SSB 3195

Senate
Study
Bill
3195
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
DAWSON)
A
BILL
FOR
An
Act
regulating
designated
contract
markets
and
providing
1
penalties.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
NEW
SECTION
.
68B.9
Prohibition
on
buying
1
or
selling
event-driven
contracts
relating
to
legislative
or
2
governmental
actions.
3
A
public
employee,
public
official,
or
lobbyist,
or
an
4
immediate
family
member
of
the
public
employee,
public
5
official,
or
lobbyist,
shall
not
buy
or
sell
an
event-driven
6
contract
on
a
designated
contract
market
relating
to
state
or
7
local
legislative
actions
or
other
governmental
actions.
As
8
used
in
this
section,
“event-driven
contract”
and
“designated
9
contract
market”
mean
the
same
as
defined
in
section
99H.1.
10
Sec.
2.
Section
68B.34,
Code
2026,
is
amended
to
read
as
11
follows:
12
68B.34
Additional
penalty.
13
In
addition
to
any
penalty
contained
in
any
other
provision
14
of
law,
a
person
who
knowingly
and
intentionally
violates
a
15
provision
of
sections
68B.2A
through
68B.8
68B.9
,
sections
16
68B.22
through
68B.24
,
or
sections
68B.35
through
68B.38
17
is
guilty
of
a
serious
misdemeanor
and
may
be
reprimanded,
18
suspended,
or
dismissed
from
the
person’s
position
or
otherwise
19
sanctioned.
20
Sec.
3.
NEW
SECTION
.
99H.1
Definitions.
21
1.
“Consumer”
means
an
individual
who
is
a
resident
of
this
22
state.
23
2.
“Designated
contract
market”
means
a
digital
marketplace
24
for
trading
event-driven
contracts
that
is
also
regulated
by
25
the
federal
commodity
futures
trading
commission.
26
3.
“Economic
indicators”
means
a
statistic
or
data
point
27
about
an
economic
activity
that
allows
an
analyst
to
assess
28
current
economic
performance.
29
4.
“Event-driven
contract”
means
a
financial
derivative
30
traded
on
a
designated
contract
market
that
provides
a
fixed
31
binary
payout
based
upon
the
occurrence
or
nonoccurrence
of
a
32
specific
future
event
that
is
contingent
upon
and
determined
33
solely
by
the
definitive
outcome
of
a
verifiable
specific
event
34
or
external
measure
rather
than
being
based
upon
the
continuous
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fluctuation
of
a
security
price,
commodity
value,
or
interest
1
rate
that
may
or
may
not
correlate
with
traditional
market
2
prices
or
broad
economic
measures.
An
“event-driven
contract”
3
is
limited
to
those
financial
derivatives
that
provide
a
fixed
4
binary
payout
related
to
sporting
activities,
lotteries,
5
elections,
legislative
actions,
and
economic
indicators.
6
5.
“Settlement
source”
means
an
entity
from
which
the
7
designated
contract
market
obtains
or
sources
information
for
8
the
purpose
of
determining
the
outcome
of
an
event-driven
9
contract.
10
6.
“Sporting
activities”
means
the
outcome
of
a
sporting
11
event,
outcomes
with
the
event,
or
outcomes
surrounding
the
12
event.
13
7.
“Statewide
telephone
number”
means
a
telephone
number
14
authorized
by
the
department
of
health
and
human
services
that
15
provides
gambling
information.
16
8.
“Trade”
means
a
format
in
which
a
trader
submits
an
17
offer
to
buy
a
position
on
a
designated
contract
market
at
a
18
specific
price
or
range
of
prices
or
offers
to
sell
a
position
19
at
a
specific
price
or
range
of
prices,
with
market
prices
20
determined
through
the
matching
of
the
offers.
21
9.
“Trader”
means
any
person
buying
or
selling
event-driven
22
contracts
on
a
designated
contract
market.
23
Sec.
4.
NEW
SECTION
.
