US Code

Public Law 119-73 (01/23/2026)

7 U.S.C. § 6c

Prohibited transactions

(a)

In general

(1)

Prohibition

It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of a transaction described in paragraph (2) involving the purchase or sale of any commodity for future delivery (or any option on such a transaction or option on a commodity) or swap if the transaction is used or may be used to—
(A)
hedge any transaction in interstate commerce in the commodity or the product or byproduct of the commodity;
(B)
determine the price basis of any such transaction in interstate commerce in the commodity; or
(C)
deliver any such commodity sold, shipped, or received in interstate commerce for the execution of the transaction.
(2)

Transaction

A transaction referred to in paragraph (1) is a transaction that—
(A)
(i)
is, of the character of, or is commonly known to the trade as, a “wash sale” or “accommodation trade”; or
(ii)
is a fictitious sale; or
(B)
is used to cause any price to be reported, registered, or recorded that is not a true and bona fide price.
(3)

Contract of sale

It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act) who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to use the information in his personal capacity and for personal gain to enter into, or offer to enter into—
(A)
a contract of sale of a commodity for future delivery (or option on such a contract);
(B)
section 78f(a) of title 15 an option (other than an option executed or traded on a national securities exchange registered pursuant to ); or
(C)
a swap.
(4)

Nonpublic information

(A)

Imparting of nonpublic information

It shall be unlawful for any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee who, by virtue of the employment or position of the Member, officer, employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity and for personal gain with intent to assist another person, directly or indirectly, to use the information to enter into, or offer to enter into—
(i)
a contract of sale of a commodity for future delivery (or option on such a contract);
(ii)
section 78f(a) of title 15 an option (other than an option executed or traded on a national securities exchange registered pursuant to ); or
(iii)
a swap.
(B)

Knowing use

It shall be unlawful for any person who receives information imparted by any employee or agent of any department or agency of the Federal Government or any Member of Congress or employee of Congress or any judicial officer or judicial employee as described in subparagraph (A) to knowingly use such information to enter into, or offer to enter into—
(i)
a contract of sale of a commodity for future delivery (or option on such a contract);
(ii)
section 78f(a) of title 15 an option (other than an option executed or traded on a national securities exchange registered pursuant to ); or
(iii)
a swap.
(C)

Theft of nonpublic information

It shall be unlawful for any person to steal, convert, or misappropriate, by any means whatsoever, information held or created by any department or agency of the Federal Government or by Congress or by the judiciary that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, where such person knows, or acts in reckless disregard of the fact, that such information has not been disseminated by the department or agency of the Federal Government holding or creating the information or by Congress or by the judiciary in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and to use such information, or to impart such information with the intent to assist another person, directly or indirectly, to use such information to enter into, or offer to enter into—
(i)
a contract of sale of a commodity for future delivery (or option on such a contract);
(ii)
section 78f(a) of title 15 an option (other than an option executed or traded on a national securities exchange registered pursuant to ); or
(iii)
1
1 So in original. Probably should be “clause”.
a swap, provided, however, that nothing in this subparagraph shall preclude a person that has provided information concerning, or generated by, the person, its operations or activities, to any employee or agent of any department or agency of the Federal Government, to Congress, any Member of Congress, any employee of Congress, any judicial officer, or any judicial employee, voluntarily or as required by law, from using such information to enter into, or offer to enter into, a contract of sale, option, or swap described in clauses  (i), (ii), or (iii).
(5)

Disruptive practices

It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that—
(A)
violates bids or offers;
(B)
demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or
(C)
is, is of the character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution).
(6)

Rulemaking authority

The Commission may make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to prohibit the trading practices described in paragraph (5) and any other trading practice that is disruptive of fair and equitable trading.

(7)

Use of swaps to defraud

It shall be unlawful for any person to enter into a swap knowing, or acting in reckless disregard of the fact, that its counterparty will use the swap as part of a device, scheme, or artifice to defraud any third party.

(b)

Regulated option trading

No person shall offer to enter into, enter into or confirm the execution of, any transaction involving any commodity regulated under this chapter which is of the character of, or is commonly known to the trade as, an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, contrary to any rule, regulation, or order of the Commission prohibiting any such transaction or allowing any such transaction under such terms and conditions as the Commission shall prescribe. Any such order, rule, or regulation may be made only after notice and opportunity for hearing, and the Commission may set different terms and conditions for different markets.

