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114th Congress   }                                   {          Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {         114-134
======================================================================
 
                     COMMODITY END-USER RELIEF ACT

                                _______
                                

  May 29, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Conaway, from the Committee on Agriculture, submitted the following

                              R E P O R T

                        [To accompany H.R. 2289]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Agriculture, to whom was referred the bill 
(H.R. 2289) to reauthorize the Commodity Futures Trading 
Commission, to better protect futures customers, to provide 
end-users with market certainty, to make basic reforms to 
ensure transparency and accountability at the Commission, to 
help farmers, ranchers, and end-users manage risks, to help 
keep consumer costs low, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Commodity End-User Relief Act''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

                     TITLE I--CUSTOMER PROTECTIONS

Sec. 101. Enhanced protections for futures customers.
Sec. 102. Electronic confirmation of customer funds.
Sec. 103. Notice and certifications providing additional customer 
protections.
Sec. 104. Futures commission merchant compliance.
Sec. 105. Certainty for futures customers and market participants.

         TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS

Sec. 201. Extension of operations.
Sec. 202. Consideration by the Commodity Futures Trading Commission of 
the costs and benefits of its regulations and orders.
Sec. 203. Division directors.
Sec. 204. Office of the Chief Economist.
Sec. 205. Procedures governing actions taken by Commission staff.
Sec. 206. Strategic technology plan.
Sec. 207. Internal risk controls.
Sec. 208. Subpoena duration and renewal.
Sec. 209. Applicability of notice and comment requirements of the 
Administrative Procedure Act to guidance voted on by the Commission.
Sec. 210. Judicial review of Commission rules.
Sec. 211. GAO study on use of Commission resources.
Sec. 212. Disclosure of required data of other registered entities.
Sec. 213. Report on status of any application of metals exchange to 
register as a foreign board of trade; deadline for action on 
application.

                       TITLE III--END-USER RELIEF

Sec. 301. Relief for hedgers utilizing centralized risk management 
practices.
Sec. 302. Indemnification requirements.
Sec. 303. Transactions with utility special entities.
Sec. 304. Utility special entity defined.
Sec. 305. Utility operations-related swap.
Sec. 306. End-users not treated as financial entities.
Sec. 307. Reporting of illiquid swaps so as to not disadvantage certain 
non-financial end-users.
Sec. 308. Relief for grain elevator operators, farmers, agricultural 
counterparties, and commercial market participants.
Sec. 309. Relief for end-users who use physical contracts with 
volumetric optionality.
Sec. 310. Commission vote required before automatic change of swap 
dealer de minimis level.
Sec. 311. Capital requirements for non-bank swap dealers.
Sec. 312. Harmonization with the Jumpstart Our Business Startups Act.
Sec. 313. Bona fide hedge defined to protect end-user risk management 
needs.
Sec. 314. Cross-border regulation of derivatives transactions.
Sec. 315. Exemption of qualified charitable organizations from 
designation and regulation as commodity pool operators.
Sec. 316. Small bank holding company clearing exemption.
Sec. 317. Core principle certainty.
Sec. 318. Treatment of Federal Home Loan Bank products.
Sec. 319. Treatment of certain funds.

                    TITLE IV--TECHNICAL CORRECTIONS

Sec. 401. Correction of references.
Sec. 402. Elimination of obsolete references to dealer options.
Sec. 403. Updated trade data publication requirement.
Sec. 404. Flexibility for registered entities.
Sec. 405. Elimination of obsolete references to electronic trading 
facilities.
Sec. 406. Elimination of obsolete reference to alternative swap 
execution facilities.
Sec. 407. Elimination of redundant references to types of registered 
entities.
Sec. 408. Clarification of Commission authority over swaps trading.
Sec. 409. Elimination of obsolete reference to the Commodity Exchange 
Commission.
Sec. 410. Elimination of obsolete references to derivative transaction 
execution facilities.
Sec. 411. Elimination of obsolete references to exempt boards of trade.
Sec. 412. Elimination of report due in 1986.
Sec. 413. Compliance report flexibility.
Sec. 414. Miscellaneous corrections.

                     TITLE I--CUSTOMER PROTECTIONS

SEC. 101. ENHANCED PROTECTIONS FOR FUTURES CUSTOMERS.

  Section 17 of the Commodity Exchange Act (7 U.S.C. 21) is amended by 
adding at the end the following:
  ``(s) A registered futures association shall--
          ``(1) require each member of the association that is a 
        futures commission merchant to maintain written policies and 
        procedures regarding the maintenance of--
                  ``(A) the residual interest of the member, as 
                described in section 1.23 of title 17, Code of Federal 
                Regulations, in any customer segregated funds account 
                of the member, as identified in section 1.20 of such 
                title, and in any foreign futures and foreign options 
                customer secured amount funds account of the member, as 
                identified in section 30.7 of such title; and
                  ``(B) the residual interest of the member, as 
                described in section 22.2(e)(4) of such title, in any 
                cleared swaps customer collateral account of the 
                member, as identified in section 22.2 of such title; 
                and
          ``(2) establish rules to govern the withdrawal, transfer or 
        disbursement by any member of the association, that is a 
        futures commission merchant, of the member's residual interest 
        in customer segregated funds as provided in such section 1.20, 
        in foreign futures and foreign options customer secured amount 
        funds, identified as provided in such section 30.7, and from a 
        cleared swaps customer collateral, identified as provided in 
        such section 22.2.''.

SEC. 102. ELECTRONIC CONFIRMATION OF CUSTOMER FUNDS.

  Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as amended by 
section 101 of this Act, is amended by adding at the end the following:
  ``(t) A registered futures association shall require any member of 
the association that is a futures commission merchant to--
          ``(1) use an electronic system or systems to report financial 
        and operational information to the association or another party 
        designated by the registered futures association, including 
        information related to customer segregated funds, foreign 
        futures and foreign options customer secured amount funds 
        accounts, and cleared swaps customer collateral, in accordance 
        with such terms, conditions, documentation standards, and 
        regular time intervals as are established by the registered 
        futures association;
          ``(2) instruct each depository, including any bank, trust 
        company, derivatives clearing organization, or futures 
        commission merchant, holding customer segregated funds under 
        section 1.20 of title 17, Code of Federal Regulations, foreign 
        futures and foreign options customer secured amount funds under 
        section 30.7 of such title, or cleared swap customer funds 
        under section 22.2 of such title, to report balances in the 
        futures commission merchant's section 1.20 customer segregated 
        funds, section 30.7 foreign futures and foreign options 
        customer secured amount funds, and section 22.2 cleared swap 
        customer funds, to the registered futures association or 
        another party designated by the registered futures association, 
        in the form, manner, and interval prescribed by the registered 
        futures association; and
          ``(3) hold section 1.20 customer segregated funds, section 
        30.7 foreign futures and foreign options customer secured 
        amount funds and section 22.2 cleared swaps customer funds in a 
        depository that reports the balances in these accounts of the 
        futures commission merchant held at the depository to the 
        registered futures association or another party designated by 
        the registered futures association in the form, manner, and 
        interval prescribed by the registered futures association.''.

SEC. 103. NOTICE AND CERTIFICATIONS PROVIDING ADDITIONAL CUSTOMER 
                    PROTECTIONS.

  Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as amended by 
sections 101 and 102 of this Act, is amended by adding at the end the 
following:
  ``(u) A futures commission merchant that has adjusted net capital in 
an amount less than the amount required by regulations established by 
the Commission or a self-regulatory organization of which the futures 
commission merchant is a member shall immediately notify the Commission 
and the self-regulatory organization of this occurrence.
  ``(v) A futures commission merchant that does not hold a sufficient 
amount of funds in segregated accounts for futures customers under 
section 1.20 of title 17, Code of Federal Regulations, in foreign 
futures and foreign options secured amount accounts for foreign futures 
and foreign options secured amount customers under section 30.7 of such 
title, or in segregated accounts for cleared swap customers under 
section 22.2 of such title, as required by regulations established by 
the Commission or a self-regulatory organization of which the futures 
commission merchant is a member, shall immediately notify the 
Commission and the self-regulatory organization of this occurrence.
  ``(w) Within such time period established by the Commission after the 
end of each fiscal year, a futures commission merchant shall file with 
the Commission a report from the chief compliance officer of the 
futures commission merchant containing an assessment of the internal 
compliance programs of the futures commission merchant.''.

SEC. 104. FUTURES COMMISSION MERCHANT COMPLIANCE.

  (a) In General.--Section 4d(a) of the Commodity Exchange Act (7 
U.S.C. 6d(a)) is amended--
          (1) by redesignating paragraphs (1) and (2) as subparagraphs 
        (A) and (B);
          (2) by inserting ``(1)'' before ``It shall be unlawful''; and
          (3) by adding at the end the following new paragraph:
          ``(2) Any rules or regulations requiring a futures commission 
        merchant to maintain a residual interest in accounts held for 
        the benefit of customers in amounts at least sufficient to 
        exceed the sum of all uncollected margin deficits of such 
        customers shall provide that a futures commission merchant 
        shall meet its residual interest requirement as of the end of 
        each business day calculated as of the close of business on the 
        previous business day.''.
  (b) Conforming Amendment.--Section 4d(h) of such Act (7 U.S.C. 6d(h)) 
is amended by striking ``Notwithstanding subsection (a)(2)'' and 
inserting ``Notwithstanding subsection (a)(1)(B)''.

SEC. 105. CERTAINTY FOR FUTURES CUSTOMERS AND MARKET PARTICIPANTS.

  Section 20(a) of the Commodity Exchange Act (7 U.S.C. 24(a)) is 
amended--
          (1) by striking ``and'' at the end of paragraph (4);
          (2) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(6) that cash, securities, or other property of the estate 
        of a commodity broker, including the trading or operating 
        accounts of the commodity broker and commodities held in 
        inventory by the commodity broker, shall be included in 
        customer property, subject to any otherwise unavoidable 
        security interest, or otherwise unavoidable contractual offset 
        or netting rights of creditors (including rights set forth in a 
        rule or bylaw of a derivatives clearing organization or a 
        clearing agency) in respect of such property, but only to the 
        extent that the property that is otherwise customer property is 
        insufficient to satisfy the net equity claims of public 
        customers (as such term may be defined by the Commission by 
        rule or regulation) of the commodity broker.''.

         TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS

SEC. 201. EXTENSION OF OPERATIONS.

  Section 12(d) of the Commodity Exchange Act (7 U.S.C. 16(d)) is 
amended by striking ``2013'' and inserting ``2019''.

SEC. 202. CONSIDERATION BY THE COMMODITY FUTURES TRADING COMMISSION OF 
                    THE COSTS AND BENEFITS OF ITS REGULATIONS AND 
                    ORDERS.

  Section 15(a) of the Commodity Exchange Act (7 U.S.C. 19(a)) is 
amended--
          (1) by striking paragraphs (1) and (2) and inserting the 
        following:
          ``(1) In general.--Before promulgating a regulation under 
        this Act or issuing an order (except as provided in paragraph 
        (3)), the Commission, through the Office of the Chief 
        Economist, shall assess and publish in the regulation or order 
        the costs and benefits, both qualitative and quantitative, of 
        the proposed regulation or order, and the proposed regulation 
        or order shall state its statutory justification.
          ``(2) Considerations.--In making a reasoned determination of 
        the costs and the benefits, the Commission shall evaluate--
                  ``(A) considerations of protection of market 
                participants and the public;
                  ``(B) considerations of the efficiency, 
                competitiveness, and financial integrity of futures and 
                swaps markets;
                  ``(C) considerations of the impact on market 
                liquidity in the futures and swaps markets;
                  ``(D) considerations of price discovery;
                  ``(E) considerations of sound risk management 
                practices;
                  ``(F) available alternatives to direct regulation;
                  ``(G) the degree and nature of the risks posed by 
                various activities within the scope of its 
                jurisdiction;
                  ``(H) the costs of complying with the proposed 
                regulation or order by all regulated entities, 
                including a methodology for quantifying the costs 
                (recognizing that some costs are difficult to 
                quantify);
                  ``(I) whether the proposed regulation or order is 
                inconsistent, incompatible, or duplicative of other 
                Federal regulations or orders;
                  ``(J) the cost to the Commission of implementing the 
                proposed regulation or order by the Commission staff, 
                including a methodology for quantifying the costs;
                  ``(K) whether, in choosing among alternative 
                regulatory approaches, those approaches maximize net 
                benefits (including potential economic and other 
                benefits, distributive impacts, and equity); and
                  ``(L) other public interest considerations.''; and
          (2) by adding at the end the following:
          ``(4) Judicial review.--Notwithstanding section 24(d), a 
        court shall affirm a Commission assessment of costs and 
        benefits under this subsection, unless the court finds the 
        assessment to be an abuse of discretion.''.

SEC. 203. DIVISION DIRECTORS.

  Section 2(a)(6)(C) of the Commodity Exchange Act (7 U.S.C. 
2(a)(6)(C)) is amended by inserting ``, and the heads of the units 
shall serve at the pleasure of the Commission'' before the period.

SEC. 204. OFFICE OF THE CHIEF ECONOMIST.

  (a) In General.--Section 2(a) of the Commodity Exchange Act (7 U.S.C. 
2(a)) is amended by adding at the end the following:
          ``(16) Office of the chief economist.--
                  ``(A) Establishment.--There is established in the 
                Commission the Office of the Chief Economist.
                  ``(B) Head.--The Office of the Chief Economist shall 
                be headed by the Chief Economist, who shall be 
                appointed by the Commission and serve at the pleasure 
                of the Commission.
                  ``(C) Functions.--The Chief Economist shall report 
                directly to the Commission and perform such functions 
                and duties as the Commission may prescribe.
                  ``(D) Professional staff.--The Commission shall 
                appoint such other economists as may be necessary to 
                assist the Chief Economist in performing such economic 
                analysis, regulatory cost-benefit analysis, or research 
                any member of the Commission may request.''.
  (b) Conforming Amendment.--Section 2(a)(6)(A) of such Act (7 U.S.C. 
2(a)(6)(A)) is amended by striking ``(4) and (5) of this subsection'' 
and inserting ``(4), (5), and (16)''.

SEC. 205. PROCEDURES GOVERNING ACTIONS TAKEN BY COMMISSION STAFF.

  Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 2(a)(12)) is 
amended--
          (1) by striking ``(12) The'' and inserting the following:
          ``(12) Rules and regulations.--
                  ``(A) In general.--Subject to the other provisions of 
                this paragraph, the''; and
          (2) by adding after and below the end the following new 
        subparagraph:
                  ``(B) Notice to commissioners.--The Commission shall 
                develop and publish internal procedures governing the 
                issuance by any division or office of the Commission of 
                any response to a formal, written request or petition 
                from any member of the public for an exemptive, a no-
                action, or an interpretive letter and such procedures 
                shall provide that the commissioners be provided with 
                the final version of the matter to be issued with 
                sufficient notice to review the matter prior to its 
                issuance.''.

SEC. 206. STRATEGIC TECHNOLOGY PLAN.

  Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)), as 
amended by section 204(a) of this Act, is amended by adding at the end 
the following:
          ``(17) Strategic technology plan.--
                  ``(A) In general.--Every 5 years, the Commission 
                shall develop and submit to the Committee on 
                Agriculture of the House of Representatives and the 
                Committee on Agriculture, Nutrition, and Forestry of 
                the Senate a detailed plan focused on the acquisition 
                and use of technology by the Commission.
                  ``(B) Contents.--The plan shall--
                          ``(i) include for each related division or 
                        office a detailed technology strategy focused 
                        on market surveillance and risk detection, 
                        market data collection, aggregation, 
                        interpretation, standardization, harmonization, 
                        normalization, validation, streamlining or 
                        other data analytic processes, and internal 
                        management and protection of data collected by 
                        the Commission, including a detailed accounting 
                        of how the funds provided for technology will 
                        be used and the priorities that will apply in 
                        the use of the funds; and
                          ``(ii) set forth annual goals to be 
                        accomplished and annual budgets needed to 
                        accomplish the goals.''.

SEC. 207. INTERNAL RISK CONTROLS.

  Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 2(a)(12)), 
as amended by section 205 of this Act, is amended by adding at the end 
the following:
                  ``(C) Internal risk controls.--The Commission, in 
                consultation with the Chief Economist, shall develop 
                comprehensive internal risk control mechanisms to 
                safeguard and govern the storage of all market data by 
                the Commission, all market data sharing agreements of 
                the Commission, and all academic research performed at 
                the Commission using market data.''.

SEC. 208. SUBPOENA DURATION AND RENEWAL.

  Section 6(c)(5) of the Commodity Exchange Act (7 U.S.C. 9(5)) is 
amended--
          (1) by striking ``(5) Subpoena.--For'' and inserting the 
        following:
          ``(5) Subpoena.--
                  ``(A) In general.--For''; and
          (2) by adding after and below the end the following:
                  ``(B) Omnibus orders of investigation.--
                          ``(i) Duration and renewal.--An omnibus order 
                        of investigation shall not be for an indefinite 
                        duration and may be renewed only by Commission 
                        action.
                          ``(ii) Definition.--In clause (i), the term 
                        `omnibus order of investigation' means an order 
                        of the Commission authorizing 1 of more members 
                        of the Commission or its staff to issue 
                        subpoenas under subparagraph (A) to multiple 
                        persons in relation to a particular subject 
                        matter area.''.

SEC. 209. APPLICABILITY OF NOTICE AND COMMENT REQUIREMENTS OF THE 
                    ADMINISTRATIVE PROCEDURE ACT TO GUIDANCE VOTED ON 
                    BY THE COMMISSION.

  Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 2(a)(12)), 
as amended by sections 205 and 207 of this Act, is amended by adding at 
the end the following:
                  ``(D) Applicability of notice and comment rules to 
                guidance voted on by the commission.--The notice and 
                comment requirements of section 553 of title 5, United 
                States Code, shall also apply with respect to any 
                Commission statement or guidance, including 
                interpretive rules, general statements of policy, or 
                rules of Commission organization, procedure, or 
                practice, that has the effect of implementing, 
                interpreting or prescribing law or policy and that is 
                voted on by the Commission.''.

SEC. 210. JUDICIAL REVIEW OF COMMISSION RULES.

  The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding 
at the end the following:

``SEC. 24. JUDICIAL REVIEW OF COMMISSION RULES.

  ``(a) A person adversely affected by a rule of the Commission 
promulgated under this Act may obtain review of the rule in the United 
States Court of Appeals for the District of Columbia Circuit or the 
United States Court of Appeals for the circuit where the party resides 
or has the principal place of business, by filing in the court, within 
60 days after publication in the Federal Register of the entry of the 
rule, a written petition requesting that the rule be set aside.
  ``(b) A copy of the petition shall be transmitted forthwith by the 
clerk of the court to an officer designated by the Commission for that 
purpose. Thereupon the Commission shall file in the court the record on 
which the rule complained of is entered, as provided in section 2112 of 
title 28, United States Code, and the Federal Rules of Appellate 
Procedure.
  ``(c) On the filing of the petition, the court has jurisdiction, 
which becomes exclusive on the filing of the record, to affirm and 
enforce or to set aside the rule in whole or in part.
  ``(d) The court shall affirm and enforce the rule unless the 
Commission's action in promulgating the rule is found to be arbitrary, 
capricious, an abuse of discretion, or otherwise not in accordance with 
law; contrary to constitutional right, power, privilege, or immunity; 
in excess of statutory jurisdiction, authority, or limitations, or 
short of statutory right; or without observance of procedure required 
by law.''.

SEC. 211. GAO STUDY ON USE OF COMMISSION RESOURCES.

  (a) Study.--The Comptroller General of the United States shall 
conduct a study of the resources of the Commodity Futures Trading 
Commission that--
          (1) assesses whether the resources of the Commission are 
        sufficient to enable the Commission to effectively carry out 
        the duties of the Commission;
          (2) examines the expenditures of the Commission on hardware, 
        software, and analytical processes designed to protect 
        customers in the areas of--
                  (A) market surveillance and risk detection; and
                  (B) market data collection, aggregation, 
                interpretation, standardization, harmonization, and 
                streamlining;
          (3) analyzes the additional workload undertaken by the 
        Commission, and ascertains where self-regulatory organizations 
        could be more effectively utilized; and
          (4) examines existing and emerging post-trade risk reduction 
        services in the swaps market, the notional amount of risk 
        reduction transactions provided by the services, and the 
        effects the services have on financial stability, including--
                  (A) market surveillance and risk detection;
                  (B) market data collection, aggregation, 
                interpretation, standardization, harmonization, and 
                streamlining; and
                  (C) oversight and compliance work by market 
                participants and regulators.
  (b) Report.--Not later than 180 days after the date of the enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Committee on Agriculture of the House of Representatives and the 
Committee on Agriculture, Nutrition, and Forestry of the Senate a 
report that contains the results of the study required by subsection 
(a).

SEC. 212. DISCLOSURE OF REQUIRED DATA OF OTHER REGISTERED ENTITIES.

  Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is amended by 
adding at the end the following:
  ``(j) Disclosure of Required Data of Other Registered Entities.--
          ``(1) Except as provided in this subsection, the Commission 
        may not be compelled to disclose any proprietary information 
        provided to the Commission, except that nothing in this 
        subsection--
                  ``(A) authorizes the Commission to withhold 
                information from Congress; or
                  ``(B) prevents the Commission from--
                          ``(i) complying with a request for 
                        information from any other Federal department 
                        or agency, any State or political subdivision 
                        thereof, or any foreign government or any 
                        department, agency, or political subdivision 
                        thereof requesting the report or information 
                        for purposes within the scope of its 
                        jurisdiction, upon an agreement of 
                        confidentiality to protect the information in a 
                        manner consistent with this paragraph and 
                        subsection (e); or
                          ``(ii) making a disclosure made pursuant to a 
                        court order in connection with an 
                        administrative or judicial proceeding brought 
                        under this Act, in any receivership proceeding 
                        involving a receiver appointed in a judicial 
                        proceeding brought under this Act, or in any 
                        bankruptcy proceeding in which the Commission 
                        has intervened or in which the Commission has 
                        the right to appear and be heard under title 11 
                        of the United States Code.
          ``(2) Any proprietary information of a commodity trading 
        advisor or commodity pool operator ascertained by the 
        Commission in connection with Form CPO-PQR, Form CTA-PR, and 
        any successor forms thereto, shall be subject to the same 
        limitations on public disclosure, as any facts ascertained 
        during an investigation, as provided by subsection (a); 
        provided, however, that the Commission shall not be precluded 
        from publishing aggregate information compiled from such forms, 
        to the extent such aggregate information does not identify any 
        individual person or firm, or such person's proprietary 
        information.
          ``(3) For purposes of section 552 of title 5, United States 
        Code, this subsection, and the information contemplated herein, 
        shall be considered a statute described in subsection (b)(3)(B) 
        of such section 552.
          ``(4) For purposes of the definition of proprietary 
        information in paragraph (5), the records and reports of any 
        client account or commodity pool to which a commodity trading 
        advisor or commodity pool operator registered under this title 
        provides services that are filed with the Commission on Form 
        CPO-PQR, CTA-PR, and any successor forms thereto, shall be 
        deemed to be the records and reports of the commodity trading 
        advisor or commodity pool operator, respectively.
          ``(5) For purposes of this section, proprietary information 
        of a commodity trading advisor or commodity pool operator 
        includes sensitive, non-public information regarding--
                  ``(A) the commodity trading advisor, commodity pool 
                operator or the trading strategies of the commodity 
                trading advisor or commodity pool operator;
                  ``(B) analytical or research methodologies of a 
                commodity trading advisor or commodity pool operator;
                  ``(C) trading data of a commodity trading advisor or 
                commodity pool operator; and
                  ``(D) computer hardware or software containing 
                intellectual property of a commodity trading advisor or 
                commodity pool operator;''.

SEC. 213. REPORT ON STATUS OF ANY APPLICATION OF METALS EXCHANGE TO 
                    REGISTER AS A FOREIGN BOARD OF TRADE; DEADLINE FOR 
                    ACTION ON APPLICATION.

  (a) Report to Congress.--Within 90 days after the date of the 
enactment of this section, the Commodity Futures Trading Commission 
shall submit to the Congress a written report on--
          (1) the status of the review by the Commission of any 
        application submitted by a metals exchange to register with the 
        Commission under section 4(b)(1) of the Commodity Exchange Act; 
        and
          (2) the status of Commission negotiations with foreign 
        regulators regarding aluminum warehousing.
  (b) Deadline for Action.--Not later than September 30, 2016, the 
Commission shall take action on any such application submitted to the 
Commission on or before August 14, 2012.

                       TITLE III--END-USER RELIEF

SEC. 301. RELIEF FOR HEDGERS UTILIZING CENTRALIZED RISK MANAGEMENT 
                    PRACTICES.

  (a) In General.--
          (1) Commodity exchange act amendment.--Section 2(h)(7)(D)(i) 
        of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(D)(i)) is 
        amended to read as follows:
                          ``(i) In general.--An affiliate of a person 
                        that qualifies for an exception under 
                        subparagraph (A) (including an affiliate entity 
                        predominantly engaged in providing financing 
                        for the purchase of the merchandise or 
                        manufactured goods of the person) may qualify 
                        for the exception only if the affiliate enters 
                        into the swap to hedge or mitigate the 
                        commercial risk of the person or other 
                        affiliate of the person that is not a financial 
                        entity, provided that if the hedge or 
                        mitigation of such commercial risk is addressed 
                        by entering into a swap with a swap dealer or 
                        major swap participant, an appropriate credit 
                        support measure or other mechanism must be 
                        utilized.''.
  (b) Applicability of Credit Support Measure Requirement.--The 
requirements in section 2(h)(7)(D)(i) of the Commodity Exchange Act, as 
amended by subsection (a), requiring that a credit support measure or 
other mechanism be utilized if the transfer of commercial risk referred 
to in such section is addressed by entering into a swap with a swap 
dealer or major swap participant shall not apply with respect to swaps 
entered into before the date of the enactment of this Act.

SEC. 302. INDEMNIFICATION REQUIREMENTS.

  (a) Derivatives Clearing Organizations.--Section 5b(k)(5) of the 
Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) is amended to read as 
follows:
          ``(5) Confidentiality agreement.--Before the Commission may 
        share information with any entity described in paragraph (4), 
        the Commission shall receive a written agreement from each 
        entity stating that the entity shall abide by the 
        confidentiality requirements described in section 8 relating to 
        the information on swap transactions that is provided.''.
  (b) Swap Data Repositories.--Section 21(d) of such Act (7 U.S.C. 
24a(d)) is amended to read as follows:
  ``(d) Confidentiality Agreement.--Before the swap data repository may 
share information with any entity described in subsection (c)(7), the 
swap data repository shall receive a written agreement from each entity 
stating that the entity shall abide by the confidentiality requirements 
described in section 8 relating to the information on swap transactions 
that is provided.''.

SEC. 303. TRANSACTIONS WITH UTILITY SPECIAL ENTITIES.

  Section 1a(49) of the Commodity Exchange Act (7 U.S.C. 1a(49)) is 
amended by adding at the end the following:
                  ``(E) Certain transactions with a utility special 
                entity.--
                          ``(i) Transactions in utility operations-
                        related swaps shall be reported pursuant to 
                        section 4r.
                          ``(ii) In making a determination to exempt 
                        pursuant to subparagraph (D), the Commission 
                        shall treat a utility operations-related swap 
                        entered into with a utility special entity, as 
                        defined in section 4s(h)(2)(D), as if it were 
                        entered into with an entity that is not a 
                        special entity, as defined in section 
                        4s(h)(2)(C).''.

SEC. 304. UTILITY SPECIAL ENTITY DEFINED.

  Section 4s(h)(2) of the Commodity Exchange Act (7 U.S.C. 6s(h)(2)) is 
amended by adding at the end the following:
                  ``(D) Utility special entity.--For purposes of this 
                Act, the term `utility special entity' means a special 
                entity, or any instrumentality, department, or 
                corporation of or established by a State or political 
                subdivision of a State, that--
                          ``(i) owns or operates, or anticipates owning 
                        or operating, an electric or natural gas 
                        facility or an electric or natural gas 
                        operation;
                          ``(ii) supplies, or anticipates supplying, 
                        natural gas and or electric energy to another 
                        utility special entity;
                          ``(iii) has, or anticipates having, public 
                        service obligations under Federal, State, or 
                        local law or regulation to deliver electric 
                        energy or natural gas service to customers; or
                          ``(iv) is a Federal power marketing agency, 
                        as defined in section 3 of the Federal Power 
                        Act.''.

SEC. 305. UTILITY OPERATIONS-RELATED SWAP.

  (a) Swap Further Defined.--Section 1a(47)(A)(iii) of the Commodity 
Exchange Act (7 U.S.C. 1a(47)(A)(iii)) is amended--
          (1) by striking ``and'' at the end of subclause (XXI);
          (2) by adding ``and'' at the end of subclause (XXII); and
          (3) by adding at the end the following:
                                  ``(XXIII) a utility operations-
                                related swap;''.
  (b) Utility Operations-related Swap Defined.--Section 1a of such Act 
(7 U.S.C. 1a) is amended by adding at the end the following:
          ``(52) Utility operations-related swap.--The term `utility 
        operations-related swap' means a swap that--
                  ``(A) is entered into by a utility to hedge or 
                mitigate a commercial risk;
                  ``(B) is not a contract, agreement, or transaction 
                based on, derived on, or referencing--
                          ``(i) an interest rate, credit, equity, or 
                        currency asset class;
                          ``(ii) except as used for fuel for electric 
                        energy generation, a metal, agricultural 
                        commodity, or crude oil or gasoline commodity 
                        of any grade; or
                          ``(iii) any other commodity or category of 
                        commodities identified for this purpose in a 
                        rule or order adopted by the Commission in 
                        consultation with the appropriate Federal and 
                        State regulatory commissions; and
                  ``(C) is associated with--
                          ``(i) the generation, production, purchase, 
                        or sale of natural gas or electric energy, the 
                        supply of natural gas or electric energy to a 
                        utility, or the delivery of natural gas or 
                        electric energy service to utility customers;
                          ``(ii) fuel supply for the facilities or 
                        operations of a utility;
                          ``(iii) compliance with an electric system 
                        reliability obligation;
                          ``(iv) compliance with an energy, energy 
                        efficiency, conservation, or renewable energy 
                        or environmental statute, regulation, or 
                        government order applicable to a utility; or
                          ``(v) any other electric energy or natural 
                        gas swap to which a utility is a party.''.

SEC. 306. END-USERS NOT TREATED AS FINANCIAL ENTITIES.

  (a) In General.--Section 2(h)(7)(C)(iii) of the Commodity Exchange 
Act (7 U.S.C. 2(h)(7)(C)(iii)) is amended to read as follows:
                          ``(iii) Limitation.--Such definition shall 
                        not include an entity--
                                  ``(I) whose primary business is 
                                providing financing, and who uses 
                                derivatives for the purpose of hedging 
                                underlying commercial risks related to 
                                interest rate and foreign currency 
                                exposures, 90 percent or more of which 
                                arise from financing that facilitates 
                                the purchase or lease of products, 90 
                                percent or more of which are 
                                manufactured by the parent company or 
                                another subsidiary of the parent 
                                company; or
                                  ``(II) who is not supervised by a 
                                prudential regulator, and is not 
                                described in any of subclauses (I) 
                                through (VII) of clause (i), and--
                                          ``(aa) is a commercial market 
                                        participant; or
                                          ``(bb) enters into swaps, 
                                        contracts for future delivery, 
                                        and other derivatives on behalf 
                                        of, or to hedge or mitigate the 
                                        commercial risk of, whether 
                                        directly or in the aggregate, 
                                        affiliates that are not so 
                                        supervised or described.''.
  (b) Commercial Market Participant Defined.--
          (1) In general.--Section 1a of such Act (7 U.S.C. 1a), as 
        amended by section 305(b) of this Act, is amended by 
        redesignating paragraphs (8) through (52) as paragraphs (9) 
        through (53), respectively, and by inserting after paragraph 
        (6) the following:
          ``(8) Commercial market participant.--The term `commercial 
        market participant' means any producer, processor, merchant, or 
        commercial user of an exempt or agricultural commodity, or the 
        products or byproducts of such a commodity.''.
          (2) Conforming amendments.--
                  (A) Section 1a of such Act (7 U.S.C. 1a) is amended--
                          (i) in subparagraph (A) of paragraph (18) (as 
                        so redesignated by paragraph (1) of this 
                        subsection), in the matter preceding clause 
                        (i), by striking ``(18)(A)'' and inserting 
                        ``(19)(A)''; and
                          (ii) in subparagraph (A)(vii) of paragraph 
                        (19) (as so redesignated by paragraph (1) of 
                        this subsection), in the matter following 
                        subclause (III), by striking ``(17)(A)'' and 
                        inserting ``(18)(A)''.
                  (B) Section 4(c)(1)(A)(i)(I) of such Act (7 U.S.C. 
                6(c)(1)(A)(i)(I)) is amended by striking ``(7), 
                paragraph (18)(A)(vii)(III), paragraphs (23), (24), 
                (31), (32), (38), (39), (41), (42), (46), (47), (48), 
                and (49)'' and inserting ``(8), paragraph 
                (19)(A)(vii)(III), paragraphs (24), (25), (32), (33), 
                (39), (40), (42), (43), (47), (48), (49), and (50)''.
                  (C) Section 4q(a)(1) of such Act (7 U.S.C. 6o-
                1(a)(1)) is amended by striking ``1a(9)'' and inserting 
                ``1a(10)''.
                  (D) Section 4s(f)(1)(D) of such Act (7 U.S.C. 
                6s(f)(1)(D)) is amended by striking ``1a(47)(A)(v)'' 
                and inserting ``1a(48)(A)(v)''.
                  (E) Section 4s(h)(5)(A)(i) of such Act (7 U.S.C. 
                6s(h)(5)(A)(i)) is amended by striking ``1a(18)'' and 
                inserting ``1a(19)''.
                  (F) Section 4t(b)(1)(C) of such Act (7 U.S.C. 
                6t(b)(1)(C)) is amended by striking ``1a(47)(A)(v)'' 
                and inserting ``1a(48)(A)(v)''.
                  (G) Section 5(d)(23) of such Act (7 U.S.C. 7(d)(23)) 
                is amended by striking ``1a(47)(A)(v)'' and inserting 
                ``1a(48)(A)(v)''.
                  (H) Section 5(e)(1) of such Act (7 U.S.C. 7(e)(1)) is 
                amended by striking ``1a(9)'' and inserting ``1a(10)''.
                  (I) Section 5b(k)(3)(A) of such Act (7 U.S.C. 7a-
                1(k)(3)(A)) is amended by striking ``1a(47)(A)(v)'' and 
                inserting ``1a(48)(A)(v)''.
                  (J) Section 5h(f)(10)(A)(iii) of such Act (7 U.S.C. 
                7b-3(f)(10)(A)(iii)) is amended by striking 
                ``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)''.
                  (K) Section 21(f)(4)(C) of such Act (7 U.S.C. 
                24a(f)(4)(C)) is amended by striking ``1a(48)'' and 
                inserting ``1a(49)''.

SEC. 307. REPORTING OF ILLIQUID SWAPS SO AS TO NOT DISADVANTAGE CERTAIN 
                    NON-FINANCIAL END-USERS.

  Section 2(a)(13) of the Commodity Exchange Act (7 U.S.C. 2(a)(13)) is 
amended--
          (1) in subparagraph (C), by striking ``The Commission'' and 
        inserting ``Except as provided in subparagraph (D), the 
        Commission''; and
          (2) by redesignating subparagraphs (D) through (G) as 
        subparagraphs (E) through (H), respectively, and inserting 
        after subparagraph (C) the following:
                  ``(D) Requirements for swap transactions in illiquid 
                markets.--Notwithstanding subparagraph (C):
                          ``(i) The Commission shall provide by rule 
                        for the public reporting of swap transactions, 
                        including price and volume data, in illiquid 
                        markets that are not cleared and entered into 
                        by a non-financial entity that is hedging or 
                        mitigating commercial risk in accordance with 
                        subsection (h)(7)(A).
                          ``(ii) The Commission shall ensure that the 
                        swap transaction information referred to in 
                        clause (i) of this subparagraph is available to 
                        the public no sooner than 30 days after the 
                        swap transaction has been executed or at such 
                        later date as the Commission determines 
                        appropriate to protect the identity of 
                        participants and positions in illiquid markets 
                        and to prevent the elimination or reduction of 
                        market liquidity.
                          ``(iii) In this subparagraph, the term 
                        `illiquid markets' means any market in which 
                        the volume and frequency of trading in swaps is 
                        at such a level as to allow identification of 
                        individual market participants.''.

SEC. 308. RELIEF FOR GRAIN ELEVATOR OPERATORS, FARMERS, AGRICULTURAL 
                    COUNTERPARTIES, AND COMMERCIAL MARKET PARTICIPANTS.

  The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by 
inserting after section 4t the following:

``SEC. 4U. RECORDKEEPING REQUIREMENTS APPLICABLE TO NON-REGISTERED 
                    MEMBERS OF CERTAIN REGISTERED ENTITIES.

  ``Except as provided in section 4(a)(3), a member of a designated 
contract market or a swap execution facility that is not registered 
with the Commission and not required to be registered with the 
Commission in any capacity shall satisfy the recordkeeping requirements 
of this Act and any recordkeeping rule, order, or regulation under this 
Act by maintaining a written record of each transaction in a contract 
for future delivery, option on a future, swap, swaption, trade option, 
or related cash or forward transaction. The written record shall be 
sufficient if it includes the final agreement between the parties and 
the material economic terms of the transaction.''.

SEC. 309. RELIEF FOR END-USERS WHO USE PHYSICAL CONTRACTS WITH 
                    VOLUMETRIC OPTIONALITY.

  Section 1a(48)(B)(ii) of the Commodity Exchange Act (7 U.S.C. 
1a(47)(B)(ii)), as so redesignated by section 306(b)(1) of this Act, is 
amended to read as follows:
                          ``(ii) any purchase or sale of a nonfinancial 
                        commodity or security for deferred shipment or 
                        delivery, so long as the transaction is 
                        intended to be physically settled, including 
                        any stand-alone or embedded option for which 
                        exercise results in a physical delivery 
                        obligation;''.

SEC. 310. COMMISSION VOTE REQUIRED BEFORE AUTOMATIC CHANGE OF SWAP 
                    DEALER DE MINIMIS LEVEL.

  Section 1a(50)(D) of the Commodity Exchange Act (7 U.S.C. 1a(49)(D)), 
as so redesignated by section 306(b)(1) of this Act, is amended--
          (1) by striking all that precedes ``shall exempt'' and 
        inserting the following:
                  ``(D) Exception.--
                          ``(i) In general.--The Commission''; and
          (2) by adding after and below the end the following new 
        clause:
                          ``(ii) De minimis quantity.--The de minimis 
                        quantity of swap dealing described in clause 
                        (i) shall be set at a quantity of 
                        $8,000,000,000, and may be amended or changed 
                        only through a new affirmative action of the 
                        Commission undertaken by rule or regulation.''.

SEC. 311. CAPITAL REQUIREMENTS FOR NON-BANK SWAP DEALERS.

  (a) Commodity Exchange Act.--Section 4s(e) of the Commodity Exchange 
Act (7 U.S.C. 6s(e)) is amended--
          (1) in paragraph (2)(B), by inserting ``in consultation with 
        the prudential regulators and the Securities and Exchange 
        Commission'' before ``shall''; and
          (2) in paragraph (3)(D)--
                  (A) in clause (ii), by striking ``shall, to the 
                maximum extent practicable,'' and inserting ``shall''; 
                and
                  (B) by adding at the end the following:
                          ``(iii) Financial models.--To the extent that 
                        swap dealers and major swap participants that 
                        are banks are permitted to use financial models 
                        approved by the prudential regulators or the 
                        Securities and Exchange Commission to calculate 
                        minimum capital requirements and minimum 
                        initial and variation margin requirements, 
                        including the use of non-cash collateral, the 
                        Commission shall, in consultation with the 
                        prudential regulators and the Securities and 
                        Exchange Commission, permit the use of 
                        comparable financial models by swap dealers and 
                        major swap participants that are not banks.''.

SEC. 312. HARMONIZATION WITH THE JUMPSTART OUR BUSINESS STARTUPS ACT.

  Within 90 days after the date of the enactment of this Act, the 
Commodity Futures Trading Commission shall--
          (1) revise section 4.7(b) of title 17, Code of Federal 
        Regulations, in the matter preceding paragraph (1), to read as 
        follows:
  ``(b) Relief available to commodity pool operators. Upon filing the 
notice required by paragraph (d) of this section, and subject to 
compliance with the conditions specified in paragraph (d) of this 
section, any registered commodity pool operator who sells 
participations in a pool solely to qualified eligible persons in an 
offering which qualifies for exemption from the registration 
requirements of the Securities Act pursuant to section 4(2) of that Act 
or pursuant to Regulation S, 17 CFR 230.901 et seq., and any bank 
registered as a commodity pool operator in connection with a pool that 
is a collective trust fund whose securities are exempt from 
registration under the Securities Act pursuant to section 3(a)(2) of 
that Act and are sold solely to qualified eligible persons, may claim 
any or all of the following relief with respect to such pool:''; and
          (2) revise section 4.13(a)(3)(i) of such title to read as 
        follows:
                          ``(i) Interests in the pool are exempt from 
                        registration under the Securities Act of 1933, 
                        and such interests are offered and sold 
                        pursuant to section 4 of the Securities Act of 
                        1933 and the regulations thereunder;''.

SEC. 313. BONA FIDE HEDGE DEFINED TO PROTECT END-USER RISK MANAGEMENT 
                    NEEDS.

  Section 4a(c) of the Commodity Exchange Act (7 U.S.C. 6a(c)) is 
amended--
          (1) in paragraph (1)--
                  (A) by striking ``may'' and inserting ``shall''; and
                  (B) by striking ``future for which'' and inserting 
                ``future, to be determined by the Commission, for which 
                either an appropriate swap is available or'';
          (2) in paragraph (2)--
                  (A) in the matter preceding subparagraph (A), by 
                striking ``subsection (a)(2)'' and all that follows 
                through ``position as'' and inserting ``paragraphs (2) 
                and (5) of subsection (a) for swaps, contracts of sale 
                for future delivery, or options on the contracts or 
                commodities, a bona fide hedging transaction or 
                position is''; and
                  (B) in subparagraph (A)(ii), by striking ``of risks'' 
                and inserting ``or management of current or anticipated 
                risks''; and
          (3) by adding at the end the following:
          ``(3) The Commission may further define, by rule or 
        regulation, what constitutes a bona fide hedging transaction, 
        provided that the rule or regulation is consistent with the 
        requirements of subparagraphs (A) and (B) of paragraph (2).''.

SEC. 314. CROSS-BORDER REGULATION OF DERIVATIVES TRANSACTIONS.

