Summary: H.R.5447 — 97th Congress (1981-1982)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Conference report filed in House (12/13/1982)

(Conference report filed in House, H. Rept. 97-964)

Futures Trading Act of 1982 - Title I: Jurisdiction - Amends the Commodity Exchange Act to set forth requirements for Commodity Futures Trading Commission (CFTC) approval of futures contracts for groups or indices of securities. Provides for Securities and Exchange Commission (SEC) consultation and oral hearing on applications filed before December 9, 1982. Limits SEC review authority on applications filed after such date to findings of whether an application meets specified criteria under this Act.

Sets forth related provisions respecting public comment periods, oral hearings, and judicial review.

States that such Act does not apply to foreign currency option transactions traded on a national securities exchange.

Provides that the investor protections under the Securities Act of 1933 and the Securities Exchange Act of 1934 applies to commodity pool participants under this Act.

Expands certain information-sharing provisions to include self-regulatory organizations.

Title II: Miscellaneous Amendments to the Commodity Exchange Act - Defines "introducing broker" as any person (other than a registered associate of a futures commission merchant) who solicits orders for futures contracts, but does not keep customers' funds, securities, or property to margin such contracts.

Amends the definition of "commodity trading advisor" to mean persons who advise (for profit) others either directly or through the various media regarding futures trading. Excludes banks and specified professionals and other persons who provide such advice incidentally to the conduct of their business or profession.

Eliminates the one-year post-government employment bar against appearances before the CFTC by former Commissioners and senior employees. (Such bar is in effect under the Ethics in Government Act of 1978).

Makes changes to existing legislative findings, including a statement concerning the effect and importance of commodity option transactions on interstate commerce.

Consolidates certain provisions concerning foreign futures traded in the United States. Provides with regard to such trading that the CFTC: (1) may promulgate rules, which may vary with different vendors or trade organizations, regarding fraud, risk disclosure, finances, recordkeeping or registration; and (2) may not promulgate rules governing foreign trade boards or requiring CFTC approval of such boards' contracts or rules action.

States that the CFTC may set speculative limits by rule, regulation, or order. Authorizes: (1) retroactive emergency position limits; (2) different speculative limits for different numbers of days remaining until the last days of trading in a contract; and (3) contract markets to set speculative limits (but not higher than CFTC limits) for futures or option transactions. Extends certain hedging transaction limit exemptions to producers, purchasers, sellers, middlemen, and commodity users. Requires the CFTC to monitor the trading activities of selected large hedgers operating in the cattle, hog, or pork belly markets, and to report to the appropriate congressional committees for at least two years.

Makes it unlawful to knowingly violate CFTC approved speculative limits.

Eliminates the ban on agricultural commodities option trading. Authorizes a three-year pilot program under which commodities may be authorized on any contract market. Lifts such limit after three years upon: (1) transmission of specified documentation to the appropriate congressional committees; and (2) the expiration of 30 days of continuous congressional session.

Requires introducing brokers to register with the CFTC. Sets forth registration requirements, including minimum financial requirements. Subjects such brokers to reporting and recordkeeping requirements.

Broadens misrepresentation prohibitions to include all persons registered with the CFTC.

Broadens the prohibition on false representation to include false representation of CFTC registration in any capacity, not only as a futures commission merchant.

Makes it the duty of large traders to keep and make books and records available for inspection independent of CFTC report-filing requirements. Requires such traders to make certain other trading information available for inspection.

Requires any person associated with a commodity pool operator (CPO), an introducing broker, or a commodity trading advisor (CTA) who solicits funds, property, or discretionary accounts to register as an associated person of such CPO or CTA. Exempts from registration: (1) persons registered with the CFTC in some other capacity; and (2) persons or classes exempted by the CFTC.

Provides that the registration of an associated person shall expire when the CFTC so orders.

Makes it unlawful for a registrant to hire an associated person whom he knows or should know to be statutorily disqualified.

Extends antifraud provisions to associated persons of CTAs and CPOs.

Extends CFTC authority to establish proficiency standards to registrants.

Requires contract markets to enforce all bylaws, rules, regulations, and resolutions if so required by the CFTC. Eliminates the $15,000 arbitration claim limit and the compulsory awards agreement requirement.

Requires: (1) prior CFTC approval of contract market rules, except those relating to the setting of margin levels; and (2) the CFTC to provide the contract market with written notice of its grounds for disapproval. Permits a contract market to put a rule into effect if the CFTC does not approve or begin disapproval proceedings within 180 days, or conclude such proceedings within one year.

Requires the CFTC to approve or disapprove a board of trade's application for contract market designation within one year. Gives the CFTC at least 60 days to rule on a resubmitted application.

Requires review of registration denials in the U.S. circuit in which the petitioner's principal place of business is located.

Authorizes the CFTC to seek ex parte court orders prohibiting persons from: (1) destroying records or books; (2) refusing to permit inspections; or (3) withdrawing or disposing of assets, funds, or property.

