7 U.S.C. § 23

Standardized contracts for certain commodities

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(a) Margin accounts or contracts and leverage accounts or contracts prohibited except as authorized

Except as authorized under subsection (b), no person shall offer to enter into, enter into, or confirm the execution of, any transaction for the delivery of any commodity under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract.

(b) Permission to enter into contracts for delivery of silver or gold bullion, bulk silver or gold coins, or platinum; rules and regulations(1) Subject to paragraph (2), no person shall offer to enter into, enter into, or confirm the execution of, any transaction for the delivery of silver bullion, gold bullion, bulk silver coins, bulk gold coins, or platinum under a standardized contract described in subsection (a), contrary to the terms of any rule, regulation, or order that the Commission shall prescribe, which may include terms designed to ensure the financial solvency of the transaction or prevent manipulation or fraud. Such rule, regulation, or order may be made only after notice and opportunity for hearing. The Commission may set different terms and conditions for transactions involving different commodities.(2) No person may engage in any activity described in paragraph (1) who is not permitted to engage in such activity, by the rules, regulations, and orders of the Commission in effect on November 10, 1986, until the Commission permits such person to engage in such activity in accordance with regulations issued in accordance with subsection (c)(2).(c) Survey of persons interested in engaging in transactions of silver and gold, etc.; assistance of futures association; regulations(1)(A) Not later than 2 years after November 10, 1986, the Commission shall—(i) with the assistance of a futures association registered under this chapter, conduct a survey concerning the persons interested in engaging in the business of offering to enter into, entering into, or confirming the execution of, the transactions described in subsection (b)(1); and(ii) transmit a report of the results of the survey to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.(B) Notwithstanding any other provision of law, for purposes of completing such report the Commission may direct, by rule, regulation, or order, a futures association registered under this chapter to render such assistance as the Commission shall specify.(C) Such report shall include the findings and any recommendations of the Commission concerning—(i) whether such transactions serve an economic purpose;(ii) the most efficient manner, consistent with the public interest, to permit additional persons to engage in the business of offering to enter into, entering into, and confirming the execution of such transactions; and(iii) the appropriate regulatory scheme to govern such transactions to ensure the financial solvency of such transactions and to prevent manipulation or fraud.(2) The report shall also include Commission regulations governing such transactions. The regulations shall provide for permitting additional persons to engage in such transactions. The regulations shall become effective on the expiration of 90 calendar days on which either House of Congress is in session after the date of the transmittal of the report to Congress. The regulations—(A) may authorize or require, notwithstanding any other provision of law, a futures association registered under this chapter to perform such responsibilities in connection with such transactions as the Commission may specify; and(B) may require that permission for additional persons to engage in such business be given on a gradual basis, so as not to place an undue burden on the resources of the Commission.(d) Savings provision

This section shall not affect any rights or obligations arising out of any transaction subject to this section, as in effect before November 10, 1986, that was entered into, or the execution of which was confirmed, before November 10, 1986.

(Sept. 21, 1922, ch. 369, § 19, as added Pub. L. 95–405, § 23, Sept. 30, 1978, 92 Stat. 876; amended Pub. L. 97–444, title II, § 234, Jan. 11, 1983, 96 Stat. 2322; Pub. L. 99–641, title I, § 109, Nov. 10, 1986, 100 Stat. 3560.)Editorial NotesPrior Provisions

Provisions similar to those appearing in subsec. (b) were formerly contained in section 15a of this title.

Amendments

1986—Subsec. (a). Pub. L. 99–641 amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “No person shall offer to enter into, enter into, or confirm the execution of, any transaction for the delivery of any commodity specifically set forth in section 2 of this title prior to October 23, 1974, under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract.”

Subsec. (b). Pub. L. 99–641 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: “No person shall offer to enter into, enter into, or confirm the execution of any transaction for the delivery of silver bullion, gold bullion, or bulk silver coins or bulk gold coins, under a standardized contract described in subsection (a) of this section, contrary to any rule, regulation, or order of the Commission designed to ensure the financial solvency of the transaction or prevent manipulation or fraud: Provided, That such rule, regulation, or order may be made only after notice and opportunity for hearing.”

Subsec. (c). Pub. L. 99–641 amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: “The Commission shall regulate any transactions under a standardized contract described in subsection (a) of this section involving commodities described in subsection (b) of this section or any other commodities (except those commodities described in subsection (a) of this section) under such terms and conditions as the Commission shall prescribe by rule, regulation, or order made only after notice and opportunity for a hearing. The Commission may set different terms and conditions for such transactions involving different commodities. Notwithstanding any other provision of this section, the Commission may prohibit any transaction for the delivery of any commodity under a standardized contract described in subsection (a) of this section that is not permitted by the rules, regulations and orders of the Commission in effect on December 9, 1982, if the Commission determines that any such transactions would be contrary to the public interest.”

Subsec. (d). Pub. L. 99–641, in amending section generally, added subsec. (d).