  (a) Rulemaking Required.--Within 1 year after the date of the 
enactment of this Act, the Commodity Futures Trading Commission shall 
issue a rule that addresses--
          (1) the nature of the connections to the United States that 
        require a non-U.S. person to register as a swap dealer or a 
        major swap participant under the Commodity Exchange Act and the 
        regulations issued under such Act;
          (2) which of the United States swaps requirements apply to 
        the swap activities of non-U.S. persons and U.S. persons and 
        their branches, agencies, subsidiaries, and affiliates outside 
        of the United States, and the extent to which the requirements 
        apply; and
          (3) the circumstances under which a U.S. person or non-U.S. 
        person in compliance with the swaps regulatory requirements of 
        a foreign jurisdiction shall be exempt from United States swaps 
        requirements.
  (b) Content of the Rule.--
          (1) Criteria.--In the rule, the Commission shall establish 
        criteria for determining that 1 or more categories of the swaps 
        regulatory requirements of a foreign jurisdiction are 
        comparable to and as comprehensive as United States swaps 
        requirements. The criteria shall include--
                  (A) the scope and objectives of the swaps regulatory 
                requirements of the foreign jurisdiction;
                  (B) the effectiveness of the supervisory compliance 
                program administered;
                  (C) the enforcement authority exercised by the 
                foreign jurisdiction; and
                  (D) such other factors as the Commission, by rule, 
                determines to be necessary or appropriate in the public 
                interest.
          (2) Comparability.--In the rule, the Commission shall--
                  (A) provide that any non-U.S. person or any 
                transaction between two non-U.S. persons shall be 
                exempt from United States swaps requirements if the 
                person or transaction is in compliance with the swaps 
                regulatory requirements of a foreign jurisdiction which 
                the Commission has determined to be comparable to and 
                as comprehensive as United States swaps requirements; 
                and
                  (B) set forth the circumstances in which a U.S. 
                person or a transaction between a U.S. person and a 
                non-U.S. person shall be exempt from United States 
                swaps requirements if the person or transaction is in 
                compliance with the swaps regulatory requirements of a 
                foreign jurisdiction which the Commission has 
                determined to be comparable to and as comprehensive as 
                United States swaps requirements.
          (3) Outcomes-based comparison.--In developing and applying 
        the criteria, the Commission shall emphasize the results and 
        outcomes of, rather than the design and construction of, 
        foreign swaps regulatory requirements.
          (4) Risk-based rulemaking.--In the rule, the Commission shall 
        not take into account, for the purposes of determining the 
        applicability of United States swaps requirements, the location 
        of personnel that arrange, negotiate, or execute swaps.
          (5) No part of any rulemaking under this section shall limit 
        the Commission's antifraud or antimanipulation authority.
  (c) Application of the Rule.--
          (1) Assessments of foreign jurisdictions.--Beginning on the 
        date on which a final rule is issued under this section, the 
        Commission shall begin to assess the swaps regulatory 
        requirements of foreign jurisdictions, in the order the 
        Commission determines appropriate, in accordance with the 
        criteria established pursuant to subsection (b)(1). Following 
        each assessment, the Commission shall determine, by rule or by 
        order, whether the swaps regulatory requirements of the foreign 
        jurisdiction are comparable to and as comprehensive as United 
        States swaps requirements.
          (2) Substituted compliance for unassessed major markets.--
        Beginning 18 months after the date of enactment of this Act--
                  (A) the swaps regulatory requirements of each of the 
                8 foreign jurisdictions with the largest swaps markets, 
                as calculated by notional value during the 12-month 
                period ending with such date of enactment, except those 
                with respect to which a determination has been made 
                under paragraph (1), shall be considered to be 
                comparable to and as comprehensive as United States 
                swaps requirements; and
                  (B) a non-U.S. person or a transaction between 2 non-
                U.S. persons shall be exempt from United States swaps 
                requirements if the person or transaction is in 
                compliance with the swaps regulatory requirements of 
                any of such unexcepted foreign jurisdictions.
          (3) Suspension of substituted compliance.--If the Commission 
        determines, by rule or by order, that--
                  (A) the swaps regulatory requirements of a foreign 
                jurisdiction are not comparable to and as comprehensive 
                as United States swaps requirements, using the 
                categories and criteria established under subsection 
                (b)(1);
                  (B) the foreign jurisdiction does not exempt from its 
                swaps regulatory requirements U.S. persons who are in 
                compliance with United States swaps requirements; or
                  (C) the foreign jurisdiction is not providing 
                equivalent recognition of, or substituted compliance 
                for, registered entities (as defined in section 1a(41) 
                of the Commodity Exchange Act) domiciled in the United 
                States,
        the Commission may suspend, in whole or in part, a 
        determination made under paragraph (1) or a consideration 
        granted under paragraph (2).
  (d) Petition for Review of Foreign Jurisdiction Practices.--A 
registered entity, commercial market participant (as defined in section 
1a(7) of the Commodity Exchange Act), or Commission registrant (within 
the meaning of such Act) who petitions the Commission to make or change 
a determination under subsection (c)(1) or (c)(3) of this section shall 
be entitled to expedited consideration of the petition. A petition 
shall include any evidence or other supporting materials to justify why 
the petitioner believes the Commission should make or change the 
determination. Petitions under this section shall be considered by the 
Commission any time following the enactment of this Act. Within 180 
days after receipt of a petition for a rulemaking under this section, 
the Commission shall take final action on the petition. Within 90 days 
after receipt of a petition to issue an order or change an order issued 
under this section, the Commission shall take final action on the 
petition.
  (e) Report to Congress.--If the Commission makes a determination 
described in this section through an order, the Commission shall 
articulate the basis for the determination in a written report 
published in the Federal Register and transmitted to the Committee on 
Agriculture of the House of Representatives and Committee on 
Agriculture, Nutrition, and Forestry of the Senate within 15 days of 
the determination. The determination shall not be effective until 15 
days after the committees receive the report.
  (f) Definitions.--As used in this Act and for purposes of the rules 
issued pursuant to this Act, the following definitions apply:
          (1) U.S. person.--The term ``U.S. person''--
                  (A) means--
                          (i) any natural person resident in the United 
                        States;
                          (ii) any partnership, corporation, trust, or 
                        other legal person organized or incorporated 
                        under the laws of the United States or having 
                        its principal place of business in the United 
                        States;
                          (iii) any account (whether discretionary or 
                        non-discretionary) of a U.S. person; and
                          (iv) any other person as the Commission may 
                        further define to more effectively carry out 
                        the purposes of this section; and
                  (B) does not include the International Monetary Fund, 
                the International Bank for Reconstruction and 
                Development, the Inter-American Development Bank, the 
                Asian Development Bank, the African Development Bank, 
                the United Nations, their agencies or pension plans, or 
                any other similar international organizations or their 
                agencies or pension plans.
          (2) United states swaps requirements.--The term ``United 
        States swaps requirements'' means the provisions relating to 
        swaps contained in the Commodity Exchange Act (7 U.S.C. 1a et 
        seq.) that were added by title VII of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act (15 U.S.C. 8301 et 
        seq.) and any rules or regulations prescribed by the Commodity 
        Futures Trading Commission pursuant to such provisions.
          (3) Foreign jurisdiction.--The term ``foreign jurisdiction'' 
        means any national or supranational political entity with 
        common rules governing swaps transactions.
          (4) Swaps regulatory requirements.--The term ``swaps 
        regulatory requirements'' means any provisions of law, and any 
        rules or regulations pursuant to the provisions, governing 
        swaps transactions or the counterparties to swaps transactions.
  (g) Conforming Amendment.--Section 4(c)(1)(A) of the Commodity 
Exchange Act (7 U.S.C. 6(c)(1)(A)) is amended by inserting ``or except 
as necessary to effectuate the purposes of the Commodity End-User 
Relief Act,'' after ``to grant exemptions,''.

SEC. 315. EXEMPTION OF QUALIFIED CHARITABLE ORGANIZATIONS FROM 
                    DESIGNATION AND REGULATION AS COMMODITY POOL 
                    OPERATORS.

  (a) Exclusion From Definition of Commodity Pool.--Section 1a(11) of 
the Commodity Exchange Act (7 U.S.C. 1a(10)), as so redesignated by 
section 306(b)(1) of this Act, is amended by adding at the end the 
following:
                  ``(C) Exclusion.--The term `commodity pool' shall not 
                include any investment trust, syndicate, or similar 
                form of enterprise excluded from the definition of 
                `investment company' pursuant to sections 3(c)(10) or 
                3(c)(14) of the Investment Company Act of 1940.''.
  (b) Inapplicability of Prohibition on Use of Instrumentalities of 
Interstate Commerce by Unregistered Commodity Trading Advisor.--Section 
4m of such Act (7 U.S.C. 6m) is amended--
          (1) in paragraph (1), in the 2nd sentence, by inserting ``: 
        Provided further, That the provisions of this section shall not 
        apply to any commodity trading advisor that is: (A) a 
        charitable organization, as defined in section 3(c)(10)(D) of 
        the Investment Company Act of 1940, or a trustee, director, 
        officer, employee, or volunteer of such a charitable 
        organization acting within the scope of the employment or 
        duties of the person with the organization, whose trading 
        advice is provided only to, or with respect to, 1 or more of 
        the following: (i) any such charitable organization, or (ii) an 
        investment trust, syndicate or similar form of enterprise 
        excluded from the definition of `investment company' pursuant 
        to section 3(c)(10) of the Investment Company Act of 1940; or 
        (B) any plan, company, or account described in section 3(c)(14) 
        of the Investment Company Act of 1940, any person or entity who 
        establishes or maintains such a plan, company, or account, or 
        any trustee, director, officer, employee, or volunteer for any 
        of the foregoing plans, persons, or entities acting within the 
        scope of the employment or duties of the person with the 
        organization, whose trading advice is provided only to, or with 
        respect to, any investment trust, syndicate, or similar form of 
        enterprise excluded from the definition of `investment company' 
        pursuant to section 3(c)(14) of the Investment Company Act of 
        1940'' before the period; and
          (2) by adding at the end the following:
  ``(4) Disclosure Concerning Excluded Charitable Organizations.--The 
operator of or advisor to any investment trust, syndicate, or similar 
form of enterprise excluded from the definition of `commodity pool' by 
reason of section 1a(10)(C) shall provide, to each donor to the fund, 
trust, syndicate, or similar form of enterprise, at the time of the 
donation or within 90 days after the date of the enactment of this 
subsection, whichever is later, written information describing the 
material terms of the operation of the fund, trust, syndicate, or 
similar form of enterprise.''.

SEC. 316. SMALL BANK HOLDING COMPANY CLEARING EXEMPTION.

  Section 2(h)(7)(C) of the Commodity Exchange Act (7 U.S.C. 
2(h)(7)(C)) is amended by adding at the end the following:
                          ``(iv) Holding companies.--A determination 
                        made by the Commission under clause (ii) shall, 
                        with respect to small banks and savings 
                        associations, also apply to their respective 
                        bank holding company (as defined in section 2 
                        of the Bank Holding Company Act of 1956), or 
                        savings and loan holding company (as defined in 
                        section 10 of the Home Owners' Loan Act of 
                        1933)), if the total consolidated assets of the 
                        holding company are no greater than the asset 
                        threshold set by the Commission in determining 
                        small bank and savings association eligibility 
                        under clause (ii).''.

SEC. 317. CORE PRINCIPLE CERTAINTY.

  Section 5h(f) of the Commodity Exchange Act (7 U.S.C. 7b-3(f)) is 
amended--
          (1) in paragraph (1)(B), by inserting ``except as described 
        in this subsection'' after ``Commission by rule or 
        regulation'';
          (2) in paragraph (2), by amending subparagraph (D) to read as 
        follows:
                  ``(D) have reasonable discretion in establishing and 
                enforcing its rules related to trade practice 
                surveillance, market surveillance, real-time marketing 
                monitoring, and audit trail given that a swap execution 
                facility may offer a trading system or platform to 
                execute or trade swaps through any means of interstate 
                commerce. A swap execution facility shall be 
                responsible for monitoring trading in swaps only on its 
                own facility.'';
          (3) in paragraph (4)(B), by adding at the end the following: 
        ``A swap execution facility shall be responsible for monitoring 
        trading in swaps only on its own facility.'';
          (4) in paragraph (6)(B)--
                  (A) by striking ``shall--'' and all that follows 
                through ``compliance with the'' and insert ``shall 
                monitor the trading activity on its facility for 
                compliance with any''; and
                  (B) by adding at the end the following: ``A swap 
                execution facility shall be responsible for monitoring 
                positions only on its own facility.'';
          (5) in paragraph (8), by striking ``to liquidate'' and all 
        that follows and inserting ``to suspend or curtail trading in a 
        swap on its own facility.'';
          (6) in paragraph (13)(B), by striking ``cover the operating 
        costs of the swap execution facility for a 1-year period, as 
        calculated on a rolling basis'' and inserting ``conduct an 
        orderly wind-down of its operations''; and
          (7) in paragraph (15)--
                  (A) in subparagraph (A), by adding at the end the 
                following: ``The individual may also perform other 
                responsibilities for the swap execution facility.'';
                  (B) in subparagraph (B)--
                          (i) in clause (i), by inserting ``, a 
                        committee of the board,'' after ``directly to 
                        the board'';
                          (ii) by striking clauses (iii) through (v) 
                        and inserting the following:
                          ``(iii) establish and administer policies and 
                        procedures that are reasonably designed to 
                        resolve any conflicts of interest that may 
                        arise;
                          ``(iv) establish and administer policies and 
                        procedures that reasonably ensure compliance 
                        with this Act and the rules and regulations 
                        issued under this Act, including rules 
                        prescribed by the Commission pursuant to this 
                        section; and''; and
                          (iii) by redesignating clause (vi) as clause 
                        (v);
                  (C) in subparagraph (C), by striking ``(B)(vi)'' and 
                inserting ``(B)(v)''; and
                  (D) in subparagraph (D)--
                          (i) in clause (i)--
                                  (I) by striking ``In accordance with 
                                rules prescribed by the Commission, 
                                the'' and inserting ``The''; and
                                  (II) by striking ``and sign''; and
                          (ii) in clause (ii)--
                                  (I) in the matter preceding subclause 
                                (I), by inserting ``or senior officer'' 
                                after ``officer'';
                                  (II) by amending subclause (I) to 
                                read as follows:
                                  ``(I) submit each report described in 
                                clause (i) to the Commission; and''; 
                                and
                                  (III) in subclause (II), by inserting 
                                ``materially'' before ``accurate''.

SEC. 318. TREATMENT OF FEDERAL HOME LOAN BANK PRODUCTS.

  Section 1a(2) of the Commodity Exchange Act (7 U.S.C. 1a(2)) is 
amended--
          (1) in subparagraph (B), by striking ``and'';
          (2) in subparagraph (C), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following:
                  ``(D) is the Federal Housing Finance Agency for any 
                Federal Home Loan Bank (as defined in section 2 of the 
                Federal Home Loan Bank Act).''.

SEC. 319. TREATMENT OF CERTAIN FUNDS.

  (a) Amendment to the Definition of Commodity Pool Operator.--Section 
1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(11)), as so 
redesignated by section 306(b)(1) of this Act, is amended by adding at 
the end the following:
                  ``(C)(i) The term `commodity pool operator' does not 
                include a person who serves as an investment adviser to 
                an investment company registered pursuant to section 8 
                of the Investment Company Act of 1940 or a subsidiary 
                of such a company, if the investment company or 
                subsidiary invests, reinvests, owns, holds, or trades 
                in commodity interests limited to only financial 
                commodity interests.
                  ``(ii) For purposes of this subparagraph only, the 
                term `financial commodity interest' means a futures 
                contract, an option on a futures contract, or a swap, 
                involving a commodity that is not an exempt commodity 
                or an agricultural commodity, including any index of 
                financial commodity interests, whether cash settled or 
                involving physical delivery.
                  ``(iii) For purposes of this subparagraph only, the 
                term `commodity' does not include a security issued by 
                a real estate investment trust, business development 
                company, or issuer of asset-backed securities, 
                including any index of such securities.''.
  (b) Amendment to the Definition of Commodity Trading Advisor.--
Section 1a(13) of such Act (7 U.S.C. 1a(12)), as so redesignated by 
section 306(b)(1) of this Act, is amended by adding at the end the 
following:
                  ``(E) The term `commodity trading advisor' does not 
                include a person who serves as an investment adviser to 
                an investment company registered pursuant to section 8 
                of the Investment Company Act of 1940 or a subsidiary 
                of such a company, if the commodity trading advice 
                relates only to a financial commodity interest, as 
                defined in paragraph (11)(C)(ii) of this section. For 
                purposes of this subparagraph only, the term 
                `commodity' does not include a security issued by a 
                real estate investment trust, business development 
                company, or issuer of asset-backed securities, 
                including any index of such securities.''.

                    TITLE IV--TECHNICAL CORRECTIONS

SEC. 401. CORRECTION OF REFERENCES.

  (a) Section 2(h)(8)(A)(ii) of the Commodity Exchange Act (7 U.S.C. 
2(h)(8)(A)(ii)) is amended by striking ``5h(f) of this Act'' and 
inserting ``5h(g)''.
  (b) Section 5c(c)(5)(C)(i) of such Act (7 U.S.C. 7a-2(c)(5)(C)(i)) is 
amended by striking ``1a(2)(i))'' and inserting ``1a(19)(i))''.
  (c) Section 23(f) of such Act (7 U.S.C. 26(f)) is amended by striking 
``section 7064'' and inserting ``section 706''.

SEC. 402. ELIMINATION OF OBSOLETE REFERENCES TO DEALER OPTIONS.

  (a) In General.--Section 4c of the Commodity Exchange Act (7 U.S.C. 
6c) is amended by striking subsections (d) and (e) and redesignating 
subsections (f) and (g) as subsections (d) and (e), respectively.
  (b) Conforming Amendments.--
          (1) Section 2(d) of such Act (7 U.S.C. 2(d)) is amended by 
        striking ``(g) of'' and inserting ``(e) of''.
          (2) Section 4f(a)(4)(A)(i) of such Act (7 U.S.C. 
        6f(a)(4)(A)(i)) is amended by striking ``, (d), (e), and (g)'' 
        and inserting ``and (e)''.
          (3) Section 4k(5)(A) of such Act (7 U.S.C. 6k(5)(A)) is 
        amended by striking ``, (d), (e), and (g)'' and inserting ``and 
        (e)''.
          (4) Section 5f(b)(1)(A) of such Act (7 U.S.C. 7b-1(b)(1)(A)) 
        is amended by striking ``, (e) and (g)'' and inserting ``and 
        (e)''.
          (5) Section 9(a)(2) of such Act (7 U.S.C. 13(a)(2)) is 
        amended by striking ``through (e)'' and inserting ``and (c)''.

SEC. 403. UPDATED TRADE DATA PUBLICATION REQUIREMENT.

  Section 4g(e) of the Commodity Exchange Act (7 U.S.C. 6g(e)) is 
amended by striking ``exchange'' and inserting ``each designated 
contract market and swap execution facility''.

SEC. 404. FLEXIBILITY FOR REGISTERED ENTITIES.

  Section 5c(b) of the Commodity Exchange Act (7 U.S.C. 7a-2(b)) is 
amended by striking ``contract market, derivatives transaction 
execution facility, or electronic trading facility'' each place it 
appears and inserting ``registered entity''.

SEC. 405. ELIMINATION OF OBSOLETE REFERENCES TO ELECTRONIC TRADING 
                    FACILITIES.

  (a) Section 1a(19)(A)(x) of the Commodity Exchange Act (7 U.S.C. 
1a(18)(A)(x)), as so redesignated by section 306(b)(1) of this Act, is 
amended by striking ``(other than an electronic trading facility with 
respect to a significant price discovery contract)''.
  (b) Section 1a(41) of such Act (7 U.S.C. 1a(40)), as so redesignated 
by section 306(b)(1) of this Act, is amended--
          (1) by adding ``and'' at the end of subparagraph (D); and
          (2) by striking all that follows ``section 21'' and inserting 
        a period.
  (c) Section 4a(e) of such Act (7 U.S.C. 6a(e)) is amended--
          (1) in the 1st sentence--
                  (A) by striking ``or by any electronic trading 
                facility'';
                  (B) by striking ``or on an electronic trading 
                facility''; and
                  (C) by striking ``or electronic trading facility'' 
                each place it appears; and
          (2) in the 2nd sentence, by striking ``or electronic trading 
        facility with respect to a significant price discovery 
        contract''.
  (d) Section 4g(a) of such Act (7 U.S.C. 6g(a)) is amended by striking 
``any significant price discovery contract traded or executed on an 
electronic trading facility or''.
  (e) Section 4i of such Act (7 U.S.C. 6i) is amended--
          (1) by striking ``, or any significant price discovery 
        contract traded or executed on an electronic trading facility 
        or any agreement, contract, or transaction that is treated by a 
        derivatives clearing organization, whether registered or not 
        registered, as fungible with a significant price discovery 
        contract''; and
          (2) by striking ``or electronic trading facility''
  (f) Section 6(b) of such Act (7 U.S.C. 8(b)) is amended by striking 
``or electronic trading facility'' each place it appears.
  (g) Section 12(e)(2) of such Act (7 U.S.C. 16(e)(2)) is amended by 
striking ``in the case of--'' and all that follows and inserting ``in 
the case of an agreement, contract, or transaction that is excluded 
from this Act under section 2(c) or 2(f) of this Act or title IV of the 
Commodity Futures Modernization Act of 2000, or exempted under section 
4(c) of this Act (regardless of whether any such agreement, contract, 
or transaction is otherwise subject to this Act).''.

SEC. 406. ELIMINATION OF OBSOLETE REFERENCE TO ALTERNATIVE SWAP 
                    EXECUTION FACILITIES.

  Section 5h(h) of the Commodity Exchange Act (7 U.S.C. 7b-3(h)) is 
amended by striking ``alternative'' before ``swap''.

SEC. 407. ELIMINATION OF REDUNDANT REFERENCES TO TYPES OF REGISTERED 
                    ENTITIES.

  Section 6b of the Commodity Exchange Act (7 U.S.C. 13a) is amended in 
the 1st sentence by striking ``as set forth in sections 5 through 5c''.

SEC. 408. CLARIFICATION OF COMMISSION AUTHORITY OVER SWAPS TRADING.

  Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended--
          (1) in paragraph (7)--
                  (A) by inserting ``the protection of swaps traders 
                and to assure fair dealing in swaps, for'' after 
                ``appropriate for'';
                  (B) in subparagraph (A), by inserting ``swaps or'' 
                after ``conditions in''; and
                  (C) in subparagraph (B), by inserting ``or swaps'' 
                after ``future delivery''; and
          (2) in paragraph (9)--
                  (A) by inserting ``swap or'' after ``or liquidation 
                of any''; and
                  (B) by inserting ``swap or'' after ``margin levels on 
                any''.

SEC. 409. ELIMINATION OF OBSOLETE REFERENCE TO THE COMMODITY EXCHANGE 
                    COMMISSION.

  Section 13(c) of the Commodity Exchange Act (7 U.S.C. 13c(c)) is 
amended by striking ``or the Commission''.

SEC. 410. ELIMINATION OF OBSOLETE REFERENCES TO DERIVATIVE TRANSACTION 
                    EXECUTION FACILITIES.

  (a) Section 1a(13)(B)(vi) of the Commodity Exchange Act (7 U.S.C. 
1a(12)(B)(vi)), as so redesignated by section 306(b)(1) of this Act, is 
amended by striking ``derivatives transaction execution facility'' and 
inserting ``swap execution facility''.
  (b) Section 1a(35) of such Act (7 U.S.C. 1a(34)), as so redesignated 
by section 306(b)(1) of this Act, is amended by striking ``or 
derivatives transaction execution facility'' each place it appears.
  (c) Section 1a(36)(B)(iii)(I) of such Act (7 U.S.C. 
1a(35)(B)(iii)(I)), as so redesignated by section 306(b)(1) of this 
Act, is amended by striking ``or registered derivatives transaction 
execution facility''.
  (d) Section 2(a)(1)(C)(ii) of such Act (7 U.S.C. 2(a)(1)(C)(ii)) is 
amended--
          (1) by striking ``, or register a derivatives transaction 
        execution facility that trades or executes,'';
          (2) by striking ``, and no derivatives transaction execution 
        facility shall trade or execute such contracts of sale (or 
        options on such contracts) for future delivery''; and
          (3) by striking ``or the derivatives transaction execution 
        facility,''.
  (e) Section 2(a)(1)(C)(v)(I) of such Act (7 U.S.C. 2(a)(1)(C)(v)(I)) 
is amended by striking ``, or any derivatives transaction execution 
facility on which such contract or option is traded,''.
  (f) Section 2(a)(1)(C)(v)(II) of such Act (7 U.S.C. 
2(a)(1)(C)(v)(II)) is amended by striking ``or derivatives transaction 
execution facility'' each place it appears.
  (g) Section 2(a)(1)(C)(v)(V) of such Act (7 U.S.C. 2(a)(1)(C)(v)(V)) 
is amended by striking ``or registered derivatives transaction 
execution facility''.
  (h) Section 2(a)(1)(D)(i) of such Act (7 U.S.C. 2(a)(1)(D)(i)) is 
amended in the matter preceding subclause (I)--
          (1) by striking ``in, or register a derivatives transaction 
        execution facility''; and
          (2) by striking ``, or registered as a derivatives 
        transaction execution facility for,''.
  (i) Section 2(a)(1)(D)(i)(IV) of such Act (7 U.S.C. 
2(a)(1)(D)(i)(IV)) is amended by striking ``registered derivatives 
transaction execution facility,'' each place it appears.
  (j) Section 2(a)(1)(D)(ii)(I) of such Act (7 U.S.C. 
2(a)(1)(D)(ii)(I)) is amended to read as follows:
          ``(I) the transaction is conducted on or subject to the rules 
        of a board of trade that has been designated by the Commission 
        as a contract market in such security futures product; or''.
  (k) Section 2(a)(1)(D)(ii)(II) of such Act (7 U.S.C. 
2(a)(1)(D)(ii)(II)) is amended by striking ``or registered derivatives 
transaction execution facility''.
  (l) Section 2(a)(1)(D)(ii)(III) of such Act (7 U.S.C. 
2(a)(1)(D)(ii)(III)) is amended by striking ``or registered derivatives 
transaction execution facility member''.
  (m) Section 2(a)(9)(B)(ii) of such Act (7 U.S.C. 2(a)(9)(B)(ii)) is 
amended--
          (1) by striking ``or registration'' each place it appears;
          (2) by striking ``or derivatives transaction execution 
        facility'' each place it appears;
          (3) by striking ``or register'';
          (4) by striking ``, registering,''; and
          (5) by striking ``, registration,''.
  (n) Section 2(c)(2) of such Act (7 U.S.C. 2(c)(2)) is amended by 
striking ``or a derivatives transaction execution facility'' each place 
it appears.
  (o) Section 4(a)(1) of such Act (7 U.S.C. 6(a)(1)) is amended by 
striking ``or derivatives transaction execution facility''.
  (p) Section 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is amended--
          (1) by striking ``or registered'' after ``designated''; and
          (2) by striking ``or derivatives transaction execution 
        facility''.
  (q) Section 4a(a)(1) of such Act (7 U.S.C. 6a(a)(1)) is amended--
          (1) by striking ``or derivatives transaction execution 
        facilities''; and
          (2) by striking``or derivatives transaction execution 
        facility''.
  (r) Section 4a(e) of such Act (7 U.S.C. 6a(e)) is amended--
          (1) by striking ``, derivatives transaction execution 
        facility,'' each place it appears; and
          (2) by striking ``or derivatives transaction execution 
        facility''.
  (s) Section 4c(e) of such Act (7 U.S.C. 6c(g)), as so redesignated by 
section 402(a) of this Act, is amended by striking ``or derivatives 
transaction execution facility'' each place it appears.
  (t) Section 4d of such Act (7 U.S.C. 6d) is amended by striking ``or 
derivatives transaction execution facility'' each place it appears.
  (u) Section 4e of such Act (7 U.S.C. 6e) is amended by striking ``or 
derivatives transaction execution facility''.
  (v) Section 4f(b) of such Act (7 U.S.C. 6f(b)) is amended by striking 
``or derivatives transaction execution facility'' each place it 
appears.
  (w) Section 4i of such Act (7 U.S.C. 6i) is amended by striking ``or 
derivatives transaction execution facility''.
  (x) Section 4j(a) of such Act (7 U.S.C. 6j(a)) is amended by striking 
``and registered derivatives transaction execution facility''.
  (y) Section 4p(a) of such Act (7 U.S.C. 6p(a)) is amended by striking 
``, or derivatives transaction execution facilities''.
  (z) Section 4p(b) of such Act (7 U.S.C. 6p(b)) is amended by striking 
``derivatives transaction execution facility,''.
  (aa) Section 5c(f) of such Act (7 U.S.C. 7a-2(f)) is amended by 
striking ``and registered derivatives transaction execution facility''.
  (bb) Section 5c(f)(1) of such Act (7 U.S.C. 7a-2(f)(1)) is amended by 
striking ``or registered derivatives transaction execution facility''.
  (cc) Section 6 of such Act (7 U.S.C. 8) is amended--
          (1) by striking ``or registered'';
          (2) by striking ``or derivatives transaction execution 
        facility'' each place it appears; and
          (3) by striking ``or registration'' each place it appears.
  (dd) Section 6a(a) of such Act (7 U.S.C. 10a(a)) is amended--
          (1) by striking ``or registered'';
          (2) by striking ``or a derivatives transaction execution 
        facility''; and
          (3) by inserting ``shall'' before ``exclude'' the first place 
        such term appears.
  (ee) Section 6a(b) of such Act (7 U.S.C. 10a(b)) is amended--
          (1) by striking ``or registered''; and
          (2) by striking ``or a derivatives transaction execution 
        facility''.
  (ff) Section 6d(1) of such Act (7 U.S.C. 13a-2(1)) is amended by 
striking ``derivatives transaction execution facility,''.

SEC. 411. ELIMINATION OF OBSOLETE REFERENCES TO EXEMPT BOARDS OF TRADE.

  (a) Section 1a(19)(A)(x) of the Commodity Exchange Act (7 U.S.C. 
1a(18)(A)(x)), as so redesignated by section 306(b)(1) of this Act, is 
amended by striking ``or an exempt board of trade''.
  (b) Section 12(e)(1)(B)(i) of such Act (7 U.S.C. 16(e)(1)(B)(i)) is 
amended by striking ``or exempt board of trade''.

SEC. 412. ELIMINATION OF REPORT DUE IN 1986.

  Section 26 of the Futures Trading Act of 1978 (7 U.S.C. 16a) is 
amended by striking subsection (b) and redesignating subsection (c) as 
subsection (b).

SEC. 413. COMPLIANCE REPORT FLEXIBILITY.

  Section 4s(k)(3)(B) of the Commodity Exchange Act (7 U.S.C. 
6s(k)(3)(B)) is amended to read as follows:
                  ``(B) Requirements.--A compliance report under 
                subparagraph (A) shall--
                          ``(i) include a certification that, under 
                        penalty of law, the compliance report is 
                        materially accurate and complete; and
                          ``(ii) be furnished at such time as the 
                        Commission determines by rule, regulation, or 
                        order, to be appropriate.''.

SEC. 414. MISCELLANEOUS CORRECTIONS.

  (a) Section 1a(13)(A)(i)(II) of the Commodity Exchange Act (7 U.S.C. 
1a(12)(A)(i)(II)), as so redesignated by section 306(b)(1) of this Act, 
is amended by adding at the end a semicolon.
  (b) Section 2(a)(1)(C)(ii)(III) of such Act (7 U.S.C. 
2(a)(1)(C)(ii)(III)) is amended by moving the provision 2 ems to the 
right.
  (c) Section 2(a)(1)(C)(iii) of such Act (7 U.S.C. 2(a)(1)(C)(iii)) is 
amended by moving the provision 2 ems to the right.
  (d) Section 2(a)(1)(C)(iv) of such Act (7 U.S.C. 2(a)(1)(C)(iv)) is 
amended by striking ``under or'' and inserting ``under''.
  (e) Section 2(a)(1)(C)(v) of such Act (7 U.S.C. 2(a)(1)(C)(v)) is 
amended by moving the provision 2 ems to the right.
  (f) Section 2(a)(1)(C)(v)(VI) of such Act (7 U.S.C. 
2(a)(1)(C)(v)(VI)) is amended by striking ``III'' and inserting 
``(III)''.
  (g) Section 2(c)(1) of such Act (7 U.S.C. 2(c)(1)) is amended by 
striking the 2nd comma.
  (h) Section 4(c)(3)(H) of such Act (7 U.S.C. 6(c)(3)(H)) is amended 
by striking ``state'' and inserting ``State''.
  (i) Section 4c(c) of such Act (7 U.S.C. 6c(c)) is amended to read as 
follows:
  ``(c) The Commission shall issue regulations to continue to permit 
the trading of options on contract markets under such terms and 
conditions that the Commission from time to time may prescribe.''.
  (j) Section 4d(b) of such Act (7 U.S.C. 6d(b)) is amended by striking 
``paragraph (2) of this section'' and inserting ``subsection (a)(2)''.
  (k) Section 4f(c)(3)(A) of such Act (7 U.S.C. 6f(c)(3)(A)) is amended 
by striking the 1st comma.
  (l) Section 4f(c)(4)(A) of such Act (7 U.S.C. 6f(c)(4)(A)) is amended 
by striking ``in developing'' and inserting ``In developing''.
  (m) Section 4f(c)(4)(B) of such Act (7 U.S.C. 6f(c)(4)(B)) is amended 
by striking ``1817(a)'' and inserting ``1817(a))''.
  (n) Section 5 of such Act (7 U.S.C. 7) is amended by redesignating 
subsections (c) through (e) as subsections (b) through (d), 
respectively.
  (o) Section 5b of such Act (7 U.S.C. 7a-1) is amended by 
redesignating subsection (k) as subsection (j).
  (p) Section 5f(b)(1) of such Act (7 U.S.C. 7b-1(b)(1)) is amended by 
striking ``section 5f'' and inserting ``this section''.
  (q) Section 6(a) of such Act (7 U.S.C. 8(a)) is amended by striking 
``the the'' and inserting ``the''.
  (r) Section 8a of such Act (7 U.S.C. 12a) is amended in each of 
paragraphs (2)(E) and (3)(B) by striking ``Investors'' and inserting 
``Investor''.
  (s) Section 9(a)(2) of such Act (7 U.S.C. 13(a)(2)) is amended by 
striking ``subsection 4c'' and inserting ``section 4c''.
  (t) Section 12(b)(4) of such Act (7 U.S.C. 16(b)(4)) is amended by 
moving the provision 2 ems to the left.
  (u) Section 14(a)(2) of such Act (7 U.S.C. 18(a)(2)) is amended by 
moving the provision 2 ems to the left.
  (v) Section 17(b)(9)(D) of such Act (7 U.S.C. 21(b)(9)(D)) is amended 
by striking the semicolon and inserting a period.
  (w) Section 17(b)(10)(C)(ii) of such Act (7 U.S.C. 21(b)(10)(C)(ii)) 
is amended by striking ``and'' at the end.
  (x) Section 17(b)(11) of such Act (7 U.S.C. 21(b)(11)) is amended by 
striking the period and inserting a semicolon.
  (y) Section 17(b)(12) of such Act (7 U.S.C. 21(b)(12)) is amended--
          (1) by striking ``(A)''; and
          (2) by striking the period and inserting ``; and''.
  (z) Section 17(b)(13) of such Act (7 U.S.C. 21(b)(13)) is amended by 
striking ``A'' and inserting ``a''.
  (aa) Section 17 of such Act (7 U.S.C. 21), as amended by sections 101 
through 103 of this Act, is amended by redesignating subsection (q), as 
added by section 233(5) of Public Law 97-444, and subsections (s) 
through (w) as subsections (r) through (x), respectively.
  (bb) Section 22(b)(3) of such Act (7 U.S.C. 25(b)(3)) is amended by 
striking ``of registered'' and inserting ``of a registered''.
  (cc) Section 22(b)(4) of such Act (7 U.S.C. 25(b)(4)) is amended by 
inserting a comma after ``entity''.

                           Brief Explanation


                     Title I--Customer Protections

    The Commodity End-User Relief Act, H.R. 2289, will better 
protect farmers and ranchers who use the futures markets by 
cementing several new regulatory customer protections into law. 
Added protections include mandates to:
     Require regulators to electronically confirm 
customer fund account balances held at depository institutions. 
This eliminates the flawed reporting system that allowed the 
management of Peregrine Financial Group, Inc. to use forged 
paper documents to steal millions of dollars of customers' 
money.
     Require firms that move more than a certain 
percentage of customer funds from one account to another to 
follow strict reporting and permission requirements before 
doing so. This provides a new safeguard to prevent a firm from 
moving funds from one account to another, without regulators 
knowing about it, as happened during the MF Global, Inc. (MF 
Global) bankruptcy.
     Require firms who become undercapitalized to 
immediately notify regulators so they can assess the firm's 
viability and act, if needed, to protect customer funds.
     Require firms to file an annual report with 
regulators from the chief compliance officer containing an 
assessment of a futures commission merchant's (FCM) internal 
compliance programs.
     Ensure farmers, ranchers, and other futures 
customers have a full business day to send their margin 
payments to an FCM, which mitigates costs of over-funding 
accounts.
     Provide legal clarity for futures customers that 
the assets of a bankrupt commodity broker would be used to help 
pay back any misappropriated or illegally transferred customer 
segregated funds.

         Title II--Commodity Futures Trading Commission Reforms

    In the past five years, the U.S. Commodity Futures Trading 
Commission (CFTC) has finalized approximately 50 rules to 
enforce the new law. In that time span, the CFTC has also 
issued an unprecedented 258 ``no-action'' letters, 56 exemptive 
letters and 43 statements of guidance, interpretation and 
advice in order to delay, revise, or exempt the application of 
these regulations upon various market participants. This 
haphazard patchwork of exemptions has been widely used in lieu 
of a thorough and well-reasoned rulemaking process. H.R. 2289 
reauthorizes the CFTC through 2019 and makes reforms to CFTC 
operations to help ensure that all Commissioners' voices are 
heard as a part of a more deliberative rulemaking process. 
These reforms include:
     Modifying the Commodity Exchange Act's (CEA's) 
cost-benefit analysis requirements for proposed rules, to more 
closely track those set forth in Executive Order 13563.
     Making the Commission's division directors 
answerable to the entire Commission, not just the Chairman's 
office.
     Creating a new Office of the Chief Economist 
answerable to the entire Commission, to provide objective 
economic data and analysis.
     Enhancing the CFTC staff procedures governing the 
issuance of ``no-action'' letters to improve Commissioners' 
oversight of the activities happening outside the official 
rulemaking process.
     Requiring the CFTC to develop a strategic 
technology plan every five years focused on market surveillance 
and risk detection, which must also include a detailed 
accounting of how funds provided for technology will be used.
     Requiring the Commission and the OCE to develop 
comprehensive internal risk control mechanisms to safeguard 
market data.
     Ensuring that every Commissioner has a seat at the 
table in approving the renewal of omnibus orders of 
investigation that authorize the issuance of subpoenas.
     Creating a judicial review process similar to that 
of the Securities and Exchange Commission's (SEC) for 
rulemakings to ensure the two regulators charged with 
overseeing the derivatives markets have similar procedures in 
place to allow market participants to challenge Commission 
rules.
     Prohibiting the Commission from issuing policy 
statements, guidance, interpretive rules, or other procedural 
rules that have the ultimate effect of law, without providing 
the public the notice and the opportunity to comment as 
required in the Administrative Procedure Act.
     Directing the Government Accountability Office 
(GAO) to conduct a study on the sufficiency of CFTC resources 
and examine prior expenditures of funds on market surveillance 
and market data collection, standardization, and harmonization. 
The study will also explore areas where self-regulatory 
organizations could reduce the CFTC's workload.
     Requiring the Commission to review and take action 
on the London Metal Exchange's application to register as a 
foreign board of trade in efforts to mitigate disruptive queues 
for aluminum and to promote a more efficient and transparent 
aluminum market.
     Providing greater protection of Commodity Pool 
Operators' (CPO) and Commodity Trading Advisors' (CTA) 
proprietary information that is submitted to the Commission on 
certain mandated disclosure documents.

                       Title III--End-User Relief

    Title III of the Commodity End-User Relief Act addresses 
the concerns shared with the Committee by many end-users over 
the past four years. These market participants are not 
speculators or risk-takers, yet they have borne the brunt of 
many of the consequences of our new regulations. Agricultural 
producers, manufacturers, electric and gas utilities, and 
pension plans have each testified about how their business are 
facing new barriers to entering these markets--from increased 
transaction costs, to increased compliance burdens, to fewer 
trading partners. Title III addresses the following concerns:
     Companies using centralized treasury units to 
manage and offset the risk of their affiliates will no longer 
be subject to burdensome and unnecessary clearing requirements.
     Trusted foreign regulators should not--and often 
cannot--be required to indemnify the CFTC for costs associated 
with the loss of data from a U.S. Swap Data Repository. The 
legal concept of indemnification does not exist within the tort 
law of all foreign jurisdictions. The bill removes that 
unworkable provision of the CEA, while maintaining the 
requirement for written confidentiality agreements.
     Government-owned utilities should not be deterred 
from entering into swaps with non-financial counterparties, 
such as natural gas producers and independent power generators, 
in order to hedge against operational risk. The bill codifies 
municipal utility companies' cost-effective access to the 
customized, non-financial commodity swaps that utility special 
entities have used for years.
     Commercial end-users should not be classified and 
treated like banks, and the bill corrects the definition of 
``financial entity'' to ensure that they are not.
     Non-financial end-users should not be 
disadvantaged in the marketplace if they use contracts that 
trade so infrequently that other market participants can 
identify them through the new public reporting requirements. 
The bill would ensure that end-users hedging in thinly-traded 
markets are provided adequate time between completing and 
reporting a transaction to protect their position.
     Grain elevators, farmers, agriculture 
counterparties, and commercial market participants should not 
be subject to overreaching recordkeeping rules that require the 
recording of all forms of communication that may possibly lead 
to a trade. The bill specifies that keeping written records of 
the final material economic terms of an agreement will be 
sufficient for market participants who are only managing their 
own money.
     Contracts that contain an option to change the 
amount of a commodity delivered, but result in actual physical 
delivery of a commodity should not be regulated as swaps. This 
impacts utilities that use natural gas to produce electricity, 
in addition to millions of consumers who use natural gas to 
heat their homes.
     Non-bank swap dealers should not be required to 
hold exponentially more capital than their bank counterparts. 
This bill would ensure that swap dealers without a prudential 
regulator would be able to use workable capital requirement 
formulas.
     On December 31, 2017, the de minimis exception 
from the swap dealer definition will be reduced by $5 billion 
because several years ago, the Commission arbitrarily decided 
it should. The bill will require a vote on a new regulation to 
change the current threshold, after the Commission completes a 
planned study on the issue.
     An oversight in the JOBS Act should not prohibit 
funds also registered as commodity pool operators from 
soliciting certain potential new investors. The bill makes a 
conforming change to CFTC regulations to bring them in line 
with the JOBS Act.
     End-users' ability to hedge against anticipated 
business risks should not be limited by the CFTC's arbitrary 
narrowing of acceptable hedging activities. The bill provides a 
more workable definition of bona fide hedging as it relates to 
position limits.
     In 50 rulemakings, the Commission still has not 
set out a rule that defines who is subject to U.S. rules, who 
is not subject to U.S. rules, and what to do when international 
rules conflict. The bill would require the CFTC to finally put 
in place a comprehensive plan for how to address the 
international nature of swaps trading and to determine how to 
share regulatory obligations over transactions that cross 
international boundaries.
     Universities, churches, and other charitable 
organizations should have the full benefit of commodities 
investments that provide diversification, opportunities to 
hedge, and returns to their respective beneficiaries. The bill 
extends the long-standing exemptions present in securities laws 
to the commodities laws, to these charitable organizations, 
thus harmonizing the overarching regulatory structure and 
eliminating onerous registration requirements for these 
entities.
     Mutual funds that are extensively regulated by the 
SEC and that do not invest in traditional commodity interests 
should not be subject to unnecessary and duplicative CFTC 
registration requirements. The bill reverses part of a recent 
CFTC rule change and restores exclusive SEC jurisdiction over 
those funds that invest only in financial derivatives.
     Small banks and savings associations that manage 
risk through swaps entered into with their holding companies 
should not be subject to unnecessary clearing mandates. The 
bill addresses this by extending clearing exemptions granted to 
small banks and savings associations to the holding companies 
of those associations.
     Swap Execution Facilities (SEFs) should not be 
subject to regulations that impose significant costs and 
prescribe onerous burdens that impede development and 
potentially contribute to their failure. The bill provides SEFs 
with more flexibility and added certainty to allow for more 
efficient operations.
     Community financial institutions should be able to 
maintain affordable access to financial services that help them 
structure their products to meet the needs of the communities 
they serve and to prudently manage their balance sheets. The 
bill assures this continued access by clarifying that Federal 
Home Loan Bank advances should not be regulated as swaps.

                    Title IV--Technical Corrections

    Working with the CFTC, House Legislative Counsel, and 
market participants, the Committee has prepared a section of 
technical edits and changes to the Commodity Exchange Act which 
correct references, remove obsolete terms, comport ambiguous 
text to existing practices, fix formatting errors, and remove a 
study due to Congress in 1986.

                            Purpose and Need


                     Title I--Customer Protections

    When futures commission merchant (FCM) MF Global, Inc. (MF 
Global), failed in November of 2011 and Peregrine Financial 
Group, Inc. (Peregrine or PFG), followed suit in July of 2012, 
thousands of farmers, ranchers, and futures customers 
collectively lost more than a billion dollars in customer funds 
that were thought to be segregated by law apart from the funds 
of the FCMs. The bankruptcy of these two firms, caused by gross 
mismanagement or outright fraud, resulted in tremendous 
hardship for a large segment of the U.S. agricultural community 
and created serious public doubts about the safety of using the 
futures markets to manage risk. After both failures, the 
Committee held several hearings and heard from numerous 
witnesses over the course of the 112th, 113th, and 114th 
Congresses to examine why these failures occurred and how 
public confidence could be restored in the futures markets.
    As a result of the Committee's work, Title I of H.R. 2289 
is designed to better protect futures customers and restore 
confidence in the marketplace while also providing regulators 
with enhanced tools to supervise FCMs. Importantly, sections 
101, 102 and 103 of H.R. 2289 would codify regulatory changes 
already implemented by both the National Futures Association 
(NFA) and the CFTC, therefore the Committee does not intend for 
any of these sections to require new rulemakings by the NFA or 
CFTC in order to implement the requirements of the legislation. 
Section 104, however, contains statutory changes that are in 
conflict with existing CFTC regulations, so the Committee would 
expect expedited action from the CFTC to conform its 
regulations to the legislation when enacted into law to provide 
for certainty in the marketplace.