99H.2
Age
restrictions.
24
1.
A
designated
contract
market
shall
not
permit
a
consumer
25
under
twenty-one
years
of
age
to
register
or
otherwise
open
an
26
account,
trade,
or
be
a
trader
of
an
event-driven
contract
on
27
the
designated
contract
market.
28
2.
If
a
designated
contract
market
has
inadvertently
29
permitted
a
consumer
under
twenty-one
years
of
age
to
register,
30
trade,
or
otherwise
become
a
trader,
the
designated
contract
31
market
shall
immediately
suspend
the
account,
close
all
32
positions
of
the
account,
pay
out
to
the
consumer
any
funds
in
33
the
account,
and
prohibit
the
consumer
under
twenty-one
years
34
of
age
from
trading
until
the
consumer
has
attained
twenty-one
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years
of
age.
1
Sec.
5.
NEW
SECTION
.
99H.3
Exclusions
from
trading.
2
1.
A
designated
contract
market
shall
maintain
and
enforce
3
policies
to
exclude
certain
persons
from
trading
including
the
4
following:
5
a.
(1)
A
consumer
who
voluntarily
self-excludes
from
6
trading.
7
(2)
A
designated
contract
market
shall
establish
a
process
8
to
allow
a
consumer
to
voluntarily
self-exclude
being
a
trader.
9
The
process
shall
provide
that
an
initial
request
by
a
consumer
10
to
be
voluntarily
excluded
shall
be
for
a
period
of
five
years
11
or
life
and
any
subsequent
request
following
any
five-year
12
period
shall
be
for
a
period
of
five
years
or
life.
The
process
13
established
shall
also
require
a
consumer
requesting
to
be
14
voluntarily
excluded
be
provided
information
compiled
by
the
15
department
of
health
and
human
services
on
gambling
treatment
16
options.
The
state
and
any
designated
contract
market
shall
17
not
be
liable
to
any
person
for
any
claim
which
may
arise
from
18
this
process.
In
addition
to
any
other
penalty
provided
by
19
law,
any
money
or
thing
of
value
that
has
been
obtained
by,
20
or
is
owed
to,
a
voluntarily
excluded
consumer
as
a
result
21
of
trades
made
by
the
consumer
after
the
consumer
has
been
22
voluntarily
excluded
shall
be
forfeited
by
the
consumer
and
23
shall
be
credited
to
the
general
fund
of
the
state.
24
(3)
If
a
consumer
voluntarily
self-excludes,
the
designated
25
contract
market
must
immediately
block
the
access
of
the
26
consumer
to
trade
and
take
reasonable
steps
to
prevent
the
27
consumer
from
creating
new
accounts.
28
b.
Any
officer,
director,
employee,
or
agent
of
the
29
designated
contract
market,
or
any
family
member
of
such
a
30
person.
31
c.
Any
officer,
director,
employee,
or
agent
of
a
source
32
settlement
provider,
or
any
family
member
of
such
a
person.
33
d.
Any
person
who
has
insider
information
on
a
particular
34
event-driven
contract.
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e.
Any
person
prohibited
pursuant
to
section
68B.9.
1
2.
Any
exclusion
shall
be
enforced
by
the
designated
2
contract
market
until
the
purpose
for
the
exclusion
no
longer
3
applies.
4
Sec.
6.
NEW
SECTION
.
99H.4
Settlement
sources.
5
1.
A
designated
contract
market
shall
maintain
a
6
comprehensive
list
of
all
settlement
sources
that
are
used
to
7
determine
outcomes
of
the
event-driven
contracts
and
shall
make
8
the
list
readily
accessible
to
consumers
at
all
stages
of
the
9
registration
process.
10
2.
Each
designated
contract
market
shall
display
on
every
11
section
of
the
internet
site
of
the
designated
contract
market
12
in
which
a
trade
may
be
made
the
settlement
source
for
the
13
settlement
of
the
trade.
14
3.
