[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: 17CFR31.25]

[Page 379]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 31_LEVERAGE TRANSACTIONS--Table of Contents
 
Sec.  31.25  Bid and ask prices; carrying charges.

    (a) A leverage transaction merchant must use the same bid price at 
any particular point in time to purchase a leverage contract from a 
leverage customer (initiation of a short transaction) and to repurchase 
a leverage contract from a leverage customer (close-out of a long 
transaction), and a leverage transaction merchant must use the same ask 
price at any particular point in time to sell a leverage contract to a 
leverage customer (initiation of a long transaction) and to resell a 
leverage contract to a leverage customer (close-out of a short 
transaction), with respect to contracts involving the same leverage 
commodity.
    (b) A leverage transaction merchant must apply a carrying charge 
rate on a short leverage contract that is within one percent per annum 
of the carrying charge rate that it applies to a long leverage contract. 
In the case of a short leverage contract, the leverage customer must be 
credited with carrying charges computed on the total initial value of 
the contract, using the bid price when the contract was executed, plus 
any margin deposits made by the leverage customer in connection with the 
contract, and the same carrying charge rate must be applied to the total 
initial value of the contract and to the margin deposits. In the case of 
a long leverage contract, the leverage customer must be assessed 
carrying charges only on the unpaid balance of the contract, which is 
the total initial value of the contract, using the ask price when the 
contract was executed, minus any margin deposits made in connection with 
the contract: Provided, however, That in the case of a long leverage 
contract, interest on unpaid carrying charges may be assessed at the 
same rate as the interest rate component of the carrying charges and, if 
such an assessment were made and if the leverage transaction merchant 
offers short leverage contracts, payment of interest on carrying charges 
that have been credited to the leverage customer's account and not 
withdrawn must be made at the same rate as the interest rate component 
of the carrying charges.

[50 FR 36416, Sept. 6, 1985, as amended at 54 FR 41082, Oct. 5, 1989]