Section 101--Enhanced protections for futures customers

    After MF Global filed for bankruptcy, it was revealed that 
in the final days before the firm's failure, customer 
segregated funds (cash deposits, securities, or other property 
of customers held by the firm to margin or guarantee futures 
trading) were used to fund the company's liquidity needs 
related to aggressive and ultimately ill-advised investments in 
European sovereign debt securities. Section 101 would provide 
the NFA and CFTC with the statutory authority to help supervise 
and prevent future mismanagement involving the illegal transfer 
of customer segregated funds.
    Accordingly, Section 101 would broadly codify regulatory 
changes proposed by the NFA, and approved by the CFTC in July 
2012 (NFA Financial Requirements Section 16), requiring FCMs to 
strengthen their controls over the treatment and monitoring of 
funds held for customers trading in the U.S. (``segregated'') 
and foreign (``Part 30 secured'') futures and options markets. 
Notable changes contained in the new NFA rules that would meet 
the statutory requirements of Section 101 include: (1) FCMs 
must now hold sufficient funds in Part 30 secured accounts to 
meet their total obligations to customer trading; (2) FCMs must 
maintain written policies and procedures governing the 
maintenance of excess (i.e., proprietary or residual) funds in 
customer segregated and Part 30 secured trading accounts; (3) 
any withdrawals of more than 25% of the excess segregated or 
Part 30 secured funds that are not for the benefit of customers 
must be pre-approved in writing by the FCM's senior management; 
and (4) FCMs must file notice with the NFA of any withdrawal of 
25% or more of the excess segregated or Part 30 secured amount 
funds that are not for the benefit of customers.
    On July 25, 2012, at a hearing entitled ``Oversight of the 
Swaps and Futures Markets: Recent Events and Impending 
Regulatory Reforms,'' the following testimony was provided by 
witnesses with respect to NFA provisions incorporated in 
Section 101:

          All of these rule changes promote greater 
        transparency for both customers and regulators and 
        should help prevent a recurrence of the type of 
        problems we saw at MF Global. These rule changes, 
        however, are only the beginning. The MF Global and 
        Peregrine customer losses are a painful reminder that 
        we must continuously improve our surveillance, audit 
        and fraud detection techniques to keep pace with 
        changing technology and an ever-more-complicated 
        financial marketplace.
        --Mr. Daniel Roth, President, NFA

          In direct response to the MFG collapse, the ``Corzine 
        Rule'' will be implemented on September 1st. The 
        ``Corzine Rule'' requires the CEO or CFO of the FCM to 
        pre-approve in writing any disbursement of customer 
        segregated funds not made for the benefit of customers 
        and that exceeds 25% of the firm's excess segregated 
        funds. The CME (or other [self-regulatory organizations 
        (SRO)] must be immediately notified of the pre-
        approval.
        --Mr. Terrance A. Duffy, Executive Chairman & 
        President, CME Group Inc. (CME)

          We also recommended and supported rules adopted by 
        the Chicago Mercantile Exchange and National Futures 
        Association that subject all FCMs to enhanced 
        recordkeeping and reporting obligations, including . . 
        . requiring the chief financial officer or other 
        appropriate senior officer to authorize in writing and 
        promptly notify the FCM's [designated self-regulatory 
        organization (DSRO)] whenever an FCM seeks to withdraw 
        more than 25 percent of its excess funds from the 
        customer segregated account in any day. These changes 
        have now been approved by the Commission.
        --Hon. Walt Lukken, President & Chief Executive 
        Officer, Futures Industry Association (FIA)

    On March 14, 2013, at a hearing entitled ``Examining 
Legislative Improvements to Title VII of the Dodd-Frank Act,'' 
the Hon. Gary Gensler, Chairman, CFTC, provided the following 
testimony with respect to provisions that were ultimately 
included in Section 101:

          The Commission also worked closely with market 
        participants on new customer protection rules adopted 
        by the self-regulatory organization (SRO), the National 
        Futures Association (NFA). These include requiring FCMs 
        to hold sufficient funds for U.S. foreign futures and 
        options customers trading on foreign contract markets 
        (in Part 30 secured accounts). Starting last year, they 
        must meet their total obligations to customers trading 
        on foreign markets under the net liquidating equity 
        method. In addition, withdrawals of 25 percent or more 
        of excess segregated funds would necessitate pre-
        approval in writing by senior management and must be 
        reported to the designated SRO and the CFTC.

    On May 21, 2013, testifying before the Committee at a 
hearing entitled ``The Future of the CFTC: Market 
Perspectives,'' Mr. Daniel Roth, President, NFA, provided the 
following testimony with respect to the provisions included in 
Section 101:

          All FCMs maintain excess segregated funds. These are 
        funds deposited by the FCM into customer segregated 
        accounts to act as a buffer in the event of customer 
        defaults. Because these funds belong to the FCM, the 
        FCM is free to withdraw the excess funds, but after MF 
        Global, NFA and the CME adopted rules to ensure notice 
        to regulators and accountability within the firm. Now 
        all FCMs must provide regulators with immediate 
        notification if they draw down their excess segregated 
        funds by 25% in any given day. Such withdrawals must be 
        approved by the CEO, CFO or a financial principal of 
        the firm and the principal must certify that the firm 
        remains in compliance with segregation requirements. 
        This rule became effective on September 1, 2012.

Section 102--Electronic confirmation of customer funds

    On Monday, July 9, 2012, the founder and Chairman of 
Peregrine, Russell R. Wasendorf Sr., unsuccessfully attempted 
suicide outside of the firm's Cedar Falls, Iowa, headquarters. 
He left a note admitting to producing elaborate forgeries of 
bank documents submitted to regulators. In court filings the 
next day, the CFTC alleged that Peregrine and Wasendorf 
``committed fraud by misappropriating customer funds, violated 
customer fund segregation laws, and made false statements in 
financial statements filed with the [CFTC]'' and that Wasendorf 
may have falsified certain bank records. According to press 
reports, Mr. Wasendorf's suicide attempt, which led to the 
discovery of the fraud, occurred only days after the NFA first 
required Peregrine to electronically confirm customer balances 
directly through a third-party electronic auditing system with 
Peregrine's banks. Prior to this requirement, self regulatory 
organizations such as the NFA and CME had relied on paper 
statements from an FCM's bank.
    Section 102 would provide broad statutory authority to 
codify regulatory changes first proposed in 2012 by a special 
committee composed of futures industry SROs (including CME, 
NFA, InterContinental Exchange, the Kansas City Board of Trade, 
and the Minneapolis Grain Exchange) to require: (1) 
confirmation of the balances of customer segregated bank 
accounts for all FCMs using a web-based electronic confirmation 
process; (2) all FCMs to provide their designated-SRO with 
direct online access to confirm segregated and secured funds 
balances at the banks which hold the FCM's customer segregated 
and secured funds; and (3) any bank that fails to provide 
electronic online access will not be considered an acceptable 
depository for holding customer segregated and secured funds.
    Notably, in light of the Peregrine fraud, Section 102 would 
also provide the statutory authority for regulations that 
require FCMs to file segregation and Part 30 secured amount 
computations on a daily basis with the NFA. Additionally, FCMs 
must file with the NFA detailed information regarding the banks 
holding customer funds and the investments made with customer 
funds as of the 15th and last business day of each month.
    On July 25, 2012, at a hearing entitled ``Oversight of the 
Swaps and Futures Markets: Recent Events and Impending 
Regulatory Reforms,'' the following testimony was provided by 
witnesses with respect to provisions the Committee decided to 
include in Section 102:

          NFA intends to expand this approach, once it is 
        implemented, to receive daily reports from all 
        depositories for customer segregated accounts, 
        including clearing FCMs. We will develop a program to 
        compare these balances with those reported by the firms 
        in their daily segregation reports. While there may be 
        reconciling items due to pending additions and 
        withdrawals, the system will generate an immediate 
        alert for any material discrepancies. We have also 
        agreed with the CME to perform an immediate 
        confirmation of all customer segregated bank accounts 
        for all of our FCM Members using the e-confirmation 
        process I referred to earlier. The completion of this 
        work within the next week or so should help ensure that 
        another Peregrine is not lurking in the industry.
        --Mr. Daniel Roth, President, NFA

          First, FIA strongly supports providing regulators 
        with the independent ability to electronically review 
        and confirm customer segregated balances across every 
        FCM at any time. Second, FIA supports the creation of 
        an automated confirmation process for segregated funds 
        that will provide regulators with timely information 
        that customer funds are secure. Technology solutions 
        can help prevent this type of event from occurring 
        again.
        --Hon. Walt Lukken, President and Chief Executive 
        Officer, FIA

    On October 2, 2013, testifying before the Committee at a 
hearing entitled ``The Future of the CFTC: Perspectives on 
Customer Protections,'' Mr. Daniel Roth, President, NFA, 
provided the following testimony:

          For years, NFA and other SROs confirmed FCM reports 
        regarding the customer segregated funds held by the FCM 
        through traditional paper confirmations mailed to the 
        banks holding those funds. These confirmations were 
        done as part of the annual examination process. In 
        early 2012 NFA began confirming bank balances 
        electronically through an e-confirm process. That 
        change led to the discovery of the fraud at PFG, but e-
        confirms were still done as part of the annual 
        examination. We had to find a better way and we did. We 
        partnered with the CME and developed a process by which 
        NFA and the CME confirm all balances in all customer 
        segregated bank accounts on a daily basis. FCMs file 
        daily reports with NFA and the CME, reflecting the 
        amount of customer funds the FCM is holding. Through a 
        third-party vendor, NFA and CME get daily reports from 
        banks for the over 2,000 customer segregated bank 
        accounts maintained by FCMs. We then perform an 
        automated comparison of the reports from the FCMs and 
        the reports from the banks to identify any suspicious 
        discrepancies. In short, Mr. Chairman, the process by 
        which we monitor FCMs for segregated fund compliance is 
        now far ahead of where it was just one year ago. We 
        have recently expanded this system to also obtain daily 
        confirmations from clearing firms and will expand it 
        again by the end of the year to include clearinghouses 
        as well.

Section 103--Notice and certifications providing additional customer 
        protections

    On October 22, 2012, the CFTC proposed additional rules to 
enhance several aspects of supervision in order to better 
protect customers of FCMs. Just over a year later, these new 
rules were finalized and adopted by the CFTC. In order to 
codify the CFTC's authority to increase customer protections, 
Section 103 would require that FCMs notify both the CFTC and 
the appropriate SRO when they become under-capitalized or 
under-segregated. By legally requiring that an FCM notify 
authorities as soon as the firm is faced with an 
undercapitalization scenario, regulators will have the power to 
step in and take preventative or corrective action to protect 
customer segregated funds. This would help prevent the same 
type of harm to customers that occurred when MF Global 
illegally transferred hundreds of millions of dollars of 
customer segregated funds to cover its trading shortfalls.
    Similarly, Section 103 requires FCMs to file a report at 
the end of each fiscal year that details an assessment of an 
FCM's internal compliance programs so the Commission can 
evaluate whether the controls are adequate or need to be 
improved or modified.
    On October 2, 2013, testifying before the Committee at a 
hearing entitled ``The Future of the CFTC: Perspectives on 
Customer Protections,'' Mr. Daniel Roth, President, NFA, 
provided the following testimony with respect to the CFTC's 
provisions included in Section 103:

          The Commission also proposed its own changes to 
        customer protection rules in a 107-page Federal 
        Register release last year. Certain parts of the 
        Commission's proposals have provoked strong opposition 
        both from the industry and from end-users of the 
        markets, particularly in the agricultural sector. As 
        described below, NFA shares many of the concerns raised 
        by others, but we fully support many of the 
        Commission's proposals. For example, the Commission's 
        proposed rules would:
           Require SROs to expand their testing of FCM 
        internal controls and develop more sophisticated 
        measures of the risks posed by each FCM;
           Require that FCM certified annual financial 
        reports and reports from the chief compliance officer 
        be filed within 60 days of the firm's fiscal year end;
           Require that an FCM that is undercapitalized 
        provide immediate notice to the Commission and its DSRO 
        . . .

Section 104--Futures Commission Merchant compliance

    In October 2013, the CFTC adopted rules regarding the 
posting of margin that it said were designed to prevent a MF 
Global level failure from recurring and to protect customers in 
the event of such a failure. The rule adopted by the CFTC 
requires FCMs to deposit their own funds into the customer 
segregated account to cover each undermargined customer's 
shortfall. This deposit is known as the ``residual interest'' 
and it affects when customers must respond to a margin call by 
their FCM.
    Specifically, the CFTC has required FCMs to deposit enough 
of the firm's money in the customer segregated account to cover 
any customer's undermargined accounts, as calculated, by the 
start of the next business day. The rule also contained a 
phased-in compliance schedule through December 31, 2018, that 
would have temporarily allowed FCM's to make their residual 
interest deposit by 6:00 p.m. the next business day.
    While customers previously had three business days to 
respond to a margin call, market participants worried that the 
new rule would incentivize FCMs to require customers to meet 
all margin calls by 9:00 a.m. at the start of the next business 
day. Market participants asked the CFTC to amend the rule and 
permanently set the residual interest deadline to 6:00 PM on 
the day following a trade, eliminating the 9:00 a.m. deadline.
    On March 18, 2015, the CFTC amended its rule by removing 
the December 31, 2018 termination date of the phased-in 
compliance period. The rule effectively extends the phase-in 
period indefinitely, while still maintaining in regulation an 
eventual 9:00 a.m. residual interest deadline, pending the 
completion of a study by CFTC staff and a Commission vote. As a 
result, the deadline would not move to earlier than 6:00 pm the 
day of settlement, without an affirmative CFTC action and an 
opportunity for public comment.
    On March 25, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Market Participant Views,'' Mr. Terrance A. Duffy, 
Executive Chairman & President, CME, provided the following 
testimony with respect to the provisions included in Section 
104:

          CME remains fully committed to protecting Futures 
        Commission Merchants (``FCM'') customers against the 
        full range of wrongful FCM misconduct that may result 
        in loss of customer funds. In 2012, the CFTC proposed a 
        rule that, under a phased-in schedule, would have 
        required an FCM to maintain at all times a sufficient 
        amount of its own funds (``residual interest'') in 
        customer-segregated accounts to equal or exceed the 
        total amount of its customers' margin deficiencies. As 
        noted in prior testimony, no system exists to enable an 
        FCM to continuously and accurately calculate customer 
        margin deficiencies in real time. The net result would 
        be that either FCMs would be forced to post their own 
        collateral into customer accounts, or customers would 
        be forced to over-collateralize their margin accounts 
        at all times. Neither outcome constitutes an efficient 
        use of capital and would effectively render derivatives 
        markets prohibitively expensive and unusable for end-
        users.
          We applaud the CFTC for moving away from the ``at all 
        times'' requirement and further eliminating last week 
        the automatic acceleration in 2018 of the posting 
        deadline to a time occurring earlier than 6:00 pm the 
        day of settlement. This Committee codified in the 
        Reauthorization Bill passed by the House last Congress 
        a provision that would permanently establish the 
        residual interest posting deadline at the end of each 
        business day, calculated as of the close of business 
        the previous business day. CME again supports the 
        inclusion of such a provision in any Reauthorization 
        Bill considered by the Committee during the current 
        Congress.

    In order to address the significant concerns voiced by 
market participants, regulators, and other stakeholders, the 
Committee directs the CFTC, in carrying out the requirements of 
Section 104, to consider an FCM in compliance with any 
requirements to use its own proprietary funds, in the form of 
residual interest, to satisfy margin deficits of the FCM's 
customers if such requirements are met at the end of the first 
business day following a trade date.

Section 105--Certainty for futures customers and market participants

    CFTC Regulation 190.08(a)(1)(ii)(J) (17 C.F.R. 190) defines 
customer property as including ``cash, securities or other 
property of the debtor's estate, including the debtor's trading 
or operating accounts and commodities of the debtor held in 
inventory, but only to the extent that the property enumerated 
is insufficient to satisfy in full all claims of public 
customers.'' The Committee's plain reading of this CFTC 
regulation is that property of the debtor FCM, even though not 
held as customer property, becomes customer property to the 
extent necessary to satisfy net equity claims of ``public 
customers,'' who are defined in Regulation 190.01 as all 
customers other than certain control persons, affiliates, and 
related parties (i.e.: non-public customers). In effect, in 
order to protect the funds of customers held in segregation, 
Regulation 190.08 subordinates the claims of non-public 
customers and non-customer creditors, other than properly 
perfected liens on such property of the debtor, to the claims 
of public customers with respect to the property of the FCM 
that was not held (and not required to be held) as customer 
property.
    However, in 2000, doubts as to the validity of Regulation 
190.08(a)(1)(ii)(J) arose after a federal bankruptcy court (In 
re Griffin Trading Co., 245 B.R. 291 (Bankr. N.D. Ill. 2000)) 
rejected an attempt by the trustee to use a bankrupt commodity 
broker's estate to pay shortfalls in the customer accounts. 
Among the issues in the case, which was later settled and the 
court's holding vacated therefore resulting in no binding 
judicial precedent, was whether the CFTC's broad definition of 
``customer property'' in Regulation 190.08 would determine 
which assets could be used to repay customers. The court found 
that the CFTC exceeded its statutory authority in enacting 
Regulation 190.08 with a definition of customer property more 
expansive than that used in the U.S. bankruptcy code. Further, 
the court found that, ``any shortfall in the customer property 
as defined in [the bankruptcy code] must be treated as a 
general unsecured claim.'' This vacated court decision has left 
uncertainty about whether, in the event that customer assets 
are insufficient to cover all customer claims, customers can 
have first priority to an FCM's general estate assets until all 
customer claims are paid in full.
    On March 24, 2015, testifying at a hearing entitled 
``Reauthorizing the CFTC: Market Participant Views,'' Mr. 
Daniel Roth, President, NFA, provided the following testimony 
with respect to the need for the provisions included in Section 
105:

          The CFTC, a long time ago, had adopted a rule that 
        provided that if an FCM was in bankruptcy, and if there 
        was a shortfall in segregated funds, then customers 
        received priority over all the other creditors of the 
        FCM, and that was a good rule. That rule has served the 
        industry well, it has served the customers well.
          Unfortunately, a few years ago a lower court opinion 
        cast some doubt on the validity of that rule. The court 
        had questioned the CFTC's authority to adopt the rule 
        that it had adopted. Last year's bill contained 
        language to clarify that point, and to make clear that 
        the Commission did have the authority to adopt that 
        rule. We supported that rule--that provision then, we 
        support it now. We hope it is in the bill that comes 
        out of this Committee this year.

    In order to provide clarity for the marketplace and make 
clear that the CFTC did not exceed its authority to promulgate 
Regulation 190.08 under Section 20(a) of the CEA, the Committee 
intends for Section 105 to provide for the broad use of the 
assets of a commodity broker's estate, other than secured 
property (such as property held at a clearinghouse, including 
offset or netting rights of creditors with respect to such type 
of property), to satisfy shortfalls in customer property beyond 
what was held in customer segregated accounts at the time of a 
firm's failure.

         Title 2--Commodity Futures Trading Commission Reforms


Section 201--Extension of operations

    The most recent reauthorization for CFTC budgetary 
appropriations was approved in 2008 as a part of the Food, 
Conservation and Energy Act (P.L. 110-246), prior to the 
financial crisis of 2008 and the enactment of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (P.L. 111-203) 
(Dodd-Frank Act). That statutory authorization expired 
September 30, 2013. Although the CFTC relied on unauthorized 
appropriations between 2005 and 2008, successful legislative 
reauthorizations occurred in 1978, 1983, 1986, 1992, 1995, and 
2000. Section 201 would reauthorize the Commission to receive 
budgetary appropriations through 2019.

Section 202--Consideration by the Commodity Futures Trading Commission 
        of the costs and benefits of its regulations and orders

    Section 15(a) of the Commodity Exchange Act sets forth 
requirements for the CFTC to consider the costs and benefits of 
the Commission's actions. In its proposed rules, however, the 
CFTC identifies the limitations of Section 15(a) in requiring 
cost-benefit analysis, stating ``[b]y its terms, Section 15(a) 
does not require the Commission to quantify the costs and 
benefits of an order to determine whether the benefits of the 
order outweigh its costs; rather, it requires that the 
Commission `consider' the costs and benefits of its actions.''
    Consequently, the CFTC's Office of Inspector General (OIG) 
issued an investigative report in April of 2011 that examined 
the cost-benefit analysis performed by the Commission in 
connection with the Dodd-Frank Act rulemakings. In that report, 
the OIG stated ``[I]t is clear that the Commission staff viewed 
section 15(a) compliance to constitute a legal issue more than 
an economic one, and the views of the Office of General Counsel 
therefore trumped those expressed by the Office of the Chief 
Economist . . . [w]e do not believe this approach enhanced the 
economic analysis performed. . . .''
    On January 18, 2011, President Obama issued Executive Order 
No. 13563, which requires non-independent executive branch 
agencies to conduct cost-benefit analyses to ensure that both 
the quantitative and qualitative costs and benefits of proposed 
rulemakings are taken into account. The Executive Order also 
requires that regulations be accessible, consistent, written in 
plain language, and easy to understand. Because the CFTC is an 
independent agency, it was not required to abide by the order 
for any of its Dodd-Frank Act rulemakings.
    As the CFTC continues to advance new rules that govern a 
large sector of the derivatives marketplace for the first time, 
this section raises the legal standard for cost-benefit 
analysis and evaluation. Further, the legislation is intended 
to operate consistently with Executive Order 13563. However, so 
as to not disrupt the regulatory process, this legislation is 
not retroactive in nature and would not impact previously 
proposed or finalized rules promulgated by the CFTC.
    On March, 14, 2013, at a hearing entitled ``Examining 
Legislative Improvements to Title VII of the Dodd-Frank Act,'' 
the following testimony was provided with respect to provisions 
included in Section 202:

          SIFMA has encouraged regulators to conduct 
        comprehensive cost-benefit analysis for all Dodd-Frank 
        Rules. This is consistent with the Obama 
        Administration's efforts to promote better cost benefit 
        analysis for Federal agencies through Executive Order 
        13563, which requires all agencies proposing or 
        adopting regulations to include cost-benefit analyses 
        in an attempt to minimize burdens, maximize net 
        benefits and specify performance objectives. The 
        President also stated that regulations should be 
        subject to meaningful public comment, be harmonized 
        across agencies, ensure objectivity and be subject to 
        periodic review. In 2012, in testimony before the House 
        Committee on Government Reform, SEC Chairman Schapiro 
        stated ``I continue to be committed to ensuring that 
        the Commission engages in sound, robust economic 
        analysis in its rulemaking, in furtherance of the 
        Commission's statutory mission, and will continue to 
        work to enhance both the process and substance of that 
        analysis.'' Congressman Conaway has introduced 
        legislation (H.R. 1003) that would require the CFTC's 
        cost-benefit analysis to be both quantitative and 
        qualitative and specifies in greater detail the costs 
        and benefits that the CFTC must take into account as 
        part of their cost-benefit analyses.
        --Hon. Kenneth E. Bentsen, Acting President and CEO, 
        the Securities Industry and Financial Markets 
        Association (SIFMA)

          Finally, because of our experience with the $25 
        million sub-threshold, we are intrigued by another 
        bipartisan bill recently introduced in the House. The 
        legislation, H.R. 1003, would require the CFTC to 
        quantify the costs and benefits of future regulations 
        and orders. Sadly, the legislation is prospective, but 
        we believe that had such an analysis been made, it 
        could have prevented the turmoil currently being caused 
        by the $25 million special entity sub-threshold.
        --Mr. Terrance P. Naulty, General Manager and CEO, 
        Owensboro Municipal Utilities (Owensboro, KY)

    On May 21, 2013, at a hearing entitled ``The Future of the 
CFTC: Market Perspectives,'' Mr. Stephen O'Connor, the then-
Chairman, International Swaps and Derivatives Association, Inc. 
(ISDA), provided the following testimony with respect to 
provisions included in Section 202:

          An appropriate cost-benefit analysis was both 
        required and desirable prior to finalization of rules; 
        however in a number of instances the CFTC's analysis 
        did not comply with the regulatory standard. As the 
        Jun. 2012 report by the CFTC Inspector General stated: 
        ``Generally speaking, it appears CFTC employees did not 
        consider quantifying costs when conducting cost-benefit 
        analyses for the definitions rule. As indicated in the 
        rule's preamble, the costs and benefits associated with 
        coverage under the various definitions (in light of the 
        various regulatory burdens that could eventually be 
        associated with coverage) were not addressed . . .'' 
        The lack of an appropriate cost-benefit analysis makes 
        it especially important that the application and 
        implementation of the final rules be phased in a 
        flexible manner. Doing so would help ensure that rules 
        achieve the purposes for which they are intended and do 
        not impose burdensome costs on the financial system. It 
        would also help regulators to identify and avoid 
        unintended consequences of their actions. And it would 
        encourage regulators to properly allocate limited 
        resources.

Section 203--Division Directors

    In order to ensure Division Directors are responsive to the 
entire Commission, this section requires that the heads of each 
of the units of the Commission serve at the pleasure of the 
Commission. Given this language is modeled after identical 
language currently in the CEA applicable to the General Counsel 
and the Executive Director, the Committee expects this section 
to be implemented in a similar manner to those two positions.

Section 204--Office of the Chief Economist

    In order to enhance the legitimacy of economic analysis of 
rules promulgated by the Commission, this section establishes 
an Office of the Chief Economist with structure and power 
mirroring that of the Office of General Counsel. Again, to 
prevent the Chief Economist from serving solely at the pleasure 
of the Chairman, this section establishes that the Chief 
Economist will be appointed by the Commission, report directly 
to the Commission, and perform functions at the request of 
Commissioners in a manner similar to the General Counsel and 
the Executive Director.

Section 205--Procedures governing actions taken by commission staff

    As of April 9, 2015, CFTC staff issued 258 no-action 
letters, 56 exemptive letters and 43 statements of guidance, 
interpretation and advice to implement the Dodd-Frank Act 
mandates. At least 24 of these no-action letters are self-
described as permanent. At times, ``no-action'' letters provide 
market participants with guidance on how the Enforcement 
Division staff of the CFTC would act in the event of market 
emergencies or would interpret recently proposed rules, at 
least in the short term. However, it appears that over the past 
three years, staff ``no-action'' letters have become 
commonplace to revise the implementation of key regulations of 
the Dodd-Frank Act, and as such do not require a vote of the 
Commission. Additionally, regardless of a designation as 
permanent, ``no-action'' letters are still non-binding in the 
legal sense that CFTC staff could decide to withdraw the letter 
at any time or the Commission could take a different position 
and overrule the letter.
    On July 23, 2013, at a hearing entitled ``The Future of the 
CFTC: Commission Perspectives,'' CFTC Commissioner Scott 
O'Malia provided the following testimony with respect to 
problems with this approach:

          [I]nstead of undertaking Commission action to amend 
        problematic rules, CFTC staff has issued an 
        unprecedented number of no-action letters, some of 
        which are indefinite and have no expiration. So far, 
        CTFC staff has issued over 100 no-action letters 
        granting relief from its new regulations under Dodd-
        Frank, and I won't be surprised if this number 
        continues to grow. No-action letters are not voted on 
        by the Commission and are not published in the Federal 
        Register. They do not include comment periods and many 
        impose conditions on affected parties. This process is 
        at odds with basic principles of the APA, like public 
        participation and the opportunity to be heard. It also 
        goes against President Obama's Executive Orders Nos. 
        13563 and 13579, mandating that administrative agencies 
        ``create an unprecedented level of openness in 
        Government'' and ``establish a system of transparency, 
        public participation, and collaboration.''

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' CFTC Commissioner Chris 
Giancarlo provided the following testimony with respect to the 
provisions included in Section 205:

          Congressman, I think you have put your finger on it. 
        The problem with the abuse of the no-action letter 
        process is it erodes the public's confidence in the 
        agency's undertaking of its responsibilities, and 
        secondly, it thwarts our ability--it stymies our 
        ability as an agency to inculcate a compliance culture 
        in the companies that we oversee. It really hurts our 
        own reputation and it makes it harder for us to do our 
        job in terms of the companies we regulate.

    In order to bring policy making back to a more open and 
transparent manner, Section 205 requires that the Commission be 
provided with sufficient notice to review the matter prior to 
any division or office of the Commission issuing a response to 
a formal, written petition for an exemptive, no-action or 
interpretive letter. The Committee would view any attempt to 
needlessly delay providing notice to the Commission until a 
regulatory deadline, or until need for no-action relief is 
imminent (so as to avoid the statutorily required sufficient 
notice review period) as a violation of the requirements 
contained in Section 205.

Section 206--Strategic technology plan

    On July 23, 2013, at a hearing entitled ``The Future of the 
CFTC: Commission Perspectives,'' Commissioner O'Malia provided 
the following testimony with respect to the need for provisions 
the Committee included in Section 206:

          A critically important component to any solution for 
        the Commission's approach to its greatly expanded 
        mission is the use of technology in order to accept, 
        sort, aggregate, and analyze the new sources of market 
        information provided for under the Dodd-Frank Act. I'd 
        like to highlight two major challenges in data and 
        technology: (1) problems faced by market participants 
        in the swap data reporting rules and (2) problems faced 
        by the Commission in understanding the massive data 
        flows as a result of our enhanced oversight of the 
        swaps and futures markets . . . [g]iven the 
        Commission's expanded regulatory responsibilities, it 
        is imperative for the Commission to develop a 
        technology plan that can assist the Commission with 
        meeting its regulatory objective. I believe the 
        Commission must develop a five-year strategic plan that 
        is focused on technology, with annual milestones and 
        budgets. To keep up to speed with the challenges of 
        enhanced regulatory oversight, this technology plan 
        would require each CFTC division to develop a 
        technology budget that reflects the regulatory needs 
        and responsibilities of that particular division.

    In order to solve the problems enumerated by Commissioner 
O'Malia, Section 206 requires the Commission to develop and 
file a strategic technology plan every 5 years with the House 
and Senate Agriculture Committees. The plan shall include a 
detailed technology strategy focused on market surveillance and 
risk detection, market data collection, aggregation, 
interpretation, normalization, standardization, harmonization, 
streamlining, and internal management and protection of data 
collected by the Commission. The report must also include a 
detailed accounting of how appropriated funds provided for 
technology will be used, and set annual goals to be 
accomplished along with the annual budgets necessary to 
accomplish those goals.

Section 207--Internal risk controls

    On December 14, 2012, it was widely reported that CME wrote 
a letter to the CFTC expressing concern that confidential and 
sensitive market data had been shared with non-CFTC employees 
who then used the data to write academic papers. CME attorneys 
claimed that the use of the data for the preparation of non-
Commission sponsored publications was a violation of federal 
law meant to protect trade secrets. At least two academic 
papers written on the subject of high-frequency trading were 
either co-written or advised by Andrei Kirilenko during his 
time as the CFTC Chief Economist. Upon leaving the CFTC in late 
2012, Kirilenko took a position at MIT. As a result of the CME 
letter and corresponding internal investigation, the CFTC 
halted the research program which allowed outside academic 
researchers and economists almost unlimited access to 
proprietary trading information across various markets, and the 
CFTC OIG launched an internal investigation.
    On July 23, 2013, at a hearing entitled ``The Future of the 
CFTC: Commission Perspectives,'' Commissioner O'Malia provided 
the following testimony:

          Currently, the Commission's Inspector General is 
        investigating whether or not market data was properly 
        controlled by the Office of the Chief Economist when 
        visiting scholars/contractors were assisting the Office 
        of the Chief Economist in research efforts. While I 
        support collaborative study programs that bring in new 
        and innovative thinking, it is vital that the 
        Commission has policies and procedures in place to 
        protect against the illegal release of market data.

    On March 21, 2014, a heavily redacted version of the CFTC's 
OIG report was released to the public. In this report, the OIG 
found that:

          The administrative review revealed that there had 
        been poor recordkeeping with regard to the so-called 
        ``on-boarding'' process for OCE economists. The 
        deficiencies included inadequate documentation of 
        security clearances, issues regarding nondisclosure 
        agreements, and non-submission of employment data to 
        the National Finance Center, as well as incomplete 
        personnel forms, one contract lacking the contractor's 
        signature, and other administrative errors. There were 
        no indications of fraud by OCE economists, or that OCE 
        economists were not actually appointed by the Chief 
        Economist, just a number of administrative errors 
        pertaining to the Agency's so-called on-boarding 
        process. The review also uncovered information security 
        concerns. Specifically, personally owned external hard 
        drives and thumb drives were found in close vicinity to 
        the computers that served the OCE economists. In 
        addition, badges for former CFTC OCE economists were 
        located in the Chief Economist's desk.

    With respect to the potentially harmful data breaches that 
occurred at the CFTC and the need to correct them to ensure 
integrity of the marketplace, the OIG's report concluded that:

          We agree that the physical and information technology 
        concerns exist; however, they are Agency-wide, and are 
        currently being addressed at least in part in 
        connection with an OIG audit of CFTC's Fiscal Year 2013 
        implementation of the Federal Information Security 
        Management Act. The absence of controls is significant: 
        lacking a reliable way to determine whether 
        confidential information was improperly taken from the 
        CFTC, we will not jump to the conclusion that 
        misconduct did or did not occur based on contradictory 
        opinions of Agency employees. We can make no finding.

    To guard against these sorts of leaks, this section 
requires the Commission, led by the Chief Economist, to develop 
internal risk control mechanisms to safeguard the storage and 
privacy of market data by the Commission. Special attention 
should be given to market data sharing agreements and academic 
research performed at the Commission using market data.

Section 208--Subpoena duration and renewal

    On July 23, 2013, at a hearing entitled ``The Future of the 
CFTC: Commission Perspectives,'' Commissioner O'Malia provided 
the following testimony with respect to his concerns on the 
operation of the Commission's omnibus orders of investigation:

          CFTC regulations ensure that the Commission is made 
        accountable for all enforcement matters by requiring a 
        Commission order to initiate investigations by the 
        Division of Enforcement. Just recently, I dissented on 
        an enforcement matter that involved a radical 
        procedural shift in the authorization of investigations 
        for potential violations of the CEA. What I found 
        troubling is that the Division of Enforcement sought to 
        circumvent the powers of the Commission by proposing to 
        bring investigations on a summary basis through the use 
        of an ``absent objection'' process. I was surprised to 
        be advised by the Commission's Office of General 
        Counsel that the Commission cannot block a staff-
        initiated absent objection circulation because this 
        process is not a Commission ``vote.'' To ensure 
        fairness in terms of true separation of functions, 
        Congress gave power to the members of the Commission to 
        reconsider CFTC staff recommendations by independently 
        assessing facts and legal justifications for initiating 
        various actions. In other words, Congress intended that 
        any decision to bring an investigation by the CFTC is 
        reflective of a shared opinion of the majority of the 
        Commissioners, rather than a unilateral assessment by 
        the Division of Enforcement's staff. The new absent 
        objection process described by the Office of General 
        Counsel is a clear abrogation of the Commission's 
        powers and a violation of Commission rules relating to 
        investigations.

    In order to ensure continuing investigations by the 
Commission's Division of Enforcement are warranted and properly 
reviewed by the Commission, Section 208 provides that 
Commission omnibus orders of investigation shall be for a 
finite period and renewed only by Commission vote.

Section 209--Applicability of notice and comment requirements of the 
        Administrative Procedure Act to guidance voted on by the 
        Commission

    As the Committee learned from numerous witnesses through 
testimony and saw firsthand through press reports and letters 
from foreign financial regulators, the Commission voted on 
guidance to interpret key provisions of the cross-border 
provisions of the Dodd-Frank Act instead of conducting 
rulemaking under the Administrative Procedure Act (APA). The 
Commission now has a set of guidelines to govern the cross-
border application of the Dodd-Frank Act, setting up probable 
legal conflicts between the CFTC's guidance and the SEC's 
proposed cross border rule that followed all requirements of 
the law and allowed for extensive public comment. Concerns 
about ``guidance'' that has the practical effect of an official 
rulemaking was described in testimony before the Committee on 
March 14, 2013, by the Hon. Kenneth E. Bentsen, Acting 
President and CEO, SIFMA, when he stated that:

          [E]qually significant, the CFTC has issued its 
        proposed cross-border release as ``guidance'' rather 
        than as formal rulemaking process subject to the 
        Administrative Procedure Act. By doing so, the CFTC 
        avoids the need to conduct a cost-benefit analysis, 
        which is critical for ensuring that the CFTC 
        appropriately weighs any costs imposed on market 
        participants as a result of implementing an overly 
        broad and complex U.S. person definition against 
        perceived benefits.

    On July 23, 2013, at a hearing entitled ``The Future of the 
CFTC: Commission Perspectives,'' Commissioner O'Malia voiced 
additional concerns in testimony about the approach taken by 
the Commission:

          I believe that putting the label of ``guidance'' on 
        this document did not change its content or 
        consequences. The courts have held that when agency 
        action has the practical effect of binding parties 
        within its scope, it has the force and effect of law, 
        regardless of the name it is given. Legally binding 
        regulations that impose new obligations on affected 
        parties--``legislative rules''--must conform to the 
        APA. As a threshold matter, the cross-border swaps 
        guidance rests on thin statutory authority, because 
        Congress limited the extraterritorial application of 
        U.S. swap regulations, and therefore the CFTC's 
        jurisdiction, to foreign activities that have a 
        ``direct and significant'' impact on the U.S. economy. 
        Despite the statutory limitation, the cross-border 
        swaps guidance sets out standards that it applies to 
        virtually all cross-border activities in the swaps 
        markets, in a broad manner similar to the application 
        of the swap dealer definition to market participants. 
        For practical reasons, market participants cannot 
        afford to ignore detailed regulations imposed upon 
        their activities that may result in enforcement or 
        other penalizing action. Accordingly, I believe that 
        the cross-border swaps guidance has a practical binding 
        effect on market participants and it should have been 
        promulgated as a legislative rule under the APA. 
        Similarly, I cannot support any future interpretive 
        guidance that would be more properly issued as a 
        notice-and-comment rulemaking.

    In an attempt to address concerns highlighted above, 
Section 209 applies the notice and comment provisions of the 
APA to any future guidance, statements and interpretive rules, 
general statements of policy, and rules of Commission 
organization, procedure, or practice, that implement, interpret 
or prescribe law or policy that are voted on by the Commission. 
Importantly, to ensure responsiveness to the regulated 
marketplace, the Committee does not intend for Section 209 to 
apply to any guidance provided by Commission staff in response 
to inquiries from the public.

Section 210--Judicial Review of Commission Rules

    In order to address concerns from stakeholders regarding 
the process by which to fairly and efficiently challenge CFTC 
final rules in court, Section 210 aligns the CFTC judicial 
review process with that of the SEC set forth in section 25(b) 
of the Securities Exchange Act of 1934. As such, the Committee 
intends for Section 210 to allow for the review of a CFTC final 
rule in the United States Court of Appeals for the District of 
Columbia Circuit or the U.S. Court of Appeals for the circuit 
where the adversely affected party resides or situates its 
principal place of business. Section 210 also provides that a 
court may affirm and enforce or set aside a rule in whole or in 
part.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' Mr. Andrew Soto, Senior Managing 
Counsel, Regulatory Affairs, American Gas Association (AGA), 
provided the following testimony with respect to the need for 
provisions included in Section 210:

          First, AGA recommends that Congress amend the 
        Commodity Exchange Act (CEA) to provide clear and 
        defined procedures for challenging CFTC rules and 
        orders in court. Although the CEA currently contains 
        provisions allowing for judicial review by a U.S. Court 
        of Appeals of certain agency actions, the provisions 
        are very limited and provide no defined avenue for 
        challenging CFTC rules and orders generally. A broad 
        judicial review provision allowing for the direct 
        challenge of CFTC rules and orders would have both a 
        rehabilitative effect on the current process and a 
        prophylactic effect on future agency action. Specific 
        judicial review provisions would allow interested 
        parties to challenge particular agency actions that are 
        unreasonable and hold the CFTC accountable for its 
        decisions. In addition, judicial review would have an 
        important prophylactic effect by requiring the agency 
        to think through its decisions before they are made to 
        ensure that they are sustainable in court, thus 
        enabling the agency to be a more conscientious and 
        prudent regulator. In the absence of specific judicial 
        review provisions, the general review provisions of the 
        Administrative Procedure Act (APA) would apply, 
        requiring parties seeking to challenge CFTC rules to 
        file a claim before a U.S. District Court, move for 
        summary judgment (as a hearing would likely be 
        unnecessary), obtain a ruling and then, if necessary, 
        seek further judicial review before a U.S. Court of 
        Appeals. In the recent litigation over the CFTC's 
        position limits rule, which followed the review 
        provisions of the APA, the CFTC's General Counsel 
        acknowledged the efficiency and desirability of direct 
        review by the U.S. Court of Appeals of agency rules, 
        and stated that the agency would have no objection to 
        such direct review assuming Congress were to authorize 
        it. Accordingly, provisions allowing for direct review 
        by a U.S. Court of Appeals of rules and orders of the 
        CFTC would enable both the industry and the agency to 
        benefit from the administrative economy, procedural 
        efficiency and certainty of having a dedicated forum in 
        which agency decisions are reviewed.

Section 211--GAO study on use of Commission resources

    In each of the hearings held this Congress related to the 
CFTC, Members of the Committee and witnesses alike have raised 
concerns about the CFTC's budget. Some have questioned whether 
the CFTC has the resources available to fulfill its oversight 
obligation. Others have asked if the CFTC's regulatory approach 
over the last five years has led to unnecessary burdens on the 
agency as it seeks to centralize functions that had previously 
been handled at Self-Regulatory Organizations.
    Although Chairman Massad expressed his view that a larger 
budget was necessary to fulfill his regulatory obligations, 
others who have testified before the Committee have noted that 
the CFTC's approach to regulation has imposed significant 
internal work to the CFTC that could be better done in other 
ways. This additional work load comes at a cost to the 
Commission in manpower, time, and other resources.
    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Mr. Doug Christie, President, 
Cargill Cotton, on behalf of the Commodity Markets Council 
(CMC), testified that the CFTC's current proscriptive 
regulatory approach, specifically when it comes to new mandates 
proposed by the position limits rule, can pose burdens on the 
Commission that were higher than the more collaborative 
approach the Commission has historically utilized:

          I think it is obviously difficult to set an absolute 
        level of what funding should be, but one comment I 
        would make on that is that historically, when we have 
        looked at regulatory issues or position limits in 
        particular, it has been more of a collaborative 
        relationship between the CFTC, market participants, the 
        exchanges, and even industry associations involved in 
        that process. And I think that brought some efficiency 
        and some clarity and--to that process that a lot 
        recordkeeping maybe doesn't necessarily do as effective 
        a job as having a more of a conversational approach. So 
        I think to the extent that it is driven by 
        recordkeeping and reporting, that may carry a cost 
        burden that is higher than when it is more 
        collaborative and more shared across all market 
        participants.

    On March 25, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Market Participant Views,'' witnesses testified to 
the additional burdens to be potentially placed on the CFTC by 
the proposed changes to how bona fide hedge exemptions are 
granted:

          To add another--when it goes to the interpretation of 
        what is the role of the CTFC, especially in granting 
        hedge exemptions for non-enumerated commodities, in the 
        proposed rules, now the CFTC would take that 
        responsibility away from the exchanges, like mine, and 
        from Mr. Duffy's exchange. I think the--in the comments 
        that I made up front, the decades of experience it 
        takes in working and interfacing with each one of our 
        commodity market participants to understand the nuances 
        of each one of those, it is a big undertaking that the 
        CFTC would need to undertake to ensure that they are 
        not disrupting a commercial entity's ability to hedge 
        in a timely manner by taking on that responsibility. 
        And, by doing that, they are going to need more funds, 
        and substantially more staff, if that is the way this 
        lands, as opposed to the way it works today.
        --Benjamin Jackson, President and COO, ICE Futures U.S.