A
designated
contract
market
shall
not
settle
any
trade
15
based
upon
proprietary
or
confidential
information.
16
Sec.
7.
NEW
SECTION
.
99H.5
Limitations
on
trading.
17
1.
Each
designated
contract
market
shall
implement
and
18
adhere
to
responsible
trading
measures
to
protect
consumers
who
19
may
be
at
risk
of
at-risk
trading
behaviors.
20
2.
The
measures
shall
include
all
of
the
following:
21
a.
Allowing
a
consumer
to
set
daily,
weekly,
or
monthly
22
limits
on
the
amount
that
can
be
deposited
into
an
account
or
23
spent
on
trading.
24
b.
Implementing
features
that
allow
consumers
to
limit
the
25
amount
of
time
spent
on
the
internet
site
of
the
designated
26
contract
market,
including
periodic
notifications
that
remind
27
consumers
of
how
long
the
consumer
has
been
active
on
the
28
designated
contract
market,
and
the
net
winnings
or
losses
29
during
the
session
of
trading.
30
c.
Posting
clearly
the
statewide
telephone
number
and
other
31
extensive
responsible
gaming
features
including
the
ability
to
32
self-exclude
pursuant
to
section
99H.3.
33
d.
Requiring
all
advertisements
and
marketing
materials
to
34
include
an
at-risk
trading
message
and
the
statewide
telephone
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number.
1
Sec.
8.
NEW
SECTION
.
99H.6
Advertising.
2
1.
Every
designated
contract
market
shall
comply
with
the
3
advertising
standards
set
forth
in
this
section.
4
2.
Advertisements
by
a
designated
contract
market
shall
not
5
do
the
following:
6
a.
Send
push
notifications
to
consumers
which
pertain
to
7
bonuses
on
trades
the
consumer
has
not
taken
a
position
on.
8
b.
Depict
persons
under
twenty-one
years
of
age,
except
9
incidentally.
10
c.
Target
consumers
under
twenty-one
years
of
age.
11
d.
Target
consumers
in
a
manner
that
is
calculated
to
reach
12
consumers
that
have
voluntarily
self-excluded
or
have
engaged
13
in
problem
gambling.
14
e.
Imply
trading
is
risk-free
or
use
similar
language.
15
f.
Imply
endorsement
by
the
state.
16
3.
Advertisements
by
a
designated
contract
market
shall
do
17
the
following:
18
a.
Be
truthful
and
not
misleading.
19
b.
Include
the
statewide
telephone
number
that
is
20
visible
for
the
entire
duration
of
the
advertisement,
or
21
in
circumstances
where
the
advertisement
is
auditory,
the
22
statewide
telephone
number
shall
be
stated
at
the
beginning
and
23
the
end
of
the
advertisement.
24
c.
Provide
consumers
with
a
readily
accessible
way
to
opt
25
out
of
direct
marketing,
upon
the
request
of
the
consumer.
26
4.
If
the
designated
contract
market
offers
bonuses,
free
27
credits,
referral
rewards,
or
other
promotions
to
consumers,
28
the
terms
and
conditions
of
the
offers
must
be
described
in
29
plain
language.
30
5.
If
a
designated
contract
market
uses
a
third
party
to
31
promote
the
designated
contract
market,
the
designated
contract
32
market
is
responsible
for
ensuring
the
third
party
complies
33
with
the
advertising
requirements
of
this
section.
34
Sec.
9.
NEW
SECTION
.
99H.7
Extending
credit.
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A
designated
contract
market
shall
not
permit
a
consumer
to
1
use
a
credit
card
or
other
credit-based
product
to
add
funds
2
to
an
account
of
the
consumer.
3
Sec.
10.
NEW
SECTION
.
99H.8
Restrictions
on
market
making.
4
1.
A
designated
contract
market
shall
not
offer
an
5
event-driven
contract
in
this
state
if
the
designated
contract
6
market
includes
as
a
liquidity
provider
or
market
maker
any
7
entity
who
engages
in
gaming
activities
in
the
normal
course
of
8
business,
whether
within
or
outside
the
state.
