timely fashion, a reviewable rule to the Commission for prior approval.

(5) The term "governing board" of a contract market means the board of directors, the board of governors, the board of managers or any other similar body of the contract market or any committee duly authorized, pursuant to a reviewable rule of the contract market that has been approved by the Commission pursuant to section 5a (12) of the Act, to take action for and on behalf of the contract market with respect to an emergency.

(6) The term "two-thirds vote" of a governing board of a contract market means the affirmative vote of two or more persons constituting not less than two-thirds of the members of such governing board either (i) physically present and voting at a meeting of such governing board at which a quorum of at least one-third of the members is physically in attendance or (ii) voting in any manner other than at a meeting of such board at which a quorum of at least one-third of the members is physically in attendance as permitted by applicable state corporation law.

(7) The term "temporary emergency rule" means a reviewable rule adopted by a "two-thirds vote" of the governing board of a contract market to meet an emergency.

(b) Submission of reviewable rules to Commission. Except as provided in paragraphs (c) and (f) of this section, all proposed reviewable rules must be submitted to the Commission for approval pursuant to section 5a(12) of the Act at least 30 days prior to their proposed effective dates or within such shorter period of time as the Commission may permit. Three copies of each such rule shall be furnished to the Commission at its Washington, D.C., headquarters, and two copies shall be furnished to the regional office of the Commission having local jurisdiction over the contract market. Each such submission shall, in the following order:

(1) Set forth the text of the proposed reviewable rule (in the case of any change in, addition to, or deletion from any existing rule of the contract market, the existing rule shall be set forth, with brackets used to indicate

words to be deleted and underscoring used to indicate words to be added

(2) Describe the action taken or an ticipated to be taken to adopt the pro posed renewable rule by the contract market, or by the governing board thereof or any committee thereof in this regard, c.te the rules of the contract market which authorize the contract market, or the governing board thereof or the committee thereof, to adopt the proposed reviewable rule);

(3) Set forth an explanation of the proposed reviewable rule, including its anticipated effective date and purpose, a description of any action taken or anticipated to be taken as a result of or pursuant to the proposed reviewable rule, how the rule fits into the contract market's scheme of self-regulation, how the rule furthers the purposes of the Act, and any other information which may be beneficial to the Commission in analyzing the proposed reviewable rule (if a proposed reviewable rule affects, directly or indirectly, the application of any other rule of the contract market, set forth the pertinent portion of the text of any such rule and describe the anticipated effect of the proposed reviewable rule on the application thereof); and

(4) Note and briefly describe any substantive opposing views expressed by the members of the contract market or others with respect to the proposed reviewable rule which were not incorporated into the proposed reviewable rule prior to its submission to the Commission.

(c) Operational and Administrative Exemption. A proposed reviewable rule is not subject to the requirements of paragraph (b) of this section, and is exempt from the requirement of section 5a(12) of the Act that it be submitted and approved by the Commission prior to being placed into effect by the contract market, where such rule is operational or administrative in nature and pertains to such matters

as:

(1) Government, organization, and administration of the contract market, including the qualification, nomination election, appointment, tenure, compensation, powers, duties, responsibilities, activities, indemnification, or meetings of officers, directors, governing boards, or committees of the contract market, but excluding any authorization to take action for or on behalf of the contract market with respect to an emergency;

(2) Membership, including applications, purchases and sales, transfers, membership fees and assessments, dues, and corporate and partnership privileges, but excluding qualifications, selection, training, arbitration, or suspension, expulsion, denial of access to the contract market, or any other disciplinary action;

(3) Meetings of members, both regular and special, including notice and quorum requirements, voting, proxies, rules of order, minutes, reports and procedural resolutions;

(4) Hours of trading;

(5) Declaration of holidays and other similar suspensions of trading;

(6) Changes in references to the Secretary of Agriculture to references to the Commission or the Department of Justice necessitated by the Commodity Futures Trading Commission Act of 1974 and all similar changes;

(7) Correction of mechanical errors in rules;

(8) Use of and payment for facilities by members;

(9) Facilities housing the contract market, physical changes in the trading floor or trading area, and all similar matters;

(10) The registration of agents, employees, and branch offices of members, but not the testing or qualifications of such agents and employees;

(11) Gratuity and similar funds; but not guaranty, reserve, or similar funds;

(12) Forms such as notices of delivery, transfer sheets, warehouse receipts, inspections, certificates of grade or quality, and assay certificates;

(13) Records, reports, and confirmations provided to customers by members; or

(14) Decorum, attire, admission to floor, badges, visitors, and all similar matters;

Provided, however, That the exemption set forth in this paragraph shall not apply to any proposed reviewable rule with respect to which the contract market is notified by the Commission, within ten (10) days after

copies of such rule are furnished to the Commission pursuant to paragraph (d) of this section, that the Commission has determined:

(i) That the purposes of the Act appear to necessitate Commission review of the proposed rule prior to its being placed into effect by the contract market, or

(ii) That the Commission is unable to make the determination described in paragraph (c)(14)(i) of this section within such ten (10) day period, and with respect to which the contract market is not subsequently notified by the Commission of its further determination that the purposes of the Act do not appear to necessitate Commission review of the proposed rule prior to its being placed into effect by the contract market.