          [W]e have to have a DSRO to do the risk management. 
        So even if you gave it to somebody else, you will 
        duplicate the cost, because we are going to do it just 
        for the risk management needs. So there is certain 
        proposals that Congress, or a Government agency, may 
        think of that they--that somebody else should do, and 
        not us, that adds a burden of cost to the Government 
        that doesn't need to happen--that has not happened. 
        Second of all, on the position limits regime is a great 
        example. We have the expertise--these position limits--
        it goes back to your earlier question. The credibility 
        of our institutions are out there, and everybody--for 
        everybody to see. We need to make sure that we continue 
        to manage this position limits issue, and do it in an 
        effective way that takes the burden away from the 
        Government, and the cost away from the taxpayer.
        --Mr. Terrance A. Duffy, Executive Chairman & 
        President, CME

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' all three Commissioners 
expressed divergent opinions on the CFTC's budget. Notably, 
Commissioner Giancarlo said:

          As a longstanding consistent supporter of the Dodd-
        Frank reforms, I believe we absolutely must have the 
        resources to do a job that has been greatly expanded. 
        However, I am also sensitive to the fact that our 
        budget has increased 123 percent since 2008. I support 
        the current funding levels, and about--in question of 
        going above those levels really turns on whether, I 
        think as you put it, the job we need to do. And I have 
        some questions as to whether in some cases we are doing 
        the job we need to do, or we are doing other jobs. I 
        have, in my White Paper, outlined ways in which I think 
        our swaps transaction reforms are overly complex, do 
        not accord with the Dodd-Frank reforms. I am also 
        concerned that our position limits proposal creates an 
        enormous amount of make-work for the Commission that 
        could be done in other ways at less taxpayer expense.

    To obtain an impartial view on whether the CFTC has enough 
resources and whether its new regulatory approaches have 
unnecessarily burdened the agency, the Committee charges the 
Government Accountability Office (GAO) to conduct a study to 
look into these questions. The Committee expects GAO, as part 
of its study, to closely examine and report on whether the CFTC 
has efficiently used its resources related to hiring and firing 
practices within the Commission, especially related to 
positions that are duplicative, outdated in their purpose, or 
underutilized. As well, the GAO should closely examine and 
report on whether the CFTC is efficiently using its resources 
related to the implementation of rules, regulations, and 
processes, especially related to regulations that are 
duplicative (both inside and outside of the Commission), 
outdated in their purpose, or underutilized. The efficient 
expenditure of funds related to computer programs, technology 
upgrades, consultants, and other noteworthy usages of 
Commission funds should also be closely examined.

Section 212--Disclosure of required data of other registered entities

    The Dodd Frank Act allowed members of the Financial 
Stability Oversight Council (``FSOC''), including the CFTC, to 
collect sensitive and confidential data for the purpose of 
assessing financial stability, and also included important 
provisions directing FSOC members to maintain the 
confidentiality of such data. The Dodd-Frank Act specifically 
amended the Investment Advisers Act of 1940 to protect the 
confidentiality of reports that the SEC requires for SEC-
registered investment advisers, but no corresponding amendments 
were made to the CEA for CFTC reports. Similar amendments to 
the CEA are appropriate to ensure that consistent 
confidentiality protections would extend to the reports, 
documents, records and sensitive and proprietary information of 
CPOs, CTAs, and their clients, collected through CFTC Form CPO-
PQR or Form CTA-PR.
    The current inconsistency between the confidentiality 
protections afforded to reports by investment advisers as 
opposed to reports by CPOs and CTAs creates two potential 
difficulties. First, it may expose data from CFTC-regulated 
entities to greater risk of public disclosure. Firms invest 
significant research, time and resources into developing 
proprietary information and there are both commercial and 
policy reasons to protect the confidentiality of such 
information. Second, it creates a potential unlevel regulatory 
playing field, disadvantaging the CFTC in its efforts to 
collect, analyze, and share data. This provision will simply 
harmonize between the SEC and the CFTC, the protections 
extended to that that valuable information.
    Working within the existing framework of the CEA, Section 
212 amends section 8 of the Commodity Exchange Act to provide 
clear circumstances under which the CFTC can disclose 
proprietary information submitted on Form CPO-PQR and Form CTA-
PR. In order to protect this proprietary information, the 
provision requires that the Commission only disclose this 
information to a foreign government, Federal department, agency 
or State, upon an agreement of confidentiality. The language 
also makes clear that the CFTC may disclose information 
pursuant to a court order, including a bankruptcy proceeding 
under title 11 of the United States Code. The provision makes 
no changes to existing requirements that the Commission 
disclose such information to Congress upon request.
    This section also defines the scope of proprietary 
information that is subject to confidential protection, 
including trading strategies, analytical or research 
methodologies, trading data, computer hardware or software 
containing intellectual property, and any additional 
information the Commission determines to be proprietary. Such 
information will also be exempt from requests made under the 
Freedom of Information Act (FOIA).
    This section imposes no restriction on Congress or this 
Committee's ability to perform oversight of the CFTC, 
commodities markets or those who participate in those markets, 
and it imposes no burdens on the disclosure of information to 
Congress upon request. However, the Committee recognizes the 
importance of strong data security procedures and protecting 
all proprietary information that it may obtain. To that end, 
the Committee is committed to reviewing its current procedures 
and practices and establishing any additional internal 
procedures and practices to maintain the confidentiality of 
proprietary information that it may obtain.

Section 213--Report on status of any application of metals exchange to 
        register as a foreign board of trade; deadline for action on 
        application

    The Committee is well aware of the persistence of long 
queues for delivery of aluminum at warehouses in the United 
States licensed by the London Metals Exchange (LME). Such 
queues have attracted considerable regulatory and Congressional 
oversight and potential regulatory enforcement inquiries. 
Queues are also problematic in non-U.S. warehouses licensed by 
the LME. The Committee is encouraged that as part of their 
review of LME's foreign board of trade application, the Agency 
has deferred action until further review and stated that it 
will continue to monitor and analyze progress toward 
eliminating disruptive queues. The Committee recognizes and 
encourages the efforts of the CFTC to continue to review the 
relationship of long queues for delivery of aluminum at 
warehouses to the pricing of aluminum, and how those issues 
impact market integrity and market participants. Given the 
continuing interest of the Committee in seeing this commodity 
market act as a place of transparent price discovery, we urge 
the CFTC to continue working domestically and with foreign 
regulators toward eliminating persistent and disruptive market 
queues. The Committee also recognizes the overseas regulators' 
oversight responsibility to ensure warehousing arrangements are 
operating in a way that enables regulators to satisfy their 
regulatory obligations, including the obligation to ensure that 
markets operate in an orderly manner. Given the continuing 
interest of the Committee, as expressed in the legislation, it 
is the intent of the legislation to exercise appropriate 
Congressional oversight and support the CFTC in its important 
review. The legislation requires an action by the CFTC on LME's 
FBOT application no later than September 30, 2016.

                        Title 3--End-User Relief


Section 301--Relief for hedgers utilizing centralized risk management 
        practices

    ``Inter-affiliate'' swaps are contracts executed between 
entities under common corporate ownership. Section 301 would 
amend the CEA to provide an exemption for inter-affiliate swaps 
from the clearing and execution requirements of the Dodd-Frank 
Act so long as the swap transaction hedges or mitigates the 
commercial risk of an entity that is not a financial entity. 
The section also requires that an ``appropriate credit support 
measure or other mechanism'' be utilized between the entity 
seeking to hedge against commercial risk if it transacts with a 
swap dealer or major swap participant, but the credit support 
measure requirement is effective prospectively from the date 
H.R. 2289 is enacted into law.
    Importantly, with respect to Section 301's use of the 
phrase ``credit support measure or other mechanism,'' the 
Committee unequivocally does not intend for the CFTC to 
interpret this statutory language as a mandate to require 
initial or variation margin for swap transactions. The 
Committee intends for the CFTC to recognize that credit support 
measures and other mechanisms have been in use between 
counterparties and affiliates engaged in swap transactions for 
many years in different formats, and therefore, there is no 
need to engage in a rulemaking to define such broad 
terminology.
    Section 301 originated from the need to provide relief for 
a parent company that has multiple affiliates within a single 
corporate group. Individually, these affiliates may seek to 
offset their business risks through swaps. However, rather than 
having each affiliate separately go to the market to engage in 
a swap with a dealer counterparty, many companies will employ a 
business model in which only a single or limited number of 
entities, such as a treasury hedging center, face swap dealers. 
These designated external facing entities will then allocate 
the transaction and its risk mitigating benefits to the 
affiliate seeking to mitigate its underlying risk.
    Companies that use this business model argue that it 
reduces the overall credit risk a corporate group poses to the 
market because they can net their positions across affiliates, 
reducing the number of external facing transactions overall. In 
addition, it permits a company to enhance its efficiency by 
centralizing its risk management expertise in a single or 
limited number of affiliates.
    Should these inter-affiliate transactions be treated as all 
other swaps, they could be subject to clearing, execution and 
margin requirements. Companies that use inter-affiliate swaps 
are concerned that this could substantially increase their 
costs, without any real reduction in risk in light of the fact 
that these swaps are purely for internal use. For example, 
these swaps could be ``double-margined''--when the centralized 
entity faces an external swap dealer, and then again when the 
same transaction is allocated internally to the affiliate that 
sought to hedge the risk.
    The uncertainty that exists regarding the treatment of 
inter-affiliate swaps spans multiple rulemakings that have been 
proposed or that will be proposed pursuant to the Dodd-Frank 
Act. Section 301 provides certainty and clarity as to what 
inter-affiliate transactions are and how they are not to be 
regulated as swaps when the parties to the transaction are 
under common control.
    On March 14, 2013, at a hearing entitled ``Examining 
Legislative Improvements to Title VII of the Dodd-Frank Act,'' 
the following testimony was provided with respect to efforts to 
address the problem with inter-affiliate swaps:

          [I]nter-affiliate swaps provide important benefits to 
        corporate groups by enabling centralized management of 
        market, liquidity, capital and other risks inherent in 
        their businesses and allowing these groups to realize 
        hedging efficiencies. Since the swaps are between 
        affiliates, rather than with external counterparties, 
        they pose no systemic risk and therefore there are no 
        significant gains to be achieved by requiring them to 
        be cleared or subjecting them to margin posting 
        requirements. In addition, these swaps are not market 
        transactions and, as a result, requiring market 
        participants to report them or trade them on an 
        exchange or swap execution facility provides no 
        transparency benefits to the market--if anything, it 
        would introduce useless noise that would make Dodd-
        Frank's transparency rules less helpful.
        --Hon. Kenneth E. Bentsen, Acting President and CEO, 
        SIFMA

          This legislation would ensure that inter-affiliate 
        derivatives trades, which take place between affiliated 
        entities within a corporate group, do not face the same 
        demanding regulatory requirements as market-facing 
        swaps. The legislation would also ensure that end-users 
        are not penalized for using central hedging centers to 
        manage their commercial risk. There are two serious 
        problems facing end-users that need addressing. First, 
        under the CFTC's proposed inter-affiliate swap rule, 
        financial end-users would have to clear purely internal 
        trades between affiliates unless they posted variation 
        margin between the affiliates or met specific 
        requirements for an exception . . . [i]f these end-
        users have to post variation margin, there is little 
        point to exempting inter-affiliate trades from clearing 
        requirements, as the costs could be similar. And let's 
        not forget the larger point--internal end-user trades 
        do not create systemic risk and, hence, should not be 
        regulated the same as those trades that do. Second, 
        many end-users--approximately one-quarter of those we 
        surveyed--execute swaps through an affiliate. This of 
        course makes sense, as many companies find it more 
        efficient to manage their risk centrally, to have one 
        affiliate trading in the open market, instead of dozens 
        or hundreds of affiliates making trades in an 
        uncoordinated fashion. Using this type of hedging unit 
        centralizes expertise, allows companies to reduce the 
        number of trades with the street and improves pricing. 
        These advantages led me to centralize the treasury 
        function at Westinghouse while I was there. However, 
        the regulators' interpretation of the Dodd-Frank Act 
        confronts nonfinancial end-users with a choice: either 
        dismantle their central hedging centers and find a new 
        way to manage risk, or clear all of their trades. 
        Stated another way, this problem threatens to deny the 
        end-user clearing exception to those end-users who have 
        chosen to hedge their risk in an efficient, highly-
        effective and risk-reducing way. It is difficult to 
        believe that this is the result Congress hoped to 
        achieve.
        --Ms. Marie N. Hollein, C.T.P., President and CEO, 
        Financial Executives International, on behalf of the 
        Coalition for Derivatives End-Users

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Mr. Lael Campbell, Director, 
Excelon Corporation (Excelon), on behalf of Edison Electric 
Institute (EEI), provided the following testimony with respect 
to the provisions included in Section 301:

          In the absence of a more expansive clearing exemption 
        for inter-affiliate trades, the costs of clearing 
        likely would deter most market participants from 
        entering into inter-affiliate transactions. For 
        example, without an exemption, additional affiliates in 
        a corporate family would need to become clearing 
        members or open accounts with a Futures Commission 
        Merchant, and all affiliates would need to develop and 
        implement redundant risk management procedures and 
        trade processing services.

    On January 14, 2015, the House of Representatives passed 
H.R. 37, the Promoting Job Creation and Reducing Small Business 
Burdens Act by a vote of 271-154. H.R. 37 contained identical 
language to Section 301. Additionally, in the 113th Congress, 
effectively identical language to Section 301 passed the House 
by voice vote when offered as a stand-alone bill, H.R. 5471.

Section 302--Indemnification requirements

    Section 302 strikes the indemnification requirements found 
in Sections 725 and 728 of the Dodd-Frank Act related to swap 
data gathered by swap data repositories (SDRs) and derivatives 
clearing organizations (DCOs). The section does maintain, 
however, that before an SDR, DCO, or the CFTC shares 
information with domestic or international regulators, they 
have to receive a written agreement stating that the regulator 
will abide by certain confidentiality agreements.
    Swap data repositories serve as electronic warehouses for 
data and information regarding swap transactions. Historically, 
SDRs have regularly shared information with foreign regulators 
as a means to cooperate, exchange views and share information 
related to OTC derivatives CCPs and trade repositories. Prior 
to the Dodd-Frank Act, international guidelines required 
regulators to maintain the confidentiality of information 
obtained from SDRs, which facilitated global information 
sharing that is critical to international regulators' ability 
to monitor for systemic risk.
    Under Sections 725 and 728 of the Dodd-Frank Act, when a 
foreign regulator requests information from a U.S. registered 
SDR or DCO, the SDR or DCO is required to receive a written 
agreement from the foreign regulator stating that it will abide 
by certain confidentiality requirements and will ``indemnify'' 
the Commissions for any expenses arising from litigation 
relating to the request for information. In short, the concept 
of ``indemnification''--requiring a party to contractually 
agree to pay for another party's possible litigation expenses-- 
is only well established in U.S. tort law, and does not exist 
in practice or in legal concept in foreign jurisdictions.
    These indemnification provisions--which were not included 
in the financial reform bill passed by the House of 
Representatives in December 2009--threaten to make data sharing 
arrangements with foreign regulators unworkable. Foreign 
regulators will most likely refuse to indemnify U.S. regulators 
for litigation expenses in exchange for access to data. As a 
result, foreign regulators may establish their own data 
repositories and clearing organizations to ensure they have 
access to data they need to perform their supervisory duties. 
This would lead to the creation of multiple databases, 
needlessly duplicative data collection efforts, and the 
possibility of inconsistent or incomplete data being collected 
and maintained across multiple jurisdictions.
    In testimony before the House Committee on Financial 
Services in March of 2012, the then-Director of International 
Affairs for the SEC, Mr. Ethiopis Tafara, endorsed a 
legislative solution to the problem, stating that:

          The SEC recommends that Congress consider removing 
        the indemnification requirement added by the Dodd-Frank 
        Act . . . the indemnification requirement interferes 
        with access to essential information, including 
        information about the cross-border OTC derivatives 
        markets. In removing the indemnification requirement, 
        Congress would assist the SEC, as well as other U.S. 
        regulators, in securing the access it needs to data 
        held in global trade repositories. Removing the 
        indemnification requirement would address a significant 
        issue of contention with our foreign counterparts . . .

    At the same hearing, the then-General Counsel for the CFTC, 
Mr. Dan Berkovitz, acknowledged that they too have received 
growing concerns from foreign regulators, but that they intend 
to issue interpretive guidance, stating that ``access to swap 
data reported to a trade repository that is registered with the 
CFTC will not be subject to the indemnification provisions of 
the Commodity Exchange Act if such trade repository is 
regulated pursuant to foreign law and the applicable requested 
data is reported to the trade repository pursuant to foreign 
law.''
    To provide clarity to the marketplace and remove any legal 
barriers to swap data being easily shared with various domestic 
and foreign regulatory agencies, this section would remove the 
indemnification requirements found in Sections 725 and 728 of 
the Dodd-Frank Act related to swap data gathered by SDRs and 
DCOs.
    On March 14, 2013, at a hearing entitled ``Examining 
Legislative Improvements to Title VII of the Dodd-Frank Act,'' 
Mr. Larry Thompson, Managing Director and General Counsel, 
Depository Trust and Clearing Corporation, provided the 
following testimony with respect to provisions of H.R. 742, 
which were included in Section 302:

          The Swap Data Repository and Clearinghouse 
        Indemnification Correction Act of 2013 would make U.S. 
        law consistent with existing international standards by 
        removing the indemnification provisions from sections 
        728 and 763 of Dodd-Frank. DTCC strongly supports this 
        legislation, which we believe represents the only 
        viable solution to the unintended consequences of 
        indemnification. H.R. 742 is necessary because the 
        statutory language in Dodd-Frank leaves little room for 
        regulators to act without U.S. Congressional 
        intervention. This point was reinforced in the CFTC/SEC 
        January 2012 Joint Report on International Swap 
        Regulation, which noted that the Commissions ``are 
        working to develop solutions that provide access to 
        foreign regulators in a manner consistent with the DFA 
        and to ensure access to foreign-based information.'' It 
        indicates legislation is needed, saying that ``Congress 
        may determine that a legislative amendment to the 
        indemnification provision is appropriate.'' H.R. 742 
        would send a clear message to the international 
        community that the United States is strongly committed 
        to global data sharing and determined to avoid 
        fragmenting the current global data set for over-the-
        counter (OTC) derivatives. By amending and passing this 
        legislation to ensure that technical corrections to 
        indemnification are addressed, Congress will help 
        create the proper environment for the development of a 
        global trade repository system to support systemic risk 
        management and oversight.

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Giancarlo provided 
the following testimony with respect to the provisions included 
in Section 302:

          Under Sections 725, 728 and 763 of the Dodd-Frank 
        Act, when a foreign regulator requests information from 
        a U.S. registered swap data repository (SDR) or 
        derivatives clearing organization (DCO), the SDR or DCO 
        is required to receive a written agreement from the 
        foreign regulator stating that it will abide by certain 
        confidentiality requirements and will ``indemnify'' the 
        CFTC for any expenses arising from litigation relating 
        to the request for information. In short, the concept 
        of ``indemnification''--requiring a party to 
        contractually agree to pay for another party's possible 
        litigation expenses--is only well established in U.S. 
        tort law, and does not exist in practice or in legal 
        concept in many foreign jurisdictions, thereby 
        introducing complications to data-sharing arrangements 
        with foreign governments and raising the possibility of 
        data fragmentation at the international level.
          Correcting this unworkable framework in the Dodd-
        Frank Act is not controversial, and Congress should 
        absolutely provide a legislative fix to this issue, 
        just as the Securities and Exchange Commission (SEC) 
        has endorsed in testimony before Congressional 
        Committees in the 112th Congress. Similarly, in the 
        113th Congress, H.R. 742 was introduced to provide a 
        narrow fix on this issue and passed the House on June 
        12, 2013, by a vote of 420-2. The same provision should 
        be included in any CFTC reauthorization legislation 
        introduced by this Congress.

    In the 113th Congress, the House of Representatives passed 
H.R. 742, the Swap Data Repository and Clearinghouse 
Indemnification Act, by a vote of 420-2, which contained 
language identical to Section 302.

Sections 303, 304, 305--Transactions with the utility special entities; 
        utility special entity defined; utility operations-related swap

    Sections 303, 304, and 305 of H.R. 2289 would preserve the 
ability of government-owned utilities, classified in the bill 
as ``utility special entities,'' to have uninterrupted and 
cost-effective access to the customized, non-financial 
commodity swaps that utility special entities have used for 
years. In effect, the counterparties of utility special 
entities would now be subject to the much higher $8 billion de 
minimis swap dealer registration threshold. Importantly, the 
legislation does not include an exemption for interest rate, 
credit, equities, currency asset classes, or agriculture 
commodities, other than commodities used for electric energy or 
natural gas production or generation. Instead, H.R. 2289 
creates a new category of swap known as the ``utility 
operations-related swap'' and provides relief to counterparties 
of utility special entities only when those specific types of 
swaps are used. To ensure transparency, the bill still requires 
all special entity swap transactions to be reported to the 
CFTC.
    On May 23, 2012, the CFTC published a rule further defining 
who is considered a ``swap dealer'' under the Dodd-Frank Act, 
which directly impacted many swap counterparties of government-
owned non-profit utilities. The rule became effective on July 
23, 2012, with registration as a swap dealer not being required 
until on or after October 12, 2012. The CFTC's swap dealer rule 
includes an exception for entities from having to register as a 
swap dealer if their outstanding annual gross notional swap 
positions do not exceed either of the two following thresholds:
    1. $3 billion (subject to an initial three year phase-in 
level of $8 billion), referred to as the ``general de minimis 
threshold''; and
    2. $25 million with regard to swaps where an entity's 
counterparty is a ``special entity'' as defined in Section 731 
of the Dodd-Frank Act, referred to as the ``special entity de 
minimis threshold.''
    On October 12, 2012, after several public power groups 
petitioned the CFTC to relieve their counterparties from 
compliance with the much lower registration threshold, CFTC 
staff issued a non-binding ``no-action relief'' letter instead, 
which increased the ``special entity sub-threshold'' to $800 
million from $25 million.
    As mentioned above, a ``special entity'' is broadly defined 
in Section 731 of the Dodd-Frank Act to include any government-
owned enterprise, such as public school boards, state 
governments, and any publicly-owned producer or supplier of 
electricity or natural gas. Casting such a broad net in 
defining ``special entity'' was a policy decision made by the 
drafters of the Dodd-Frank Act which sought to protect 
taxpayers from the use of complex financial swaps by their 
municipality. For example, the use of fixed-for-floating 
interest rate swaps tied to municipal bonds issued by Jefferson 
County, Alabama, contributed to the county's multi-billion 
dollar debt that rapidly expanded during the 2008 financial 
crisis, later resulting in what was at the time the largest 
municipal bankruptcy filing in U.S. history.
    Prior to enactment of the Dodd-Frank Act, however, many 
publicly-owned utilities relied on their non-financial 
counterparties, such as natural gas producers, independent 
power generators, and investor-owned utility companies to enter 
into swaps in order to hedge against operational risks. Many of 
these utilities have heard from numerous counterparties who are 
evaluating their future business plans in light of the final 
CFTC rules. These counterparties are strictly limiting their 
business, or completely cutting all ties with utility special 
entities given the special entity sub-threshold and uncertainty 
surrounding the new regulatory regime for the swaps 
marketplace.
    Unless counterparties can determine with certainty that 
their swap activities with special entities will not result in 
them being classified as a ``swap dealer'' under the Dodd-Frank 
Act, it appears that numerous counterparties may avoid doing 
business with them altogether. This ultimately limits 
competition and forces special entities to do business with 
financial institutions or large swap dealers, which 
concentrates risk and may raise costs for many utility special 
entities eventually leading to increased costs for ratepayers. 
The Committee recognizes that on March 21, 2014, the Commission 
staff provided a ``no-action letter'' to utility special 
entities so they are not subjected to the $25 million de 
minimis threshold. However, permanent statutory relief that 
would be provided in Sections 303, 304, and 305 is still needed 
due to the questionable legal certainty contained in this--and 
all--CFTC no-action letters, which state that ``[a]s with all 
no-action letters, the Division retains the authority, in its 
discretion, to further condition, modify, suspend, terminate or 
otherwise restrict the terms of the no-action relief provided 
herein.''
    On September 26, 2014, the CFTC issued a final rule to 
correct the missteps that would be remedied by Sections 303, 
304, and 305. While the regulatory change is welcomed by the 
Committee, statutory certainty can provide millions of 
consumers across the country with greater certainty that their 
utility rates will not increase due to the Dodd-Frank Act.
    On March 14, 2013, at a hearing entitled ``Examining 
Legislative Improvements to Title VII of the Dodd-Frank Act,'' 
Mr. Terrance P. Naulty, General Manager and CEO, Owensboro 
Municipal Utilities, provided the following testimony with 
respect to the provisions included in Sections 303, 304, and 
305:

          Government-owned utilities depend on nonfinancial 
        commodity transactions, trade options, and ``swaps,'' 
        as well as the futures markets, to hedge commercial 
        risks that arise from their utility facilities, 
        operations, and public service obligations. Together, 
        nonfinancial commodity markets play a central role in 
        the ability of government-owned utilities to secure 
        electric energy, fuel for generation, and natural gas 
        supplies for delivery to consumers at reasonable and 
        stable prices . . . [t]he CFTC has said that it 
        retained the $25 million threshold in light of the 
        special protections that the Dodd-Frank Act affords to 
        special entities. However, the statute does not 
        require--even mention--special protections for special 
        entities in regard to the swap dealer definition. As 
        noted above, the law imposes requirements on swap 
        dealers and major swap participants advising or 
        entering into swaps with special entities. Nowhere does 
        the law mention deeming a participant to be a swap 
        dealer solely based on its volume of swaps with 
        government-owned entities. Government-owned utilities 
        understand the operations-related swap transactions 
        they use to manage their commercial risks and do not 
        need the special protections provided by the $25 
        million sub-threshold. In fact, and ironically, these 
        ``protections'' are likely to limit the ability of 
        these utilities to hedge operational and price risks 
        rather than to protect these utilities and their 
        customers from risk. On July 12, 2012, APPA, the Large 
        Public Power Council (LPPC), the American Public Gas 
        Association (APGA), the Transmission Access Policy 
        Study Group (TAPS), and the Bonneville Power 
        Administration (BPA), filed with the CFTC a ``Petition 
        for Rulemaking to Amend CFTC Regulation 1.3(ggg)(4).'' 
        . . . The legislation [H.R. 1038] largely mirrors the 
        intent and effect of the NFP EEU petition to the CFTC, 
        providing narrowly targeted relief for operations-
        related swaps for government-owned utilities. 
        Specifically, the legislation would provide that the 
        CFTC, in making a determination to exempt a swap dealer 
        under the de minimis exception, shall treat a utility 
        operations-related swap with a utility special entity 
        the same as a utility operations-related swaps with any 
        entity that is not a special entity. . . . [t]he 
        legislation carefully defines which entities would 
        qualify as a ``utility special entity.'' It also 
        specifically defines the types of swaps that could and 
        could not be considered a ``utility operations-related 
        swap.'' For example, the legislation specifically 
        prohibits interest, credit, equity, and currency swaps 
        from being considered as a utility operations-related 
        swap. Likewise, except in relation to their use as a 
        fuel, commodity swaps in metal, agricultural, crude 
        oil, or gasoline would not qualify either. Finally, the 
        legislation also confirms that utility operations-
        related swaps are fully subject to swap reporting 
        requirements. When implemented, this legislation should 
        provide the certainty to nonfinancial entities that 
        they can enter into swap transactions with government-
        owned utilities without fear of being deemed a swap 
        dealer. It truly levels the playing field. And, it does 
        nothing to otherwise alter the CFTC's implementation of 
        the Dodd-Frank Act.

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Giancarlo provided 
the following testimony with respect to the provisions included 
in Sections 303, 304 and 305:

          The Dodd-Frank Act requires that American towns and 
        municipalities be labeled as ``special entities'' when 
        they enter into swaps transactions. The purpose was to 
        provide specific protections for municipalities who 
        used complex financial swaps of the type that ensnared 
        Jefferson County, Alabama, and led it to file what--at 
        the time--was the largest municipal bankruptcy in U.S. 
        history. Congress never intended, however, and Dodd-
        Frank does not include requirements to limit the 
        ability of our not-for-profit utilities to manage 
        ordinary risks associated with generating electricity 
        or producing natural gas.
          Unfortunately, the CFTC's first shot at the ``special 
        entity'' rule contained onerous restrictions on 
        ordinary risk management activities by America's not-
        for-profit taxpayer-owned utilities. It generated an 
        enormous amount of public comment. Many commenters 
        asserted that the rule would cause trading 
        counterparties to avoid dealing with special entity 
        utilities due to the increased regulatory compliance 
        and registration burdens of being labeled as a swap 
        dealer. That meant that these utilities would have had 
        far fewer tools to control fluctuations in operational 
        costs or supply and demand, resulting in increased 
        electricity and other energy costs for American 
        consumers.
          The CFTC's original special entity proposal also led 
        to two identical pieces of legislation to correct the 
        CFTC's action in Congress, one passed the House 
        unanimously, and the other was introduced in the Senate 
        with 14 co-sponsors evenly split between both political 
        parties.
          Fortunately, in September of last year, the 
        Commission finalized a rule change that recognized 
        Congressional concern. It provided the relief that our 
        not-for-profit taxpayer-owned utilities need to manage 
        risks in the production of natural gas and electricity. 
        Without the rule change, a regulatory action inspired 
        by the Dodd-Frank Act would have increased utility 
        rates for millions of Americans. In times of economic 
        uncertainty, that would have been an unacceptable 
        result. The legislative solutions offered during the 
        last Congress, however, would still provide added 
        certainty to the marketplace, and I support making the 
        CFTC's regulatory changes permanent in statute.

    In the 113th Congress, the House of Representatives passed 
H.R. 1038, the Public Power Risk Management Act, by a vote of 
423-0, which contained substantially similar language to 
sections 303, 304, and 305.

Section 306--End-Users not treated as financial entities

    Section 306 is intended to remove non-financial end-users 
that were unintentionally captured in the definition of 
``financial entity'' in Section 2(h)(7)(C) of the Commodity 
Exchange Act due to a cross-reference to Section 4(k) of the 
Bank Holding Company Act of 1956. By defining ``commercial 
market participants'' using longstanding CFTC terminology found 
in the Joint CFTC-SEC Rule Defining Swap (CFTC Reference: 77 FR 
48207) and current CFTC Regulations governing Trade Options 
(CFTC Regulations Part 32.3(a)(1)(ii)), the Committee seeks to 
provide narrow relief to entities not supervised by a 
prudential regulator and that are commercial market 
participants or enter into swaps, futures and other derivatives 
on behalf of, or to hedge the commercial risk of, non-financial 
affiliates.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' Mr. Richard F. McMahon, Jr., 
Vice President, EEI, provided the following testimony with 
respect to the need for the provisions included in Section 306:

          The Dodd-Frank Act defines the term ``financial 
        entity'', in part, as an entity that is ``predominantly 
        engaged in activities that are in the business of 
        banking, or in activities that are financial in nature, 
        as defined in section 4(k) of the Bank Holding Company 
        Act of 1956.'' Incorporating banking concepts into a 
        definition that also applies to commercial commodity 
        market participants has had unintended consequences. 
        Unlike our members, banks and bank holding companies 
        generally cannot take or make delivery of physical 
        commodities. However, banks and bank holding companies 
        can invest and trade in certain commodity derivatives. 
        As a result, the definition of ``financial in nature'' 
        includes investing and trading in futures and swaps as 
        well as other physical transactions that are settled by 
        instantaneous transfer of title of the physical 
        commodity. An entity that falls under the definition of 
        a ``financial entity'' is generally not entitled to the 
        end-user exemption-an exemption that Congress included 
        to benefit commercial commodity market participants--
        and can therefore be subject to many of the 
        requirements placed upon swap dealers and major swap 
        participants. In addition, the CFTC has used financial 
        entity as a material term in numerous rules, no-action 
        relief, and guidance, including, most recently, its 
        cross-border guidance. The Dodd-Frank Act allows 
        affiliates or subsidiaries of an end-user to rely on 
        the end-user exception when entering into the swap on 
        behalf of the end-user. However, swaps entered into by 
        end-user hedging affiliates who fall under the 
        definition of ``financial entity'' cannot take 
        advantage of the end-user exemption, despite the fact 
        that the transactions are entered into on behalf of the 
        end-user. Many energy companies structure their 
        businesses so that a single legal entity within the 
        corporate family acts as a central hedging, trading and 
        marketing entity--allowing companies to centralize 
        functions such as credit and risk management. However, 
        when the banking law definitions are applied in this 
        context, these types of central entities may be viewed 
        as engaging in activity that is ``financial in 
        nature,'' even with respect to physical transactions. 
        Hence, some energy companies may be precluded from 
        electing the end-user clearing exception for swaps used 
        to hedge their commercial risks and be subject to 
        additional regulations applicable to financial 
        entities. Importantly, two similar energy companies may 
        be treated differently if, for example, one entity uses 
        a central affiliate to conduct these activities and 
        another conducts the same activity in an entity that 
        also owns physical assets or that has subsidiaries that 
        own physical assets. Accordingly, Congress should amend 
        the definition of ``financial entity'' to ensure that 
        commercial end-users are not inadvertently regulated as 
        ``financial entities.''

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Mr. Lael Campbell, Director, 
Excelon, on behalf of EEI, provided the following testimony 
with respect to the provisions included in Section 306:

          Many energy companies structure their business so 
        that a single legal entity within the corporate family 
        acts as a central hedging, trading and marketing 
        entity--allowing companies to centralize functions such 
        as credit and risk management. However, when the 
        banking law definitions are applied in this context, 
        these types of central entities may be viewed as 
        engaging in activity that is ``financial in nature,'' 
        even with respect to physical transactions. Hence, some 
        energy companies may be precluded from electing the 
        end-user clearing exception for swaps used to hedge 
        their commercial risks and be subject to additional 
        regulations applicable to financial entities. 
        Importantly, two similar energy companies may be 
        treated differently if, for example, one entity uses a 
        central affiliate to conduct these activities and 
        another conducts the same activity in an entity that 
        also owns physical assets or that has subsidiaries that 
        own physical assets.

Section 307--Reporting of illiquid swaps so as not to disadvantage 
        certain non-financial end-users

    Real-time public reporting of swap transactions as required 
by the CFTC may ultimately lead to more efficient prices for 
commercial end-users. However, based on the fact that liquidity 
diminishes for longer-dated contracts further out in time, 
there is a point where the benefits derived from public 
reporting do not outweigh the detriment to those who are 
trading in illiquid markets. While transparency is helpful in 
establishing a price between buyers and sellers, if market 
participants become easier to identify in certain sparsely 
traded swaps, other market participants will be able to take 
advantage of their positions and increase their cost of doing 
business for future trades. These sparsely traded swaps are 
used by a handful of companies with excellent credit ratings to 
provide long-term protection against price fluctuations for 
commodities such as oil and jet fuel.
    While the goal of increasing market transparency was well 
intended, the CFTCs final rule on reporting requirements does 
not differentiate between the appropriate times needed for 
reporting between different types of swaps contracts. Instead, 
this rule has led to a change in market behavior that affects 
long-established business models which traditionally allowed 
companies to protect against commodity price increases. 
Effective risk management helped these companies keep prices 
low for consumers. Southwest Airlines Co. (Southwest Airlines) 
offers a prime example of how this new CFTC regulation has 
impacted its business and its customers. Following enactment of 
the CFTC's reporting requirements, Southwest Airlines' exact 
market positions became known by competitors due to near 
instantaneous reporting of market positions. As a result, 
Southwest Airlines was forced to pay more in order to protect 
against the fluctuating cost of fuel.
    There is precedent in CFTC policy in recognizing the 
sensitivity around transaction counterparty identities in 
public data reporting. The Commission has for years issued 
publicly a weekly ``Commitment of Traders Report'' (COT). In 
describing the issuance of this report, the Commission states: 
``The [COT] reports provide a breakdown of each Tuesday's open 
interest for markets in which 20 or more traders hold positions 
equal to or above the reporting levels established by the 
CFTC.'' In other words, when the number of market participants 
in a reportable contract drops below a certain level, the 
Commission has recognized there can be damage to counterparty 
anonymity when there are a limited number of participants in a 
given market, and therefore does not issue a report for that 
contract. Because the Committee believes that the number of 
participants and transactions in a given market diminishes for 
longer-dated contracts, the Commission shall create a standard 
for reporting all swap asset classes based off of when 
liquidity in a contract lowers to the level of being able to 
easily identify market participants.
    As such, Section 307 would correct the unintended 
consequences of the new CFTC reporting regime while still 
maintaining the goal of increasing market transparency. This 
section preserves the real-time reporting of these sparsely 
traded swaps directly to the CFTC to ensure that government 
regulators have the information they need to police the 
markets. By simply making a technical change to the timeframe 
in which end-users are required to release their trading 
information to the general public, Section 307 achieves market 
transparency in a manner that does not harm long-standing 
business models and that helps keep costs low for millions of 
Americans.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' Mr. Chris Monroe, Treasurer, 
Southwest Airlines, provided the following testimony with 
respect to the need for provisions included in Section 307:

          One key to our unparalleled success has been our 
        ability to hedge fuel through legitimate end-user 
        derivatives purchased in the futures markets. Hedging 
        at Southwest is enterprise risk management--essential 
        in our view given our $6 billion annual fuel bill. To 
        hedge, we commonly enter into transactions many months 
        or years in advance of needing the physical product. 
        Trading in these illiquid markets allows us to manage 
        our fuel costs, which in turn helps us to keep fares 
        low and maintain large jet (Boeing 737) flights in the 
        communities we serve. I am here today to highlight a 
        few issues that have begun to impact these important 
        markets that companies such as Southwest relay on to 
        manage risk. One area where we are seeing a negative 
        commercial impact is the Commodity Futures Trading 
        Commission's (``CFTC's'') Real-Time Public Reporting of 
        Swap Transaction Data Rule (``Real-Time Reporting 
        Rule'') . . . [i]mportantly, trades between a 
        legitimate commercial end-user and a dealer must be 
        reported within the dealer's shorter time limit. Given 
        that the vast majority of bilateral trades entered into 
        by commercial end-users are transacted with a dealer, 
        this means nearly all commercial end-user trades are 
        reported on the accelerated time limit. The dealer time 
        delays may be sufficient for liquid markets, but the 
        timeframes are not sufficient for illiquid markets, 
        which, as I said before, is where Southwest commonly 
        trades. Only a few market participants trade that far 
        out the curve, which makes the contracts highly 
        illiquid, even in contracts that may be liquid in the 
        front months such as crude oil. Additionally, Southwest 
        has a particularly identifiable trading strategy, a 
        hedging ``DNA'' if you will, which makes us quite 
        visible in a market with few participants. This is 
        particularly harmful. When a dealer has to report 
        illiquid trades to the market quickly, the dealer is 
        less likely to be able to lay off the risk of that 
        trade in the prescribed time. If the dealer is still 
        holding a large amount of the risk when the trade is 
        shown to the public, the dealer can be front-run and, 
        as a result, take a loss on the trade. That increased 
        risk to the dealer will either curtail trades or 
        materially increase the costs of the trade to the end-
        users. If an end-user like Southwest can no longer 
        access the markets to hedge fuel it would be contrary 
        to the purposes of the legislation and in our view 
        hostile to Congressional intent.

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' witnesses provided the 
following testimony with respect to the provisions included in 
Section 307:

          As I mentioned, liquidity in the swaps market is very 
        different. There are a number of very important market 
        participants, such as Southwest Airlines, that are 
        engaged in transactions that just can't settle in a 
        day, 2 days, 3 days, and it may take longer, and our 
        rules need to be much open to that. It should not be an 
        exception to our rule that there are transactions like 
        that. Our rule framework should accommodate 
        transactions like that. And market participants 
        shouldn't have to come cap in hand to the CFTC with a 
        question that says, Mother, may I, to engage in a 
        transaction that is just part of their everyday 
        business of serving their customers. We--our rule 
        framework should allow for that because that is the 
        nature of the swaps market. It is very different than 
        futures; it is the nature of the swaps market.
        --Commissioner Giancarlo

          I think you are referring to the relief on the real-
        time reporting obligation that--and there was relief 
        given to Southwest Air. I think we should try and deal 
        with issues like that on more of a broad basis than an 
        individualized basis, and if there is, in fact, an 
        unintended effect of liquidity based on reporting, it 
        does stand to reason that it could be impactful for 
        other market participants as well. So it does make you 
        wonder, well, does something need to be addressed in 
        the timing of the reporting of those particularly long-
        dated swaps. So I think it is something we should 
        revisit. . . . And incidentally, Congressman, I expect 
        we will probably get requests, and you might have that 
        on your mind when you asked that question, but I 
        wouldn't be surprised if we get requests from others.
        --Commissioner Wetjen

    In November 2014, the Commission granted time-limited no-
action relief to Southwest Airlines and its counterparties to 
allow additional time to comply with their reporting obligation 
for transactions in long-dated Brent and WTI crude oil swaps 
and swaptions. Section 307 extends this relief to similarly 
situated market participants.

Section 308--Relief for grain elevator operators, farmers, agricultural 
        counterparties, and commercial market participants

    As a service to their customers, farmer-owned cooperative 
FCMs have a network of branch operations embedded in locations 
such as grain elevators, whose primary business is handling the 
cash grain volume of their farmer customers. As a branch office 
of a cooperatively-owned FCM, these commercial grain elevators 
have chosen to provide brokerage services as a means of 
providing access to risk management tools for their farmer 
customers who want to hedge their production volume through 
futures and/or options.
    In response to the Dodd-Frank Act, the CFTC greatly 
expanded record keeping requirements by making it necessary for 
brokers to retain all forms of written and oral communication 
that might ``lead to the execution of a transaction in a 
commodity interest.'' Given the infrequent and low volume of 
futures/options transactions handled by ``branches'' associated 
with those FCMs, complying with the recording requirements 
under this vague regulation would not be economically feasible. 
The necessary investment to put in place and maintain a system 
to record every form of communication that might ``lead to the 
execution of a transaction'' would exceed not only any profits, 
but in many cases the total revenues of those FCM branches. 
Local branches could no longer provide brokerage services 
resulting in reduced risk management options, and their use, by 
farmers and ranchers.
    Section 308 does not eliminate a grain elevator's record 
keeping responsibilities, but merely relieves them from 
purchasing and maintaining costly technology to record and save 
all incoming communication that may lead to a transaction in a 
commodity interest. Grain elevators and other end-users will 
still be required to maintain a written record of such 
transactions that include all of the transactions' material 
economic terms. Without Section 308, the vague, sweeping 
language of the CFTC's current regulation will result in 
significant time and financial costs to commercial grain 
elevators attempting to comply with the rule. Rather than 
facilitating the collection of useful transaction records, the 
rule is likely to result in grain elevators' no longer 
providing useful brokerage services to their customers. As a 
result, countless farmers and ranchers will lose access to 
valuable risk management tools that allow them to hedge their 
production volume.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' the following witnesses provided 
testimony with respect to provisions included in Section 308:

          A significant and concerning expansion of current 
        data requirements beyond the scope of Dodd-Frank is 
        related to record-keeping requirements in Part 1 of 
        Commission regulations. In accordance with Dodd-Frank, 
        the CFTC expanded the futures record-keeping 
        requirements that existed for certain markets 
        participants to swaps. However, they also significantly 
        expanded the written requirements, as well as created a 
        new requirement to record oral conversations. 
        Compliance costs have already been incredibly 
        substantial now that compliance with the written 
        requirements is mandatory and will only increase once 
        compliance with the oral recording requirement comes 
        into effect later this year. Again, the market is 
        searching for a reason for and measurable benefit of 
        all of this new information that must be maintained and 
        archived in a particular way. In addition, the rule is 
        vague as to which communications must be retained, so 
        in an abundance of caution, market participants are 
        effectively saving every e-mail, news article, or any 
        other piece of information that might ``lead to the 
        execution of a transaction'' and soon will have to 
        begin recording every phone call that might ``lead to 
        the execution of a transaction.'' This vague ``lead to 
        . . .'' language appears nowhere in any prior iteration 
        of Rule 1.35 or in any prior CFTC Advisory relating to 
        the rule, and operates to expand substantially the 
        scope and burdens of the rule. Also, the application of 
        the requirements to members of an exchange seems to 
        have no regulatory rationale and only serves as a 
        disincentive to be an exchange member. Finally, the 
        cost figures contained in the cost-benefit analysis in 
        the final rule are not justified. Compliance costs are 
        exponentially higher than they estimate, and in some 
        cases the technology is not even available to market 
        participants. Requests for clarification have not yet 
        been answered, and CMC will be submitting a written 
        request soon in a continued effort to clarify and 
        hopefully narrow the scope of what must be retained 
        and, therefore, reduce what we view as unnecessary 
        compliance costs.
        --Mr. Lance Kotschwar, Senior Compliance Attorney, The 
        Gavilon Group, LLC (Gavilon), on behalf of the CMC

          Given the infrequent and low volume of futures/
        options transactions handled by ``branches'' associated 
        with those FCMs, complying with the oral recording 
        requirements (recording of all phone calls) under this 
        regulation would not be economically feasible. The 
        necessary investment to put in place and maintain a 
        system to comply with the regulations would exceed not 
        only any profits, but in many cases the total revenues 
        of those FCM branches--to the point that those local 
        branches could no longer provide brokerage services. 
        The effect would be reduced risk management options, 
        and their use, by farmers and ranchers.
        --Mr. Scott Cordes, President, CHS Hedging, Inc. (CHS 
        Hedging), on behalf of the National Council of Farmer 
        Cooperatives (NCFC)

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' the following witnesses provided 
testimony with respect to provisions included in Section 308:

          [A]lthough unregistered members of a designated 
        contract market (DCM) or swap execution facility (SEF) 
        are now exempted from the requirement to retain text 
        messages, unregistered members must still retain 
        written and electronic records of pre-trade 
        communications. As a result of these unnecessary 
        burdens, end-users may opt not to become members of a 
        DCM or SEF, despite the policy goal of the Dodd-Frank 
        Act to encourage more on-exchange activity. For this 
        same reason end-users may also forgo a direct clearing 
        membership arrangement, despite growing global concerns 
        with rising costs of clearing that a direct clearing 
        membership would help mitigate.
        --Mr. Lael Campbell, Director, Excelon, on behalf of 
        EEI

          If further relief and clarification is not provided, 
        [the CFTC's recordkeeping requirements] will discourage 
        membership in DCMs and SEFs, which will in effect 
        reduce transparency in the marketplace, limit the 
        ability of commercial firms to utilize modern and 
        efficient means of communication, and lead to legal and 
        regulatory uncertainty for end-users and customers.
        --Mr. Doug Christie, President, Cargill Cotton, on 
        behalf of the CMC

    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Wetjen provided 
the following testimony with respect to the provisions included 
in Section 308:
          There are two key points, I think, for me. The first 
        is, if you are an entity that has not triggered 
        registration because you are not engaged in the sort of 
        activities that would require that, or if you have 
        consciously chosen to change your activities in a way 
        so that you don't have to register with the CFTC, and 
        you are an end-user, that is meaningful to me. The 
        second thing that I am looking at very carefully is, 
        regardless of how we finalize this rule, it should be 
        not--it should not be done in a way that unnecessarily 
        or unintentionally impedes access by an end-user to a 
        particular marketplace.