9
2.
The
prohibition
in
subsection
1
applies
to
any
affiliated
10
entities,
subsidiaries,
parent
companies,
joint
ventures,
11
partnerships,
agents,
employees,
or
any
other
entity
acting
at
12
the
direction
of,
or
in
cooperation
with,
or
for
the
financial
13
benefit
of
the
entity
acting
as
a
liquidity
provider
or
market
14
maker.
15
Sec.
11.
NEW
SECTION
.
99H.9
Insider
trading
and
market
16
manipulation.
17
1.
A
designated
contract
market
shall
implement
18
commercially
reasonable
and
technically
feasible
measures
19
to
detect
and
prevent
fraudulent
or
manipulative
conduct
by
20
traders.
21
2.
If
the
designated
contract
market
detects
potential
22
manipulation
by
traders,
the
designated
contract
market
23
shall
notify
the
attorney
general,
and,
if
appropriate,
law
24
enforcement.
25
Sec.
12.
NEW
SECTION
.
99H.10
Penalties
——
injunction.
26
1.
The
attorney
general
shall
administer
this
chapter
and
27
enforce
the
provisions
of
this
chapter.
28
2.
Any
designated
contract
market
that
violates
any
29
provision
of
this
chapter
is
subject
to
civil
penalties,
not
to
30
exceed
ten
thousand
dollars,
for
each
violation.
31
3.
If
the
attorney
general
determines
the
designated
32
contract
market
engaged
in
a
persistent
course
of
conduct
in
33
violation
of
this
chapter,
the
attorney
general
may
impose
a
34
civil
penalty
not
to
exceed
fifty
thousand
dollars
for
each
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violation.
1
4.
a.
Whenever
the
attorney
general
believes
that
a
2
designated
contract
market
has
engaged
in
a
persistent
course
3
of
conduct
in
violation
of
this
chapter,
the
attorney
general
4
may
seek
injunctive
relief
or
a
temporary
restraining
order
5
pending
the
outcome
of
an
enforcement
proceeding
under
this
6
chapter.
In
such
an
action,
any
injunctive
relief
or
temporary
7
restraining
order
granted
shall
be
governed
by
the
applicable
8
Iowa
rules
of
civil
procedure.
9
b.
Where
a
designated
contract
market
continues
to
operate
10
in
the
state
after
an
order
has
been
granted
under
paragraph
11
“a”
,
the
designated
contract
market
shall
incur
a
civil
12
penalty
in
the
amount
of
one
million
dollars
for
each
day
the
13
designated
contract
market
is
operating
in
violation
of
the
14
order.
15
5.
Nothing
in
this
section
shall
be
construed
to
preclude
16
criminal
prosecution
under
any
other
law.
17
Sec.
13.
NEW
SECTION
.
99H.11
Internal
controls
——
18
reporting.
19
1.
Prior
to
permitting
consumers
to
trade
on
a
designated
20
contract
market,
the
designated
contract
market
shall
provide
21
the
attorney
general
with
a
description
of
the
internal
22
controls
implemented
by
the
designated
contract
market
to
23
comply
with
this
chapter
including
but
not
limited
to
age
24
verification,
measures
to
identify
the
traders,
prevention
of
25
insider
trading
or
market
manipulation,
ability
to
receive
26
and
act
upon
tips
related
to
insider
trading
or
market
27
manipulation,
standards
used
to
monitor
event-driven
contracts
28
and
restrictions
placed
on
known
violators,
monitoring
trades
29
within
the
state
boundaries,
prevention
of
unauthorized
30
withdrawals
from
the
account
of
a
trader,
the
manner
31
event-driven
contract
funds
are
segregated
from
other
funds,
32
and
the
protection
of
any
personal
and
private
information
of
a
33
trader.
34
2.
