round-robin of trades among four traders at a uniform price could occur only by prior arrangement, the cftc charged them with unlawful trading practices.”
Sam Wong & Son, Inc. v. New York Mercantile Exch., 735 F.2d 653 (2d Cir. 1984). “38(b), 17 C.F.R. § 1.38 (b), authorize the EFP procedure.”
Gary R. Bergamo v. Commodity Futures Trading Comm'n, 192 F.3d 78 (2d Cir. 1999). “38(a), 17 C.F.R. § 1.38 (a). The ALJ issued cease and desist orders against the CSCE respondents, revoked their floor broker registrations, banned them from trading on markets regulated by the Commission for specified periods of time, and imposed civil monetary penalties.”
Reddy v. Commodity Futures Trading Comm'n, 191 F.3d 109 (2d Cir. 1999). “ommodity futures contracts; Section 4b(B) of the CEA, which prohibits the entering of false records; Section 4b(C) of the CEA, which prohibits deception in connection with the execution of orders for futures contracts; Section 4b(D) of the CEA, which prohibits the bucketing of…”
Elsasser v. DV Trading, LLC (N.D. Ill. 2020). “They brought this suit in their individual capacities seeking damages and a judgment declaring that they have no obligation to reimburse DV for any portion of the penalty.”
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