Section 309--Relief for end-users who use physical contracts with 
        volumetric optionality

    Forward contracts that result in the physical delivery of 
commodities are expressly exempted from the definition of a 
``swap'' under the CEA. Section 309 would clarify the 
application of this exemption in order to prevent unnecessary 
and costly regulations on companies that enter into 
transactions to ensure the efficient physical delivery of 
commodities necessary to conduct their core business 
operations. Without clarification, the CFTC could impose costly 
regulations on risk management transactions, which increase 
companies' operating costs and ultimately result in increased 
costs to consumers across the nation.
    Risk management contracts that allow for an adjustment of 
the quantity of a commodity delivered do not pose a threat to 
the stability of financial markets and should not be regulated 
the same as financial derivatives. These contracts do provide 
companies with an efficient and cost effective means of 
acquiring the commodities they need to conduct their daily 
business, such as providing affordable sources of energy to 
millions of American households. The misguided regulation of 
these harmless transactions will actually have the effect of 
increasing companies' costs of doing business, will consolidate 
risk in the marketplace because some businesses will be forced 
out of the market, and will ultimately raise costs for everyday 
American consumers. Such costly and unnecessary regulation 
defies the intent of Congress and needlessly subjects a large 
segment of the energy marketplace to burdensome regulation 
under the Dodd-Frank Act.
    The Dodd-Frank Act, passed to reform the U.S. financial 
system, should not result in increased utility rates for 
consumers of natural gas, electricity, and other forms of 
energy used to heat homes, run factories, and power the 
American economy. Without relief, many utilities and energy 
companies will not be able to effectively manage risk--which 
will only increase their costs and possibly lead to higher 
energy rates for millions of Americans--an unacceptable result 
during a period of tremendous economic uncertainty.
    As such, Section 309 would exempt forward contracts between 
end-users that allow for deferred delivery or shipment of a 
non-financial commodity, so long as the contract results in an 
actual physical settlement obligation. The Committee notes that 
optionality includes both allowing a counterparty to reduce the 
amount of commodity delivered and allowing a counterparty to 
increase the amount of commodity delivered.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' the following witnesses provided 
testimony with respect to provisions included in Section 309:

          Because gas consumption to residential and commercial 
        customers is largely weather driven (consumption 
        increases as the weather gets colder) and predicting 
        the weather is not an exact science, gas supply 
        contracts with delivery flexibility help AGA members 
        make sure gas supplies are, or can be made, available 
        when the customers actually need the gas without having 
        to pay excessively higher prices at the actual time of 
        need and/or other fees associated with pipeline 
        imbalance penalties. There remain disagreements and 
        confusion within the natural gas industry as to which 
        types of gas supply transactions, if any, will be 
        subject to CFTC regulation. These transactions are 
        normal commercial merchandising transactions that 
        parties use to buy and sell natural gas for ultimate 
        delivery to end-use customers. They would not normally 
        be considered speculative, financial transactions as 
        the parties contemplate physical delivery of the 
        commodity. Nevertheless, transactions that contain some 
        option or choice for one or the other counterparty, 
        raise questions for some as to whether they would be 
        considered commodity options regulated as swaps, meet a 
        three part test and a seven-part test to be excluded as 
        options embedded in forward contracts, be viewed as 
        trade options subject to a lessened reporting burden, 
        or be considered facility use agreements that meet a 
        three-part test and then a five-part test and not 
        subject to regulation at all.
        --Andrew K. Soto, Senior Managing Counsel, Regulatory 
        Affairs, AGA

          Recently, however, in light of the CFTC's seven-part 
        interpretation in the rule, some NCFC members have 
        raised concerns over the appropriate treatment of 
        forward contracts commonly used in physical supply 
        arrangements that contain volumetric optionality. If 
        the CFTC were to take a narrow view of the seven-part 
        interpretation, it may view as options many other 
        routine physical supply contracts in which the 
        predominant feature is delivery. Such an interpretation 
        would require those common commercial forward contracts 
        to come under the regulations intended for swaps such 
        as reporting and position limits. The uncertainty of 
        the CFTC interpretation of these types of contracts, 
        all previously covered under the forward contracting 
        exclusion, will require NCFC members to expend 
        significant labor and costs to review hundreds of sales 
        transactions to determine if they continue to meet the 
        forward contract exclusion. Again, this is an 
        unnecessary resource and cost burden on end-users that 
        should be avoided. We hope CFTC will interpret this 
        exclusion consistently with its historical 
        understanding and prior guidance.
        --Mr. Scott Cordes, President, CHS Hedging, on behalf 
        of the NCFC

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Lael Campbell, Director, Excelon, 
on behalf of EEI, testified with respect to provisions included 
in Section 309:

          Trade options and physically delivered forward 
        transactions with embedded optionality serve the 
        purpose of providing the option holder flexibility to 
        respond to changing supply and demand circumstances, 
        such as ensuring delivery of fuel to a generation plant 
        when fuel is needed. EEI members create a physical 
        supply portfolio designed so that they can provide 
        electric service to their retail consumers at low 
        rates. Contracts for physical delivery of commodities 
        such as electricity or natural gas are vital to the 
        business of EEI members. Treating every-day 
        transactions that are used to manage operational and 
        physical supply risks as swaps' has significantly, and 
        unnecessarily, increased end-user regulatory and 
        compliance costs associated with these transactions, 
        with no recognizable offsetting public benefit.

Section 310--Commission vote required before automatic change of swap 
        dealer de minimis level

    Section 310 would simply require the CFTC Commissioners to 
vote before changing the current $8 billion swap dealer de 
minimis exemption from registering as a swap dealer. Without 
Section 310, a CFTC rule will automatically set the de minimis 
exemption at $3 billion, potentially requiring dozens of end-
users to register with the Commission in the coming years as 
``swap dealers'' and imposing costly new regulations on public 
utilities, energy companies, and other end-users that played no 
part in the financial crisis.
    As the regulations currently stand, if a company does more 
than $8 billion worth of swap business per year (known as the 
de minimis level of swap dealing), it must register with the 
CFTC as a ``swap dealer.'' The CFTC's regulations will 
arbitrarily lower the registration threshold to $3 billion 
starting five years from October of 2012 (and possibly sooner) 
with no Commission vote, despite rules requiring a Commission 
``study'' to determine if the swap dealer registration 
threshold is appropriately set at $8 billion.
    An arbitrary 60% decline in the swap dealer registration 
threshold from $8 billion to $3 billion creates significant 
uncertainty for non-financial companies that engage in 
relatively small levels of swap dealing to manage business risk 
for themselves and their customers. Lowering the swap dealer 
registration threshold below its current level of $8 billion 
could drive many non-financial companies out of the business of 
offering their customers risk management products, which will 
limit risk management options for end-users, and ultimately 
consolidate marketplace risk in only a few large swap dealers. 
This consolidation runs counter to the goals of the Dodd-Frank 
Act to reduce systemic risk in the marketplace.
    CFTC regulations should not arbitrarily change the swap 
dealer registration de minimis level without a formal 
rulemaking process. The regulations themselves require a formal 
study by the Commission to determine if the current $8 billion 
level is appropriate. However, the study is completely 
irrelevant because the de minimis level is moved to $3 billion 
in five years regardless of the study's findings. Because 
provisions embedded deep within CFTC regulations failed to 
mandate that the Commission must vote to determine what policy 
is best for future market conditions, the markets could be 
forced to adhere to outdated policies for years to come. 
Further, as demonstrated in the context of utility special 
entities, a de minimis exception threshold that is too low can 
significantly disrupt markets, hinder competition, and leave 
non-financial businesses with limited ways to manage their 
economic and operational risks. Section 310 would result in a 
Commission review of whether lowering the de minimis exception 
threshold would drive participants out of the swap market, 
limit competition and potentially harm end-users. In 
particular, pursuant to Section 310, the Committee expects that 
the Commission would periodically review the de minimis 
exception threshold to consider whether, in light of changes in 
prices and market structure, the de minimis exception threshold 
should also be increased to greater than $8 billion to ensure 
non-financial end-users are able to obtain risk management 
solutions from a broad range of counterparties.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' the following witnesses provided 
testimony with respect to the need for the provisions included 
in Section 310:

          Current regulations have arbitrarily established a de 
        minimis level, the breach of which requires 
        registration as a swap dealer, at $8 billion with a 
        drop to $3 billion following an unpredictable CFTC 
        decision making process. The only certainty in the 
        process is that a lack of action will result in the de 
        minimis level declining in 5 years. This $3 billion 
        level is also arbitrary and would significantly affect 
        the number of firms defined and regulated as swap 
        dealers. Changes should not be made through such a long 
        and ill-defined process, which includes several 
        unpredictable and difficult to follow steps for market 
        participants. We need a more predictable process.
        --Mr. Lance Kotschwar, Senior Compliance Attorney, 
        Gavilon, on behalf of the CMC
          A new category of market participants, swap dealers, 
        was created by the Dodd-Frank Act. These swap dealers 
        must register with the CFTC and are subject to 
        extensive record-keeping, reporting, business conduct 
        standards, clearing, and--in the future--regulatory 
        capital and margin requirements. However, the Act 
        directed the CFTC to exempt from designation as a swap 
        dealer entities that engage in a de minimis quantity of 
        swap dealing. The CFTC issued a proposed rule on the de 
        minimis threshold for comment in early 2011. After 
        review of hundreds of comments, a series of 
        Congressional hearings and after dozens of meetings 
        with market participants, the CFTC set this de minimis 
        threshold at $8 billion. However, it will then be 
        reduced automatically to $3 billion in 2018 absent CFTC 
        action. We oppose such a dramatic reduction in the de 
        minimis threshold without deliberate CFTC action. 
        Inaction is always easier than action, and inaction 
        should not be the default justification for such a 
        major regulatory action. In addition, we believe the 
        CFTC should not have the authority to change the de 
        minimis level without a formal rulemaking process that 
        allows stakeholders to provide input on what the 
        appropriate threshold should be. Absent these 
        procedural changes, we are concerned a deep reduction 
        in the de minimis level could result in commercial end-
        users being misclassified as swap dealers, hindering 
        end-users' ability to hedge market risk while imposing 
        unnecessary costs that eventually will be borne by 
        consumers.
        --Mr. Richard F. McMahon, Jr., Vice President, EEI

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Mr. Doug Christie, President, 
Cargill Cotton, on behalf of the CMC, testified with respect to 
provisions included in Section 310:

          CMC members are concerned that a lower swap dealer de 
        minimis level will cause companies to exit the swap 
        business because the extra costs of swap dealer 
        registration are not sustainable for most non-financial 
        companies. This in turn would lead to fewer 
        counterparties available to offer end users risk 
        management solutions. A lower swap dealer de minimis 
        level would lead to further consolidation of the swap 
        business toward only a hand-full of registered swap 
        dealers, mostly Wall Street banks. This threat is not 
        purely hypothetical: when the CFTC initially proposed a 
        lower dealing threshold for counterparties of municipal 
        utilities, those utilities found that liquidity rapidly 
        disappeared and the number of available counterparties 
        diminished. Eventually the CFTC was forced to retreat 
        and increase the de minimis level for energy swaps with 
        municipal utilities to $8 billion dollars. It is likely 
        that a lower de minimis level would have the same 
        effect, not only for utilities but all companies that 
        use swaps to manage risk.

Section 311--Capital requirements for non-bank swap dealers

    Under currently-proposed CFTC regulations for capital and 
margin, non-bank swap dealers would be forced by the CFTC to 
adhere to an inflexible capital requirement standard (based 
partially on the capital requirements from the soon-to-be 
outdated Basel II Accords first proposed in 2004, which have 
since been eclipsed by the Basel III Accords proposed in 2011). 
According to testimony received from Mr. William J. Dunaway, 
CFO, INTL FCStone, Inc., before the Committee on May 21, 2013, 
under the CFTC's proposal, a firm could be assessed a capital 
charge beyond their net position in a contract, especially in 
relation to commodity swaps. Furthermore, the CFTC's capital 
requirements stand in stark contrast to the SEC's capital 
requirements for security-based swap dealing due to the SEC's 
allowance for dealers to utilize pre-approved internal capital 
models. As a result, the Committee learned that, under a worst 
case scenario, ``the same derivatives portfolio that would 
require a bank-affiliated Swap Dealer to hold $10 Million in 
regulatory capital using standard internal models would require 
us to set aside up to $1 Billion in capital. . . .''
    On March 25, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Market Participant Views,'' Mr. Mark Maurer, CEO, 
INTL FCStone Markets LLC (IFM), provided the following 
testimony with respect to the provisions included in Section 
311:

          [T]he competitive advantage given to bank-affiliated 
        Swap Dealers under proposed rules is extraordinary. IFM 
        will be required to hold regulatory capital potentially 
        hundreds of times more than that required for a bank-
        affiliated Swap Dealer for the same portfolio of 
        positions. This disparate treatment to non-bank Swap 
        Dealers like IFM is in part because the proposed rules 
        allow bank-affiliated Swap Dealers to use internal 
        models to calculate risk associated with customer 
        positions, while IFM and other non-banks cannot use 
        their internal models. These models are in some cases 
        the very same models used by the banks.
          The use of internal models is important because 
        internal models generally provide for more 
        sophisticated netting of commodity positions to 
        determine applicable market risk capital charges. As a 
        result of limited netting under the CFTC's 
        ``standardized approach,'' a non-bank Swap Dealer will 
        have to hold market risk capital against economically 
        offsetting commodity swap positions, resulting in a 
        higher capital requirement overall relative to the 
        capital requirement for a bank-affiliated Swap Dealer 
        using an internal model. This increased capital 
        requirement would have the perverse effect of actually 
        incentivizing a non-bank affiliated Swap Dealer to not 
        fully offset the risk of a customer OTC transaction and 
        thus incurring potentially unlimited market risk.
          Under the ``standardized approach'' proposed by the 
        CFTC to calculate Swap Dealer capital requirements . . 
        . many of the commodity derivatives that we make 
        available to our agricultural customers are subject to 
        higher capital requirements than any other derivatives 
        asset class. Agricultural products are at the heart and 
        soul of the U.S. and global infrastructure, and 
        requiring more capital for derivatives in agricultural 
        products is counterproductive to the hedging needs of 
        America's agricultural businesses. We will have to hold 
        more capital for agricultural products than interest 
        rate swaps, because the rules treat ``commodities'' 
        disparately from other asset classes, and in addition, 
        as a non-bank Swap Dealer, we will not be allowed to 
        use our internal models, simply because we are not 
        affiliated with a bank.
          Taken in conjunction, the same derivatives portfolio 
        that would require a bank-affiliated Swap Dealer to 
        hold $10 Million in regulatory capital using standard 
        internal models would require us to set aside up to $1 
        Billion in capital in a worst case scenario. Regulatory 
        capital requirements of this magnitude are . . . not 
        economically feasible for a company of any size.

                                  . . .

          As other non-banks register [as Swap Dealers], 
        particularly those in the agricultural and energy 
        space, additional market participants will be caught in 
        this position and either squeezed out of the market, or 
        at least seriously disadvantaged relative to the bank-
        affiliated dealers.
          Obviously, this regulatory capital disparity is not a 
        small hurdle for the already disadvantaged independent 
        dealers to overcome. If left unchanged, these capital 
        rules will eventually cause nonbank Swap Dealers to 
        exit the business. The direct result will be higher 
        costs for end-users, and then for consumers. Increasing 
        concentration in the industry until only the big banks 
        are left will leave many customers with no place to go. 
        Serving farmers, ranchers and grain elevators has not 
        been a focus or a profitable business model for the 
        large dealers.
          Even larger customers who might be able to access to 
        OTC hedging tools through bank affiliated dealers will 
        still face higher costs as the big bank dealers will be 
        able to take advantage of decreased market competition. 
        A larger percentage of customers carried through a 
        handful of large, bank affiliated Swap Dealers will 
        increase systemic risk.

    Because this potential disparity in capital charges for 
non-bank versus bank-affiliated swap dealers could harm more 
than one market participant, Section 311 would require that the 
CFTC amend its proposed rule and, in close consultation with 
the SEC and prudential financial regulators, allow non-bank 
swap dealers to use capital requirements comparable to those 
used by bank-affiliated swap dealers.

Section 312--Harmonization with the jumpstart our business startups act

    In letters to the CFTC, stakeholders representing a wide 
variety of market participants, such as SIFMA, the Managed 
Funds Association (MFA), and the Financial Services Roundtable 
requested that the Commission harmonize its ``private 
offering'' requirements in CFTC Regulations 4.7 and 4.13(a)(3) 
with the broadened scope of solicitation permitted by the SEC 
after it proposed amendments to Rule 506 of Regulation D and 
Rule 144A under the Securities Act of 1933. The SEC's proposed 
changes to the solicitation rules for securities offerings came 
about after the Jumpstart Our Business Startups Act (JOBS Act) 
(P.L. 112-106) was signed into law in April of 2012, which 
allows for solicitation of accredited investors for private 
securities offerings in order to raise needed capital for 
companies to expand and create jobs.
    While the JOBS Act mandates consistent treatment of 
Regulation D, Rule 506 offerings across the federal securities 
laws, it unintentionally omitted harmonizing changes to the 
CFTC's regulations, which creates an inconsistency between the 
SEC's rules and the CFTC's rules governing solicitation. 
Accordingly, because the relief is needed quickly as to not 
impede use of the JOBS Act by the marketplace, Section 312 
would directly amend CFTC regulations (which would obviate the 
need for a Commission rulemaking) to provide an exemption for 
any registered commodity pool operator to engage in the general 
solicitation for the sale of commodity pools parallel to the 
exemption provided for general solicitation of securities under 
the JOBS Act.
    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Giancarlo provided 
the following testimony with respect to the provisions included 
in Section 312:

          Because relief was needed quickly so as to not impede 
        use of the JOBS Act by the marketplace, I welcomed CFTC 
        staff letter 14-116 issued on September 9, 2014, to 
        provide relief to market participants from certain 
        provisions of CFTC Regulations 4.7(b) and 4.13(a)(3) 
        restricting marketing to the public. However, because 
        permanent changes to our regulations via statutory 
        language provides the most certainty to the 
        marketplace, I support the inclusion of the language 
        from H.R. 4413 and H.R. 4392 from the last Congress 
        which would provide an exemption for any registered 
        commodity pool operator parallel to the exemption 
        provided for general solicitation of securities under 
        the JOBS Act.

Section 313--bona fide hedge defined to protect end-user risk 
        management needs

    In 2010, the Dodd-Frank Act instructed the CFTC on how to 
define what constitutes a bona fide hedging transaction (i.e., 
non-speculative trading) or position so those trades would not 
count towards any positions limits. The statutory definition 
states that the reduction of risk inherent to a commercial 
enterprise is a component in determining what qualifies as a 
bona fide hedging transaction. However, in a change from prior 
practice, the CFTC's approach in both the originally proposed 
2011 position limits rule (which was overturned by a federal 
district court for the District of Columbia in September 2012) 
and the position limits rule proposed in November of 2013 was 
to limit the availability of the bona fide hedge exemption to a 
limited set of transactions, unless the CFTC gave specific 
approval to a particular form of transaction.
    In the most-recently proposed position limits rule, instead 
of providing a clear bona fide exemption from position limits 
to allow end-users of physical commodities to properly hedge 
their commercial risk, many risk-reducing practices commonly 
used in the futures markets today were excluded from the list 
of bona fide hedging transactions prescribed in CFTC Rule 
151.5(a)(2). This concern was confirmed by Mr. Jeffrey 
Sprecher, CEO of IntercontinentalExchange, Inc., in testimony 
before the Committee on May 21, 2013, when he stated that 
``[t]he narrow definition of bona fide hedge will likely hurt 
commercial end-users that these markets are intended to serve, 
and thus support the bona fide hedge exemption relied upon 
historically would bring greater certainty to end-users in 
executing their risk management operations.''
    The CFTC's limitation of bona fide hedges to only a handful 
of transaction types places significant limitations on many 
end-users' ability to hedge risk efficiently. As such, the 
Committee formulated Section 313 to provide for a workable 
hedge exemption. The bona fide hedge provisions in Section 
4a(c) of the CEA are intended to provide market participants 
with certain relief from position limits and therefore give 
end-users the flexibility necessary to hedge their legitimate 
anticipated business risks.
    One of the main purposes of Section 313 is to make clear 
that the statutory requirements with respect to what 
constitutes a bona fide hedge transaction must be reflected in 
the CFTC's further definition of that term. Specifically, 
changing ``may'' to ``shall'' in Section 4a(c)(1) reflects the 
intent of the Committee that the CFTC is not authorized to 
promulgate a further definition of ``bona fide hedge 
transaction'' that is narrower or more restrictive than what is 
described in the CEA. In addition, Section 313 is intended to 
clarify that the CFTC's further definition of ``bona fide hedge 
transaction'' must include hedges of legitimate anticipated 
business needs.
    Section 313 is also intended to provide more flexibility to 
market participants as hedging practices evolve. It is 
Congress' intent that the CFTC provide bona fide hedge status 
to all legitimate risk management practices now and in the 
future. A narrow definition of what constitutes bona fide 
hedging that is limited to an enumerated list of transactions 
will place significant limitations on many end-users' ability 
to hedge risk properly and efficiently. In further defining 
what constitutes a bona fide hedging transaction, the CFTC 
should provide flexibility such that changes and advances in 
hedging practices can easily be incorporated into the bona fide 
hedging regime in an efficient and timely manner, without 
further Commission rulemakings that would add uncertainty to 
the marketplace.
    On July 24, 2013, at a hearing entitled ``The Future of the 
CFTC: End-User Perspectives,'' the following witnesses provided 
testimony with respect to the need for provisions included in 
Section 313:

          Congress provided a definition of a bona fide hedge 
        within Dodd-Frank that the CFTC has unnecessarily 
        narrowed, including related to anticipatory hedging, 
        and has created at least five different definitions in 
        various rules of what constitutes a bona fide hedge. 
        This is nonsensical and creates unnecessary confusion, 
        while disrupting legitimate risk mitigation practices. 
        We are committed to working with Congress to set 
        clearer direction on bona fide hedges so that 
        transactions that limit economic risks are viewed as 
        bona fide hedges by the CFTC.
        --Mr. Lance Kotschwar, Senior Compliance Attorney, 
        Gavilon, on behalf of the CMC

          On September 28, 2012, the U.S. District Court for 
        the District of Columbia vacated final CFTC rules 
        regarding position limits. These vacated rules defined 
        the term bona fide hedging. As written in the CFTC's 
        rule that was vacated, the definition was unnecessarily 
        narrow and would have discouraged a significant amount 
        of important and beneficial risk management activity. 
        Specifically, the rule narrowed the existing definition 
        considerably by providing that a transaction or 
        position that would otherwise qualify as a bona fide 
        hedge also must fall within one of eight categories of 
        enumerated hedging transactions, a definitional change 
        neither supported in nor required by the Dodd-Frank 
        Act. This restrictive definition of bona fide hedging 
        transactions could disrupt the commodity markets, make 
        hedging more difficult and costly, and may increase 
        systemic risk by encouraging end-users to leave a 
        relatively large portion of their portfolios un-hedged.
        --Mr. Richard F. McMahon, Jr., Vice President, EEI

    On March 24, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: End-User Views,'' Mr. Doug Christie, President, 
Cargill Cotton, on behalf of the CMC testified with respect to 
provisions included in Section 313:

          The fundamental principle is this: price risk is far 
        more complex than just fixed-price risk, but may 
        include volatility and similar non-linear risks 
        associated with prices, and a transaction to hedge any 
        of these risks in connection with a commercial business 
        should receive bona fide hedging treatment. Regulators 
        should not condition bona fide hedging treatment as 
        available only when risk crystalizes by virtue of a 
        firm holding a physical position or by entering into a 
        contract. Commercial market practices would be severely 
        impacted if hedging transactions were not deemed bona 
        fide hedges.

                                  . . .

          By narrowly defining bona fide hedging, the 
        traditional hedger will be compromised and thus will 
        not be able to effectively manage its risks. If this 
        happens, risk premiums are going to rise throughout the 
        business, which will be passed along the supply chain. 
        Bid/offer spreads will widen and liquidity will be 
        substantially reduced. This narrow view of hedging, if 
        adopted, will mean that producer prices will decline 
        and the cost to the consumer will increase.

                                  . . .

          Within Title VII of Dodd-Frank and in the Commodity 
        Exchange Act (CEA), Congress explicitly referred to 
        anticipatory and merchandising hedging as bona fide 
        hedging methods because they are crucial to the risk 
        management functions of commercial and end-user firms. 
        Anticipatory hedging allows commercial firms to 
        mitigate commercial risk that can reasonably be 
        ascertained to occur in the future as part of normal 
        risk management practices.

    On March 25, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Market Participant Views,'' the following witnesses 
provided testimony with respect to provisions included in 
Section 313:

          There is no evidence that Congress intended for the 
        Agency to make it more difficult through position 
        limits rules for farmers, ranchers, and other 
        commercial end-users to hedge their price risks. By 
        limiting the exemption to a rigid and narrow list of 
        enumerated hedges, the Agency's proposal threatens to 
        inject considerable risk into commercial operations.''
        --Mr. Terrance A. Duffy, Executive Chairman & 
        President, CME

          [The CFTC's] prohibitions or limitations on 
        anticipatory hedging are likely to greatly constrain 
        the risk management practices of energy and 
        agricultural firms.
        --Benjamin Jackson, President and COO, ICE Futures U.S.

Section 314--Cross-border regulation of derivatives transactions

    As the global financial system has evolved, U.S. 
institutions have expanded their derivatives operations 
overseas to provide services to both U.S. and non-U.S. 
customers. At the same time, foreign institutions have 
established subsidiaries and branches in the U.S. to offer 
derivatives directly to U.S. customers. The growth of this 
cross-border activity makes questions regarding the application 
of the Dodd-Frank Act to activities that occur outside the U.S. 
(known as ``extraterritorial'') complex and critical.
    Section 722(d) of Title VII sets forth that provisions of 
the Dodd-Frank Act shall not apply to activities outside the 
United States unless those activities: (1) have a direct and 
significant connection with activities in, or effect on, 
commerce of the United States, or (2) contravene such rules or 
regulations as the CFTC prescribes are necessary to prevent 
evasion of the Dodd-Frank Act. This is consistent with 
historical practice by both the CFTC and the prudential 
regulators in their treatment of foreign entities with 
operations in the U.S. or of U.S. entities with regard to their 
operations in foreign jurisdictions. Generally, the U.S. 
regulatory agencies have deferred to foreign regulatory 
authorities for the supervision of entities located abroad if 
the agencies found that those entities were subject to a 
regulatory regime comparable to that imposed by the U.S.
    However, in April of 2012, the prudential regulators 
proposed a rule for the application of margin requirements as 
required by Title VII for Major Swap Participants and Swap 
Dealers. Under the prudential regulators' proposal, margin 
requirements would apply to all transactions of U.S. financial 
institutions--whether they involve their U.S. or non-U.S. 
customers. For example, a foreign subsidiary of a U.S. bank in 
Europe would be subject to the Dodd-Frank Act's margin rules 
even when dealing with European customers.
    On June 29, 2012, the CFTC issued proposed ``interpretive 
guidance'' for the cross-border application of Title VII of the 
Dodd-Frank Act. The proposal of this guidance, approved by all 
five commissioners, was done without the concurrent release of 
similar guidance from the SEC for security-based swaps and, as 
it was not in the form of a proposed rule, did not include a 
cost-benefit analysis. When the proposed guidance was released, 
then-CFTC Commissioner Jill Sommers stated that `[CFTC] staff 
had been guided by what could only be called the Intergalactic 
Commerce Clause' of the United States Constitution, in that 
every single swap a U.S. person enters into, no matter what the 
swap or where it was transacted, was stated to have a direct 
and significant connection with activities in, or effect on, 
commerce of the United States. This statutory and 
constitutional analysis of the extraterritorial application of 
U.S. law was, in my view, nothing short of extra-statutory and 
extra-constitutional.''
    On December 13, 2012, the Committee on Agriculture 
Subcommittee on General Farm Commodities and Risk Management 
held a hearing where Commissioners Sommers and Chilton 
testified alongside top regulators from Japan and the European 
Commission. Combined, the three regulatory jurisdictions 
testifying at the hearing represented an overwhelming majority 
of the global derivatives marketplace. Based on testimony the 
subcommittee received, there appeared to be a serious lack of 
coordination between both foreign and domestic regulators.
    For example, Mr. Masamichi Kono with the Financial Services 
Agency of Japan (who at the time was Chairman of the 
International Organization of Securities Commissions (IOSCO)) 
testified during the hearing that ``much needs to be done'' by 
the CFTC and that ``it is important that the details of the 
applicable laws and regulations are made clear as much as 
possible before their implementation in order to minimize 
regulatory uncertainty.'' Further, with respect to minimizing 
risk in the marketplace--a goal central to the creation of the 
Dodd-Frank Act--Mr. Kono testified that:

          [S]uch risks need not be addressed by 
        extraterritorial application of the U.S. laws and 
        regulations; rather, the U.S. authorities could rely on 
        foreign regulators upon establishing of course that the 
        foreign regulators have the required authority and 
        competence to exercise appropriate regulation and 
        oversight over those entities and activities. This is 
        what we consider as the most efficient and effective 
        approach, in line with the principles of international 
        comity between sovereign jurisdictions.

    At the same hearing, Mr. Patrick Pearson with the European 
Commission testified before the Committee about regulatory 
conflicts between the United States and 27 member nations of 
the European Union. With respect to the risk posed to global 
markets if international regulators do not properly coordinate 
the regulation of the markets, he stated that:

          [T]rades will not be able to be cleared. If they 
        can't be cleared, they won't take place. This means 
        that firms and users will not hedge their risks, or 
        firms will hedge their risks but they will only take 
        place within one jurisdiction, which means that risk 
        will be concentrated in one jurisdiction on the planet. 
        That could be the United States. If your firms can't 
        hedge their risks outside of the United States, they'll 
        have to hedge them here. The consequences of that is 
        obviously a fragmented market and a significant 
        concentration of financial risk in the U.S. system, and 
        this is exactly what we tried to prevent with our 
        global regulatory reform.

    In the 113th Congress, on March 14, 2013, at a Committee 
hearing entitled ``Examining Legislative Improvements to Title 
VII of the Dodd-Frank Act,'' the Hon. Kenneth E. Bentsen, 
Acting President and CEO, SIFMA, provided the following 
testimony that informed the drafting of Section 314:

          Though Title VII was signed into law 2\1/2\ years 
        ago, we still do not know which swaps activities will 
        be subject to U.S. regulation and which will be subject 
        to foreign regulation. Section 722 of the Dodd-Frank 
        Act limits the CFTC's jurisdiction over swap 
        transactions outside of the United States to those that 
        ``have a direct and significant connection with 
        activities in, or effect on, commerce of the U.S.'' or 
        are meant to evade Dodd-Frank. Section 772 limits the 
        SEC's jurisdiction over security based swap 
        transactions outside of the United States to those 
        meant to evade Dodd- Frank. However, the CFTC and SEC 
        have not yet finalized (or, in the SEC's case, 
        proposed) rules clarifying their interpretation of 
        these statutory provisions. The result has been 
        significant uncertainty in the international 
        marketplace and, due to the aggressive position being 
        taken by the CFTC as described below, a reluctance of 
        foreign market participants to trade with U.S. 
        financial institutions until that uncertainty is 
        resolved. While the CFTC has proposed guidance on the 
        cross-border impact of their swaps rules, that guidance 
        inappropriately recasts the restriction that Congress 
        placed on CFTC jurisdiction over swap transactions 
        outside the United States into a grant of authority to 
        regulate cross-border trades. The CFTC primarily does 
        so with a very broad definition of ``U.S. Person,'' 
        which it applies to persons with even a minimal 
        jurisdictional nexus to the United States. In addition, 
        the CFTC has released several differing interim and 
        proposed definitions of ``U.S. Person'' for varying 
        purposes, resulting in a great deal of ambiguity and 
        confusion for market participants. SIFMA supports a 
        final definition of U.S. Person that focuses on real, 
        rather than nominal, connections to the United States 
        and that is simple, objective and determinable so a 
        person can determine its status and the status of its 
        counterparties.

    On April 18, 2013, the finance ministers of the European 
Commission, France, Germany, United Kingdom, Japan, 
Switzerland, Russia, South Africa and Brazil wrote to Treasury 
Secretary Jacob Lew stating that ``[w]e are already starting to 
see evidence of fragmentation in this vitally important 
financial market as a result of lack of regulatory 
coordination'' and ``[w]e are concerned that, without clear 
direction from global policymakers and regulators, derivatives 
markets will recede into localised and less efficient 
structures, impairing the ability of business across the globe 
to manage risk.''
    On May 21, 2013, testifying before the Committee at a 
hearing entitled ``The Future of the CFTC: Market 
Perspectives,'' Mr. Jeffery Sprecher, Founder, Chairman, and 
CEO, IntercontinentalExchange, Inc., testified with respect to 
provisions included in Section 314:

          If regulators fail to harmonize, the effects of 
        uncertainty and the prospect for regulatory arbitrage 
        will be damaging. Because markets are global and 
        capital flows across borders, no single country or 
        regulatory regime oversees the derivatives market. In 
        order to make long-term business decisions, market 
        participants require certainty that their transactions 
        will not be judged on conflicting standards. The 
        derivatives markets are international: the majority of 
        companies that operate globally use derivatives to 
        manage price risks, and they conduct these transactions 
        with both U.S. and non-U.S. counterparties. The likely 
        outcome will be that regulators deem other countries' 
        financial regulatory systems as ``nonequivalent'', 
        which would lead to those countries erecting barriers 
        to its financial markets. It is crucial to understand 
        that if countries erect these barriers, WE markets and 
        market participants will be damaged. Currently, the 
        U.S. derivatives markets are home to vital global 
        benchmark contracts in agriculture, energy, financial 
        asset classes. These have become benchmark contracts 
        because Asian and European market participants have 
        direct access to U.S. markets. Importantly, the long-
        standing global nature of the derivatives markets and 
        the resulting international competition has led to 
        advances in transparency, risk management, and 
        historically, regulatory cooperation. Over the past 
        year, ICE has been delivering this message to domestic 
        and international regulators, yet regulations continue 
        to diverge, particularly in the U.S. and Europe. We ask 
        the Committee, in its oversight role, to impress upon 
        the Commodity Futures Trading Commission the importance 
        of working with European and Asian counterparts to 
        harmonize regulation and avoid creating unintended, 
        unpredictable impacts on financial markets and their 
        users. The time for agreement is closing.

    His testimony was echoed by Mr. Stephen O'Conner, the then-
Chairman of ISDA, in his remarks:
          ISDA and our members believe that a globally 
        harmonized approach to cross-border regulation is of 
        paramount importance. What they face now is 
        considerable uncertainty. Uncertainty is never a good 
        thing in financial markets, as there are typically only 
        two things to do in face of that uncertainty. One 
        response is to pull back and wait until such time as 
        greater certainty is provided. On a firm level, that 
        means missed opportunity. On a market level, that 
        translates to less efficient, less liquid and more 
        volatile markets, material harm to financing and 
        investing activities and a drag on the economy in 
        general. . . . Harmonization of regulatory approaches, 
        particularly on issues with systemic risk implications, 
        and a concerted program of mutual recognition of 
        regulatory regimes by global regulators are essential 
        parts of the solution to ET.

    In the 114th Congress, the Subcommittee on Commodity 
Exchanges, Energy, and Credit held three separate hearings 
specifically on issues surrounding the reauthorization of the 
CFTC in which concerns about the Commission's approach to 
cross-border issues have been raised. On March 24, 2015, the 
subcommittee held a hearing entitled ``Reauthorizing the CFTC: 
End-User Views'' in which market participants testified to the 
uncertainty and damaging impact the CFTC's current cross-border 
guidance is having on their ability to manage risks. At that 
hearing, Mr. Mark Maurer, Chairman, INTLFCStone Markets, LLC, 
shared his concerns about the CFTC Cross-Border guidance:

          The CFTC's cross-border guidance proved to be overly 
        complex, resulting in industry challenges and 
        culminating in litigation. We support recognition of 
        non-U.S. regulators' interest in regulating their own 
        markets, with deference to regulators that have 
        comparable regulatory regimes. Better foreign relations 
        are needed going forward to have a cohesive, global 
        swap market.

    At that same hearing, in response to a question about areas 
in which the CFTC could improve, Ms. Lisa Cavallari, Director 
of Fixed Income Derivatives at Russell Investments said:

          I think--again, when it comes back to the 
        implementation of these particular regulations, the 
        CFTC is critically important in terms of how we go 
        forward, and the intersection of so many rules, not 
        just the--that the CFTC makes, but that has been 
        emphasized in terms of cross-border, these--we need to 
        keep liquid markets and those market participants 
        active. And each one of us at . . . this table actually 
        represents a different end-use, and . . . we need to 
        preserve, and the CFTC can help this, the liquidity of 
        these marketplaces.

    On March 25, 2015, the subcommittee held a similar hearing 
with other market participants, entitled ``Reauthorizing the 
CFTC: Market Participant Views.'' At that hearing, Mr. Benjamin 
Jackson, President and COO, ICE Futures U.S., testified about 
the historical importance of working with foreign regulators to 
accomplish comprehensive global financial regulations:

          Before financial reform, these conflicts in 
        regulation were the exception, not the norm, because 
        financial regulation was based on a common set of 
        regulatory principles. For example, since 1984, Section 
        4(b) of the Commodity Exchange Act expressly excluded 
        foreign transactions from CFTC jurisdiction. The CFTC 
        relied on foreign regulators to regulate foreign 
        transactions and worked with regulators to adopt common 
        principles that all regulated markets should adopt. 
        Likewise, European regulators took a similar approach 
        to U.S. markets. This approach was very successful, as 
        it led to greater harmonization of regulation, yet 
        allowed foreign regulators to oversee their 
        institutions. We strongly encourage a return to this 
        approach.

    On April 14, 2015, the subcommittee held a hearing entitled 
``Reauthorizing the CFTC: Commissioners' Perspectives'' in 
which Commissioners Bowen, Giancarlo, and Wetjen were invited 
to provided testimony to the Committee on issues facing the 
CFTC. During that hearing, Commissioner Giancarlo said:

          Unfortunately, fragmentation of global swaps markets 
        between U.S. persons and non-U.S. persons means smaller 
        and disconnected liquidity pools and less efficient and 
        more volatile pricing for market participants and their 
        end-user customers. It also means greater risk of 
        market failure in the event of economic crisis. By 
        Balkanizing global swaps liquidity, the CFTC's 
        Interpretive Guidance is actually increasing the 
        systemic risk that it was predicated on reducing. Like 
        Smoot-Hawley, the CFTC's Interpretive Guidance is ill-
        suited to its ostensible purpose of systemic risk 
        reduction. It is, however, wreaking havoc and forcing 
        U.S. financial institutions to retreat from what were 
        once global markets. We simply cannot allow 
        uncoordinated regulatory reforms to permanently divide 
        global swaps markets between U.S. and non-U.S. persons.
          The CFTC must replace its cross-border Interpretive 
        Guidance with a formal rulemaking that recognizes 
        outcomes-based substituted compliance for competent 
        non-U.S. regulatory regimes. I support the withdrawal 
        of the CFTC staff's November 2013 Advisory that fails 
        not only the letter and spirit of the ``Path Forward,'' 
        but also contradicts the conceptual underpinnings of 
        the CFTC's Interpretive Guidance.

    As of writing this report, global regulators have yet to 
harmonize their approach to global derivatives regulation. In 
order to address the serious concerns voiced by both 
international and domestic regulators, and numerous witnesses 
who have testified before the Committee over the past three 
years, Section 314 requires the CFTC to propose and finalize a 
rule on how U.S. swaps requirements apply to swaps transactions 
that are not wholly transacted within the United States or 
between two U.S. Persons. The Committee reminds the Commission 
of the commitments agreed to by the G-20 Leaders in the 
Leaders' Declaration agreed to at the 2013 St. Petersburg 
Summit:

          We also welcome the recent set of understandings by 
        key regulators on cross-border issues related to OTC 
        derivatives reforms, as a major constructive step 
        forward for resolving remaining conflicts, 
        inconsistencies, gaps and duplicative requirements 
        globally, and look forward to speedy implementation of 
        these understandings once regimes are in force and 
        available for assessment. We agree that jurisdictions 
        and regulators should be able to defer to each other 
        when it is justified by the quality of their respective 
        regulatory and enforcement regimes, based on similar 
        outcomes, in a non-discriminatory way, paying due 
        respect to home country regulation regimes.

    The intent of the Committee is that the CFTC must develop a 
workable system to evaluate the swaps requirements of foreign 
jurisdictions to determine if such foreign jurisdictions are 
comparable to and as comprehensive as U.S. swaps requirements. 
The Committee firmly agrees with the 2013 G-20 Leaders' 
Declaration that international swaps regulation is best served 
by domestic regulators having comparable regimes and deference 
to regulators in their home jurisdiction, both here in the 
United States and around the world. The legislation lays out a 
two-step process to achieve this goal.
    First, in Sections (a) and (b), the Committee requires the 
CFTC to write a rule defining who is a U.S. person and subject 
to the full weight of the U.S. rules, what criteria will be 
used to evaluate each category of swaps requirements to 
determine a foreign jurisdiction's comparability to the United 
States, and when a U.S. person will be exempted from complying 
with U.S. rules, because they are in compliance with equivalent 
foreign rules.
    As the Commission undertakes this effort, Sections (b)(3) 
and (b)(4) provide additional direction for the rulemaking. 
Section (b)(3) instructs the CFTC to compare regulatory 
outcomes, as opposed to the actual mechanics of the rule. The 
Committee agrees with the understanding reached by the OTC 
Derivatives Regulators Group regarding equivalence and 
substituted compliance and put forth in their November 2014 
report to G-20 leaders:

          [A] flexible, outcomes-based approach should form the 
        basis of final assessments regarding equivalence and 
        substituted compliance. The final assessments of a 
        foreign regime for equivalence or substituted 
        compliance should be based on regulatory outcomes of 
        that foreign regime, taking into account the different 
        frameworks, local market practices and characteristics 
        across jurisdictions. An equivalence or substituted 
        compliance assessment also should be based on an 
        understanding that similar regulatory outcomes may be 
        achieved through the implementation of detailed rules 
        or an applicable supervisory framework, or both. Such 
        assessments may be made on a broad category-by-category 
        basis, rather than on the foreign regime as a whole. An 
        equivalence or substituted compliance assessment should 
        fully take into account international standards, where 
        they are appropriate, regulatory arbitrage, investor 
        protection, risk importation, prudential and other 
        relevant considerations.