After
receiving
the
information
provided
in
subsection
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1,
the
attorney
general
shall
have
thirty
days
to
approve
1
trading
on
the
designated
contract
market
by
consumers,
or
2
to
request
additional
information,
and
if
such
additional
3
information
is
requested,
the
thirty-day
time
period
shall
4
begin
anew.
5
3.
If,
after
the
approval
of
the
internal
controls
in
6
subsection
1,
the
designated
contract
market
changes
any
of
7
the
approved
internal
controls,
the
designated
contract
market
8
shall
be
required
to
submit
the
changes
to
the
attorney
general
9
for
review
at
least
fifteen
days
prior
to
implementing
any
10
changes
to
the
internal
controls.
11
Sec.
14.
NEW
SECTION
.
99H.12
Rules.
12
The
attorney
general
shall
adopt
rules
pursuant
to
chapter
13
17A
to
administer
this
chapter.
14
EXPLANATION
15
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
16
the
explanation’s
substance
by
the
members
of
the
general
assembly.
17
This
bill
regulates
designated
contract
markets.
18
The
bill
defines
“designated
contract
markets”
(market)
to
19
mean
a
digital
marketplace
for
trading
event-driven
contracts
20
that
is
also
regulated
by
the
federal
commodity
futures
trading
21
commission.
22
The
bill
defines
“event-driven
contracts”
(contract)
to
23
mean
a
financial
derivative
traded
on
a
designated
contract
24
market
that
provides
a
fixed
binary
payout
based
upon
the
25
occurrence
or
nonoccurrence
of
a
specific
future
event
that
is
26
contingent
upon
and
determined
solely
by
the
definitive
outcome
27
of
a
verifiable
specific
event
or
external
measure
rather
than
28
being
based
upon
the
continuous
fluctuation
of
a
security
29
price.
An
“event-driven
contract”
is
limited
under
the
bill
30
to
those
financial
derivatives
that
provide
a
fixed
binary
31
payout
related
to
sporting
activities,
lotteries,
elections,
32
legislative
actions,
and
economic
indicators.
33
The
bill
requires
a
market
to
prohibit
a
person
under
21
34
years
of
age
to
trade
contracts
on
the
market,
and
to
implement
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controls
to
identify
such
persons.
1
The
bill
requires
a
market
to
maintain
and
enforce
policies
2
to
exclude
certain
persons
from
trading
including
allowing
3
persons
to
self-exclude
from
trading
contracts.
The
other
4
persons
required
to
be
excluded
from
trading
on
the
market
5
include
(1)
officers,
employees,
and
family
members
of
the
6
officers
and
employees
of
the
market,
(2)
any
person
with
7
inside
information
on
a
particular
contract,
(3)
any
public
8
employee,
public
official,
lobbyist,
and
family
member
of
such
9
persons
trading
contracts
related
to
legislation
or
other
10
governmental
actions,
and
(4)
officers,
employees,
and
family
11
members
of
the
officers
and
employees
of
the
settlement
source.
12
The
bill
defines
“settlement
source”
to
mean
an
entity
from
13
which
the
market
obtains
or
sources
information
for
the
purpose
14
of
determining
the
outcome
of
a
contract.
15
The
bill
requires
a
market
to
maintain
a
comprehensive
list
16
of
all
settlement
sources
that
are
used
to
determine
outcomes
17
of
the
contracts
and
is
required
to
make
the
list
readily
18
accessible
to
persons.
19
The
bill
prohibits
a
market
from
settling
a
trade
based
upon
20
proprietary
or
confidential
information.
21
The
bill
requires
each
market
to
implement
and
adhere
to
22
responsible
trading
measures
to
protect
persons
who
may
be
23
at
risk
of
at-risk
trading
behaviors.
The
measures
include
24
(1)
allowing
a
person
to
set
personal
limits
on
trading,
(2)
25
implementing
features
that
allow
persons
to
view
the
amount
of
26
time
spent
trading,
(3)
posting
clearly
the
statewide
telephone
27
number
approved
by
the
department
of
health
and
human
services
28
related
to
gambling,
and
(4)
requiring
all
advertisements
to
29
include
an
at-risk
trading
message
and
the
statewide
telephone
30
number.