(c)

Regulations for elimination of pilot status of commodity option transactions; terms and conditions of options trading

Not later than 90 days after , the Commission shall issue regulations—
(1)
to eliminate the pilot status of its program for commodity option transactions involving the trading of options on contract markets, including any numerical restrictions on the number of commodities or option contracts for which a contract market may be designated; and
(2)
otherwise to continue to permit the trading of such commodity options under such terms and conditions that the Commission from time to time may prescribe.
(d)

Dealer options exempt from subsections (b) and (c) prohibitions; requirements

Notwithstanding the provisions of subsection (c) of this section—
(1)
section 2(a) of this titleProvided any person domiciled in the United States who on , was in the business of granting an option on a physical commodity, other than a commodity specifically set forth in prior to , and was in the business of buying, selling, producing, or otherwise using that commodity, may continue to grant or issue options on that commodity in accordance with Commission regulations in effect on , until thirty days after the effective date of regulations issued by the Commission under clause (2) of this subsection: , That if such person files an application for registration under the regulations issued under clause (2) of this subsection within thirty days after the effective date of such regulations, that person may continue to grant or issue options pending a final determination by the Commission on the application; and
(2)
section 2(a) of this title the Commission shall issue regulations that permit grantors and futures commission merchants to offer to enter into, enter into, or confirm the execution of, any commodity option transaction on a physical commodity subject to the provisions of subsection (b) of this section, other than a commodity specifically set forth in prior to , if—
(A)
the grantor is a person domiciled in the United States who—
(i)
is in the business of buying, selling, producing, or otherwise using the underlying commodity;
(ii)
at all times has a net worth of at least $5,000,000 certified annually by an independent public accountant using generally accepted accounting principles;
(iii)
notifies the Commission and every futures commission merchant offering the grantor’s option if the grantor knows or has reason to believe that the grantor’s net worth has fallen below $5,000,000;
(iv)
section 78c(a)(12) of title 15 segregates daily, exclusively for the benefit of purchasers, money, exempted securities (within the meaning of ), commercial paper, bankers’ acceptances, commercial bills, or unencumbered warehouse receipts, equal to an amount by which the value of each transaction exceeds the amount received or to be received by the grantor for such transaction;
(v)
provides an identification number for each transaction; and
(vi)
provides confirmation of all orders for such transactions executed, including the execution price and a transaction identification number;
(B)
the futures commission merchant is a person who—
(i)
has evidence that the grantor meets the requirements specified in subclause (A) of this clause;
(ii)
treats and deals with all money, securities, or property received from its customers as payment of the purchase price in connection with such transactions, as belonging to such customers until the expiration of the term of the option, or, if the customer exercises the option, until all rights of the customer under the commodity option transaction have been fulfilled;
(iii)
records each transaction in its customer’s name by the transaction identification number provided by the grantor;
(iv)
provides a disclosure statement to its customers, under regulations of the Commission, that discloses, among other things, all costs, including any markups or commissions involved in such transaction; and
(C)
the grantor and futures commission merchant comply with any additional uniform and reasonable terms and conditions the Commission may prescribe, including registration with the Commission.
section 2(a) of this titleProvidedThe Commission may permit persons not domiciled in the United States to grant options under this subsection, other than options on a commodity specifically set forth in prior to , under such additional rules, regulations, and orders as the Commission may adopt to provide protection to purchasers that are substantially the equivalent of those applicable to grantors domiciled in the United States. The Commission may terminate the right of any person to grant, offer, or sell options under this subsection only after a hearing, including a finding that the continuation of such right is contrary to the public interest: , That pending the completion of such termination proceedings, the Commission may suspend the right to grant, offer, or sell options of any person whose activities in the Commission’s judgment present a substantial risk to the public interest.
(e)

Rules and regulations

The Commission may adopt rules and regulations, after public notice and opportunity for a hearing on the record, prohibiting the granting, issuance, or sale of options permitted under subsection (d) of this section if the Commission determines that such options are contrary to the public interest.

(f)

Nonapplicability to foreign currency options

Nothing in this chapter shall be deemed to govern or in any way be applicable to any transaction in an option on foreign currency traded on a national securities exchange.

(g)

Oral orders

The Commission shall adopt rules requiring that a contemporaneous written record be made, as practicable, of all orders for execution on the floor or subject to the rules of each contract market or derivatives transaction execution facility placed by a member of the contract market or derivatives transaction execution facility who is present on the floor at the time such order is placed.