    Section (b)(4) directs the CFTC to consider risks to the 
U.S. financial markets when developing its rulemaking on who is 
a U.S. Person and how U.S. Swaps rules apply to market 
participants. As expressed in our hearing on April 14, 2015, 
the Committee is concerned about the issuance of the Cross-
Border interpretive guidance and the staff interpretations of 
the guidance that have dramatically altered the scope of its 
application. Section (b)(4) requires the Commission to base its 
rulemaking on risks to the U.S. marketplace that meet the 
direct and significant test put forward in Section 722 of the 
Dodd-Frank Act:

          The provisions of this Act relating to swaps . . . 
        shall not apply to activities outside the United States 
        unless those activities . . . have a direct and 
        significant connection with activities in, or effect 
        on, commerce of the United States . . .

    This direction is in line with the testimony provided by 
Commissioner Bowen at the April 14, 2015 hearing, when Mr. 
Emmer of Minnesota asked ``does the location of the individual 
negotiating a trade have a direct and significant impact on 
U.S. commerce, if the trade occurs between foreign 
counterparties in a foreign jurisdiction?'' Commissioner Bowen 
replied:

          I would suggest that we should follow where the risks 
        actually lie. And so whether the person is located in 
        New York versus London, in some respects, may not be 
        indicative as to where the real risk is. And so we have 
        global markets, the concept of a U.S. person, frankly, 
        may be irrelevant because transactions will be taking 
        place in cyberspace.

    Second, Section (c) requires the Commission to utilize the 
criteria established in the rulemaking to evaluate foreign 
jurisdictions and determine if the rules they have imposed are, 
in fact, comparable to and as comprehensive as U.S. swaps 
rules. The legislation provides the Commission the authority to 
make these determinations by rule or by order, to ensure the 
Commission has the flexibility needed to make determinations in 
a timely fashion. It is the Committee's expectation that the 
Commission will use the rulemaking process, with notice and 
comment, for determinations that are more controversial, more 
complex, or more disruptive to market participants.
    The legislation contemplates the eventual completion of 
swaps rules by other major financial regulators. It provides 
for recognition as comparable for the rules in the 
jurisdictions encompassing the eight largest swaps markets by 
notional value 18 months after the enactment of this Act. It is 
the Committee's expectation that substituted compliance for the 
rules of other sophisticated market regulators who are 
implementing similar reforms be achieved. However, the 
Committee also recognizes that certain regulators may not 
complete their rules in a timely manner or may not offer 
reciprocal recognition to U.S. swaps rules. To that end, 
subsection (c)(3) provides the Commission with an important 
option to suspend that recognition.
    The subsection provides the Commission with three explicit 
determinations it can make under which any grant of substituted 
compliance can be suspended, including: if the foreign 
jurisdiction's swaps rules are not comparable to and as 
comprehensive as U.S. swaps rules, if the foreign jurisdiction 
is not exempting U.S. persons in compliance with U.S. rules 
from foreign rules, or if the foreign jurisdiction is not 
providing equivalent recognition or substituted compliance for 
U.S. registered entities.
    These three determinations are intended to support the CFTC 
Chairman as he is negotiating with his foreign counterparts on 
similar cross-border issues and to enable the Commission to 
hold foreign regulators accountable if they are not negotiating 
in good faith and also working towards an outcomes-based 
substituted compliance regime.
    In the subcommittee's March 24, 2015 hearing, we heard 
testimony from two witnesses on the importance of the current 
cross-border negotiations over CCP recognition. Mr. Terrence 
Duffy, Executive Chairman and President, CME, said:

          Among the most critical issues facing the Commission 
        today is the potential for the United States to be 
        denied status as a country whose regulations are 
        equivalent to Europe's . . . Historically, both the 
        U.S. and EU have mutually recognized each other's 
        regulatory regimes to promote cross-border access.
          Recently, however, the European Commission has taken 
        a different approach. Under European law, U.S. 
        clearinghouses and exchanges--like CME--must first be 
        recognized by European regulators in order to be 
        treated the same as EU clearinghouses and exchanges. 
        The European Commission is conditioning its recognition 
        of U.S. derivatives laws as equivalent to European law 
        on demands for harmful regulatory changes by the U.S. 
        that would impose competitive burdens on U.S., but not 
        EU, clearinghouses and exchanges, and would harm both 
        U.S. and EU market participants.
          After more than two years of negotiation and delay, 
        the EU still has refused to grant U.S. equivalence. . . 
        . By contrast, the European Commission recently granted 
        ``equivalent'' status to several jurisdictions in Asia, 
        including Singapore, which has the same margin regime 
        as the U.S. . . . The European Commission's 
        discriminatory approach to U.S. access to EU markets is 
        creating significant competitive disadvantages for U.S. 
        markets and the participants that use those markets. 
        Without an EU recognition of equivalence, U.S. 
        clearinghouses will not be able to clear EU-mandated 
        derivatives . . .
          Make no mistake that a continued decrease in 
        participation in U.S. futures products will harm both 
        EU and U.S. market participants, reducing liquidity and 
        impeding the ability of farmers, ranchers and other 
        U.S. and EU businesses to conduct prudent risk 
        management.

    Similarly, Mr. Gerald Corcoran, Chairman of the Board, FIA 
testified:

          We operate in global markets and to assume otherwise 
        is very dangerous given that market participants are 
        best served with deep liquidity. If global regulations 
        are not well coordinated the markets will fragment 
        within regulatory jurisdictions and become far less 
        liquid, to the detriment of the ultimate end-users. To 
        date, much of the public regulatory scrutiny has 
        focused on the cross-border regulation of trade 
        execution parties, both the client and the swap 
        dealers, but there are also cross-border challenges 
        within the regulation of the infrastructure that is 
        expected to support the clearing of derivatives. For 
        example, the ``Dodd-Frank Act'' specifically provides 
        the CFTC with the ability to exempt comparably 
        regulated foreign clearinghouses from registration with 
        the U.S. regulator yet the CFTC has never established a 
        means by which clearinghouses, also known as central 
        counterparties (CCPs), might seek such exemptions. Thus 
        any foreign CCP clearing swaps for U.S. entities must 
        register with the CFTC, as well as their home country 
        regulator. U.S. based CCPs who are registered with the 
        CFTC and do business with European participants are 
        required under EU law to be ``recognized'' by having 
        equivalent regulations to those in Europe. Assuming 
        that each regulatory jurisdiction is unlikely to 
        prescribe identical requirements, the practicality of 
        such dual registration or recognition hinges upon the 
        various jurisdictions' ability to acknowledge 
        regulatory differences and rely upon each other as 
        front line regulators. I would like to highlight one 
        specific example of a current regulatory coordination 
        challenge we are facing: Europe and the U.S. have 
        developed differing requirements relative to margin 
        methodologies that CCPs must apply. As clearing members 
        of CCPs in each country, we are perplexed by recent 
        suggestions that the competing methodologies should be 
        run simultaneously. As such, clearing members and their 
        clients would be subjected to the model resulting in 
        the highest margin requirement on any given day. This 
        overly-complex and operationally risky policy seems to 
        overlook the implication to those who post margin--the 
        client and the clearing member. There has been very 
        little transparency or involvement of the clearing 
        members to date in the discussion between the CFTC and 
        EU authorities.

    The Committee does not intend Section 314 to offer relief 
for market participants from all swaps regulatory obligations. 
It is the Committee's expectation that market participants with 
a direct and significant impact on the United States should 
comply with U.S. Rules or another set of rules that has been 
deemed to be comparable to and as comprehensive as U.S. rules. 
However, the Committee firmly believes that no market 
participant should be subject to multiple sets of regulations 
that are incompatible with one another and would require a 
participant to break one rule to meet another.
    In the 113th Congress, the House of Representatives passed 
H.R. 1256, the Swap Jurisdiction Certainty Act, by a vote of 
301-124, which contained similar requirements to Section 314.

Section 315--Exemption of qualified charitable organizations from 
        designation and regulation as commodity pool operators

    As a result of the Dodd-Frank Act's addition of swaps to 
the commodity pool definition, certain colleges and 
universities currently face uncertainty as to whether the 
practices of universities managing their endowment funds 
together with funds of affiliated organizations (such as 
university newspapers, clubs, charitable remainder trusts and 
other organizations within the university community) and 
entering into swaps in the ordinary course of managing their 
investment exposure and operational risk (e.g., interest rates 
or energy prices) would cause university endowments to be 
commodity pools and universities themselves to be CPOs or CTAs, 
subject to CFTC regulation.
    Many colleges, universities and other charitable 
organizations faced similar uncertainty with respect to the 
Investment Advisors Act of 1940, and this uncertainty was 
addressed by the Philanthropy Protection Act of 1995 (``PPA''). 
Since that time, university endowments have relied on the 
changes made by the PPA to provide an exemption from SEC 
registration in recognition of the special status of these 
funds.
    Similarly, church benefits boards often use investment 
managers or advisers that engage in commodities transactions. 
Church benefits boards also have the ability to pool plan 
assets with other funds for the benefit of the church (``church 
plan-related accounts''), purely for investment management 
purposes. While securities laws clearly exempt church plans and 
church plan-related accounts from SEC registration 
requirements. The CEA and CFTC rules are not so clear.
    Section 315 will harmonize the exemptions between 
securities laws and the CEA and CFTC regulations. It will 
prevent university endowments, church pension plans and church 
plan-related accounts from having to be registered as commodity 
pools. Likewise, Section 315 will prevent the universities and 
church benefits boards from having to register as CPOs or CTAs. 
These exemptions would reduce the cost to churches, 
universities and charitable organizations, and would also 
ensure they have the full benefit of commodities investments 
that provide diversification, opportunities to hedge, and 
returns to their respective beneficiaries.

Section 316--Small bank holding company clearing exemption

    Under the Dodd-Frank Act, end-users that are not considered 
a ``financial entity'' are exempt from the Act's swaps clearing 
mandate. The Act directed the CFTC to determine whether to 
exempt small banks and savings associations with assets less 
than $10 billion from the definition of ``financial entity,'' 
thereby making them eligible for the end-user exemption from 
the swaps clearing mandate. In July 2012, the CFTC issued a 
final rule exempting ``small financial institutions'' with 
total assets of $10 billion or less from classification as a 
``financial entity.''
    Most banks are structured under a holding company. The 
holding companies use swaps to manage risk across the small 
banks and savings associations that they own. Entering into 
swaps with the holding company is commonplace, with many small 
banks and savings associations entering into swaps exclusively 
with the holding company. These non-speculative swaps between 
holding companies and their small banks and savings 
associations pose minimal risk to the marketplace. Having to 
clear these swaps would impose significant costs on the small 
banks and savings associations. If the holding companies are 
not exempted from the Act's swaps clearing mandate, small banks 
and savings associations may have to either forgo the use of 
swaps at the holding company, or undertake tremendous 
operational expense for the ability to enter into as little as 
one swap. Section 316 extends the Commission's exemption for 
small banks and savings associations to the holding companies 
that own them.

Section 317--Core principle certainty

    The Dodd-Frank Act required that cleared swaps must be 
executed through a swap execution facility (SEF). SEFs are 
facilities, trading systems or platforms in which multiple 
participants have the ability to execute or trade swaps by 
accepting bids and offers made by multiple participants in the 
facility or system. The Dodd-Frank Act's swaps clearing mandate 
is predicated on the vibrant operation of SEFs. Regulations 
that impose significant costs and prescribe onerous burdens on 
SEFs thereby impeding their development and potentially 
contributing to their failure should be discouraged.
    The Dodd-Frank Act provided a core principles-based 
framework for SEFs. SEF Core Principle 4 requires SEFs to 
monitor trading in swaps to prevent manipulation, price 
distortion and disruptions of the delivery or cash settlement 
process, among other things. Certain rules promulgated under 
Core Principle 4 require a SEF to look beyond its own market to 
gain the information necessary to perform these functions. For 
example, a SEF that executes a credit default swap on a Ford 
Motor Company bond must also monitor trading in the underlying 
Ford Motor Company bonds to prevent manipulation, price 
distortion and disruption in its market. While a SEF has the 
ability to monitor trades it executes, asking it to monitor 
manipulation in another marketplace in which it may provide no 
execution services is an undue, unfair and unwarranted burden. 
As the CFTC admits on its website, only it can perform cross-
market surveillance.
    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Giancarlo provided 
the following testimony with respect to the provisions included 
in Section 317:

          Congress should clarify SEF Core Principle 4 to make 
        clear that a SEF is not required to monitor markets 
        beyond its own. . . . The CFTC should also revise its 
        rules to this effect.

    Similarly, SEF Core Principle 6 requires a SEF to ``adopt 
for each of the contracts of the facility, as necessary and 
appropriate, position or accountability for speculators.'' As 
with a SEF's ability to monitor trades, a SEF's ability to 
monitor positions held by market participants is limited. A SEF 
can only know about the transactions completed at its own 
facility and has no way of knowing what the portfolio of swaps 
a market participant may hold. Mr. Shawn Bernardo, testifying 
on behalf of the Wholesale Market Brokers Association, 
Americas, explained:

          Position limits or accountability levels apply 
        market-wide to an entity's overall position in a given 
        swap, commodity, or instrument subject to limits and 
        ownership and control provisions. To monitor an 
        entity's positions and take action to enforce such a 
        market-wide requirement, a SEF would need to have 
        access to information about an entity's overall 
        positions in the swap and underlying instrument or 
        commodity, which it does not have.

    Section 317 would require a SEF ``be responsible for 
monitoring positions only on its own facility.''
    SEF Core Principle 13 requires a SEF to have ``financial 
resources [in an amount that] exceeds the total amount that 
would enable the [SEF] to cover the operating costs of the 
[SEF] for a 1-year period, as calculated on a rolling basis.'' 
This is the same financial resources requirement imposed on 
designated contract markets (DCM). However, the market impact 
of a SEF failure is not nearly comparable to the effect of a 
DCM failure. A SEF failure will not likely create a liquidity 
crisis because participants can easily move their trading to 
another SEF. This is in contrast with the futures market where 
a DCM owns the products traded on it. The failure of one DCM 
will likely harm liquidity absent regulatory action to transfer 
those products and corresponding open interest to another DCM. 
Further, a failed SEF would likely be able to wind-down its 
business in far less than one year. Accordingly, forcing a SEF 
to retain capital to cover one year of operating expenses is 
unwarranted.
    On April 14, 2015, at a hearing entitled ``Reauthorizing 
the CFTC: Commissioner Views,'' Commissioner Giancarlo provided 
the following testimony with respect to the provisions included 
in Section 317:

          Congress should reexamine this core principle and 
        only require a SEF to hold enough capital to conduct an 
        orderly wind-down of its operations. It would not take 
        a SEF one year to terminate employees and contracts and 
        conduct an orderly wind-down of its operations. It 
        would not be unreasonable to expect a SEF to conduct 
        such a wind-down in three months. This approach would 
        release significant capital back to the SEF for 
        innovation, lower barriers to entry, reduce costs and 
        increase competition.

    The Dodd-Frank Act narrowly prescribed the extensive duties 
and responsibilities of a SEF's chief compliance officer 
without consideration for a SEF's potential limited resources. 
Because SEFs maintain relatively small corporate structures, 
certain duties and responsibilities of their chief compliance 
officers have proven to be unduly burdensome. For these 
reasons, SEF chief compliance officers require greater 
flexibility to fulfil their obligations under the Dodd-Frank 
Act.
    Section 317 provides a swap execution facility SEF with 
flexibility in developing and implementing its surveillance and 
monitoring rules, narrows SEF's monitoring responsibility to 
swaps trading only on its own facility, replaces the 
requirement that a SEF hold funds to cover its operating costs 
for 1 year with a requirement that it hold funds to conduct an 
orderly wind-down of its operations, and provides flexibility 
for SEF chief compliance officers and procedures for SEF annual 
reports to the CFTC.

Section 318--Treatment of Federal Home Loan Bank products

    The 12 regional Federal Home Loan Banks (FHLBanks), created 
by Congress in 1932, are member-owned cooperative institutions 
regulated by the Federal Housing Finance Agency (FHFA). FHLBank 
members include banks, credit unions, insurance companies and 
community development financial institutions. The mission of 
the FHLBanks is to provide their members with reliable 
wholesale funding and liquidity to support housing finance, 
community development, and economic growth. The FHLBanks' 
lending to their member financial institutions have been 
critical to the flow of credit, including residential mortgage 
credit, particularly through the financial crisis.
    The Dodd-Frank Act generally exempts ``identified banking 
products'' (including loans) from regulation as ``swaps,'' or 
derivatives, even if these loans contain features such as caps, 
floors or options that are sometimes included in derivatives. 
FHLBanks are not included as ``banks'' for purposes of this 
exemption and the FHFA is not included as an appropriate 
federal regulator for the purposes of the exemption. 
Regardless, FHLBank loans to its members (advances) have been 
afforded a similar exemption as commercial bank loans through 
CFTC regulatory guidance due to the cooperative nature and 
regulatory structure of the FHLBank System.
    However, the scope of the FHLBanks' exemption is unclear. 
In its regulatory guidance, the CFTC exempted certain loans 
entered into by FHLBanks. The CFTC also exempted a number of 
loans embedded with derivative-like features subject to certain 
limitations, but it didn't specifically impose those 
limitations on the FHLBanks' use of those loans. Therefore, 
it's unclear whether FHLBanks' loans are subject to those 
limitations. Subjecting FHLBank advances to the multitude of 
the Dodd-Frank Act requirements could increase the cost of 
funds to lenders nationwide.
    Section 318 resolves any ambiguities by adding language to 
the CEA definitively categorizing FHLBank advances as 
``identified banking products'' and, in so doing, assuring that 
FHLBank advances are not considered swaps under the Dodd-Frank 
Act. Section 318 ensures that community financial institutions 
will keep affordable access to financial services that help 
them to structure their products to meet the needs of the 
communities they serve and to prudently manage their balance 
sheets.

Section 319--Treatment of certain funds

    From 1985 until 2012, CFTC Regulation 4.5 excluded 
``otherwise regulated entities''--registered funds, insurance 
company separate accounts, bank trust and custodial accounts, 
and retirement plans subject to the Employee Retirement Income 
Security Act of 1974 (ERISA)--from CPO regulation because they 
were already regulated by the SEC. As a part of a 2012 
rulemaking, the CFTC significantly broadened the reach of its 
oversight of registered funds. As a result, more than 70 fund 
companies managing over 5,000 mutual funds have had to register 
with the CFTC as CPOs, resulting in increased costs for 
registered funds and the Americans who invest in them.
    Additional regulation by the CFTC is unnecessary, 
particularly for those funds that do not resemble or compete 
with traditional commodity pools. Registered funds and their 
advisers are comprehensively regulated by the SEC, including 
regulations that govern the funds' derivatives holdings.
    In a statement submitted for the March 24, 2015 
``Reauthorizing the CFTC: End-User Views'' hearing record, the 
Investment Company Institute addressed its concerns regarding 
Regulation 4.5:

          In February 2012, the CFTC voted to significantly 
        narrow the exclusion from CPO regulation in Rule 4.5 
        under the CEA as it relates to registered funds and 
        rescind an exemption from CPO registration that 
        previously was available to sponsors of private 
        investment funds. During the public comment period, ICI 
        and many other stakeholders warned the agency that its 
        proposals were overbroad, and offered a myriad of 
        recommendations for tailoring the rules to achieve the 
        CFTC's stated regulatory objectives without placing 
        undue burdens on registered and private funds and their 
        sponsors/advisers, as well as on the CFTC's limited 
        resources. Unfortunately, the CFTC proceeded to adopt 
        the rules largely as proposed. As anticipated by 
        commenters, these rule changes have had significant 
        implications for many asset management firms--in 
        addition to the many new obligations imposed on these 
        firms by the Dodd-Frank Act. Indeed, we understand that 
        over 700 additional firms, which collectively operate 
        thousands of registered and private funds, have now 
        registered as CPOs. Many more firms may be required to 
        register in the future. Unfortunately, most of the 
        costs imposed by this additional regulation will be 
        indirectly borne by fund shareholders.

          The timing of these rule changes was unfortunate and 
        unnecessary. The changes were not mandated by the Dodd-
        Frank Act, although the CFTC attempted to link them to 
        the Act by describing them as being ``consistent with 
        the tenor'' of that Act. Their promulgation has 
        required ICI members and other stakeholders to expend 
        significant time and resources on complying with the 
        amended Rule 4.5 exclusion or, if they were unable to 
        rely on the exclusion, registering as a CPO and 
        complying with the applicable requirements.

          ICI, both individually and jointly with other trade 
        associations, has submitted more than 20 requests to 
        the CFTC and NFA for clarification, confirmation, and 
        interpretive or no-action relief necessary to 
        facilitate compliance as a result of the amended rule. 
        Many of these requests remain unanswered, months or 
        even years after their submission. The registered fund 
        industry is characterized by a strong culture of 
        compliance, and the uncertainty created by these 
        outstanding requests has made it unnecessarily 
        challenging and costly for registered funds and their 
        advisers to navigate their compliance obligations under 
        CFTC regulations. These efforts have come at a time 
        when ICI, its members and other stakeholders are 
        devoting time and resources to understanding and 
        complying with the many significant new rules that were 
        required by the Dodd-Frank Act.

    Section 319 exempts registered funds already subject to SEC 
regulation from having to register with the CFTC as CPOs if 
their funds' only investment in commodity interests is limited 
to ``financial commodities'' (e.g., S&P; 500 swaps). It reduces 
the unnecessary regulation and costs created by the Rule 4.5 
amendments without undermining investor protection. Section 319 
allows the CFTC to continue to regulate funds that resemble or 
compete with traditional commodity pools, while restoring 
exclusive SEC jurisdiction over those funds that invest only in 
financial derivatives.

                    Title IV--Technical Corrections

    Committee staff, CFTC staff, and House Legislative Counsel 
staff worked together to develop Title IV and fix a number of 
statutory oversights and drafting errors.

Section 401--Correction of references

    Section 5h(f) refers to SEF core principles, whereas 
section 5h(g) is the intended provision under which a SEF can 
be exempt from registration due to being ``subject to 
comparable, comprehensive supervision and regulation.''
    Section 1a(2)(i) does not exist, and the provision is meant 
to reference the definition of ``excluded commodity'' in 
section 1a(19)(i).
    This amendment corrects a typographical error in the cross-
reference to the Administrative Procedure Act.

Section 402--Elimination of obsolete references to dealer options

    The provisions refer to activity that occurred prior to 
1978. Dealer options are no longer traded, and the Commission 
deleted the corresponding regulation (32.23) as part of its 
commodity options rulemaking.

Section 403--Updated trade data publication requirement

    The term ``exchange'' is not a defined term in the CEA, and 
this updated language reflects the current trade data 
publication requirements under the CEA.

Section 404--Flexibility for registered entities

    This amendment allows all registered entities to delegate 
functions under core principles to a third-party service 
provider. For consistency in regulation SEFs, DCOs and SDRs 
should be allowed to delegate these functions as DCMs are 
currently able to do.

Section 405--Elimination of obsolete references to electronic trading 
        facilities

    The CFMA added the term ``electronic trading facility'' to 
support two forms of trading that were abolished by the Dodd-
Frank Act. There is no longer a need for this term in the CEA.

Section 406--Elimination of obsolete reference to alternative swap 
        execution facilities

    Initially, the Dodd-Frank Act referred to SEFs as 
``alternative swap execution facilities''. ``Alternative'' was 
dropped in later versions of the legislation.

Section 407--Elimination of redundant references to types of registered 
        entities

    The reference to registered entities is sufficient. The 
deleted language is unnecessary.

Section 408--Clarification of Commission authority over swaps trading

    These amendments clarify the Commission's authority under 
Section 8a over swaps trading.

Section 409--Elimination of obsolete reference to the Commodity 
        Exchange Commission

    This strikes an obsolete reference to the Commodity 
Exchange Commission.

Section 410--Elimination of obsolete references to derivative 
        transaction execution facilities

    Derivatives Transaction Execution Facility (DTEF) was a 
type of registered entity created by the CFMA in 2000. It was 
abolished by the Dodd-Frank Act in 2010.

Section 411--Elimination of obsolete references to exempt boards of 
        trade

    Exempt Boards of Trade (EBOTs) were abolished by the Dodd-
Frank Act in 2010.

Section 412--Elimination of report due in 1986

    Section 16a of the CEA requires the CFTC to submit a study 
to the Congressional Agriculture Committees on the function of 
the National Futures Association. This section would eliminate 
this language.

Section 413--Compliance report flexibility

    The timing requirement under current Section 4s(k)(3)(B)(i) 
has proven to be unworkable. This amendment gives the 
Commission administrative flexibility over timing.

Section 414--Miscellaneous corrections

    Section 414 is a collection of additional miscellaneous 
statutory corrections that fix drafting errors from prior 
legislation.

                        COMMITTEE CONSIDERATION


                              I. HEARINGS

    The Committee on Agriculture and Subcommittee on Commodity 
Exchanges, Energy and Credit held four hearings during the 
114th Congress in anticipation of legislation to reauthorize 
the Commodity Futures Trading Commission (CFTC).
    On March 12, 2015, the Full Committee on Agriculture held a 
hearing entitled, ``To Review the 2015 Agenda for the Commodity 
Futures Trading Commission'' where the Committee heard from 
CFTC Chairman Timothy Massad.
    On March 24, 2015, the Subcommittee head a hearing 
entitled, ``Reauthorizing the CFTC: End-User Views'' where the 
following witnesses testified on matters included in H.R. 2289:
     Mr. Douglas Christie, President, Cargill Cotton, 
Cordova, TN; on behalf of the Commodity Markets Council
     Mr. Lael E. Campbell, Director Regulatory & 
Government Affairs, Constellation, an Exelon Company, 
Washington, D.C.; on behalf of the Edison Electric Institute
     Ms. Lisa A. Cavallari, Director, Fixed Income 
Derivatives, Russell Investments, Seattle, WA; on behalf of the 
American Benefits Council
     Mr. Mark Maurer, Chief Executive Officer, INTL 
FCStone Markets, LLC, Chicago, IL
     Mr. Howard Peterson, Jr., President & Owner, 
Peterson Oil Service, Worcester, MA; on behalf of the New 
England Fuel Institute
    On March 25, 2015, the Subcommittee on Commodity Exchanges, 
Energy, and Credit held a hearing entitled, ``Reauthorizing the 
CFTC: Market Participant Views'' where the following witnesses 
testified on matters included in H.R. 2289:
     Mr. Terrence A. Duffy, Executive Chairman & 
President, CME Group, Chicago, IL
     Mr. Benjamin Jackson, President and Chief 
Operating Officer, ICE Futures U.S., New York, NY
     Mr. Daniel J. Roth, President and CEO, National 
Futures Association, Chicago, IL
     Mr. Gerald F. Corcoran, Chairman of the Board & 
Chief Executive Officer, R.J. O'Brien & Associates, LLC, 
Chicago, IL; on behalf of the Futures Industry Association
     Mr. Shawn Bernardo, Chief Executive Officer, 
tpSEF--Tullett Prebon, Jersey City, NJ; on behalf of the 
Wholesale Market Brokers Association, Americas
    On April 14, 2015, the Subcommittee on Commodity Exchanges, 
Energy, and Credit held a hearing entitled, ``Reauthorizing the 
CFTC: Commissioners' Perspectives'' where the following 
witnesses testified on matters included in H.R. 2289:
     The Honorable Sharon Y. Bowen, Commissioner, 
Commodity Futures Trading Commission, Washington, D.C.
     The Honorable J. Christopher Giancarlo, 
Commissioner, Commodity Futures Trading Commission, Washington, 
D.C.
     The Honorable Mark P. Wetjen, Commissioner, 
Commodity Futures Trading Commission, Washington, D.C.
    In addition to the Committee's work in the 114th Congress 
outlined above, during the 113th Congress, the Committee held 
four hearings to gather input regarding the reauthorization of 
the CFTC from CFTC Commissioners, end-users, and a variety of 
market participants. The Committee also held a legislative 
hearing to examine seven legislative proposals to improve Title 
VII of the Dodd-Frank Act. Two of those measures were 
eventually signed into law and the remaining five were 
individually passed by the House with bipartisan support, and/
or were included in H.R. 4413, the Customer Protection and End-
User Relief Act, and ultimately in this legislation where noted 
under Purpose and Need.
    In the 112th Congress, the Committee also considered a 
variety of bills addressing concerns similar to those addressed 
in the Commodity End-User Relief Act of 2015. The Committee was 
the first to hear testimony from Jon Corzine following the 
collapse of MF Global, and later heard the views of foreign 
regulators regarding the cross-border application of U.S. swaps 
rules. The Committee held an additional 10 hearings regarding 
derivatives markets, end-users, and the implementation of Title 
VII of the Dodd-Frank Act.

                           II. FULL COMMITTEE

    On May 14, 2015, the Committee on Agriculture met pursuant 
to notice, with a quorum present to consider H.R. 2289. 
Chairman Conaway made an opening statement as did Ranking 
Member Peterson, Subcommittee Chairman Austin Scott, and 
Subcommittee Ranking Member David Scott.
    Chairman Conaway placed H.R. 2289 before the Committee and, 
without objection a first reading of the bill was waived and it 
was open to amendment by title.
    Chairman Conaway recognized Mr. Peterson to offer and 
explain his amendment to strike most of the text of the base 
bill and substitute a version of the bill that included only 
certain sections of the base bill. Discussion occurred and by a 
voice vote, the amendment failed.
    Mr. Lucas offered an amendment to clarify when the CFTC can 
disclose proprietary information submitted to the Commission on 
forms CPO-PQR and Form CTA-PR. The amendment was adopted by 
voice vote.
    Ms. Delbene offered an amendment to clarify that the 
Commission's assessment of costs and benefits regarding rules 
and orders will be affirmed by a court unless that assessment 
is found to be an abuse of discretion. The amendment was 
adopted by voice vote.
    Mr. Goodlatte offered an amendment that directs the CFTC to 
report to Congress within 90 days of enactment the status of 
on-going review of Foreign Board of Trade applications and the 
status of the CFTC's negotiations with foreign regulators 
regarding aluminum warehousing. The amendment also requires the 
CFTC to take final action on any such application by September 
30, 2016. The amendment was adopted by a voice vote.
    Mr. Davis offered an amendment to address recent changes to 
CFTC Rule 4.5 and restore exclusive jurisdiction over those 
funds that invest only in financial derivatives to the U.S. 
Securities and Exchange Commission, while allowing the CFTC to 
continue to regulate funds that resemble or compete with 
traditional commodity pools. The amendment was adopted by a 
voice vote.
    Ms. Kuster offered an amendment to amend section 1 a(10) of 
the Commodity Exchange Act by removing commodity pool operator 
registration requirements for investment trusts, syndicates, or 
similar forms of enterprises that are already exempt from the 
definition of investment company in the Investment Company Act 
of 1940. The amendment was adopted by a voice vote.
    Mr. Emmer offered an amendment to amend section 2(h)(7)(C) 
of the Commodity Exchange Act by clarifying that the CFTC's 
decisions to exempt small banks and savings associations from 
classification as a financial entity will also be extended to 
similarly-sized holding companies of those associations. The 
amendment was adopted by a voice vote.
    Mr. Austin Scott offered an amendment to amend section 
5h(f) of the Commodity Exchange Act to narrow a Swap Execution 
Facility's (SEF) monitoring responsibility over ``trading in 
swaps'' to swaps trading ``only on its own facility.'' It also 
replaces the requirement that a SEF hold funds to cover its 
operating costs for one year with the requirement that it hold 
funds to conduct an orderly wind-down of operations. It further 
modifies the duties of a SEF chief compliance officer and the 
procedures for SEF annual reports to the CFTC. The amendment 
was adopted by a voice vote.
    Mr. Lucas offered an amendment to clarify that for the 
purposes of any Federal Home Loan Bank, the Federal Housing 
Finance Agency is an ``appropriate Federal banking agency.'' 
The amendment was adopted by a voice vote.
    Mr. Bost offered an amendment to allow the CFTC to suspend 
a determination that a foreign jurisdiction's swaps 
requirements are comparable to or as comprehensive as the U.S. 
swaps requirements when a foreign jurisdiction has not provided 
equivalent recognition or substituted compliance for registered 
entities domiciled in the United States. The amendment was 
adopted by a voice vote.
    There being no further amendments, Mr. David Scott moved 
that H.R. 2289, as amended, be adopted and reported favorably 
to the House with the recommendation that it do pass. By a 
voice vote, the bill was adopted.
    At the conclusion of the meeting, Chairman Conaway advised 
Members that pursuant to the rules of the House of 
Representatives Members had until May 18, 2015, to file any 
supplemental, minority, additional, or dissenting views with 
the Committee.
    Without objection, staff was given permission to make any 
necessary clerical, technical or conforming changes to reflect 
the intent of the Committee. Chairman Conaway thanked all the 
Members and adjourned the meeting.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, H.R. 2289 was reported by voice vote with a 
majority quorum present. There was no request for a recorded 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee on Agriculture's 
oversight findings and recommendations are reflected in the 
body of this report.

           Budget Act Compliance (Sections 308, 402, and 423)

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the Committee prior to the 
filing of this report are as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 28, 2015.
Hon. K. Michael Conaway,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2289, the 
Commodity End-User Relief Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                              Keith Hall, Director.
    Enclosure.

H.R. 2289--Commodity End-User Relief Act

    Summary: H.R. 2289 would authorize appropriations to 
operate the Commodity Futures Trading Commission (CFTC) through 
2019 and to make changes in some of the agency's operating 
procedures. The bill also would amend the Commodity Exchange 
Act to provide greater protections for customer funds held by 
entities that broker transactions in commodity futures and to 
relax requirements on certain participants in swap 
transactions. (A swap is a contract that calls for an exchange 
of cash between two participants, based on an underlying rate 
or index or on the performance of an asset.)
    CBO estimates that implementing H.R. 2289 would cost $1.1 
billion over the 2016-2020 period, assuming appropriation of 
the necessary amounts. CBO expects that enacting H.R. 2289 
would affect direct spending; therefore, pay-as-you-go 
procedures apply. However, CBO estimates that those effects 
would not be significant. Enacting H.R. 2289 would not affect 
revenues.
    H.R. 2289 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 2289 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                    ------------------------------------------------------------
                                                       2016      2017      2018      2019      2020    2016-2020
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
CFTC Reauthorization:
    Estimated Authorization Level..................       256       263       270       278         0      1,067
    Estimated Outlays..............................       228       263       264       272        25      1,052
Other Provisions:
    Estimated Authorization Level..................        15         7         7         8         8         45
    Estimated Outlays..............................        13         8         7         7         8         44
    Total Changes:
        Estimated Authorization Level..............       271       270       277       286         8      1,112
        Estimated Outlays..........................       241       271       271       279        33      1,096
----------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding.
CFTC = Commodity Futures Trading Commission.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the end of fiscal year 2015, the 
necessary amounts will be appropriated near the beginning of 
each fiscal year, and outlays will follow spending patterns for 
similar activities at the CFTC.

Spending subject to appropriation

    CFTC reauthorization: H.R. 2289 would authorize 
appropriations for CFTC operations through 2019; for 2015, the 
CFTC received an appropriation of $250 million. Based on the 
agency's current budget and adjusting for anticipated 
inflation, CBO estimates that extending the authorization of 
appropriations for the current functions of the CFTC through 
2019 would cost about $1.1 billion over the 2015-2020 period, 
assuming those amounts are appropriated each year.
    Other provisions: H.R. 2289 also would direct the CFTC to:
           Change certain procedures in its rulemaking 
        process and to improve safeguards of market data in the 
        agency's control;
           Report price and volume data for swap 
        transactions when the volume of trading is at a level 
        that individual market participants could be identified 
        (known as ``illiquid markets''); and
           Issue rules that define the application of 
        United States regulations to swap transactions 
        undertaken between a U.S. entity and a foreign entity.
    Based on information from the CFTC, CBO estimates that the 
agency would require 30 additional personnel annually to handle 
the increased workload under these provisions, an increase of 
about 4 percent over the agency's 2014 staffing level. We 
estimate that salaries, benefits, and overhead for those 
additional staff, as well as new administrative expenses, would 
cost $44 million over the 2015-2020 period, assuming 
appropriation of the necessary amounts.

Direct spending and revenues

    H.R. 2289 would affect federally owned utilities by 
changing the way CFTC regulates certain electric and natural 
gas utility contracts. CBO estimates that the net effect on 
direct spending as a result of those changes would not be 
significant over the 2015-2025 period. Enacting H.R. 2289 would 
not affect revenues.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Enacting H.R. 2289 would affect direct spending; 
however, CBO estimates that those effects would not be 
significant.
    Intergovernmental and private-sector impact: H.R. 2289 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Susan Willie; Impact 
on State, Local, and Tribal Governments: J'nell Blanco Suchy; 
Impact on the Private Sector: Logan Smith.
    Estimate approved by: Theresa Gullo, Assistant Director for 
Budget Analysis.

                    Performance Goals and Objectives

    With respect to the requirement of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of this legislation are to 
reauthorize the Commodity Futures Trading Commission, to better 
protect futures customers, to provide end users with market 
certainty, to make basic reforms to ensure transparency and 
accountability at the Commission, to help farmers, ranchers, 
and end users manage risks, to help keep consumer costs low, 
and for other purposes.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The Committee adopted as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

  Earmark Statement Required by Clause 9 of Rule XXI of the Rules of 
                        House of Representatives

    H.R. 2289 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(e), 9(f), or 9(g) of rule XXI of the Rules of the 
House Representatives.

                    Duplication of Federal Programs

    This bill does not establish or reauthorize a program of 
the Federal Government known to be duplicative of another 
Federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 2289 specifically directs 
CFTC to conduct one rule making proceedings within the meaning 
of 5 U.S.C. 551.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

COMMODITY EXCHANGE ACT

           *       *       *       *       *       *       *


SEC. 1A. DEFINITIONS.