1983—Subsec. (c). Pub. L. 97–444, § 234(1), substituted “shall regulate” for “may prohibit or regulate” and authorized Commission prohibition of transactions for delivery of commodities under a standardized contract that was not permitted by the rules, regulations and orders of the Commission in effect on Dec. 9, 1982, where transactions are determined to be contrary to the public interest.

Subsec. (d). Pub. L. 97–444, § 234(2), struck out subsec. (d) which provided for regulation of transactions in accordance with applicable provisions of this chapter where Commission determined the transactions under subsecs. (b) and (c) of this section were contracts for future delivery within the meaning of this chapter.

Statutory Notes and Related SubsidiariesEffective Date of 1983 Amendment

Amendment by Pub. L. 97–444 effective Jan. 11, 1983, see section 239 of Pub. L. 97–444, set out as a note under section 2 of this title.

Effective Date

Section effective Oct. 1, 1978, see section 28 of Pub. L. 95–405, set out as an Effective Date of 1978 Amendment note under section 2 of this title.

Notes of Decisions

Cited in 19 cases (1 in the last 5 years), 1981–2025 · leading case: Breyer v. First Nat'l Monetary Corp., 548 F. Supp. 955 (D.N.J. 1982).

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Breyer v. First Nat'l Monetary Corp., 548 F. Supp. 955 (D.N.J. 1982). · cites it 9× “The defendant argues in response that its Customer Account Agreement is not a “futures contract”, but a “leverage contract” as defined in § 19 of the CEA, 7 U.S.C. § 23 . Leverage contracts, although subject to regulation by the CFTC, are not required to be traded on a…”

Theodore Purdy v. Commodity Futures Trading Comm'n, 968 F.2d 510 (5th Cir. 1992). · cites it 5× “§ 15a with 7 U.S.C.A. § 23 (b) (West 1980), amended by 7 U.”

United States Commodity Futures Trading Comm'n v. Hunter Wise Commodities, LLC, 21 F. Supp. 3d 1317 (S.D. Fla. 2014). · cites it 4× “Jager’s attempt to read a specific durational requirement and to expand the definition of a “leverage contract” under 7 U.S.C. § 23 26 to the *1341 Dodd-Frank amendment in § 2(c)(2)(D), “tenuous, at best.”

Exotic Coins, Inc. v. Beacom, 699 P.2d 930 (Colo. 1985). · cites it 3× “7 U.S.C. § 23 (b) (1980). Purchasers of gold or silver coins, who are regulated by the Act, are interested in these coins for their metallic value or value as collectors’ items, rather than for their value as currency.”

United States Commodity Futures Trading Comm'n v. Hunter Wise Commodities, LLC, 749 F.3d 967 (11th Cir. 2014). · cites it 2× “They point to 7 U.S.C. § 23 , where the Act prohibits commodity transactions “under a standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract,” except as authorized.”

Commodity Futures Trading Comm'n v. Premex, Inc., & Samuel Zack, 655 F.2d 779 (7th Cir. 1981). “95-598, 7 U.S.C. § 23 (Supp. Ill 1979). 5 . Rule 30.”

Commodity Futures Trading Comm'n v. Am. Precious Metals, LLC, 845 F. Supp. 2d 1279 (S.D. Fla. 2011). · cites it 7× “Plaintiff Commodity Futures Trading Commission (hereinafter “the CFTC”) initiated the above-styled cause with the filing of a two-count Complaint (DE 1), alleging in Count I that Defendants violated Section 19 of the Commodities Exchange Act (hereinafter “the CEA”), 7 U.S.C. §…”

Procter & Gamble Co. v. Bankers Trust Co., 925 F. Supp. 1270 (S.D. Ohio 1996). “Section (III) does not apply, because the 5s/30s and DM swaps do not fit within the CFTC’s regulations for leverage contracts referred to in 7 U.S.C. § 23 (a). 7 A commodity trading advisor is one who is “in the business of advising others on the value or advisability of trading…”

First Nat'l Monetary Corp. v. Commodity Futures Trading Comm'n, 860 F.2d 654 (1st Cir. 1988). · cites it 4× “§ 6h. The Division, in a previous appeal to this court raising administrative issues not pertinent here, indicated that if FNMC could show that its “cash forward” contracts constituted off-exchange leverage contracts within the meaning of section 19 of the CEA, 7 U.”

Sol Kotz & Kolar, Inc. v. Bache Halsey Stuart, Inc., 685 F.2d 1204 (9th Cir. 1982). “7 U.S.C. § 23 (b). The anti-fraud rules are set out in 17 C.”

Gen. Resources Org., Inc. v. Deadman, 907 S.W.2d 22 (Tex. App. 1995). “The trial court granted a partial remittitur and entered judgment.”

Premex, Inc., & Samuel N. Zack v. Commodity Futures Trading Comm'n, 785 F.2d 1403 (9th Cir. 1986). “§ 6f(2), by failing to meet the minimum financial requirements for the preceeding 16 months; had violated the predecessors of 7 U.S.C. § 23 and 17 C.F.R. § 31.03 by distributing false and misleading promotional materials; had violated section 4f(l) of the Act, 7 U.”

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