States that nothing in such Act shall prohibit a State from proceeding (in State court) against a registrant (other than a floor broker or registered futures association) for antifraud violations of such Act or related regulations. Requires CFTC notice. Grants the CFTC the rights of intervention and appeal. Permits removal to U.S. district court within 60 days of service on the defendant.

Authorizes the CFTC to withhold from public disclosure data or information in connection with any pending investigation of any person.

Extends the prohibition on CFTC information disclosure to receivership and certain bankruptcy proceedings.

Authorizes the CFTC to disclose information to any Federal agency or department (currently limited to the executive branch), including State, local, and foreign enforcement agencies.

Requires the CFTC upon receiving a subpoena to notify the person concerned and wait 14 days before disclosing such information. Exempts congressional requests and subpoenas from such provisions.

Requires the CFTC to furnish registration information to a requesting State.

Authorizes the CFTC to grant temporary (six-month maximum) licenses.

Establishes a system of statutory registration disqualifications. Lists circumstances in which the CFTC may refuse or condition a registration without a hearing (usually where a previous registration has been suspended or revoked, or the applicant has been denied trading privileges as the result of legal proceedings).

Specifies circumstances in which the CFTC may refuse or condition a registration only after granting an opportunity for a hearing (usually where the applicant has been in violation of the Commodity Exchange Act, or has been convicted of felonies or misdemeanors relating to commodities or securities transactions).

Permits the CFTC to authorize any person to perform any portion of the registration functions subject to rules approved by the CFTC.

Includes within the CFTC's emergency powers authority to set temporary emergency margin levels on futures contracts and to fix position limits prior to CFTC action.

Permits judicial review of such actions in U.S. courts of appeal.

Authorizes the CFTC to suspend registrants for violating specified agricultural export sales reporting requirements.

Extends the provisions pertaining to embezzlement, theft, or criminal conversion to all persons and their agents covered by the registration requirements of such Act. Provides for suspension of registration upon conviction.

Extends authorization of appropriations under such Act through FY 1986.

Provides for shared jurisdiction with other Federal agencies and States over transactions involving commodities, services, products, rights, or interests not subject to contract market rules or regulated by the CFTC. Authorizes the CFTC to refer any matter subject to other Federal or State statutes to the agency or department enforcing such statutes.

Extends the aiding and abetting prohibition to all legal proceedings (currently limited to administrative proceedings) arising under such Act.

Provides that any person who directly or indirectly controls any person who violates such Act shall be liable as a principal, unless he or she did not know or did not have reason to know of the facts constituting the violation.

Limits reparations claims to cases where a respondent is registered with the CFTC. Authorizes the CFTC to promulgate necessary administrative regulations for such claims. Eliminates the requirement that administrative judges must hear claims over $5,000. Suspends trading privileges for failure to pay an award within 15 days.

Authorizes a registered futures association to collect members' fingerprints, submit them to the Attorney General, and receive the results of the Attorney General's analysis.

Requires each association to submit proposed rules or changes to the CFTC. Requires the CFTC to act on such rules within 30 days if it intends to review them, unless it notifies the association that it cannot complete the review within such time. Gives the CFTC 180 days to complete a rule review, and one year to initiate and complete a disapproval proceeding.

Authorizes the CFTC to require an association to perform registration functions.

Requires each association to establish: (1) training standards; (2) capital and financial requirements; (3) sales practices standards; and (4) audit and enforcement provisions.

Requires each association to develop a comprehensive implementation program (by September 30, 1985, for those registered as of enactment of this Act, and within two and one-half years for those registering after such date).

Requires the CFTC to regulate gold, silver, and other nonagricultural commodities leverage transactions under terms it shall prescribe. Permits different terms to be set for different commodities.

Authorizes the CFTC to prohibit leverage transactions on any commodity not being lawfully sold as of December 2, 1982, and not in the public interest.

Provides for private rights of action to recover actual damages in U.S. district courts. Permits actions: (1) against persons for violations of such Act; and (2) against organizations or officers for failure to enforce specified rules or regulations. Requires any judicial action to be brought within two years after the cause of action accrues.

Requires the Federal Reserve, with the assistance of the SEC, the CFTC, and the Treasury, to make a special study of the effects on the economy of futures contracts and options trading. Limits costs to $3,000,000. Requires a report to Congress by September 30, 1984.

Requires: (1) a CFTC study of insider trading; and (2) a report to the appropriate congressional committees by September 30, 1984.

Amends the Futures Trading Act of 1978 to direct the CFTC to report to Congress by January 1, 1986, regarding a study of the National Futures Association's regulatory experience for the period beginning January 1, 1983 and ending September 30, 1985.

Amends the Agricultural Act of 1970 to prohibit restrictions on the export of certain agricultural products in non-emergency periods.