   As used in this Act:
          (1) Alternative trading system.--The term 
        ``alternative trading system'' means an organization, 
        association, or group of persons that--
                  (A) is registered as a broker or dealer 
                pursuant to section 15(b) of the Securities 
                Exchange Act of 1934 (except paragraph (11) 
                thereof);
                  (B) performs the functions commonly performed 
                by an exchange (as defined in section 3(a)(1) 
                of the Securities Exchange Act of 1934);
                  (C) does not--
                          (i) set rules governing the conduct 
                        of subscribers other than the conduct 
                        of such subscribers' trading on the 
                        alternative trading system; or
                          (ii) discipline subscribers other 
                        than by exclusion from trading; and
                  (D) is exempt from the definition of the term 
                ``exchange'' under such section 3(a)(1) by rule 
                or regulation of the Securities and Exchange 
                Commission on terms that require compliance 
                with regulations of its trading functions.
          (2) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency''--
                  (A) has the meaning given the term in section 
                3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813);
                  (B) means the Board in the case of a 
                noninsured State bank; [and]
                  (C) is the Farm Credit Administration for 
                farm credit system institutions[.]; and
                  (D) is the Federal Housing Finance Agency for 
                any Federal Home Loan Bank (as defined in 
                section 2 of the Federal Home Loan Bank Act).
          (3) Associated person of a security-based swap dealer 
        or major security-based swap participant.--The term 
        ``associated person of a security-based swap dealer or 
        major security-based swap participant'' has the meaning 
        given the term in section 3(a) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)).
          (4) Associated person of a swap dealer or major swap 
        participant.--
                  (A) In general.--The term ``associated person 
                of a swap dealer or major swap participant'' 
                means a person who is associated with a swap 
                dealer or major swap participant as a partner, 
                officer, employee, or agent (or any person 
                occupying a similar status or performing 
                similar functions), in any capacity that 
                involves--
                          (i) the solicitation or acceptance of 
                        swaps; or
                          (ii) the supervision of any person or 
                        persons so engaged.
                  (B) Exclusion.--Other than for purposes of 
                section 4s(b)(6), the term ``associated person 
                of a swap dealer or major swap participant'' 
                does not include any person associated with a 
                swap dealer or major swap participant the 
                functions of which are solely clerical or 
                ministerial.
          (5) Board.--The term ``Board'' means the Board of 
        Governors of the Federal Reserve System.
          (6) Board of trade.--The term ``board of trade'' 
        means any organized exchange or other trading facility.
          (7) Cleared swap.--The term ``cleared swap'' means 
        any swap that is, directly or indirectly, submitted to 
        and cleared by a derivatives clearing organization 
        registered with the Commission.
          (8) Commercial market participant.--The term 
        ``commercial market participant'' means any producer, 
        processor, merchant, or commercial user of an exempt or 
        agricultural commodity, or the products or byproducts 
        of such a commodity.
          [(8)] (9) Commission.--The term ``Commission'' means 
        the Commodity Futures Trading Commission established 
        under section 2(a)(2).
          [(9)] (10) Commodity.--The term ``commodity'' means 
        wheat, cotton, rice, corn, oats, barley, rye, flaxseed, 
        grain sorghums, mill feeds, butter, eggs, Solanum 
        tuberosum (Irish potatoes), wool, wool tops, fats and 
        oils (including lard, tallow, cottonseed oil, peanut 
        oil, soybean oil, and all other fats and oils), 
        cottonseed meal, cottonseed, peanuts, soybeans, soybean 
        meal, livestock, livestock products, and frozen 
        concentrated orange juice, and all other goods and 
        articles, except onions (as provided by the first 
        section of Public Law 85-839 (7 U.S.C. 13-1)) and 
        motion picture box office receipts (or any index, 
        measure, value, or data related to such receipts), and 
        all services, rights, and interests (except motion 
        picture box office receipts, or any index, measure, 
        value or data related to such receipts) in which 
        contracts for future delivery are presently or in the 
        future dealt in.
          [(10)] (11) Commodity pool.--
                  (A) In general.--The term ``commodity pool'' 
                means any investment trust, syndicate, or 
                similar form of enterprise operated for the 
                purpose of trading in commodity interests, 
                including any--
                          (i) commodity for future delivery, 
                        security futures product, or swap;
                          (ii) agreement, contract, or 
                        transaction described in section 
                        2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
                          (iii) commodity option authorized 
                        under section 4c; or
                          (iv) leverage transaction authorized 
                        under section 19.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``commodity pool'' any 
                investment trust, syndicate, or similar form of 
                enterprise if the Commission determines that 
                the rule or regulation will effectuate the 
                purposes of this Act.
                  (C) Exclusion.--The term ``commodity pool'' 
                shall not include any investment trust, 
                syndicate, or similar form of enterprise 
                excluded from the definition of ``investment 
                company'' pursuant to sections 3(c)(10) or 
                3(c)(14) of the Investment Company Act of 1940.
          [(11)] (12) Commodity pool operator.--
                  (A) In general.--The term ``commodity pool 
                operator'' means any person--
                          (i) engaged in a business that is of 
                        the nature of a commodity pool, 
                        investment trust, syndicate, or similar 
                        form of enterprise, and who, in 
                        connection therewith, solicits, 
                        accepts, or receives from others, 
                        funds, securities, or property, either 
                        directly or through capital 
                        contributions, the sale of stock or 
                        other forms of securities, or 
                        otherwise, for the purpose of trading 
                        in commodity interests, including any--
                                  (I) commodity for future 
                                delivery, security futures 
                                product, or swap;
                                  (II) agreement, contract, or 
                                transaction described in 
                                section 2(c)(2)(C)(i) or 
                                section 2(c)(2)(D)(i);
                                  (III) commodity option 
                                authorized under section 4c; or
                                  (IV) leverage transaction 
                                authorized under section 19; or
                          (ii) who is registered with the 
                        Commission as a commodity pool 
                        operator.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``commodity pool 
                operator'' any person engaged in a business 
                that is of the nature of a commodity pool, 
                investment trust, syndicate, or similar form of 
                enterprise if the Commission determines that 
                the rule or regulation will effectuate the 
                purposes of this Act.
                  (C)(i) The term ``commodity pool operator'' 
                does not include a person who serves as an 
                investment adviser to an investment company 
                registered pursuant to section 8 of the 
                Investment Company Act of 1940 or a subsidiary 
                of such a company, if the investment company or 
                subsidiary invests, reinvests, owns, holds, or 
                trades in commodity interests limited to only 
                financial commodity interests.
                  (ii) For purposes of this subparagraph only, 
                the term ``financial commodity interest'' means 
                a futures contract, an option on a futures 
                contract, or a swap, involving a commodity that 
                is not an exempt commodity or an agricultural 
                commodity, including any index of financial 
                commodity interests, whether cash settled or 
                involving physical delivery.
                  (iii) For purposes of this subparagraph only, 
                the term ``commodity'' does not include a 
                security issued by a real estate investment 
                trust, business development company, or issuer 
                of asset-backed securities, including any index 
                of such securities.
          [(12)] (13) Commodity trading advisor.--
                  (A) In general.--Except as otherwise provided 
                in this paragraph, the term ``commodity trading 
                advisor'' means any person who--
                          (i) for compensation or profit, 
                        engages in the business of advising 
                        others, either directly or through 
                        publications, writings, or electronic 
                        media, as to the value of or the 
                        advisability of trading in--
                                  (I) any contract of sale of a 
                                commodity for future delivery, 
                                security futures product, or 
                                swap;
                                  (II) any agreement, contract, 
                                or transaction described in 
                                section 2(c)(2)(C)(i) or 
                                section 2(c)(2)(D)(i);
                                  (III) any commodity option 
                                authorized under section 4c; or
                                  (IV) any leverage transaction 
                                authorized under section 19;
                          (ii) for compensation or profit, and 
                        as part of a regular business, issues 
                        or promulgates analyses or reports 
                        concerning any of the activities 
                        referred to in clause (i);
                          (iii) is registered with the 
                        Commission as a commodity trading 
                        advisor; or
                          (iv) the Commission, by rule or 
                        regulation, may include if the 
                        Commission determines that the rule or 
                        regulation will effectuate the purposes 
                        of this Act.
                  (B) Exclusions.--Subject to subparagraph (C), 
                the term ``commodity trading advisor'' does not 
                include--
                          (i) any bank or trust company or any 
                        person acting as an employee thereof;
                          (ii) any news reporter, news 
                        columnist, or news editor of the print 
                        or electronic media, or any lawyer, 
                        accountant, or teacher;
                          (iii) any floor broker or futures 
                        commission merchant;
                          (iv) the publisher or producer of any 
                        print or electronic data of general and 
                        regular dissemination, including its 
                        employees;
                          (v) the fiduciary of any defined 
                        benefit plan that is subject to the 
                        Employee Retirement Income Security Act 
                        of 1974 (29 U.S.C. 1001 et seq.);
                          (vi) any contract market or 
                        [derivatives transaction execution 
                        facility] swap execution facility; and
                          (vii) such other persons not within 
                        the intent of this paragraph as the 
                        Commission may specify by rule, 
                        regulation, or order.
                  (C) Incidental services.--Subparagraph (B) 
                shall apply only if the furnishing of such 
                services by persons referred to in subparagraph 
                (B) is solely incidental to the conduct of 
                their business or profession.
                  (D) Advisors.--The Commission, by rule or 
                regulation, may include within the term 
                ``commodity trading advisor'', any person 
                advising as to the value of commodities or 
                issuing reports or analyses concerning 
                commodities if the Commission determines that 
                the rule or regulation will effectuate the 
                purposes of this paragraph.
                  (E) The term ``commodity trading advisor'' 
                does not include a person who serves as an 
                investment adviser to an investment company 
                registered pursuant to section 8 of the 
                Investment Company Act of 1940 or a subsidiary 
                of such a company, if the commodity trading 
                advice relates only to a financial commodity 
                interest, as defined in paragraph (11)(C)(ii) 
                of this section. For purposes of this 
                subparagraph only, the term ``commodity'' does 
                not include a security issued by a real estate 
                investment trust, business development company, 
                or issuer of asset-backed securities, including 
                any index of such securities.
          [(13)] (14) Contract of sale.--The term ``contract of 
        sale'' includes sales, agreements of sale, and 
        agreements to sell.
          [(14)] (15) Cooperative association of producers.--
        The term ``cooperative association of producers'' means 
        any cooperative association, corporate, or otherwise, 
        not less than 75 percent in good faith owned or 
        controlled, directly or indirectly, by producers of 
        agricultural products and otherwise complying with the 
        Act of February 18, 1922 (42 Stat. 388, chapter 57; 7 
        U.S.C. 291 and 292), including any organization acting 
        for a group of such associations and owned or 
        controlled by such associations, except that business 
        done for or with the United States, or any agency 
        thereof, shall not be considered either member or 
        nonmember business in determining the compliance of any 
        such association with this Act.
          [(15)] (16) Derivatives clearing organization.--
                  (A) In general.--The term ``derivatives 
                clearing organization'' means a clearinghouse, 
                clearing association, clearing corporation, or 
                similar entity, facility, system, or 
                organization that, with respect to an 
                agreement, contract, or transaction--
                          (i) enables each party to the 
                        agreement, contract, or transaction to 
                        substitute, through novation or 
                        otherwise, the credit of the 
                        derivatives clearing organization for 
                        the credit of the parties;
                          (ii) arranges or provides, on a 
                        multilateral basis, for the settlement 
                        or netting of obligations resulting 
                        from such agreements, contracts, or 
                        transactions executed by participants 
                        in the derivatives clearing 
                        organization; or
                          (iii) otherwise provides clearing 
                        services or arrangements that mutualize 
                        or transfer among participants in the 
                        derivatives clearing organization the 
                        credit risk arising from such 
                        agreements, contracts, or transactions 
                        executed by the participants.
                  (B) Exclusions.--The term ``derivatives 
                clearing organization'' does not include an 
                entity, facility, system, or organization 
                solely because it arranges or provides for--
                          (i) settlement, netting, or novation 
                        of obligations resulting from 
                        agreements, contracts, or transactions, 
                        on a bilateral basis and without a 
                        central counterparty;
                          (ii) settlement or netting of cash 
                        payments through an interbank payment 
                        system; or
                          (iii) settlement, netting, or 
                        novation of obligations resulting from 
                        a sale of a commodity in a transaction 
                        in the spot market for the commodity.
          [(16)] (17) Electronic trading facility.--The term 
        ``electronic trading facility'' means a trading 
        facility that--
                  (A) operates by means of an electronic or 
                telecommunications network; and
                  (B) maintains an automated audit trail of 
                bids, offers, and the matching of orders or the 
                execution of transactions on the facility.
          [(17)] (18) Eligible commercial entity.--The term 
        ``eligible commercial entity'' means, with respect to 
        an agreement, contract or transaction in a commodity--
                  (A) an eligible contract participant 
                described in clause (i), (ii), (v), (vii), 
                (viii), or (ix) of paragraph [(18)(A)] (19)(A) 
                that, in connection with its business--
                          (i) has a demonstrable ability, 
                        directly or through separate 
                        contractual arrangements, to make or 
                        take delivery of the underlying 
                        commodity;
                          (ii) incurs risks, in addition to 
                        price risk, related to the commodity; 
                        or
                          (iii) is a dealer that regularly 
                        provides risk management or hedging 
                        services to, or engages in market-
                        making activities with, the foregoing 
                        entities involving transactions to 
                        purchase or sell the commodity or 
                        derivative agreements, contracts, or 
                        transactions in the commodity;
                  (B) an eligible contract participant, other 
                than a natural person or an instrumentality, 
                department, or agency of a State or local 
                governmental entity, that--
                          (i) regularly enters into 
                        transactions to purchase or sell the 
                        commodity or derivative agreements, 
                        contracts, or transactions in the 
                        commodity; and
                          (ii) either--
                                  (I) in the case of a 
                                collective investment vehicle 
                                whose participants include 
                                persons other than--
                                          (aa) qualified 
                                        eligible persons, as 
                                        defined in Commission 
                                        rule 4.7(a) (17 CFR 
                                        4.7(a));
                                          (bb) accredited 
                                        investors, as defined 
                                        in Regulation D of the 
                                        Securities and Exchange 
                                        Commission under the 
                                        Securities Act of 1933 
                                        (17 CFR 230.501(a)), 
                                        with total assets of 
                                        $2,000,000; or
                                          (cc) qualified 
                                        purchasers, as defined 
                                        in section 2(a)(51)(A) 
                                        of the Investment 
                                        Company Act of 1940;
                                in each case as in effect on 
                                the date of the enactment of 
                                the Commodity Futures 
                                Modernization Act of 2000, has, 
                                or is one of a group of 
                                vehicles under common control 
                                or management having in the 
                                aggregate, $1,000,000,000 in 
                                total assets; or
                                  (II) in the case of other 
                                persons, has, or is one of a 
                                group of persons under common 
                                control or management having in 
                                the aggregate, $100,000,000 in 
                                total assets; or
                  (C) such other persons as the Commission 
                shall determine appropriate and shall designate 
                by rule, regulation, or order.
          [(18)] (19) Eligible contract participant.--The term 
        ``eligible contract participant'' means--
                  (A) acting for its own account--
                          (i) a financial institution;
                          (ii) an insurance company that is 
                        regulated by a State, or that is 
                        regulated by a foreign government and 
                        is subject to comparable regulation as 
                        determined by the Commission, including 
                        a regulated subsidiary or affiliate of 
                        such an insurance company;
                          (iii) an investment company subject 
                        to regulation under the Investment 
                        Company Act of 1940 (15 U.S.C. 80a-1 et 
                        seq.) or a foreign person performing a 
                        similar role or function subject as 
                        such to foreign regulation (regardless 
                        of whether each investor in the 
                        investment company or the foreign 
                        person is itself an eligible contract 
                        participant);
                          (iv) a commodity pool that--
                                  (I) has total assets 
                                exceeding $5,000,000; and
                                  (II) is formed and operated 
                                by a person subject to 
                                regulation under this Act or a 
                                foreign person performing a 
                                similar role or function 
                                subject as such to foreign 
                                regulation (regardless of 
                                whether each investor in the 
                                commodity pool or the foreign 
                                person is itself an eligible 
                                contract participant) provided, 
                                however, that for purposes of 
                                section 2(c)(2)(B)(vi) and 
                                section 2(c)(2)(C)(vii), the 
                                term ``eligible contract 
                                participant'' shall not include 
                                a commodity pool in which any 
                                participant is not otherwise an 
                                eligible contract participant;
                          (v) a corporation, partnership, 
                        proprietorship, organization, trust, or 
                        other entity--
                                  (I) that has total assets 
                                exceeding $10,000,000;
                                  (II) the obligations of which 
                                under an agreement, contract, 
                                or transaction are guaranteed 
                                or otherwise supported by a 
                                letter of credit or keepwell, 
                                support, or other agreement by 
                                an entity described in 
                                subclause (I), in clause (i), 
                                (ii), (iii), (iv), or (vii), or 
                                in subparagraph (C); or
                                  (III) that--
                                          (aa) has a net worth 
                                        exceeding $1,000,000; 
                                        and
                                          (bb) enters into an 
                                        agreement, contract, or 
                                        transaction in 
                                        connection with the 
                                        conduct of the entity's 
                                        business or to manage 
                                        the risk associated 
                                        with an asset or 
                                        liability owned or 
                                        incurred or reasonably 
                                        likely to be owned or 
                                        incurred by the entity 
                                        in the conduct of the 
                                        entity's business;
                          (vi) an employee benefit plan subject 
                        to the Employee Retirement Income 
                        Security Act of 1974 (29 U.S.C. 1001 et 
                        seq.), a governmental employee benefit 
                        plan, or a foreign person performing a 
                        similar role or function subject as 
                        such to foreign regulation--
                                  (I) that has total assets 
                                exceeding $5,000,000; or
                                  (II) the investment decisions 
                                of which are made by--
                                          (aa) an investment 
                                        adviser or commodity 
                                        trading advisor subject 
                                        to regulation under the 
                                        Investment Advisers Act 
                                        of 1940 (15 U.S.C. 80b-
                                        1 et seq.) or this Act;
                                          (bb) a foreign person 
                                        performing a similar 
                                        role or function 
                                        subject as such to 
                                        foreign regulation;
                                          (cc) a financial 
                                        institution; or
                                          (dd) an insurance 
                                        company described in 
                                        clause (ii), or a 
                                        regulated subsidiary or 
                                        affiliate of such an 
                                        insurance company;
                          (vii)(I) a governmental entity 
                        (including the United States, a State, 
                        or a foreign government) or political 
                        subdivision of a governmental entity;
                          (II) a multinational or supranational 
                        government entity; or
                          (III) an instrumentality, agency, or 
                        department of an entity described in 
                        subclause (I) or (II);
                        except that such term does not include 
                        an entity, instrumentality, agency, or 
                        department referred to in subclause (I) 
                        or (III) of this clause unless (aa) the 
                        entity, instrumentality, agency, or 
                        department is a person described in 
                        clause (i), (ii), or (iii) of paragraph 
                        [(17)(A)] (18)(A); (bb) the entity, 
                        instrumentality, agency, or department 
                        owns and invests on a discretionary 
                        basis $50,000,000 or more in 
                        investments; or (cc) the agreement, 
                        contract, or transaction is offered by, 
                        and entered into with, an entity that 
                        is listed in any of subclauses (I) 
                        through (VI) of section 2(c)(2)(B)(ii);
                          (viii)(I) a broker or dealer subject 
                        to regulation under the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78a et 
                        seq.) or a foreign person performing a 
                        similar role or function subject as 
                        such to foreign regulation, except 
                        that, if the broker or dealer or 
                        foreign person is a natural person or 
                        proprietorship, the broker or dealer or 
                        foreign person shall not be considered 
                        to be an eligible contract participant 
                        unless the broker or dealer or foreign 
                        person also meets the requirements of 
                        clause (v) or (xi);
                          (II) an associated person of a 
                        registered broker or dealer concerning 
                        the financial or securities activities 
                        of which the registered person makes 
                        and keeps records under section 15C(b) 
                        or 17(h) of the Securities Exchange Act 
                        of 1934 (15 U.S.C. 78o-5(b), 78q(h));
                          (III) an investment bank holding 
                        company (as defined in section 17(i) of 
                        the Securities Exchange Act of 1934 (15 
                        U.S.C. 78q(i));
                          (ix) a futures commission merchant 
                        subject to regulation under this Act or 
                        a foreign person performing a similar 
                        role or function subject as such to 
                        foreign regulation, except that, if the 
                        futures commission merchant or foreign 
                        person is a natural person or 
                        proprietorship, the futures commission 
                        merchant or foreign person shall not be 
                        considered to be an eligible contract 
                        participant unless the futures 
                        commission merchant or foreign person 
                        also meets the requirements of clause 
                        (v) or (xi);
                          (x) a floor broker or floor trader 
                        subject to regulation under this Act in 
                        connection with any transaction that 
                        takes place on or through the 
                        facilities of a registered entity 
                        [(other than an electronic trading 
                        facility with respect to a significant 
                        price discovery contract) or an exempt 
                        board of trade], or any affiliate 
                        thereof, on which such person regularly 
                        trades; or
                          (xi) an individual who has amounts 
                        invested on a discretionary basis, the 
                        aggregate of which is in excess of--
                                  (I) $10,000,000; or
                                  (II) $5,000,000 and who 
                                enters into the agreement, 
                                contract, or transaction in 
                                order to manage the risk 
                                associated with an asset owned 
                                or liability incurred, or 
                                reasonably likely to be owned 
                                or incurred, by the individual;
                  (B)(i) a person described in clause (i), 
                (ii), (iv), (v), (viii), (ix), or (x) of 
                subparagraph (A) or in subparagraph (C), acting 
                as broker or performing an equivalent agency 
                function on behalf of another person described 
                in subparagraph (A) or (C); or
                  (ii) an investment adviser subject to 
                regulation under the Investment Advisers Act of 
                1940, a commodity trading advisor subject to 
                regulation under this Act, a foreign person 
                performing a similar role or function subject 
                as such to foreign regulation, or a person 
                described in clause (i), (ii), (iv), (v), 
                (viii), (ix), or (x) of subparagraph (A) or in 
                subparagraph (C), in any such case acting as 
                investment manager or fiduciary (but excluding 
                a person acting as broker or performing an 
                equivalent agency function) for another person 
                described in subparagraph (A) or (C) and who is 
                authorized by such person to commit such person 
                to the transaction; or
                  (C) any other person that the Commission 
                determines to be eligible in light of the 
                financial or other qualifications of the 
                person.
          [(19)] (20) Excluded commodity.--The term ``excluded 
        commodity'' means--
                          (i) an interest rate, exchange rate, 
                        currency, security, security index, 
                        credit risk or measure, debt or equity 
                        instrument, index or measure of 
                        inflation, or other macroeconomic index 
                        or measure;
                          (ii) any other rate, differential, 
                        index, or measure of economic or 
                        commercial risk, return, or value that 
                        is--
                                  (I) not based in substantial 
                                part on the value of a narrow 
                                group of commodities not 
                                described in clause (i); or
                                  (II) based solely on one or 
                                more commodities that have no 
                                cash market;
                          (iii) any economic or commercial 
                        index based on prices, rates, values, 
                        or levels that are not within the 
                        control of any party to the relevant 
                        contract, agreement, or transaction; or
                          (iv) an occurrence, extent of an 
                        occurrence, or contingency (other than 
                        a change in the price, rate, value, or 
                        level of a commodity not described in 
                        clause (i)) that is--
                                  (I) beyond the control of the 
                                parties to the relevant 
                                contract, agreement, or 
                                transaction; and
                                  (II) associated with a 
                                financial, commercial, or 
                                economic consequence.
          [(20)] (21) Exempt commodity.--The term ``exempt 
        commodity'' means a commodity that is not an excluded 
        commodity or an agricultural commodity.
          [(21)] (22) Financial institution.--The term 
        ``financial institution'' means--
                  (A) a corporation operating under the fifth 
                undesignated paragraph of section 25 of the 
                Federal Reserve Act (12 U.S.C. 603), commonly 
                known as ``an agreement corporation'';
                  (B) a corporation organized under section 25A 
                of the Federal Reserve Act (12 U.S.C. 611 et 
                seq.), commonly known as an ``Edge Act 
                corporation'';
                  (C) an institution that is regulated by the 
                Farm Credit Administration;
                  (D) a Federal credit union or State credit 
                union (as defined in section 101 of the Federal 
                Credit Union Act (12 U.S.C. 1752));
                  (E) a depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act 
                (12 U.S.C. 1813));
                  (F) a foreign bank or a branch or agency of a 
                foreign bank (each as defined in section 1(b) 
                of the International Banking Act of 1978 (12 
                U.S.C. 3101(b)));
                  (G) any financial holding company (as defined 
                in section 2 of the Bank Holding Company Act of 
                1956);
                  (H) a trust company; or
                  (I) a similarly regulated subsidiary or 
                affiliate of an entity described in any of 
                subparagraphs (A) through (H).
          [(22)] (23) Floor broker.--
                  (A) In general.--The term ``floor broker'' 
                means any person--
                          (i) who, in or surrounding any pit, 
                        ring, post, or other place provided by 
                        a contract market for the meeting of 
                        persons similarly engaged, shall 
                        purchase or sell for any other person--
                                  (I) any commodity for future 
                                delivery, security futures 
                                product, or swap; or
                                  (II) any commodity option 
                                authorized under section 4c; or
                          (ii) who is registered with the 
                        Commission as a floor broker.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``floor broker'' any 
                person in or surrounding any pit, ring, post, 
                or other place provided by a contract market 
                for the meeting of persons similarly engaged 
                who trades for any other person if the 
                Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          [(23)] (24) Floor trader.--
                  (A) In general.--The term ``floor trader'' 
                means any person--
                          (i) who, in or surrounding any pit, 
                        ring, post, or other place provided by 
                        a contract market for the meeting of 
                        persons similarly engaged, purchases, 
                        or sells solely for such person's own 
                        account--
                                  (I) any commodity for future 
                                delivery, security futures 
                                product, or swap; or
                                  (II) any commodity option 
                                authorized under section 4c; or
                          (ii) who is registered with the 
                        Commission as a floor trader.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``floor trader'' any 
                person in or surrounding any pit, ring, post, 
                or other place provided by a contract market 
                for the meeting of persons similarly engaged 
                who trades solely for such person's own account 
                if the Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          [(24)] (25) Foreign exchange forward.--The term 
        ``foreign exchange forward'' means a transaction that 
        solely involves the exchange of 2 different currencies 
        on a specific future date at a fixed rate agreed upon 
        on the inception of the contract covering the exchange.
          [(25)] (26) Foreign exchange swap.--The term 
        ``foreign exchange swap'' means a transaction that 
        solely involves--
                  (A) an exchange of 2 different currencies on 
                a specific date at a fixed rate that is agreed 
                upon on the inception of the contract covering 
                the exchange; and
                  (B) a reverse exchange of the 2 currencies 
                described in subparagraph (A) at a later date 
                and at a fixed rate that is agreed upon on the 
                inception of the contract covering the 
                exchange.
          [(26)] (27) Foreign futures authority.--The term 
        ``foreign futures authority'' means any foreign 
        government, or any department, agency, governmental 
        body, or regulatory organization empowered by a foreign 
        government to administer or enforce a law, rule, or 
        regulation as it relates to a futures or options 
        matter, or any department or agency of a political 
        subdivision of a foreign government empowered to 
        administer or enforce a law, rule, or regulation as it 
        relates to a futures or options matter.
          [(27)] (28) Future delivery.--The term ``future 
        delivery'' does not include any sale of any cash 
        commodity for deferred shipment or delivery.
          [(28)] (29) Futures commission merchant.--
                  (A) In general.--The term ``futures 
                commission merchant'' means an individual, 
                association, partnership, corporation, or 
                trust--
                          (i) that--
                                  (I) is--
                                          (aa) engaged in 
                                        soliciting or in 
                                        accepting orders for--
                                                  (AA) the 
                                                purchase or 
                                                sale of a 
                                                commodity for 
                                                future 
                                                delivery;
                                                  (BB) a 
                                                security 
                                                futures 
                                                product;
                                                  (CC) a swap;
                                                  (DD) any 
                                                agreement, 
                                                contract, or 
                                                transaction 
                                                described in 
                                                section 
                                                2(c)(2)(C)(i) 
                                                or section 
                                                2(c)(2)(D)(i);
                                                  (EE) any 
                                                commodity 
                                                option 
                                                authorized 
                                                under section 
                                                4c; or
                                                  (FF) any 
                                                leverage 
                                                transaction 
                                                authorized 
                                                under section 
                                                19; or
                                          (bb) acting as a 
                                        counterparty in any 
                                        agreement, contract, or 
                                        transaction described 
                                        in section 
                                        2(c)(2)(C)(i) or 
                                        section 2(c)(2)(D)(i); 
                                        and
                                  (II) in or in connection with 
                                the activities described in 
                                items (aa) or (bb) of subclause 
                                (I), accepts any money, 
                                securities, or property (or 
                                extends credit in lieu thereof) 
                                to margin, guarantee, or secure 
                                any trades or contracts that 
                                result or may result therefrom; 
                                or
                          (ii) that is registered with the 
                        Commission as a futures commission 
                        merchant.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``futures commission 
                merchant'' any person who engages in soliciting 
                or accepting orders for, or acting as a 
                counterparty in, any agreement, contract, or 
                transaction subject to this Act, and who 
                accepts any money, securities, or property (or 
                extends credit in lieu thereof) to margin, 
                guarantee, or secure any trades or contracts 
                that result or may result therefrom, if the 
                Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          [(29)] (30) Hybrid instrument.--The term ``hybrid 
        instrument'' means a security having one or more 
        payments indexed to the value, level, or rate of, or 
        providing for the delivery of, one or more commodities.
          [(30)] (31) Interstate commerce.--The term 
        ``interstate commerce'' means commerce--
                  (A) between any State, territory, or 
                possession, or the District of Columbia, and 
                any place outside thereof; or
                  (B) between points within the same State, 
                territory, or possession, or the District of 
                Columbia, but through any place outside 
                thereof, or within any territory or possession, 
                or the District of Columbia.
          [(31)] (32) Introducing broker.--
                  (A) In general.--The term ``introducing 
                broker'' means any person (except an individual 
                who elects to be and is registered as an 
                associated person of a futures commission 
                merchant)--
                          (i) who--
                                  (I) is engaged in soliciting 
                                or in accepting orders for--
                                          (aa) the purchase or 
                                        sale of any commodity 
                                        for future delivery, 
                                        security futures 
                                        product, or swap;
                                          (bb) any agreement, 
                                        contract, or 
                                        transaction described 
                                        in section 
                                        2(c)(2)(C)(i) or 
                                        section 2(c)(2)(D)(i);
                                          (cc) any commodity 
                                        option authorized under 
                                        section 4c; or
                                          (dd) any leverage 
                                        transaction authorized 
                                        under section 19; and
                                  (II) does not accept any 
                                money, securities, or property 
                                (or extend credit in lieu 
                                thereof) to margin, guarantee, 
                                or secure any trades or 
                                contracts that result or may 
                                result therefrom; or
                          (ii) who is registered with the 
                        Commission as an introducing broker.
                  (B) Further definition.--The Commission, by 
                rule or regulation, may include within, or 
                exclude from, the term ``introducing broker'' 
                any person who engages in soliciting or 
                accepting orders for any agreement, contract, 
                or transaction subject to this Act, and who 
                does not accept any money, securities, or 
                property (or extend credit in lieu thereof) to 
                margin, guarantee, or secure any trades or 
                contracts that result or may result therefrom, 
                if the Commission determines that the rule or 
                regulation will effectuate the purposes of this 
                Act.
          [(32)] (33) Major security-based swap participant.--
        The term ``major security-based swap participant'' has 
        the meaning given the term in section 3(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
          [(33)] (34) Major swap participant.--
                  (A) In general.--The term ``major swap 
                participant'' means any person who is not a 
                swap dealer, and--
                          (i) maintains a substantial position 
                        in swaps for any of the major swap 
                        categories as determined by the 
                        Commission, excluding--
                                  (I) positions held for 
                                hedging or mitigating 
                                commercial risk; and
                                  (II) positions maintained by 
                                any employee benefit plan (or 
                                any contract held by such a 
                                plan) as defined in paragraphs 
                                (3) and (32) of section 3 of 
                                the Employee Retirement Income 
                                Security Act of 1974 (29 U.S.C. 
                                1002) for the primary purpose 
                                of hedging or mitigating any 
                                risk directly associated with 
                                the operation of the plan;
                          (ii) whose outstanding swaps create 
                        substantial counterparty exposure that 
                        could have serious adverse effects on 
                        the financial stability of the United 
                        States banking system or financial 
                        markets; or
                          (iii)(I) is a financial entity that 
                        is highly leveraged relative to the 
                        amount of capital it holds and that is 
                        not subject to capital requirements 
                        established by an appropriate Federal 
                        banking agency; and
                          (II) maintains a substantial position 
                        in outstanding swaps in any major swap 
                        category as determined by the 
                        Commission.
                  (B) Definition of substantial position.--For 
                purposes of subparagraph (A), the Commission 
                shall define by rule or regulation the term 
                ``substantial position'' at the threshold that 
                the Commission determines to be prudent for the 
                effective monitoring, management, and oversight 
                of entities that are systemically important or 
                can significantly impact the financial system 
                of the United States. In setting the definition 
                under this subparagraph, the Commission shall 
                consider the person's relative position in 
                uncleared as opposed to cleared swaps and may 
                take into consideration the value and quality 
                of collateral held against counterparty 
                exposures.
                  (C) Scope of designation.--For purposes of 
                subparagraph (A), a person may be designated as 
                a major swap participant for 1 or more 
                categories of swaps without being classified as 
                a major swap participant for all classes of 
                swaps.
                  (D) Exclusions.--The definition under this 
                paragraph shall not include an entity whose 
                primary business is providing financing, and 
                uses derivatives for the purpose of hedging 
                underlying commercial risks related to interest 
                rate and foreign currency exposures, 90 percent 
                or more of which arise from financing that 
                facilitates the purchase or lease of products, 
                90 percent or more of which are manufactured by 
                the parent company or another subsidiary of the 
                parent company.
          [(34)] (35) Member of a registered entity; member of 
        a derivatives transaction execution facility.--The term 
        ``member'' means, with respect to a registered entity 
        [or derivatives transaction execution facility], an 
        individual, association, partnership, corporation, or 
        trust--
                  (A) owning or holding membership in, or 
                admitted to membership representation on, the 
                registered entity [or derivatives transaction 
                execution facility]; or
                  (B) having trading privileges on the 
                registered entity [or derivatives transaction 
                execution facility].
        A participant in an alternative trading system that is 
        designated as a contract market pursuant to section 5f 
        is deemed a member of the contract market for purposes 
        of transactions in security futures products through 
        the contract market.
          [(35)] (36) Narrow-based security index.--
                  (A) The term ``narrow-based security index'' 
                means an index--
                          (i) that has 9 or fewer component 
                        securities;
                          (ii) in which a component security 
                        comprises more than 30 percent of the 
                        index's weighting;
                          (iii) in which the five highest 
                        weighted component securities in the 
                        aggregate comprise more than 60 percent 
                        of the index's weighting; or
                          (iv) in which the lowest weighted 
                        component securities comprising, in the 
                        aggregate, 25 percent of the index's 
                        weighting have an aggregate dollar 
                        value of average daily trading volume 
                        of less than $50,000,000 (or in the 
                        case of an index with 15 or more 
                        component securities, $30,000,000), 
                        except that if there are two or more 
                        securities with equal weighting that 
                        could be included in the calculation of 
                        the lowest weighted component 
                        securities comprising, in the 
                        aggregate, 25 percent of the index's 
                        weighting, such securities shall be 
                        ranked from lowest to highest dollar 
                        value of average daily trading volume 
                        and shall be included in the 
                        calculation based on their ranking 
                        starting with the lowest ranked 
                        security.
                  (B) Notwithstanding subparagraph (A), an 
                index is not a narrow-based security index if--
                          (i)(I) it has at least 9 component 
                        securities;
                          (II) no component security comprises 
                        more than 30 percent of the index's 
                        weighting; and
                          (III) each component security is--
                                  (aa) registered pursuant to 
                                section 12 of the Securities 
                                Exchange Act of 1934;
                                  (bb) one of 750 securities 
                                with the largest market 
                                capitalization; and
                                  (cc) one of 675 securities 
                                with the largest dollar value 
                                of average daily trading 
                                volume;
                          (ii) a board of trade was designated 
                        as a contract market by the Commodity 
                        Futures Trading Commission with respect 
                        to a contract of sale for future 
                        delivery on the index, before the date 
                        of the enactment of the Commodity 
                        Futures Modernization Act of 2000;
                          (iii)(I) a contract of sale for 
                        future delivery on the index traded on 
                        a designated contract market [or 
                        registered derivatives transaction 
                        execution facility] for at least 30 
                        days as a contract of sale for future 
                        delivery on an index that was not a 
                        narrow-based security index; and
                          (II) it has been a narrow-based 
                        security index for no more than 45 
                        business days over 3 consecutive 
                        calendar months;
                          (iv) a contract of sale for future 
                        delivery on the index is traded on or 
                        subject to the rules of a foreign board 
                        of trade and meets such requirements as 
                        are jointly established by rule or 
                        regulation by the Commission and the 
                        Securities and Exchange Commission;
                          (v) no more than 18 months have 
                        passed since the date of the enactment 
                        of the Commodity Futures Modernization 
                        Act of 2000 and--
                                  (I) it is traded on or 
                                subject to the rules of a 
                                foreign board of trade;
                                  (II) the offer and sale in 
                                the United States of a contract 
                                of sale for future delivery on 
                                the index was authorized before 
                                the date of the enactment of 
                                the Commodity Futures 
                                Modernization Act of 2000; and
                                  (III) the conditions of such 
                                authorization continue to be 
                                met; or
                          (vi) a contract of sale for future 
                        delivery on the index is traded on or 
                        subject to the rules of a board of 
                        trade and meets such requirements as 
                        are jointly established by rule, 
                        regulation, or order by the Commission 
                        and the Securities and Exchange 
                        Commission.
                  (C) Within 1 year after the date of the 
                enactment of the Commodity Futures 
                Modernization Act of 2000, the Commission and 
                the Securities and Exchange Commission jointly 
                shall adopt rules or regulations that set forth 
                the requirements under subparagraph (B)(iv).
                  (D) An index that is a narrow-based security 
                index solely because it was a narrow-based 
                security index for more than 45 business days 
                over 3 consecutive calendar months pursuant to 
                clause (iii) of subparagraph (B) shall not be a 
                narrow-based security index for the 3 following 
                calendar months.
                  (E) For purposes of subparagraphs (A) and 
                (B)--
                          (i) the dollar value of average daily 
                        trading volume and the market 
                        capitalization shall be calculated as 
                        of the preceding 6 full calendar 
                        months; and
                          (ii) the Commission and the 
                        Securities and Exchange Commission 
                        shall, by rule or regulation, jointly 
                        specify the method to be used to 
                        determine market capitalization and 
                        dollar value of average daily trading 
                        volume.
          [(36)] (37) Option.--The term ``option'' means an 
        agreement, contract, or transaction that is of the 
        character of, or is commonly known to the trade as, an 
        ``option'', ``privilege'', ``indemnity'', ``bid'', 
        ``offer'', ``put'', ``call'', ``advance guaranty'', or 
        ``decline guaranty''.
          [(37)] (38) Organized exchange.--The term ``organized 
        exchange'' means a trading facility that--
                  (A) permits trading--
                          (i) by or on behalf of a person that 
                        is not an eligible contract 
                        participant; or
                          (ii) by persons other than on a 
                        principal-to-principal basis; or
                  (B) has adopted (directly or through another 
                nongovernmental entity) rules that--
                          (i) govern the conduct of 
                        participants, other than rules that 
                        govern the submission of orders or 
                        execution of transactions on the 
                        trading facility; and
                          (ii) include disciplinary sanctions 
                        other than the exclusion of 
                        participants from trading.
          [(38)] (39) Person.--The term ``person'' imports the 
        plural or singular, and includes individuals, 
        associations, partnerships, corporations, and trusts.
          [(39)] (40) Prudential regulator.--The term 
        ``prudential regulator'' means--
                  (A) the Board in the case of a swap dealer, 
                major swap participant, security-based swap 
                dealer, or major security-based swap 
                participant that is--
                          (i) a State-chartered bank that is a 
                        member of the Federal Reserve System;
                          (ii) a State-chartered branch or 
                        agency of a foreign bank;
                          (iii) any foreign bank which does not 
                        operate an insured branch;
                          (iv) any organization operating under 
                        section 25A of the Federal Reserve Act 
                        or having an agreement with the Board 
                        under section 225 of the Federal 
                        Reserve Act;
                          (v) any bank holding company (as 
                        defined in section 2 of the Bank 
                        Holding Company Act of 1965 (12 U.S.C. 
                        1841)), any foreign bank (as defined in 
                        section 1(b)(7) of the International 
                        Banking Act of 1978 (12 U.S.C. 
                        3101(b)(7)) that is treated as a bank 
                        holding company under section 8(a) of 
                        the International Banking Act of 1978 
                        (12 U.S.C. 3106(a)), and any subsidiary 
                        of such a company or foreign bank 
                        (other than a subsidiary that is 
                        described in subparagraph (A) or (B) or 
                        that is required to be registered with 
                        the Commission as a swap dealer or 
                        major swap participant under this Act 
                        or with the Securities and Exchange 
                        Commission as a security-based swap 
                        dealer or major security-based swap 
                        participant);
                          (vi) after the transfer date (as 
                        defined in section 311 of the Dodd-
                        Frank Wall Street Reform and Consumer 
                        Protection Act), any savings and loan 
                        holding company (as defined in section 
                        10 of the Home Owners' Loan Act (12 
                        U.S.C. 1467a)) and any subsidiary of 
                        such company (other than a subsidiary 
                        that is described in subparagraph (A) 
                        or (B) or that is required to be 
                        registered as a swap dealer or major 
                        swap participant with the Commission 
                        under this Act or with the Securities 
                        and Exchange Commission as a security-
                        based swap dealer or major security-
                        based swap participant); or
                          (vii) any organization operating 
                        under section 25A of the Federal 
                        Reserve Act (12U.S.C. 611 et seq.) or 
                        having an agreement with the Board 
                        under section 25 of the Federal Reserve 
                        Act (12 U.S.C. 601 et seq.);
                  (B) the Office of the Comptroller of the 
                Currency in the case of a swap dealer, major 
                swap participant, security-based swap dealer, 
                or major security-based swap participant that 
                is--
                          (i) a national bank;
                          (ii) a federally chartered branch or 
                        agency of a foreign bank; or
                          (iii) any Federal savings 
                        association;
                  (C) the Federal Deposit Insurance Corporation 
                in the case of a swap dealer, major swap 
                participant, security-based swap dealer, or 
                major security-based swap participant that is--
                          (i) a State-chartered bank that is 
                        not a member of the Federal Reserve 
                        System; or
                          (ii) any State savings association;
                  (D) the Farm Credit Administration, in the 
                case of a swap dealer, major swap participant, 
                security-based swap dealer, or major security-
                based swap participant that is an institution 
                chartered under the Farm Credit Act of 1971 (12 
                U.S.C. 2001 et seq.); and
                  (E) the Federal Housing Finance Agency in the 
                case of a swap dealer, major swap participant, 
                security-based swap dealer, or major security-
                based swap participant that is a regulated 
                entity (as such term is defined in section 1303 
                of the Federal Housing Enterprises Financial 
                Safety and Soundness Act of 1992).
          [(40)] (41) Registered entity.--The term ``registered 
        entity'' means--
                  (A) a board of trade designated as a contract 
                market under section 5;
                  (B) a derivatives clearing organization 
                registered under section 5b;
                  (C) a board of trade designated as a contract 
                market under section 5f;
                  (D) a swap execution facility registered 
                under section 5h; and
                  (E) a swap data repository registered under 
                section 21[; and].
                  [(F) with respect to a contract that the 
                Commission determines is a significant price 
                discovery contract, any electronic trading 
                facility on which the contract is executed or 
                traded.]
          [(41)] (42) Security.--The term ``security'' means a 
        security as defined in section 2(a)(1) of the 
        Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or section 
        3(a)(10) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)(10)).
          [(42)] (43) Security-based swap.--The term 
        ``security-based swap'' has the meaning given the term 
        in section 3(a) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78c(a)).
          [(43)] (44) Security-based swap dealer.--The term 
        ``security-based swap dealer'' has the meaning given 
        the term in section 3(a) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78c(a)).
          [(44)] (45) Security future.--The term ``security 
        future'' means a contract of sale for future delivery 
        of a single security or of a narrow-based security 
        index, including any interest therein or based on the 
        value thereof, except an exempted security under 
        section 3(a)(12) of the Securities Exchange Act of 1934 
        as in effect on the date of the enactment of the 
        Futures Trading Act of 1982 (other than any municipal 
        security as defined in section 3(a)(29) of the 
        Securities Exchange Act of 1934 as in effect on the 
        date of the enactment of the Futures Trading Act of 
        1982). The term ``security future'' does not include 
        any agreement, contract, or transaction excluded from 
        this Act under section 2(c), 2(d), 2(f), or 2(g) of 
        this Act (as in effect on the date of the enactment of 
        the Commodity Futures Modernization Act of 2000) or 
        title IV of the Commodity Futures Modernization Act of 
        2000.
          [(45)] (46) Security futures product.--The term 
        ``security futures product'' means a security future or 
        any put, call, straddle, option, or privilege on any 
        security future.
          [(46)] (47) Significant price discovery contract.--
        The term ``significant price discovery contract'' means 
        an agreement, contract, or transaction subject to 
        section 2(h)(5).
          [(47)] (48) Swap.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``swap'' means any 
                agreement, contract, or transaction--
                          (i) that is a put, call, cap, floor, 
                        collar, or similar option of any kind 
                        that is for the purchase or sale, or 
                        based on the value, of 1 or more 
                        interest or other rates, currencies, 
                        commodities, securities, instruments of 
                        indebtedness, indices, quantitative 
                        measures, or other financial or 
                        economic interests or property of any 
                        kind;
                          (ii) that provides for any purchase, 
                        sale, payment, or delivery (other than 
                        a dividend on an equity security) that 
                        is dependent on the occurrence, 
                        nonoccurrence, or the extent of the 
                        occurrence of an event or contingency 
                        associated with a potential financial, 
                        economic, or commercial consequence;
                          (iii) that provides on an executory 
                        basis for the exchange, on a fixed or 
                        contingent basis, of 1 or more payments 
                        based on the value or level of 1 or 
                        more interest or other rates, 
                        currencies, commodities, securities, 
                        instruments of indebtedness, indices, 
                        quantitative measures, or other 
                        financial or economic interests or 
                        property of any kind, or any interest 
                        therein or based on the value thereof, 
                        and that transfers, as between the 
                        parties to the transaction, in whole or 
                        in part, the financial risk associated 
                        with a future change in any such value 
                        or level without also conveying a 
                        current or future direct or indirect 
                        ownership interest in an asset 
                        (including any enterprise or investment 
                        pool) or liability that incorporates 
                        the financial risk so transferred, 
                        including any agreement, contract, or 
                        transaction commonly known as--
                                  (I) an interest rate swap;
                                  (II) a rate floor;
                                  (III) a rate cap;
                                  (IV) a rate collar;
                                  (V) a cross-currency rate 
                                swap;
                                  (VI) a basis swap;
                                  (VII) a currency swap;
                                  (VIII) a foreign exchange 
                                swap;
                                  (IX) a total return swap;
                                  (X) an equity index swap;
                                  (XI) an equity swap;
                                  (XII) a debt index swap;
                                  (XIII) a debt swap;
                                  (XIV) a credit spread;
                                  (XV) a credit default swap;
                                  (XVI) a credit swap;
                                  (XVII) a weather swap;
                                  (XVIII) an energy swap;
                                  (XIX) a metal swap;
                                  (XX) an agricultural swap;
                                  (XXI) an emissions swap; 
                                [and]
                                  (XXII) a commodity swap; and
                                  (XXIII) a utility operations-
                                related swap;
                          (iv) that is an agreement, contract, 
                        or transaction that is, or in the 
                        future becomes, commonly known to the 
                        trade as a swap;
                          (v) including any security-based swap 
                        agreement which meets the definition of 
                        ``swap agreement'' as defined in 
                        section 206A of the Gramm-Leach-Bliley 
                        Act (15 U.S.C. 78c note) of which a 
                        material term is based on the price, 
                        yield, value, or volatility of any 
                        security or any group or index of 
                        securities, or any interest therein; or
                          (vi) that is any combination or 
                        permutation of, or option on, any 
                        agreement, contract, or transaction 
                        described in any of clauses (i) through 
                        (v).
                  (B) Exclusions.--The term ``swap'' does not 
                include--
                          (i) any contract of sale of a 
                        commodity for future delivery (or 
                        option on such a contract), leverage 
                        contract authorized under section 19, 
                        security futures product, or agreement, 
                        contract, or transaction described in 
                        section 2(c)(2)(C)(i) or section 
                        2(c)(2)(D)(i);
                          [(ii) any sale of a nonfinancial 
                        commodity or security for deferred 
                        shipment or delivery, so long as the 
                        transaction is intended to be 
                        physically settled;]
                          (ii) any purchase or sale of a 
                        nonfinancial commodity or security for 
                        deferred shipment or delivery, so long 
                        as the transaction is intended to be 
                        physically settled, including any 
                        stand-alone or embedded option for 
                        which exercise results in a physical 
                        delivery obligation;
                          (iii) any put, call, straddle, 
                        option, or privilege on any security, 
                        certificate of deposit, or group or 
                        index of securities, including any 
                        interest therein or based on the value 
                        thereof, that is subject to--
                                  (I) the Securities Act of 
                                1933 (15 U.S.C. 77a et seq.); 
                                and
                                  (II) the Securities Exchange 
                                Act of 1934 (15 U.S.C. 78a et 
                                seq.);
                          (iv) any put, call, straddle, option, 
                        or privilege relating to a foreign 
                        currency entered into on a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78f(a));
                          (v) any agreement, contract, or 
                        transaction providing for the purchase 
                        or sale of 1 or more securities on a 
                        fixed basis that is subject to--
                                  (I) the Securities Act of 
                                1933 (15 U.S.C. 77a et seq.); 
                                and
                                  (II) the Securities Exchange 
                                Act of 1934 (15 U.S.C. 78a et 
                                seq.);
                          (vi) any agreement, contract, or 
                        transaction providing for the purchase 
                        or sale of 1 or more securities on a 
                        contingent basis that is subject to the 
                        Securities Act of 1933 (15 U.S.C. 77a 
                        et seq.) and the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78a et seq.), 
                        unless the agreement, contract, or 
                        transaction predicates the purchase or 
                        sale on the occurrence of a bona fide 
                        contingency that might reasonably be 
                        expected to affect or be affected by 
                        the creditworthiness of a party other 
                        than a party to the agreement, 
                        contract, or transaction;
                          (vii) any note, bond, or evidence of 
                        indebtedness that is a security, as 
                        defined in section 2(a)(1) of the 
                        Securities Act of 1933 (15 U.S.C. 
                        77b(a)(1));
                          (viii) any agreement, contract, or 
                        transaction that is--
                                  (I) based on a security; and
                                  (II) entered into directly or 
                                through an underwriter (as 
                                defined in section 2(a)(11) of 
                                the Securities Act of 1933 (15 
                                U.S.C. 77b(a)(11)) by the 
                                issuer of such security for the 
                                purposes of raising capital, 
                                unless the agreement, contract, 
                                or transaction is entered into 
                                to manage a risk associated 
                                with capital raising;
                          (ix) any agreement, contract, or 
                        transaction a counterparty of which is 
                        a Federal Reserve bank, the Federal 
                        Government, or a Federal agency that is 
                        expressly backed by the full faith and 
                        credit of the United States; and
                          (x) any security-based swap, other 
                        than a security-based swap as described 
                        in subparagraph (D).
                  (C) Rule of construction regarding master 
                agreements.--
                          (i) In general.--Except as provided 
                        in clause (ii), the term ``swap'' 
                        includes a master agreement that 
                        provides for an agreement, contract, or 
                        transaction that is a swap under 
                        subparagraph (A), together with each 
                        supplement to any master agreement, 
                        without regard to whether the master 
                        agreement contains an agreement, 
                        contract, or transaction that is not a 
                        swap pursuant to subparagraph (A).
                          (ii) Exception.--For purposes of 
                        clause (i), the master agreement shall 
                        be considered to be a swap only with 
                        respect to each agreement, contract, or 
                        transaction covered by the master 
                        agreement that is a swap pursuant to 
                        subparagraph (A).
                  (D) Mixed swap.--The term ``security-based 
                swap'' includes any agreement, contract, or 
                transaction that is as described in section 
                3(a)(68)(A) of the Securities Exchange Act of 
                1934 (15 U.S.C. 78c(a)(68)(A)) and also is 
                based on the value of 1 or more interest or 
                other rates, currencies, commodities, 
                instruments of indebtedness, indices, 
                quantitative measures, other financial or 
                economic interest or property of any kind 
                (other than a single security or a narrow-based 
                security index), or the occurrence, non-
                occurrence, or the extent of the occurrence of 
                an event or contingency associated with a 
                potential financial, economic, or commercial 
                consequence (other than an event described in 
                subparagraph (A)(iii)).
                  (E) Treatment of foreign exchange swaps and 
                forwards.--
                          (i) In general.--Foreign exchange 
                        swaps and foreign exchange forwards 
                        shall be considered swaps under this 
                        paragraph unless the Secretary makes a 
                        written determination under section 1b 
                        that either foreign exchange swaps or 
                        foreign exchange forwards or both--
                                  (I) should be not be 
                                regulated as swaps under this 
                                Act; and
                                  (II) are not structured to 
                                evade the Dodd-Frank Wall 
                                Street Reform and Consumer 
                                Protection Act in violation of 
                                any rule promulgated by the 
                                Commission pursuant to section 
                                721(c) of that Act.
                          (ii) Congressional notice; 
                        effectiveness.--The Secretary shall 
                        submit any written determination under 
                        clause (i) to the appropriate 
                        committees of Congress, including the 
                        Committee on Agriculture, Nutrition, 
                        and Forestry of the Senate and the 
                        Committee on Agriculture of the House 
                        of Representatives. Any such written 
                        determination by the Secretary shall 
                        not be effective until it is submitted 
                        to the appropriate committees of 
                        Congress.
                          (iii) Reporting.--Notwithstanding a 
                        written determination by the Secretary 
                        under clause (i), all foreign exchange 
                        swaps and foreign exchange forwards 
                        shall be reported to either a swap data 
                        repository, or, if there is no swap 
                        data repository that would accept such 
                        swaps or forwards, to the Commission 
                        pursuant to section 4r within such time 
                        period as the Commission may by rule or 
                        regulation prescribe.
                          (iv) Business standards.--
                        Notwithstanding a written determination 
                        by the Secretary pursuant to clause 
                        (i), any party to a foreign exchange 
                        swap or forward that is a swap dealer 
                        or major swap participant shall conform 
                        to the business conduct standards 
                        contained in section 4s(h).
                          (v) Secretary.--For purposes of this 
                        subparagraph, the term ``Secretary'' 
                        means the Secretary of the Treasury.
                  (F) Exception for certain foreign exchange 
                swaps and forwards.--
                          (i) Registered entities.--Any foreign 
                        exchange swap and any foreign exchange 
                        forward that is listed and traded on or 
                        subject to the rules of a designated 
                        contract market or a swap execution 
                        facility, or that is cleared by a 
                        derivatives clearing organization, 
                        shall not be exempt from any provision 
                        of this Act or amendments made by the 
                        Wall Street Transparency and 
                        Accountability Act of 2010 prohibiting 
                        fraud or manipulation.
                          (ii) Retail transactions.--Nothing in 
                        subparagraph (E) shall affect, or be 
                        construed to affect, the applicability 
                        of this Act or the jurisdiction of the 
                        Commission with respect to agreements, 
                        contracts, or transactions in foreign 
                        currency pursuant to section 2(c)(2).
          [(48)] (49) Swap data repository.--The term ``swap 
        data repository'' means any person that collects and 
        maintains information or records with respect to 
        transactions or positions in, or the terms and 
        conditions of, swaps entered into by third parties for 
        the purpose of providing a centralized recordkeeping 
        facility for swaps.
          [(49)] (50) Swap dealer.--
                  (A) In general.--The term ``swap dealer'' 
                means any person who--
                          (i) holds itself out as a dealer in 
                        swaps;
                          (ii) makes a market in swaps;
                          (iii) regularly enters into swaps 
                        with counterparties as an ordinary 
                        course of business for its own account; 
                        or
                          (iv) engages in any activity causing 
                        the person to be commonly known in the 
                        trade as a dealer or market maker in 
                        swaps,
                provided however, in no event shall an insured 
                depository institution be considered to be a 
                swap dealer to the extent it offers to enter 
                into a swap with a customer in connection with 
                originating a loan with that customer.
                  (B) Inclusion.--A person may be designated as 
                a swap dealer for a single type or single class 
                or category of swap or activities and 
                considered not to be a swap dealer for other 
                types, classes, or categories of swaps or 
                activities.
                  (C) Exception.--The term ``swap dealer'' does 
                not include a person that enters into swaps for 
                such person's own account, either individually 
                or in a fiduciary capacity, but not as a part 
                of a regular business.
                  [(D) De minimis exception.--The Commission]
                  (D) Exception._
                          (i) In general._The Commission shall 
                        exempt from designation as a swap 
                        dealer an entity that engages in a de 
                        minimis quantity of swap dealing in 
                        connection with transactions with or on 
                        behalf of its customers. The Commission 
                        shall promulgate regulations to 
                        establish factors with respect to the 
                        making of this determination to exempt.
                          (ii) De minimis quantity.--The de 
                        minimis quantity of swap dealing 
                        described in clause (i) shall be set at 
                        a quantity of $8,000,000,000, and may 
                        be amended or changed only through a 
                        new affirmative action of the 
                        Commission undertaken by rule or 
                        regulation.
                  (E) Certain transactions with a utility 
                special entity.--
                          (i) Transactions in utility 
                        operations-related swaps shall be 
                        reported pursuant to section 4r.
                          (ii) In making a determination to 
                        exempt pursuant to subparagraph (D), 
                        the Commission shall treat a utility 
                        operations-related swap entered into 
                        with a utility special entity, as 
                        defined in section 4s(h)(2)(D), as if 
                        it were entered into with an entity 
                        that is not a special entity, as 
                        defined in section 4s(h)(2)(C).
          [(50)] (51) Swap execution facility.--The term ``swap 
        execution facility'' means a trading system or platform 
        in which multiple participants have the ability to 
        execute or trade swaps by accepting bids and offers 
        made by multiple participants in the facility or 
        system, through any means of interstate commerce, 
        including any trading facility, that--
                  (A) facilitates the execution of swaps 
                between persons; and
                  (B) is not a designated contract market.
          [(51)] (52) Trading facility.--
                  (A) In general.--The term ``trading 
                facility'' means a person or group of persons 
                that constitutes, maintains, or provides a 
                physical or electronic facility or system in 
                which multiple participants have the ability to 
                execute or trade agreements, contracts, or 
                transactions--
                          (i) by accepting bids or offers made 
                        by other participants that are open to 
                        multiple partipants in the facility or 
                        system; or
                          (ii) through the interaction of 
                        multiple bids or multiple offers within 
                        a system with a pre-determined non-
                        discretionary automated trade matching 
                        and execution algorithm.
                  (B) Exclusions.--The term ``trading 
                facility'' does not include--
                          (i) a person or group of persons 
                        solely because the person or group of 
                        persons constitutes, maintains, or 
                        provides an electronic facility or 
                        system that enables participants to 
                        negotiate the terms of and enter into 
                        bilateral transactions as a result of 
                        communications exchanged by the parties 
                        and not from interaction of multiple 
                        bids and multiple offers within a 
                        predetermined, nondiscretionary 
                        automated trade matching and execution 
                        algorithm;
                          (ii) a government securities dealer 
                        or government securities broker, to the 
                        extent that the dealer or broker 
                        executes or trades agreements, 
                        contracts, or transactions in 
                        government securities, or assists 
                        persons in communicating about, 
                        negotiating, entering into, executing, 
                        or trading an agreement, contract, or 
                        transaction in government securities 
                        (as the terms ``government securities 
                        dealer'', ``government securities 
                        broker'', and ``government securities'' 
                        are defined in section 3(a) of the 
                        Securities Exchange Act of 1934 (15 
                        U.S.C. 78c(a))); or
                          (iii) facilities on which bids and 
                        offers, and acceptances of bids and 
                        offers effected on the facility, are 
                        not binding.
                Any person, group of persons, dealer, broker, 
                or facility described in clause (i) or (ii) is 
                excluded from the meaning of the term ``trading 
                facility'' for the purposes of this Act without 
                any prior specific approval, certification, or 
                other action by the Commission.
                  (C) Special rule.--A person or group of 
                persons that would not otherwise constitute a 
                trading facility shall not be considered to be 
                a trading facility solely as a result of the 
                submission to a derivatives clearing 
                organization of transactions executed on or 
                through the person or group of persons.
          (53) Utility operations-related swap.--The term 
        ``utility operations-related swap'' means a swap that--
                  (A) is entered into by a utility to hedge or 
                mitigate a commercial risk;
                  (B) is not a contract, agreement, or 
                transaction based on, derived on, or 
                referencing--
                          (i) an interest rate, credit, equity, 
                        or currency asset class;
                          (ii) except as used for fuel for 
                        electric energy generation, a metal, 
                        agricultural commodity, or crude oil or 
                        gasoline commodity of any grade; or
                          (iii) any other commodity or category 
                        of commodities identified for this 
                        purpose in a rule or order adopted by 
                        the Commission in consultation with the 
                        appropriate Federal and State 
                        regulatory commissions; and
                  (C) is associated with--
                          (i) the generation, production, 
                        purchase, or sale of natural gas or 
                        electric energy, the supply of natural 
                        gas or electric energy to a utility, or 
                        the delivery of natural gas or electric 
                        energy service to utility customers;
                          (ii) fuel supply for the facilities 
                        or operations of a utility;
                          (iii) compliance with an electric 
                        system reliability obligation;
                          (iv) compliance with an energy, 
                        energy efficiency, conservation, or 
                        renewable energy or environmental 
                        statute, regulation, or government 
                        order applicable to a utility; or
                          (v) any other electric energy or 
                        natural gas swap to which a utility is 
                        a party.

