[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR1.47]

[Page 92-93]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 1_GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT--Table 
of Contents
 
Sec.  1.47  Requirements for classification of purchases or sales of 
contracts for future delivery as bona fide hedging under 
Sec.  1.3(z)(3) of the regulations.

    (a) Any person who wishes to avail himself of the provisions of 
Sec.  1.3(z)(3) of the regulations and to make purchases or sales of any 
commodity for future delivery in any commodity in excess of trading and 
position limits then in effect pursuant to section 4a of the Act shall 
file statement with the Commission in conformity with the requirements 
of this section. All or a specified portion of the transactions and 
positions described in these statements shall not be considered as bona 
fide hedging if such person is so notified by the Commission:
    (1) Within 30 days after the Commission is furnished the information 
required under paragraph (b) of this section, or
    (2) Within 10 days after the Commission is furnished with the 
information required under paragraph (c) of this section.

The Commission may request the person notified to file specific 
additional information with the Commission to support a determination 
that all, or the specified portion, of the transactions and positions be 
considered as bona fide hedging transactions and positions. In such 
cases, the Commission shall consider all information so filed and, by 
notice to such person, shall specify the extent to which the Commission 
has determined that the transactions and positions may be classified as 
bona fide hedging. In no case shall transactions and positions described 
be considered as bona fide hedging if they exceed the levels specified 
in paragraph (d) of this section.
    (b) Initial statement. Initial statements concerning the 
classification of transactions and positions as bona fide hedging 
pursuant to Sec.  1.3(z)(3) shall be filed with the Commission at least 
30 days in advance of the date that such transactions or positions would 
be in excess of limits then in effect pursuant to section 4a of the Act. 
Such statements shall:
    (1) Describe the transactions and positions for future delivery and 
the offsetting cash positions;

[[Page 93]]

    (2) Set forth in detail information which will demonstrate that the 
purchases and sales are economically appropriate to the reduction of 
risk exposure attendant to the conduct and management of a commercial 
enterprise;
    (3) Contain, and upon request of the Commission be supplemented by, 
such other information which is necessary to enable the Commission to 
make a determination whether the particular purchases and sales for 
future delivery fall within the scope of those described in section 
1.3(z)(1) of the regulations;
    (4) Include a statement concerning the maximum size of positions for 
future delivery (both long and short) which will be acquired any time 
during the next fiscal year or marketing season of the person filing or 
on whose behalf the filing is made.
    (5) In addition: statements filed by an agent, concerning a futures 
position which would offset a cash position which the agent does not own 
or has not contracted to buy or sell, shall contain information 
describing all contractual arrangements between the agent filing and the 
person who owns the commodity or holds the cash market commitment being 
offset;
    (6) Statements concerning futures positions to be acquired against 
unsold anticipated production or unfilled anticipated requirements for 
manufacturing, processing or feeding shall also include the information 
required under Sec.  1.48 of the regulations.
    (c) Supplemental reports. Whenever the purchases or sales which a 
person wishes to classify as bona fide hedging shall exceed the amount 
provided in the person's most recent filing pursuant to this section or 
the amount previously specified by the Commission pursuant to paragraph 
(a) of this section, such person shall file with the Commission a 
statement which updates the information provided in the person's most 
recent filing and provides the reasons for this change at least ten days 
in advance of the date that person wishes to exceed those amounts.
    (d) Maximum purchases and sales. Purchases and sales for future 
delivery considered bona fide hedging pursuant to Sec.  1.3(z)(3) of the 
regulations shall at no time exceed the lesser of:
    (1) The value fluctuation equivalent (in terms of the commodity for 
future delivery) of the current cash position described in the 
information most recently filed pursuant to this section, or
    (2) The maximum level of long or short open positions provided in 
the information most recently filed pursuant to this section or most 
recently specified by the Commission pursuant to paragraph (a) of this 
section.
    (e) Updated reports. Reports updating the information required 
pursuant to this section also shall be filed with the Commission upon 
specific request.

(Approved by the Office of Management and Budget under control number 
3038-0013)

[42 FR 42751, Aug. 8, 1977, as amended at 46 FR 63035, Dec. 30, 1981]