15 U.S.C. § 8306 — Determining status of novel derivative products

submitted 16 years ago by Pub. L. 111-203 to r/title-15-COMMERCE-AND-TRADE · 955 words · no verdicts yet

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This law creates a process for deciding whether a new kind of derivative product is a security or a commodity contract. The CFTC and SEC notify each other and can request a formal decision. Either agency's ruling can be appealed to a federal court.

(a) Process for determining status. (1) Notice. Anyone filing to list or trade a "novel derivative product" — one that might have features of both a security and a futures contract — may notify both the SEC and the CFTC at the same time, saying that both agencies were notified. If that double notice isn't given, whichever Commission first realizes the filing might straddle both categories must tell the other Commission within 5 business days and share a copy of the filing. (2) Request for determination. Within 21 days of getting notice (or on its own, if no notice was given), the CFTC may ask the SEC to decide whether the product is a "security" as defined in section 78c(a)(10) of this title. In the same way, the SEC may ask the CFTC to decide whether the product is a futures contract, an option on one, or an option on a commodity under the CFTC's exclusive authority. Either request must be submitted in writing. This process doesn't stop either agency from separately asking the other to grant an exemption under the relevant securities or commodities law, though neither agency is required to grant an exemption just because it's asked. An order granting or denying such an exemption can't be appealed to court. A Commission can withdraw its request at any time before a determination is made, by giving written notice to the other Commission. (3) Determination. No matter what any other law says, within 120 days of getting a request, the Commission that was asked must issue a formal, written determination (with its reasons) on whichever question was asked — unless the request was withdrawn. For a request asking for an exemption, the Commission must either grant it or explain in writing why it won't; if the SEC refuses, that refusal can't be reviewed under section 78y of this title. (b) Judicial resolution. (1) If either agency believes a final determination affects its own legal authority, it can ask the U.S. Court of Appeals for the D.C. Circuit to review that order, within 60 days after the order is entered. The court must handle the case on an expedited basis. (2) The agency appealing must send a copy of its petition to the other agency within 1 business day of filing; the agency being appealed must then file the order under review, related documents, and anything else the court asks for. (3) The court reviews the case without giving special weight or presumption to either agency's views. (4) Filing the appeal automatically pauses ("stays") the order under review until the court's decision — including any appeal of that decision — becomes final.

the actual law source: uscode.house.gov ↗public domain

(a) Process for determining the status of a novel derivative product

(1) Notice

(A) In general

Any person filing a proposal to list or trade a novel derivative product that may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities) may concurrently provide notice and furnish a copy of such filing with the Securities and Exchange Commission and the Commodity Futures Trading Commission. Any such notice shall state that notice has been made with both Commissions.

(B) Notification

If no concurrent notice is made pursuant to subparagraph (A), within 5 business days after determining that a proposal that seeks to list or trade a novel derivative product may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities), the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall notify the other Commission and provide a copy of such filing to the other Commission.

(2) Request for determination

(A) In general

No later than 21 days after receipt of a notice under paragraph (1), or upon its own initiative if no such notice is received, the Commodity Futures Trading Commission may request that the Securities and Exchange Commission issue a determination as to whether a product is a security, as defined in section 78c(a)(10) of this title.

(B) Request

No later than 21 days after receipt of a notice under paragraph (1), or upon its own initiative if no such notice is received, the Securities and Exchange Commission may request that the Commodity Futures Trading Commission issue a determination as to whether a product is a contract of sale of a commodity for future delivery, an option on such a contract, or an option on a commodity subject to the Commodity Futures Trading Commission’s exclusive jurisdiction under section 2(a)(1)(A) of title 7.

A request under subparagraph (A) or (B) shall be made by submitting such request, in writing, to the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable.

(D) Effect

Nothing in this paragraph shall be construed to prevent—

(i)

the Commodity Futures Trading Commission from requesting that the Securities and Exchange Commission grant an exemption pursuant to section 78mm(a)(1) of this title with respect to a product that is the subject of a filing under paragraph (1); or

(ii)

the Securities and Exchange Commission from requesting that the Commodity Futures Trading Commission grant an exemption pursuant to section 6(c)(1) of title 7 with respect to a product that is the subject of a filing under paragraph (1),

Provided, however, that nothing in this subparagraph shall be construed to require the Commodity Futures Trading Commission or the Securities and Exchange Commission to issue an exemption requested pursuant to this subparagraph; provided further, That an order granting or denying an exemption described in this subparagraph and issued under paragraph (3)(B) shall not be subject to judicial review pursuant to subsection (b).

(E) Withdrawal of request

A request under subparagraph (A) or (B) may be withdrawn by the Commission making the request at any time prior to a determination being made pursuant to paragraph (3) for any reason by providing written notice to the head of the other Commission.

(3) Determination

Notwithstanding any other provision of law, no later than 120 days after the date of receipt of a request—

(A)

under subparagraph (A) or (B) of paragraph (2), unless such request has been withdrawn pursuant to paragraph (2)(E), the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall, by order, issue the determination requested in subparagraph (A) or (B) of paragraph (2), as applicable, and the reasons therefor; or

(B)

under paragraph (2)(D), unless such request has been withdrawn, the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall grant an exemption or provide reasons for not granting such exemption, provided that any decision by the Securities and Exchange Commission not to grant such exemption shall not be reviewable under section 78y of this title.

(b) Judicial resolution

(1) In general

The Commodity Futures Trading Commission or the Securities and Exchange Commission may petition the United States Court of Appeals for the District of Columbia Circuit for review of a final order of the other Commission issued pursuant to subsection (a)(3)(A), with respect to a novel derivative product that may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities) that it believes affects its statutory jurisdiction within 60 days after the date of entry of such order, a written petition requesting a review of the order. Any such proceeding shall be expedited by the Court of Appeals.

(2) Transmittal of petition and record

A copy of a petition described in paragraph (1) shall be transmitted not later than 1 business day after filing by the complaining Commission to the responding Commission. On receipt of the petition, the responding Commission shall file with the court a copy of the order under review and any documents referred to therein, and any other materials prescribed by the court.

(3) Standard of review

The court, in considering a petition filed pursuant to paragraph (1), shall give no deference to, or presumption in favor of, the views of either Commission.

(4) Judicial stay

The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate as a stay of the order, until the date on which the determination of the court is final (including any appeal of the determination).

Source credit: (Pub. L. 111–203, title VII, § 718, July 21, 2010, 124 Stat. 1652.)

history & why it existsrecord from the source credit

2010Enacted · Pub. L. 111-203 · 124 Stat. 1652

A history note hasn’t been published yet. The record shows enactment by Pub. L. 111-203 on 2010-07-21.

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