7 U.S.C. § 6f — Registration and financial requirements; risk assessment

(a) Registration of futures commission merchants, introducing brokers, and floor brokers and traders (1) Anyone who wants to work as a futures commission merchant, introducing broker, floor broker, or floor trader must register with the Commission. You apply in the form the Commission sets. You must give the Commission facts about your business. Futures commission merchants and introducing brokers must also list their branch office managers and, depending on how the business is organized, their officers, partners, directors, and stockholders. After you register, you must keep sending the Commission this information and any other information it asks for about your business. Your registration expires every December 31, or on another date the Commission picks that's at least a year after you got it. You can renew it unless it's suspended (and the suspension hasn't ended) or revoked. (2) A broker or dealer already registered with the Securities and Exchange Commission (SEC) can register as a futures commission merchant or introducing broker through an easier path. This works if: (A) the broker or dealer only solicits, accepts, executes, or places orders for security futures products on a contract market or registered derivatives transaction execution facility; (B) it files a written notice with the Commission in the form the Commission requires; (C) the SEC hasn't suspended its registration; and (D) it belongs to a national securities association registered under 15 U.S.C. § 78o-3(a). The registration takes effect as soon as the notice is submitted. (3) A floor broker or floor trader doesn't have to register under section 6e or paragraph (1) if: (A) it's already an SEC-registered broker or dealer; (B) it limits its futures order activity on contract markets to security futures products; and (C) the SEC hasn't suspended its registration. (4)(A) A broker or dealer that registers this simpler way under paragraph (2), or a floor broker or floor trader exempt under paragraph (3), doesn't have to follow a list of other rules in this chapter: certain parts of section 6c; sections 6d, 6e, and 6h; certain parts of this section itself; sections 6j, 6k(1), 6p, and 13a-2; certain parts of section 12; and section 20. (4)(B) The Commission can also give these brokers and dealers other exemptions from this chapter's rules, if doing so serves the public interest and protects investors. The Commission decides its own procedures for granting these exemptions and can refuse to even consider a request. (4)(C) These brokers, dealers, floor brokers, and floor traders don't have to join a registered futures association. And a futures association can't stop its members from doing business with them. (b) Financial requirements for futures commission merchants and introducing brokers To register as a futures commission merchant or introducing broker, you must meet minimum financial requirements the Commission sets by regulation. You must keep meeting them the whole time you're registered. But if you're a member of a contract market or derivatives transaction execution facility, and you follow that exchange's own financial standards (which the Commission has approved as good enough), that counts as meeting this requirement. (c) Risk assessment for holding company systems (1) Two terms matter here. An "affiliated person" is anyone who controls, is controlled by, or shares control with a futures commission merchant, as the Commission defines by rule. A "Federal banking agency" has the same meaning as in 12 U.S.C. § 1813(q). (2) Every registered futures commission merchant must gather information and keep records the Commission requires about how it monitors and controls financial and operational risk coming from its affiliated companies (not individual people). These records must describe, in summary, the futures and other financial activities of any affiliate whose business could seriously affect the merchant's finances — including its capital, cash flow, or ability to operate. The Commission can require the merchant to file summary reports of this information, but no more than once a quarter. (3) If bad market conditions, the reports above, or other information give the Commission real concerns about a registered merchant's financial health, the Commission can demand more detailed reports about the futures and other financial activities of that merchant's risky affiliates. The Commission must specify exactly what information it wants, how long the requirement lasts, and when the reports are due — and say whether they go straight to the Commission or to the merchant's usual regulator, like a contract market or derivatives transaction execution facility. (4) When the Commission writes rules under paragraph (2) that touch an affiliate already overseen by a Federal banking agency, it must consult that agency and consider its views. If the banking agency comments in writing on a proposed rule, the Commission must respond in writing before finalizing the rule — and publish both, if the banking agency asks. A merchant is treated as having complied with a recordkeeping or reporting rule if it simply reuses reports the affiliate already filed with its banking agency under certain listed banking laws. The Commission can require extra information beyond that only if it makes an explicit finding that the extra information is necessary — and only after first asking the banking agency to expand its own reporting to cover it. (5) Before asking a merchant for information about a bank-affiliated company under paragraph (3), the Commission must first tell that company's banking agency what it wants and consult with the agency about whether the agency already has it — unless waiting would be unsafe for the merchant's finances or the markets' stability. (6) None of this lets the Commission force a merchant to hand over a banking agency's actual examination reports or the agency's internal supervisory opinions. (7) Information the Commission gets from a banking agency about a bank-affiliated company can't be shared with anyone else without that banking agency's written permission (except as sections 12 and 12a(6) allow). (8) The Commission must tell a banking agency if it has real concerns that a merchant's activities are creating financial or operational risk for an affiliate the banking agency oversees. (9) The Commission can exempt any person or group of persons from this whole subsection, under whatever terms and time limits it sets. In deciding, it must weigh: (A) whether similar information is already available from another regulator — a state insurance commissioner, the SEC, a similar foreign regulator, or another federal supervisory agency; (B) what the affiliate's main business is; (C) how much domestic or foreign regulation already covers the affiliate; (D) how much futures and options business the merchant itself does; and (E) how much of the merchant's and its affiliates' combined assets and revenue come from U.S. futures markets. (10) Information given under this subsection is protected under section 12's confidentiality rules. Except as section 12 allows, the Commission can't be forced to disclose this information, or information any other regulator — domestic or foreign — gave it about an affiliate's finances. (11) Nothing in paragraphs (1) through (10) cuts back the Commission's other powers under this chapter or its regulations.