[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: 17CFR31.23]

[Page 378-379]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 31_LEVERAGE TRANSACTIONS--Table of Contents
 
Sec.  31.23  Limited right to rescind first leverage contract.

    (a) A leverage customer who is entering a leverage contract or 
contracts for the first time with a particular leverage transaction 
merchant may rescind such contract or contracts during a period of not 
less than three business days from and including the day on which the 
leverage customer receives the Confirmation Statement pursuant to the 
following provisions:
    (1) Such customer may be assessed actual price losses accruing to 
the customer's position from the time at which the customer entered into 
a leverage contract to the time that the leverage contract was 
rescinded. Such losses do not extend to any other charges or fees, such 
as account initiation, carrying, margin or account termination;
    (2) In the case of a leverage customer whose initial leverage 
transaction was a purchase of a leverage contract from a leverage 
transaction merchant (long leverage contract), actual losses accruing to 
the position may be calculated only by subtracting the ask price of the 
leverage contract offered by the leverage transaction merchant at the 
time when the leverage contract was rescinded from the ask price at 
which the leverage contract was purchased by the leverage customer and 
which appears on the Confirmation Statement. In the case of a leverage 
customer whose initial leverage transaction was a sale of a leverage 
contract to a leverage transaction merchant (short leverage contract), 
actual losses are calculated by subtracting the bid price at which the 
leverage contract was sold by the leverage customer and which appears on 
the Confirmation Statement

[[Page 379]]

from the bid price of the leverage contract offered by the leverage 
transaction merchant at the time when the leverage contract was 
rescinded.
    (3) Such customer may rescind the contract by telegram sent to the 
leverage transaction merchant at the address provided on the 
confirmation statement, or by telephone to a telephone number provided 
by the leverage transaction merchant on the Confirmation Statement with 
immediate written affirmation of rescission by telegram, certified 
letter or at least equivalent means.
    (b) A leverage transaction merchant must make complete refund of all 
monies received except for actual price losses as calculated in 
paragraph (a)(2) of this section, to the leverage customer who has 
rescinded a contract pursuant to paragraph (a) of this section within 24 
hours of notification of rescission.

(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]