[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR31.18]

[Page 377]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 31_LEVERAGE TRANSACTIONS--Table of Contents
 
Sec.  31.18  Margin calls.

    (a) No leverage transaction merchant shall liquidate a leverage 
contract because of a margin deficiency without effecting personal 
contact with the leverage customer. If a leverage transaction merchant 
is unable to effect personal contact with a leverage customer, a 
telegram sent to the leverage customer at the address furnished by the 
customer to the leverage transaction merchant shall be sufficient 
contact.
    (b) A leverage transaction merchant shall allow a leverage customer 
a reasonable time after contact is effected in which to respond to a 
margin call. Twenty-four hours, excluding Saturdays, Sundays, and 
holidays, will be a reasonable time: Provided, however, That in the 
event the leverage customer's leverage account equity falls below 50 
percent of aggregate minimum margin with respect to the leverage 
contracts therein, the leverage transaction merchant may liquidate 
sufficient contracts to restore minimum margin without prior notice: 
Provided, further, That the leverage customer must be notified of such 
liquidation within no more than 24 hours thereafter and must be 
permitted to re-establish his contract for a period of 5 business days 
at the then prevailing bid price in the case of a long leverage contract 
and at the then prevailing ask price in the case of a short leverage 
contract, without commissions, fees or other mark-ups or charges. If a 
termination charge was assessed by the leverage transaction merchant 
upon liquidation of a contract in accordance with the first proviso of 
this paragraph, such a charge must be rescinded upon re-establishment of 
the contract in accordance with the second proviso of this paragraph.
    (c) A record of all margin calls, including all contacts with 
leverage customers and attempts to contact leverage customers with 
respect to such calls, shall be kept by the leverage transaction 
merchant in accordance with the provisions of Sec.  31.14.
    (d) Leverage contracts liquidated by a leverage transaction merchant 
because of a margin deficiency must be liquidated in declining order of 
loss, commencing with the leverage contract with the greatest loss.

(Secs. 8a(5) and 19 of the Commodity Exchange Act, as amended, 7 U.S.C. 
12a(5) and 23 (1982))

[49 FR 5540, Feb. 13, 1984, as amended at 50 FR 34, Jan. 2, 1985; 50 FR 
36416, Sept. 6, 1985]