COMMISSION OVERSIGHT; DEFICIENCY ORDERS.

SEC. 202. COMMISSION OVERSIGHT; DEFICIENCY ORDERS. (a) In General.— The Act is amended by inserting after section 8d (7 U.S.C. 12d) the following new section: “SEC. 8e. COMMISSION OVERSIGHT; DEFICIENCY ORDERS. “(a) Assessments.— At least once every two years, to the extent practicable, the Commission shall assess whether the trade monitoring system of each contract market satisfies section 5a(b). “(b) Deficiency Orders.— “(1) Causes.—The Commission may issue a proposed deficiency order in accordance with paragraph (2), or take such other administrative or enforcement action as the Commission determines is appropriate, if, based on its assessment or on other information, the Commission at any time has reason to believe that a contract market’s trade monitoring system implemented pursuant to section 5a(b) does not satisfy one or more of the requirements of such section. “(2) Contents.— A proposed deficiency order issued under this subsection shall specify— “(A) the deficiencies the Commission has reason to believe exist in the trade monitoring system of the contract market and a statement of reasons supporting the Commission’s belief that those deficiencies exist; “(B) the corrective action that the Commission believes that the contract market must take and an acceptable timetable for such corrective action; and “(C) a date, not less than twenty days from the date of issuance of the proposed deficiency order, when such deficiency order will become final, subject to subsection (d). “(3) Remedies.— On becoming final, the Commission deficiency order may— “(A) require the contract market to— “(i) institute appropriate improvements in its trade monitoring system necessary to correct the deficiencies noted therein; “(ii) satisfy stated objective performance criteria to correct such deficiencies; “(iii) upgrade or reconfigure existing systems for collecting or processing relevant data on trading and trader or broker activity, including, where appropriate, the commitment of additional resources; or “(B) revoke any exemption of the contract market from the regulations prohibiting the privilege of dual trading under section 4j(a), if the deficiency noted in such deficiency order relates to— “(i) the audit trail system the contract market is required to maintain under paragraph (2), (3), or (4) of section 5a(b); or “(ii) the prevention, detection, or disciplining of violations attributable to such trading at such contract market, subject to the standards, exceptions, and duration provisions of section 4j(a); or 106 STAT. 3599 “(C) take any combination of the actions described in subparagraphs (A) and (B). “(4) Removal.— If the Commission finds, after notice and opportunity for a hearing on the record prior to such deficiency order becoming final, that a named officer, director, committee member, or employee of such contract market has willfully— “(A) violated this Act, the rules or regulations of the Commission thereunder, or the rules of such contract market; “(B) abused the authority of such person; or “(C) without reasonable justification or excuse, failed to enforce compliance with any provision of the rules of such contract market by any member or person associated with a member thereof, the Commission may issue a deficiency order under this section to remove such officer, director, committee member, or employee. “(5) Designation as contract market.—Notwithstanding section 6, during the period that a proposed or final deficiency order under this section is in effect, the Commission may refrain from approving any application for designation as a contract market made by the board of trade whose contract market is the subject of such deficiency order. “(6) Delegation.—The Commission shall not delegate the authority to issue deficiency orders under this subsection. “(c) Rescission, Modification, or Delay of Deficiency Orders.—Before any proposed deficiency order issued by the Commission under subsection (b) may become final, the Commission shall— “(1) provide the affected contract market with an opportunity for a hearing through submission of written data, views, or arguments and, under terms set by the Commission at the request of the contract market, through an oral presentation of views and comments to the Commission, in order to petition the Commission to rescind, modify, or delay such deficiency order; and “(2) rule on such petition, not less than twenty days before the deficiency order takes effect, making findings, as appropriate, as to whether— “(A) the deficiencies cited by the Commission have been corrected or are being corrected under an expeditious timetable acceptable to the Commission; “(B) the trade monitoring system of the contract market is deficient as noted in the deficiency order; or “(C) the timetable for corrective action by the contract market in the proposed deficiency order, and the particular corrective action proposed, is appropriate in light of the deficiencies noted and the purposes of this Act. “(d) Penalties.— Violation of a final deficiency order issued under subsection (c) shall be considered a violation of an order of the Commission for purposes of— “(1) establishing liability and assessing penalties against a contract market or any director, officer, agent, or employee thereof under section 6b or 6c; or “(2) initiating proceedings under section 5b or 6(a). “(e) Judicial Review.— 106 STAT. 3600 “(1) Persons.—Any person, other than a contract market, aggrieved by a deficiency order issued under subsection (b)(4), may obtain review of such deficiency order when issued by the Commission under the terms and conditions in section 6(b). “(2) Contract markets.—Any contract market that has petitioned the Commission to rescind, modify, or delay any proposed deficiency order issued under subsection (b) may obtain judicial review of any final such deficiency order only in the United States Court of Appeals for the circuit in which the party seeking review resides or has its principal place of business, or in the United States Court of Appeals for the District of Columbia Circuit, under the standards applicable to rulemaking proceedings under section 553 of title 5, United States Code.”.