(d) Rules placed into effect without prior Commission review. Except as provided in paragraph (f) of this section (temporary emergency rules), two copies of any reviewable rule which a contract market proposes to place into effect without prior submission to the Commission pursuant to paragraph (b) of this section shall be furnished to the Commission at its Washington, D.C., headquarters at least ten (10) days prior to its proposed effective date or within such shorter period of time as the Commission may permit. Two copies shall also be transmitted by the contract market to the regional office of the Commission having local jurisdiction over the contract market. (In the case of any change in, addition to, or deletion from any existing rule of the contract market, the existing rule shall be set forth, with brackets used to indicate words to be deleted and underscoring used to indicate words to be added.) Where a proposed contract market reviewable rule is submitted to the Commission pursuant to paragraph (d) rather than paragraph (b) of this section because the contract market has determined such rule is within the exemption provided by paragraph (c) of this section, the submission of such rule shall clearly designate the rule as an "operational or administrative reviewable rule exempted from the prior-approval requirement of section 5a(12) of the Act by paragraph (c) of this section."

(e) Membership changes. Each contract market shall promptly furnish the Commission with written notification of any changes in its membership. One copy of such notification shall be furnished to the Commission at its Washington, D.C., headquarters, and one copy shall be transmitted to the regional office of the Commission having local jurisdiction over the contract market.

(f) Temporary emergency rules. In the event of an emergency, a contract market, by a two-thirds vote of its governing board, may place into immediate effect a temporary emergency rule to deal with the emergency without prior Commission approval, subject to the following provisions:

(1) A temporary emergency rule, including any modification thereof, may not extend beyond the duration of the emergency, as determined by the contract market; but in no event shall a temporary emergency rule, or any modification thereof, continue, without express Commission authorization, beyond 30 days after the temporary emergency rule is first put into effect. In no event shall a temporary emergency rule, or any modification thereof, remain in effect for more than 90 days after the temporary emergency rule is first put into effect.

(2) The contract market shall notify the Commission at its Washington, D.C., headquarters of the adoption, modification and termination of a temporary emergency rule by the fastest available means of communication. A written copy of each such temporary emergency rule, and any modification and termination thereof, shall promptly thereafter be furnished to the Commission at its Washington, D.C., headquarters, along with a complete explanation of the emergency and the action taken to meet the emergency; two additional such copies shall also be promptly furnished by the contract market to the regional office of the Conunission having local jurisdiction over the contract market.

(3) A temporary emergency rule may provide for, or may authorize the contract market, or the governing board thereof or any committee thereof, to undertake actions necessary or appro

priate to meet the emergency, including, but not limited to, such actions as:

(i) Limiting trading to liquidation only, in whole or in part, or limiting trading to liquidation only except for new sales by parties who have the commodity to deliver pursuant to such sales;

(ii) Extending or shortening the expiration date for trading in contracts; (iii) Extending the time of delivery; (iv) Changing delivery points; (v) Ordering the liquidation of contracts, the fixing of a settlement price or the reduction in positions;

(vi) Ordering the transfer of contracts, and the money, securities, and property securing such contracts, held on behalf of customers by a member of the contract market to another member, or other members, of the contract market willing to assume such contracts or obligated to do so;

(vii) Extending, limiting or changing hours of trading;

(viii) Suspending trading; and (ix) Modifying or suspending any provision of the rules of the contract market.

(g) Physical emergencies. In the event the physical functions of a contract market are, or are threatened to be, severely and adversely affected by a "physical emergency," such as fire or other casualty, bomb threats, substantial inclement weather, power failures, communications breakdowns, or transportation breakdowns, a contract market official, duly authorized to take such action for and on behalf of the contract market with respect to such a "physical emergency” pursuant to a reviewable rule of the contract market that has been approved by the Commission pursuant to section 5a(12) of the Act, may take any action authorized by such reviewable rule necessary or appropriate to deal with the emergency, including, but not limited to, suspending trading on the contract market. In no event, however, shall suspension of trading on the contract market by such a designated official continue in effect for more than five (5) days. If so authorized by a reviewable rule of the contract market, such designated contract market official may also order restoration of trading on the contract market, or removal of other restrictions imposed by the official as permitted by this paragraph (g), in the absence of action by the governing board of the contract market, upon a determination by such official that the "physical emergency" has sufficiently abated to permit the physical functions of the contract market to continue in an orderly

manner.