Sept. 21, 1922, ch. 369, § 4cJune 15, 1936, ch. 545, § 549 Stat. 1494Pub. L. 93–463, title I, § 103(a)88 Stat. 1392Pub. L. 95–405, § 392 Stat. 867Pub. L. 97–444, title I, § 10296 Stat. 2296Pub. L. 99–641, title I, § 102100 Stat. 3557Pub. L. 102–546, title II, § 203(a)106 Stat. 3600Pub. L. 106–554, § 1(a)(5) [title I, §§ 109, 123(a)(6)]114 Stat. 2763Pub. L. 111–203, title VII124 Stat. 1731Pub. L. 112–105, § 5126 Stat. 293(, as added , ; amended , title IV, § 402, , , 1412; , , ; , title II, § 206, , , 2301; , , ; , title IV, § 402(4), , , 3624; , , , 2763A–383, 2763A–407; , §§ 741(b)(2), 746, 747, , , 1737, 1739; , , .)

Editorial Notes

References in Text

section 2 of Pub. L. 112–105section 13101 of Title 5Section 2 of the STOCK Act, referred to in subsec. (a)(3), is , which is set out as a note under , Government Organization and Employees.

Amendments

Pub. L. 112–105, § 5(1)2012—Subsec. (a)(3). , inserted in introductory provisions “or any Member of Congress or employee of Congress (as such terms are defined under section 2 of the STOCK Act) or any judicial officer or judicial employee (as such terms are defined, respectively, under section 2 of the STOCK Act)” after “any department or agency of the Federal Government”, “Member, officer,” after “position of the”, and “or by Congress or by the judiciary” after “creating the information”.

Pub. L. 112–105, § 5(2)(A)Subsec. (a)(4)(A). , inserted in introductory provisions “or any Member of Congress or employee of Congress or any judicial officer or judicial employee” after “any department or agency of the Federal Government”, “Member, officer,” after “position of the”, and “or by Congress or by the judiciary” after “creating the information”.

Pub. L. 112–105, § 5(2)(B)Subsec. (a)(4)(B). , inserted “or any Member of Congress or employee of Congress or any judicial officer or judicial employee” after “Federal Government” in introductory provisions.

Pub. L. 112–105, § 5(2)(C)(i)Subsec. (a)(4)(C). , inserted “or by Congress or by the judiciary” in two places in introductory provisions.

Pub. L. 112–105, § 5(2)(C)(ii)Subsec. (a)(4)(C)(iii). , inserted “to Congress, any Member of Congress, any employee of Congress, any judicial officer, or any judicial employee,” after “Federal Government,”.

Pub. L. 111–203, § 741(b)(2)2010—Subsec. (a)(1). , inserted “or swap” before “if the transaction is used or may be used”.

Pub. L. 111–203, § 746Subsec. (a)(3), (4). , added pars. (3) and (4).

Pub. L. 111–203, § 747Subsec. (a)(5) to (7). , added pars. (5) to (7).

Pub. L. 106–554, § 1(a)(5) [title I, § 109]2000—, inserted section catchline.

Pub. L. 106–554, § 1(a)(5) [title I, § 109]Subsec. (a). , added subsec. (a) and struck out former subsec. (a) which read as follows: “It shall be unlawful for any person to offer to enter into, enter into, or confirm the execution of, any transaction involving any commodity, which is or may be used for (1) hedging any transaction in interstate commerce in such commodity or the products or byproducts thereof, or (2) determining the price basis of any such transaction in interstate commerce in such commodity, or (3) delivering any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof—

“(A) if such transaction is, is of the character of, or is commonly known to the trade as, a ‘wash sale,’ ‘cross trade,’ or ‘accommodation trade,’ or is a fictitious sale; or

“(B) if such transaction is used to cause any price to be reported, registered, or recorded which is not a true and bona fide price.

Nothing in this section shall be construed to prevent the exchange of futures in connection with cash commodity transactions or of futures for cash commodities, or of transfer trades or office trades if made in accordance with board of trade rules applying to such transactions and such rules shall have been approved by the Commission.”

Pub. L. 106–554, § 1(a)(5) [title I, § 123(a)(6)]Subsec. (g). , inserted “or derivatives transaction execution facility” after “contract market” in two places.

Pub. L. 102–546, § 402(4)section 78c(a)(12) of title 15section 2(a) of this title1992—Subsec. (d)(2). , made technical amendments to references to in subpar. (A)(iv) and to in concluding provisions.

Pub. L. 102–546, § 203(a)Subsec. (g). , added subsec. (g).

Pub. L. 99–6411986—Subsec. (c). , amended subsec. (c) generally, substituting provisions relating to regulations to eliminate pilot status of program for commodity option transactions for provisions relating to commodity option transactions, pilot program and permanent authorization, conditions ending prohibition, and excepted persons.