31
The
bill
places
limitations
on
advertising
by
the
markets
32
including
limiting
push
notifications,
depictions
of
persons
33
under
21
years
of
age,
targeting
certain
at-risk
consumers,
34
implying
trading
is
risk-free,
and
implying
endorsement
by
the
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state.
1
The
bill
requires
any
offers,
bonuses,
free
credits,
2
referral
rewards,
or
other
promotions
offered
to
persons
be
3
described
in
plain
language.
4
If
a
market
uses
a
third
party
for
advertising,
the
bill
5
specifies
the
market
is
responsible
for
ensuring
the
third
6
parties
comply
with
the
advertising
requirements
of
the
bill.
7
The
bill
prohibits
a
market
from
allowing
a
person
to
use
a
8
credit
card
or
other
credit-based
product
to
add
funds
to
any
9
account
with
the
market.
10
The
bill
prohibits
a
market
to
offer
a
contract
if
the
11
market
includes
as
a
liquidity
provider
or
market
maker,
any
12
entity
who
engages
in
gaming
activities
in
the
normal
course
of
13
business,
whether
within
or
outside
the
state.
14
A
market
is
also
required
to
implement
commercially
15
reasonable
and
technically
feasible
measures
to
detect
and
16
prevent
fraudulent
or
manipulative
conduct
by
traders.
17
The
attorney
general
is
designated
to
administer
and
enforce
18
the
provisions
of
the
bill.
19
Any
market
that
violates
the
bill
is
subject
to
civil
20
penalties,
not
to
exceed
$10,000,
for
each
violation.
21
If
the
attorney
general
determines
the
market
engaged
in
22
a
persistent
course
of
conduct
in
violation
of
the
bill,
the
23
attorney
general
may
impose
a
civil
penalty
not
to
exceed
24
$50,000
for
each
violation.
25
Whenever
the
attorney
general
believes
that
a
market
has
26
engaged
in
a
persistent
course
of
conduct
in
violation
of
the
27
bill,
the
attorney
general
may
seek
injunctive
relief
or
a
28
temporary
restraining
order.
29
In
situations
where
a
designated
contract
market
continues
30
to
operate
after
an
injunction
or
a
temporary
order
has
been
31
issued,
the
market
shall
incur
a
civil
penalty
in
the
amount
of
32
$1
million
for
each
day
the
market
is
operating
in
violation
33
of
the
order.
34
A
public
employee,
public
official,
or
lobbyist
who
trades
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state
or
local
legislative
actions
or
other
governmental
1
actions
on
the
market
is
guilty
of
a
serious
misdemeanor,
2
and
may
be
dismissed
from
the
person’s
position
or
otherwise
3
sanctioned.
4
Prior
to
permitting
persons
to
trade
on
a
market
in
this
5
state,
the
market
shall
provide
the
attorney
general
with
6
a
description
of
the
internal
controls
implemented
by
the
7
designated
contract
market
to
comply
with
the
bill
including
8
but
not
limited
to
age
verification,
measures
to
identify
the
9
traders,
prevention
of
insider
trading
or
market
manipulation,
10
ability
to
receive
and
act
upon
tips
related
to
insider
trading
11
or
market
manipulation,
monitoring
trades
within
the
state
12
boundaries,
standards
used
to
monitor
event-driven
contracts
13
and
restrictions
placed
by
known
violators,
prevention
of
14
unauthorized
withdrawals
from
the
account
of
a
trader,
the
15
manner
contract
funds
are
segregated
from
other
funds,
and
the
16
protection
of
any
personal
and
private
information
of
a
trader.
17
The
attorney
general
is
required
to
adopt
rules
pursuant
to
18
Code
chapter
17A
to
administer
the
bill.
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