[41 FR 40098, Sept. 17, 1976]

§ 1.41a Delegation of authority to the Executive Director and the Director of

the Division of Trading and Markets. The Commission hereby delegates, until the Commission orders otherwise, the following authority to the Executive Director and the Director of the Division of Trading and Markets, to be exercised alternatively by either such Director or by such other employee or employees of the Commission under the supervision of either Director as may be designated from time to time by the Director responsible for the supervision of such other employee or employees:

(a) Pursuant to § 1.41(c), to determine whether a proposed operational or administrative reviewable rule appears to require Commission review prior to its being placed into effect by the contract market or that such determination cannot be made within ten (10) days of the receipt of such rule by the Commission, and to so notify the contract market; and

(b) Pursuant to § 1.41(d), to permit a contract market to furnish, less than ten (10) days prior to its proposed effective date, copies of any reviewable rule which the contract market proposes to place into effect without prior submission to the Commission pursuant to § 1.41(b). where such Director determines that such rule does not appear to require Commission review prior to its being placed into effect by the contract market.

[41 FR 40100, Sept. 17, 1976]

§ 1.42 Delivery notice; filing of copy.

(a) Each contract market shall furnish or cause to be furnished promptly to the Commission a copy of each notice of delivery issued by any member thereof covering the delivery

of any commodity on a futures contract made on or subject to the rules of such contract market, and shall also furnish or cause to be furnished promptly to the Commission a record of all endorsements of the original notice of delivery shown in the order in which such endorsements were made.

(b) Any contract market may provide the required delivery notice information on compatible data processing punched cards, magnetic tapes, magnetic discs, computer printouts, or other means: Provided, That the format and coding structure and the nature of the information contained thereon have been approved in writing by the Commission. A complete and accurate computer listing of any information supplied via data processing media must also be provided by an officer of the contract market at the time information via data processing media is supplied.

(Secs. 4g(1), 41, 5(b), 8a(5), Commodity Exchange Act 7 U.S.C. 6g(1), 6i, 7(b), 12a(5) (Supp. V, 1975))

[41 FR 48112, Nov. 2, 1976, as amended at 42 FR 12375, Mar. 3, 1977]

§ 1.43 Information required concerning warehouses, depositories, and other similar entities.

Each contract market shall file with the Commission a list of all warehouses, depositories and other similar entities in which or out of which commodities are deliverable in satisfaction of futures contracts made on or subject to the rules of such contract market, which list shall show the name, location, and storage capacity of each such warehouse, depository or other similar entity, together with the name and business address of the operator thereof. The Commission shall be kept currently advised of all changes affecting such information. Each contract market shall require the operator of such warehouse, depository or other similar entity to furnish, upon call by the Commission, a schedule of storage charges, handling charges, and the annual fire insurance rate applicable to such warehouse, depository or other similar entity.

(Sec. 5a, 49 Stat. 1497; 7 U.S.C. 7a)

§1.44 Records and reports of warehouses, depositories, and other similar entities; visitation of premises.

Each contract market shall require the operators of warehouses, depositories and other similar entities whose receipts are deliverable in satisfaction of commodity futures contracts made on or subject to the rules of such contract market:

modity for future delivery on or subject to the rules of such contract market shall provide for the delivery thereunder of commodities of grades conforming to United States standards if such standards shall have been officially promulgated and adopted by the Commission. In the event of a change in United States standards, all contracts made on and after the effective date of the adoption of the revised standard by the Commission shall be made on the basis of the standards as changed: Provided, That this shall not be construed to prevent the closing of trades made prior to the effective date of such adoption by the Commission.

leased space of the warehouse, depository or other similar entity;

(b) Upon call from the Commission, to report the stocks of commodities in such warehouses, depositories and other similar entities and to furnish information concerning stocks of each commodity traded in for future delivery on such contract market about to be transferred or in process of being transferred, or otherwise moved into or out of such warehouses, depositories and other similar entities, as well as any other information concerning commodities stored in such warehouse, depositories and other similar entities and which are or may be available for delivery on futures contracts; and

(c) To permit visitation of the premises and inspection of the books and records of such warehouses, depositories and other similar entities by duly authorized representatives of the Commission or the Department of Justice, and to keep all books, records, papers, and memoranda relating to the storage and warehousing of commodities in such warehouse, depository or other similar entity for a period of 5 years from the date thereof.

(Sec. 5a, 49 Stat. 1497; 7 U.S.C. 7a)

§ 1.45 Delivery of commodities conforming to United States standards.

Each contract market shall require that all contracts of sale of any com

(Sec. 5a, 49 Stat. 1493; 7 U.S.C. 7a)

setting long and short positions.

(a) Application of purchases and sales. Any futures commission merchant who, on or subject to the rules of a contract market:

(1) Shall purchase any commodity for future delivery for the account of any customer (other than the "Customers' Account" of another futures commission merchant) when the account of such customer at the time of such purchase has a short position in the same future of the same commodity on the same market, or

(2) Shall sell any commodity for future delivery for the account of any customer (other than the "Customers' Account" of another futures commission merchant) when the account of such customer at the time of such sale has a long position in the same future of the same commodity on the same market,

shall on the same day apply such purchase or sale against such previously held short or long position, as the case may be, and shall promptly furnish such customer a purchase and sale statement, or account sale, showing the financial result of the transactions involved.

(b) Close-out against oldest open position. In all instances wherein the short or long position in such customers' account immediately prior to such offsetting purchase or sale is greater than the quantity purchased or sold, the futures commission merchant