Pub. L. 97–444, § 206(1)section 2(a) of this title1983—Subsec. (a)(B), (C). , redesignated par. (C) as (B). Former par. (B), relating to transactions involving any commodity specifically set forth in , prior to , if such transactions were of the character of, or were commonly known to the trade as, an “option”, “privilege”, “indemnity”, “bid”, “offer”, “put”, “call”, “advance guaranty”, or “decline guaranty”, was struck out.

Pub. L. 97–444, § 206(2)section 2(a) of this titleSubsec. (b). , in revising section generally, struck out references to any transaction subject to provisions of subsection (a) of this section and to any commodity not specifically set forth in , prior to , and struck out “within one year after the effective date of the Commodity Futures Trading Commission Act of 1974 unless the Commission determines and notifies the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture that it is unable to prescribe such terms and conditions within such period of time:” after “such terms and conditions as the Commission shall prescribe”.

Pub. L. 97–444, § 206(3)section 2(a) of this titleSubsec. (c). , inserted “With respect to any commodity regulated under this chapter and specifically set forth in prior to , the Commission may, pursuant to the procedures set forth in this subsection, establish a pilot program for a period not to exceed three years to permit such commodity option transactions. The Commission may authorize commodity option transactions during the pilot program in as many commodities as will provide an adequate test of the trading of such option transactions. After completion of the pilot program, the Commission may authorize commodity option transactions without regard to the restrictions in the pilot program after the Commission transmits to the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry the documentation required under clause (1) of the first sentence of this subsection and the expiration of thirty calendar days of continuous session of Congress after the date of such transmittal.”

Pub. L. 97–444, § 206(4)(A)section 2(a) of this titleSubsec. (d)(1). , inserted “, other than a commodity specifically set forth in prior to ,” after “physical commodity”.

Pub. L. 97–444, § 206(4)(B)section 2(a) of this titleSubsec. (d)(2). , inserted “, other than a commodity specifically set forth in prior to ,” after “subsection (b) of this section” in provisions preceding subpar. (A).

Pub. L. 97–444, § 206(4)(C)section 2(a) of this title, inserted “, other than options on a commodity specifically set forth in prior to ,” after “The Commission may permit persons not domiciled in the United States to grant options under this subsection” in provisions following par. (2).

Pub. L. 97–444, § 102Subsec. (f). , added subsec. (f).

Pub. L. 95–405, § 3(1)1978—Subsec. (a). , in provisions following par. (C) substituted “have been approved” for “not have been disapproved”.

Pub. L. 95–405, § 3(2)Subsec. (b). , substituted “Senate Committee on Agriculture, Nutrition, and Forestry” for “Senate Committee on Agriculture and Forestry”.

Pub. L. 95–405, § 3(3)Subsecs. (c) to (e). , added subsecs. (c) to (e).

Pub. L. 93–463section 2(a) of this titlesection 6b of this titlesection 6b of this title1974—Subsec. (a). , §§ 103(a), 402(a), (b), (d), designated existing provisions as subsec. (a), in par. (B) of subsec. (a) as so designated inserted “if such transaction involves any commodity specifically set forth in , prior to the enactment of the Commodity Futures Trading Commission Act of 1974, and” and “option”, and in provisions following par. (C), struck out provisions prohibiting a construction of this section or which would impair any State law applicable to any transaction enumerated or described in this section or and substituted “Commission” for “Secretary of Agriculture”.

Pub. L. 93–463, § 402(c)Subsec. (b). , added subsec. (b).

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Pub. L. 111–203Pub. L. 111–203section 754 of Pub. L. 111–203section 1a of this titleAmendment by effective on the later of 360 days after , or, to the extent a provision of subtitle A (§§ 711–754) of title VII of requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see , set out as a note under .

Effective Date of 1992 Amendment

Pub. L. 102–546, title II, § 203(b)106 Stat. 3600

“The Commission shall adopt the rules required by the amendment made under subsection (a) [amending this section] within two hundred and seventy days after the date of enactment of this Act [].”
, , , provided that:

Effective Date of 1983 Amendment

Pub. L. 97–444section 239 of Pub. L. 97–444section 2 of this titleAmendment by effective , see , set out as a note under .

Effective Date of 1978 Amendment

Pub. L. 95–405section 28 of Pub. L. 95–405section 2 of this titleAmendment by effective , see , set out as a note under .

Effective Date of 1974 Amendment

Pub. L. 93–463section 418 of Pub. L. 93–463section 2 of this titleFor effective date of amendment by , see , set out as a note under .

Effective Date

section 1 of this titleFor effective date of section, see section 13 of act , set out as an Effective Date of 1936 Amendment note under .