           *       *       *       *       *       *       *


SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL FOR ACT OF 
                    AGENT; COMMODITY FUTURES TRADING COMMISSION; 
                    TRANSACTION IN INTERSTATE COMMERCE.

  (a) Jurisdiction of Commission; Commodity Futures Trading 
Commission.--
          (1) Jurisdiction of commission.--
                  (A) In general.--The Commission shall have 
                exclusive jurisdiction, except to the extent 
                otherwise provided in the Wall Street 
                Transparency and Accountability Act of 2010 
                (including an amendment made by that Act) and 
                subparagraphs (C), (D), and (I) of this 
                paragraph and subsections (c) and (f), with 
                respect to accounts, agreements (including any 
                transaction which is of the character of, or is 
                commonly known to the trade as, an ``option'', 
                ``privilege'', ``indemnity'', ``bid'', 
                ``offer'', ``put'', ``call'', ``advance 
                guaranty'', or ``decline guaranty''), and 
                transactions involving swaps or contracts of 
                sale of a commodity for future delivery 
                (including significant price discovery 
                contracts), traded or executed on a contract 
                market designated pursuant to section 5 or a 
                swap execution facility pursuant to section 5h 
                or any other board of trade, exchange, or 
                market, and transactions subject to regulation 
                by the Commission pursuant to section 19 of 
                this Act. Except as hereinabove provided, 
                nothing contained in this section shall (I) 
                supersede or limit the jurisdiction at any time 
                conferred on the Securities and Exchange 
                Commission or other regulatory authorities 
                under the laws of the United States or of any 
                State, or (II) restrict the Securities and 
                Exchange Commission and such other authorities 
                from carrying out their duties and 
                responsibilities in accordance with such laws. 
                Nothing in this section shall supersede or 
                limit the jurisdiction conferred on courts of 
                the United States or any State.
                  (B) Liability of principal for act of 
                agent.--The act, omission, or failure of any 
                official, agent, or other person acting for any 
                individual, association, partnership, 
                corporation, or trust within the scope of his 
                employment or office shall be deemed the act, 
                omission, or failure of such individual, 
                association, partnership, corporation, or 
                trust, as well as of such official, agent, or 
                other person.
  (C) Notwithstanding any other provision of law--
          (i)(I) Except as provided in subclause (II), this Act 
        shall not apply to and the Commission shall have no 
        jurisdiction to designate a board of trade as a 
        contract market for any transaction whereby any party 
        to such transaction acquires any put, call, or other 
        option on one or more securities (as defined in section 
        2(1) of the Securities Act of 1933 or section 3(a)(10) 
        of the Securities Exchange Act of 1934 on the date of 
        enactment of the Futures Trading Act of 1982), 
        including any group or index of such securities, or any 
        interest therein or based on the value thereof.
                  (II) This Act shall apply to and the 
                Commission shall have jurisdiction with respect 
                to accounts, agreements, and transactions 
                involving, and may permit the listing for 
                trading pursuant to section 5c(c) of, a put, 
                call, or other option on 1 or more securities 
                (as defined in section 2(a)(1) of the 
                Securities Act of 1933 or section 3(a)(10) of 
                the Securities Exchange Act of 1934 on the date 
                of enactment of the Futures Trading Act of 
                1982), including any group or index of such 
                securities, or any interest therein or based on 
                the value thereof, that is exempted by the 
                Securities and Exchange Commission pursuant to 
                section 36(a)(1) of the Securities Exchange Act 
                of 1934 with the condition that the Commission 
                exercise concurrent jurisdiction over such put, 
                call, or other option; provided, however, that 
                nothing in this paragraph shall be construed to 
                affect the jurisdiction and authority of the 
                Securities and Exchange Commission over such 
                put, call, or other option.
          (ii) This Act shall apply to and the Commission shall 
        have exclusive jurisdiction with respect to accounts, 
        agreements (including any transaction which is of the 
        character of, or is commonly known to the trade as, an 
        ``option'', ``privilege'', ``indemnity'', ``bid'', 
        ``offer'', ``put'', ``call'', ``advance guaranty'', or 
        ``decline guaranty'') and transactions involving, and 
        may designate a board of trade as a contract market 
        in[, or register a derivatives transaction execution 
        facility that trades or executes,] contracts of sale 
        (or options on such contracts) for future delivery of a 
        group or index of securities (or any interest therein 
        or based upon the value thereof): Provided, however, 
        That no board of trade shall be designated as a 
        contract market with respect to any such contracts of 
        sale (or options on such contracts) for future 
        delivery[, and no derivatives transaction execution 
        facility shall trade or execute such contracts of sale 
        (or options on such contracts) for future delivery], 
        unless the board of trade [or the derivatives 
        transaction execution facility,] and the applicable 
        contract, meet the following minimum requirements:
                  (I) Settlement of or delivery on such 
                contract (or option on such contract) shall be 
                effected in cash or by means other than the 
                transfer or receipt of any security, except an 
                exempted security under section 3 of the 
                Securities Act of 1933 or section 3(a)(12) of 
                the Securities Exchange Act of 1934 as in 
                effect on the date of enactment of the Futures 
                Trading Act of 1982 (other than any municipal 
                security, as defined in section 3(a)(29) of the 
                Securities Exchange Act of 1934 on the date of 
                enactment of the Futures Trading Act of 1982);
                  (II) Trading in such contract (or option on 
                such contract) shall not be readily susceptible 
                to manipulation of the price of such contract 
                (or option on such contract), nor to causing or 
                being used in the manipulation of the price of 
                any underlying security, option on such 
                security or option on a group or index 
                including such securities; and
                          (III) Such group or index of 
                        securities shall not constitute a 
                        narrow-based security index.
                  (iii) If, in its discretion, the Commission 
                determines that a stock index futures contract, 
                notwithstanding its conformance with the 
                requirements in clause (ii) of this 
                subparagraph, can reasonably be used as a 
                surrogate for trading a security (including a 
                security futures product), it may, by order, 
                require such contract and any option thereon be 
                traded and regulated as security futures 
                products as defined in section 3(a)(56) of the 
                Securities Exchange Act of 1934 and section 1a 
                of this Act subject to all rules and 
                regulations applicable to security futures 
                products under this Act and the securities laws 
                as defined in section 3(a)(47) of the 
                Securities Exchange Act of 1934.
          (iv) No person shall offer to enter into, enter into, 
        or confirm the execution of any contract of sale (or 
        option on such contract) for future delivery of any 
        security, or interest therein or based on the value 
        thereof, except an exempted security [under or] under 
        section 3(a)(12) of the Securities Exchange Act of 1934 
        as in effect on the date of enactment of the Futures 
        Trading Act of 1982 (other than any municipal security 
        as defined in section 3(a)(29) of the Securities 
        Exchange Act of 1934 on the date of enactment of the 
        Futures Trading Act of 1982), or except as provided in 
        clause (ii) of this subparagraph or subparagraph (D), 
        any group or index of such securities or any interest 
        therein or based on the value thereof.
                  (v)(I) Notwithstanding any other provision of 
                this Act, any contract market in a stock index 
                futures contract (or option thereon) other than 
                a security futures product[, or any derivatives 
                transaction execution facility on which such 
                contract or option is traded,] shall file with 
                the Board of Governors of the Federal Reserve 
                System any rule establishing or changing the 
                levels of margin (initial and maintenance) for 
                such stock index futures contract (or option 
                thereon) other than security futures products.
                  (II) The Board may at any time request any 
                contract market [or derivatives transaction 
                execution facility] to set the margin for any 
                stock index futures contract (or option 
                thereon), other than for any security futures 
                product, at such levels as the Board in its 
                judgment determines are appropriate to preserve 
                the financial integrity of the contract market 
                [or derivatives transaction execution 
                facility], or its clearing system, or to 
                prevent systemic risk. If the contract market 
                [or derivatives transaction execution facility] 
                fails to do so within the time specified by the 
                Board in its request, the Board may direct the 
                contract market [or derivatives transaction 
                execution facility] to alter or supplement the 
                rules of the contract market [or derivatives 
                transaction execution facility] as specified in 
                the request.
                  (III) Subject to such conditions as the Board 
                may determine, the Board may delegate any or 
                all of its authority, relating to margin for 
                any stock index futures contract (or option 
                thereon), other than security futures products, 
                under this clause to the Commission.
                  (IV) It shall be unlawful for any futures 
                commission merchant to, directly or indirectly, 
                extend or maintain credit to or for, or collect 
                margin from any customer on any security 
                futures product unless such activities comply 
                with the regulations prescribed pursuant to 
                section 7(c)(2)(B) of the Securities Exchange 
                Act of 1934.
                  (V) Nothing in this clause shall supersede or 
                limit the authority granted to the Commission 
                in section 8a(9) to direct a contract market 
                [or registered derivatives transaction 
                execution facility], on finding an emergency to 
                exist, to raise temporary margin levels on any 
                futures contract, or option on the contract 
                covered by this clause, or on any security 
                futures product.
                  (VI) Any action taken by the Board, or by the 
                Commission acting under the delegation of 
                authority under subclause [III] (III), under 
                this clause directing a contract market to 
                alter or supplement a contract market rule 
                shall be subject to review only in the Court of 
                Appeals where 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. The review shall 
                be based on the examination of all information 
                before the Board or the Commission, as the case 
                may be, at the time the determination was made. 
                The court reviewing the action of the Board or 
                the Commission shall not enter a stay or order 
                of mandamus unless the court has determined, 
                after notice and a hearing before a panel of 
                the court, that the agency action complained of 
                was arbitrary, capricious, an abuse of 
                discretion, or otherwise not in accordance with 
                law.
  (D)(i) Notwithstanding any other provision of this Act, the 
Securities and Exchange Commission shall have jurisdiction and 
authority over security futures as defined in section 3(a)(55) 
of the Securities Exchange Act of 1934, section 2(a)(16) of the 
Securities Act of 1933, section 2(a)(52) of the Investment 
Company Act of 1940, and section 202(a)(27) of the Investment 
Advisers Act of 1940, options on security futures, and persons 
effecting transactions in security futures and options thereon, 
and this Act shall apply to and the Commission shall have 
jurisdiction with respect to accounts, agreements (including 
any transaction which is of the character of, or is commonly 
known to the trade as, an ``option'', ``privilege'', 
``indemnity'', ``bid'', ``offer'', ``put'', ``call'', ``advance 
guaranty'', or ``decline guaranty''), contracts, and 
transactions involving, and may designate a board of trade as a 
contract market [in, or register a derivatives transaction 
execution facility] that trades or executes, a security futures 
product as defined in section 1a of this Act: Provided, 
however, That, except as provided in clause (vi) of this 
subparagraph, no board of trade shall be designated as a 
contract market with respect to[, or registered as a 
derivatives transaction execution facility for,] any such 
contracts of sale for future delivery unless the board of trade 
and the applicable contract meet the following criteria:
          (I) Except as otherwise provided in a rule, 
        regulation, or order issued pursuant to clause (v) of 
        this subparagraph, any security underlying the security 
        future, including each component security of a narrow-
        based security index, is registered pursuant to section 
        12 of the Securities Exchange Act of 1934.
          (II) If the security futures product is not cash 
        settled, the board of trade on which the security 
        futures product is traded has arrangements in place 
        with a clearing agency registered pursuant to section 
        17A of the Securities Exchange Act of 1934 for the 
        payment and delivery of the securities underlying the 
        security futures product.
          (III) Except as otherwise provided in a rule, 
        regulation, or order issued pursuant to clause (v) of 
        this subparagraph, the security future is based upon 
        common stock and such other equity securities as the 
        Commission and the Securities and Exchange Commission 
        jointly determine appropriate.
          (IV) The security futures product is cleared by a 
        clearing agency that has in place provisions for linked 
        and coordinated clearing with other clearing agencies 
        that clear security futures products, which permits the 
        security futures product to be purchased on a 
        designated contract market, [registered derivatives 
        transaction execution facility,] national securities 
        exchange registered under section 6(a) of the 
        Securities Exchange Act of 1934, or national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 and offset on 
        another designated contract market, [registered 
        derivatives transaction execution facility,] national 
        securities exchange registered under section 6(a) of 
        the Securities Exchange Act of 1934, or national 
        securities association registered pursuant to section 
        15A(a) of the Securities Exchange Act of 1934.
          (V) Only futures commission merchants, introducing 
        brokers, commodity trading advisors, commodity pool 
        operators or associated persons subject to suitability 
        rules comparable to those of a national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 solicit, accept any 
        order for, or otherwise deal in any transaction in or 
        in connection with the security futures product.
          (VI) The security futures product is subject to a 
        prohibition against dual trading in section 4j of this 
        Act and the rules and regulations thereunder or the 
        provisions of section 11(a) of the Securities Exchange 
        Act of 1934 and the rules and regulations thereunder, 
        except to the extent otherwise permitted under the 
        Securities Exchange Act of 1934 and the rules and 
        regulations thereunder.
          (VII) Trading in the security futures product is not 
        readily susceptible to manipulation of the price of 
        such security futures product, nor to causing or being 
        used in the manipulation of the price of any underlying 
        security, option on such security, or option on a group 
        or index including such securities;
          (VIII) The board of trade on which the security 
        futures product is traded has procedures in place for 
        coordinated surveillance among such board of trade, any 
        market on which any security underlying the security 
        futures product is traded, and other markets on which 
        any related security is traded to detect manipulation 
        and insider trading, except that, if the board of trade 
        is an alternative trading system, a national securities 
        association registered pursuant to section 15A(a) of 
        the Securities Exchange Act of 1934 or national 
        securities exchange registered pursuant to section 6(a) 
        of the Securities Exchange Act of 1934 of which such 
        alternative trading system is a member has in place 
        such procedures.
          (IX) The board of trade on which the security futures 
        product is traded has in place audit trails necessary 
        or appropriate to facilitate the coordinated 
        surveillance required in subclause (VIII), except that, 
        if the board of trade is an alternative trading system, 
        a national securities association registered pursuant 
        to section 15A(a) of the Securities Exchange Act of 
        1934 or national securities exchange registered 
        pursuant to section 6(a) of the Securities Exchange Act 
        of 1934 of which such alternative trading system is a 
        member has rules to require such audit trails.
          (X) The board of trade on which the security futures 
        product is traded has in place procedures to coordinate 
        trading halts between such board of trade and markets 
        on which any security underlying the security futures 
        product is traded and other markets on which any 
        related security is traded, except that, if the board 
        of trade is an alternative trading system, a national 
        securities association registered pursuant to section 
        15A(a) of the Securities Exchange Act of 1934 or 
        national securities exchange registered pursuant to 
        section 6(a) of the Securities Exchange Act of 1934 of 
        which such alternative trading system is a member has 
        rules to require such coordinated trading halts.
          (XI) The margin requirements for a security futures 
        product comply with the regulations prescribed pursuant 
        to section 7(c)(2)(B) of the Securities Exchange Act of 
        1934, except that nothing in this subclause shall be 
        construed to prevent a board of trade from requiring 
        higher margin levels for a security futures product 
        when it deems such action to be necessary or 
        appropriate.
  (ii) It shall be unlawful for any person to offer, to enter 
into, to execute, to confirm the execution of, or to conduct 
any office or business anywhere in the United States, its 
territories or possessions, for the purpose of soliciting, or 
accepting any order for, or otherwise dealing in, any 
transaction in, or in connection with, a security futures 
product unless--
          [(I) the transaction is conducted on or subject to 
        the rules of a board of trade that--
                  [(aa) has been designated by the Commission 
                as a contract market in such security futures 
                product; or
                  [(bb) is a registered derivatives transaction 
                execution facility for the security futures 
                product that has provided a certification with 
                respect to the security futures product 
                pursuant to clause (vii);]
          (I) the transaction is conducted on or subject to the 
        rules of a board of trade that has been designated by 
        the Commission as a contract market in such security 
        futures product; or
          (II) the contract is executed or consummated by, 
        through, or with a member of the contract market [or 
        registered derivatives transaction execution facility]; 
        and
          (III) the security futures product is evidenced by a 
        record in writing which shows the date, the parties to 
        such security futures product and their addresses, the 
        property covered, and its price, and each contract 
        market member [or registered derivatives transaction 
        execution facility member] shall keep the record for a 
        period of 3 years from the date of the transaction, or 
        for a longer period if the Commission so directs, which 
        record shall at all times be open to the inspection of 
        any duly authorized representative of the Commission.
  (iii)(I) Except as provided in subclause (II) but 
notwithstanding any other provision of this Act, no person 
shall offer to enter into, enter into, or confirm the execution 
of any option on a security future.
  (II) After 3 years after the date of the enactment of the 
Commodity Futures Modernization Act of 2000, the Commission and 
the Securities and Exchange Commission may by order jointly 
determine to permit trading of options on any security future 
authorized to be traded under the provisions of this Act and 
the Securities Exchange Act of 1934.
  (iv)(I) All relevant records of a futures commission merchant 
or introducing broker registered pursuant to section 4f(a)(2), 
floor broker or floor trader exempt from registration pursuant 
to section 4f(a)(3), associated person exempt from registration 
pursuant to section 4k(6), or board of trade designated as a 
contract market in a security futures product pursuant to 
section 5f shall be subject to such reasonable periodic or 
special examinations by representatives of the Commission as 
the Commission deems necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in 
furtherance of the purposes of this Act, and the Commission, 
before conducting any such examination, shall give notice to 
the Securities and Exchange Commission of the proposed 
examination and consult with the Securities and Exchange 
Commission concerning the feasibility and desirability of 
coordinating the examination with examinations conducted by the 
Securities and Exchange Commission in order to avoid 
unnecessary regulatory duplication or undue regulatory burdens 
for the registrant or board of trade.
  (II) The Commission shall notify the Securities and Exchange 
Commission of any examination conducted of any futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), floor broker or floor trader exempt from 
registration pursuant to section 4f(a)(3), associated person 
exempt from registration pursuant to section 4k(6), or board of 
trade designated as a contract market in a security futures 
product pursuant to section 5f, and, upon request, furnish to 
the Securities and Exchange Commission any examination report 
and data supplied to or prepared by the Commission in 
connection with the examination.
  (III) Before conducting an examination under subclause (I), 
the Commission shall use the reports of examinations, unless 
the information sought is unavailable in the reports, of any 
futures commission merchant or introducing broker registered 
pursuant to section 4f(a)(2), floor broker or floor trader 
exempt from registration pursuant to section 4f(a)(3), 
associated person exempt from registration pursuant to section 
4k(6), or board of trade designated as a contract market in a 
security futures product pursuant to section 5f that is made by 
the Securities and Exchange Commission, a national securities 
association registered pursuant to section 15A(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o-3(a)), or a 
national securities exchange registered pursuant to section 
6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)).
  (IV) Any records required under this subsection for a futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), floor broker or floor trader exempt from 
registration pursuant to section 4f(a)(3), associated person 
exempt from registration pursuant to section 4k(6), or board of 
trade designated as a contract market in a security futures 
product pursuant to section 5f, shall be limited to records 
with respect to accounts, agreements, contracts, and 
transactions involving security futures products.
  (v)(I) The Commission and the Securities and Exchange 
Commission, by rule, regulation, or order, may jointly modify 
the criteria specified in subclause (I) or (III) of clause (i), 
including the trading of security futures based on securities 
other than equity securities, to the extent such modification 
fosters the development of fair and orderly markets in security 
futures products, is necessary or appropriate in the public 
interest, and is consistent with the protection of investors.
  (II) The Commission and the Securities and Exchange 
Commission, by order, may jointly exempt any person from 
compliance with the criterion specified in clause (i)(IV) to 
the extent such exemption fosters the development of fair and 
orderly markets in security futures products, is necessary or 
appropriate in the public interest, and is consistent with the 
protection of investors.
  (vi)(I) Notwithstanding clauses (i) and (vii), until the 
compliance date, a board of trade shall not be required to meet 
the criterion specified in clause (i)(IV).
  (II) The Commission and the Securities and Exchange 
Commission shall jointly publish in the Federal Register a 
notice of the compliance date no later than 165 days before the 
compliance date.
  (III) For purposes of this clause, the term ``compliance 
date'' means the later of--
          (aa) 180 days after the end of the first full 
        calendar month period in which the average aggregate 
        comparable share volume for all security futures 
        products based on single equity securities traded on 
        all designated contract markets and registered 
        derivatives transaction execution facilities equals or 
        exceeds 10 percent of the average aggregate comparable 
        share volume of options on single equity securities 
        traded on all national securities exchanges registered 
        pursuant to section 6(a) of the Securities Exchange Act 
        of 1934 and any national securities associations 
        registered pursuant to section 15A(a) of such Act; or
          (bb) 2 years after the date on which trading in any 
        security futures product commences under this Act.
  (vii) It shall be unlawful for a board of trade to trade or 
execute a security futures product unless the board of trade 
has provided the Commission with a certification that the 
specific security futures product and the board of trade, as 
applicable, meet the criteria specified in subclauses (I) 
through (XI) of clause (i), except as otherwise provided in 
clause (vi).
  (E)(i) To the extent necessary or appropriate in the public 
interest, to promote fair competition, and consistent with 
promotion of market efficiency, innovation, and expansion of 
investment opportunities, the protection of investors, and the 
maintenance of fair and orderly markets, the Commission and the 
Securities and Exchange Commission shall jointly issue such 
rules, regulations, or orders as are necessary and appropriate 
to permit the offer and sale of a security futures product 
traded on or subject to the rules of a foreign board of trade 
to United States persons.
  (ii) The rules, regulations, or orders adopted under clause 
(i) shall take into account, as appropriate, the nature and 
size of the markets that the securities underlying the security 
futures product reflects.
  (F)(i) Nothing in this Act is intended to prohibit a futures 
commission merchant from carrying security futures products 
traded on or subject to the rules of a foreign board of trade 
in the accounts of persons located outside of the United 
States.
  (ii) Nothing in this Act is intended to prohibit any eligible 
contract participant located in the United States from 
purchasing or carrying securities futures products traded on or 
subject to the rules of a foreign board of trade, exchange, or 
market to the same extent such person may be authorized to 
purchase or carry other securities traded on a foreign board of 
trade, exchange, or market so long as any underlying security 
for such security futures products is traded principally on, 
by, or through any exchange or market located outside the 
United States.
                  (G)(i) Nothing in this paragraph shall limit 
                the jurisdiction conferred on the Securities 
                and Exchange Commission by the Wall Street 
                Transparency and Accountability Act of 2010 
                with regard to security-based swap agreements 
                as defined pursuant to section 3(a)(78) of the 
                Securities Exchange Act of 1934, and security-
                based swaps.
                  (ii) In addition to the authority of the 
                Securities and Exchange Commission described in 
                clause (i), nothing in this subparagraph shall 
                limit or affect any statutory authority of the 
                Commission with respect to an agreement, 
                contract, or transaction described in clause 
                (i).
                  (H) Notwithstanding any other provision of 
                law, the Wall Street Transparency and 
                Accountability Act of 2010 shall not apply to, 
                and the Commodity Futures Trading Commission 
                shall have no jurisdiction under such Act (or 
                any amendments to the Commodity Exchange Act 
                made by such Act) with respect to, any security 
                other than a security-based swap.
                  (I)(i) Nothing in this Act shall limit or 
                affect any statutory authority of the Federal 
                Energy Regulatory Commission or a State 
                regulatory authority (as defined in section 
                3(21) of the Federal Power Act (16 U.S.C. 
                796(21)) with respect to an agreement, 
                contract, or transaction that is entered into 
                pursuant to a tariff or rate schedule approved 
                by the Federal Energy Regulatory Commission or 
                a State regulatory authority and is--
                          (I) not executed, traded, or cleared 
                        on a registered entity or trading 
                        facility; or
                          (II) executed, traded, or cleared on 
                        a registered entity or trading facility 
                        owned or operated by a regional 
                        transmission organization or 
                        independent system operator.
                  (ii) In addition to the authority of the 
                Federal Energy Regulatory Commission or a State 
                regulatory authority described in clause (i), 
                nothing in this subparagraph shall limit or 
                affect--
                          (I) any statutory authority of the 
                        Commission with respect to an 
                        agreement, contract, or transaction 
                        described in clause (i); or
                          (II) the jurisdiction of the 
                        Commission under subparagraph (A) with 
                        respect to an agreement, contract, or 
                        transaction that is executed, traded, 
                        or cleared on a registered entity or 
                        trading facility that is not owned or 
                        operated by a regional transmission 
                        organization or independent system 
                        operator (as defined by sections 3(27) 
                        and (28) of the Federal Power Act (16 
                        U.S.C. 796(27), 796(28)).
          (2)(A) There is hereby established, as an independent 
        agency of the United States Government, a Commodity 
        Futures Trading Commission. The Commission shall be 
        composed of five Commissioners who shall be appointed 
        by the President, by and with the advice and consent of 
        the Senate. In nominating persons for appointment, the 
        President shall--
                  (i) select persons who shall each have 
                demonstrated knowledge in futures trading or 
                its regulation, or the production, 
                merchandising, processing or distribution of 
                one or more of the commodities or other goods 
                and articles, services, rights, and interests 
                covered by this Act; and
                  (ii) seek to ensure that the demonstrated 
                knowledge of the Commissioners is balanced with 
                respect to such areas.
        Not more than three of the members of the Commission 
        shall be members of the same political party. Each 
        Commissioner shall hold office for a term of five years 
        and until his successor is appointed and has qualified, 
        except that he shall not so continue to serve beyond 
        the expiration of the next session of Congress 
        subsequent to the expiration of said fixed term of 
        office, and except (i) any Commissioner appointed to 
        fill a vacancy occurring prior to the expiration of the 
        term for which his predecessor was appointed shall be 
        appointed for the remainder of such term, and (ii) the 
        terms of office of the Commissioners first taking 
        office after the enactment of this paragraph shall 
        expire as designated by the President at the time of 
        nomination, one at the end of one year, one at the end 
        of two years, one at the end of three years, one at the 
        end of four years, and one at the end of five years.
          (B) The President shall appoint, by and with the 
        advice and consent of the Senate, a member of the 
        Commission as Chairman, who shall serve as Chairman at 
        the pleasure of the President. An individual may be 
        appointed as Chairman at the same time that person is 
        appointed as a Commissioner. The Chairman shall be the 
        chief administrative officer of the Commission and 
        shall preside at hearings before the Commission. At any 
        time, the President may appoint, by and with the advice 
        and consent of the Senate, a different Chairman, and 
        the Commissioner previously appointed as Chairman may 
        complete that Commissioner's term as a Commissioner.
          (3) A vacancy in the Commission shall not impair the 
        right of the remaining Commissioners to exercise all 
        the powers of the Commission.
          (4) The Commission shall have a General Counsel, who 
        shall be appointed by the Commission and serve at the 
        pleasure of the Commission. The General Counsel shall 
        report directly to the Commission and serve as its 
        legal advisor. The Commission shall appoint such other 
        attorneys as may be necessary, in the opinion of the 
        Commission, to assist the General Counsel, represent 
        the Commission in all disciplinary proceedings pending 
        before it, represent the Commission in courts of law 
        whenever appropriate, assist the Department of Justice 
        in handling litigation concerning the Commission in 
        courts of law, and perform such other legal duties and 
        functions as the Commission may direct.
          (5) The Commission shall have an Executive Director, 
        who shall be appointed by the Commission and serve at 
        the pleasure of the Commission. The Executive Director 
        shall report directly to the Commission and perform 
        such functions and duties as the Commission may 
        prescribe.
          (6)(A) Except as otherwise provided in this paragraph 
        and in paragraphs [(4) and (5) of this subsection ] 
        (4), (5), and (16), the executive and administrative 
        functions of the Commission, including functions of the 
        Commission with respect to the appointment and 
        supervision of personnel employed under the Commission, 
        the distribution of business among such personnel and 
        among administrative units of the Commission, and the 
        use and expenditure of funds, according to budget 
        categories, plans, programs, and priorities established 
        and approved by the Commission, shall be exercised 
        solely by the Chairman.
          (B) In carrying out any of his functions under the 
        provisions of this paragraph, the Chairman shall be 
        governed by general policies, plans, priorities, and 
        budgets approved by the Commission and by such 
        regulatory decisions, findings, and determinations as 
        the Commission may by law be authorized to make.
          (C) The appointment by the Chairman of the heads of 
        major administrative units under the Commission shall 
        be subject to the approval of the Commission, and the 
        heads of the units shall serve at the pleasure of the 
        Commission.
          (D) Personnel employed regularly and full time in the 
        immediate offices of Commissioners other than the 
        Chairman shall not be affected by the provisions of 
        this paragraph.
          (E) There are hereby reserved to the Commission its 
        functions with respect to revising budget estimates and 
        with respect to determining the distribution of 
        appropriated funds according to major programs and 
        purposes.
          (F) The Chairman may from time to time make such 
        provisions as he shall deem appropriate authorizing the 
        performance by any officer, employee, or administrative 
        unit under his jurisdiction of any functions of the 
        Chairman under this paragraph.
          (7) Appointment and compensation.--
                  (A) In general.--The Commission may appoint 
                and fix the compensation of such officers, 
                attorneys, economists, examiners, and other 
                employees as may be necessary for carrying out 
                the functions of the Commission under this Act.
                  (B) Rates of pay.--Rates of basic pay for all 
                employees of the Commission may be set and 
                adjusted by the Commission without regard to 
                chapter 51 or subchapter III of chapter 53 of 
                title 5, United States Code.
                  (C) Comparability.--
                          (i) In general.--The Commission may 
                        provide additional compensation and 
                        benefits to employees of the Commission 
                        if the same type of compensation or 
                        benefits are provided by any agency 
                        referred to in section 1206(a) of the 
                        Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989 
                        (12 U.S.C. 1833b(a)) or could be 
                        provided by such an agency under 
                        applicable provisions of law (including 
                        rules and regulations).
                          (ii) Consultation.--In setting and 
                        adjusting the total amount of 
                        compensation and benefits for 
                        employees, the Commission shall consult 
                        with, and seek to maintain 
                        comparability with, the agencies 
                        referred to in section 1206(a) of the 
                        Financial Institutions Reform, 
                        Recovery, and Enforcement Act of 1989 
                        (12 U.S.C. 1833b(a)).
          (8) No Commissioner or employee of the Commission 
        shall accept employment or compensation from any 
        person, exchange, or clearinghouse subject to 
        regulation by the Commission under this Act during his 
        term of office, nor shall he participate, directly or 
        indirectly, in any registered entity operations or 
        transactions of a character subject to regulation by 
        the Commission.
          (9)(A) The Commission shall, in cooperation with the 
        Secretary of Agriculture, maintain a liaison between 
        the Commission and the Department of Agriculture. The 
        Secretary shall take such steps as may be necessary to 
        enable the Commission to obtain information and utilize 
        such services and facilities of the Department of 
        Agriculture as may be necessary in order to maintain 
        effectively such liaison. In addition, the Secretary 
        shall appoint a liaison officer, who shall be an 
        employee of the Office of the Secretary, for the 
        purpose of maintaining a liaison between the Department 
        of Agriculture and the Commission. The Commission shall 
        furnish such liaison officer appropriate office space 
        within the offices of the Commission and shall allow 
        such liaison officer to attend and observe all 
        deliberations and proceedings of the Commission.
          (B)(i) The Commission shall maintain communications 
        with the Department of the Treasury, the Board of 
        Governors of the Federal Reserve System, and the 
        Securities and Exchange Commission for the purpose of 
        keeping such agencies fully informed of Commission 
        activities that relate to the responsibilities of those 
        agencies, for the purpose of seeking the views of those 
        agencies on such activities, and for considering the 
        relationships between the volume and nature of 
        investment and trading in contracts of sale of a 
        commodity for future delivery and in securities and 
        financial instruments under the jurisdiction of such 
        agencies.
          (ii) When a board of trade applies for designation 
        [or registration] as a contract market [or derivatives 
        transaction execution facility] involving transactions 
        for future delivery of any security issued or 
        guaranteed by the United States or any agency thereof, 
        the Commission shall promptly deliver a copy of such 
        application to the Department of the Treasury and the 
        Board of Governors of the Federal Reserve System. The 
        Commission may not designate [or register] a board of 
        trade as a contract market [or derivatives transaction 
        execution facility] based on such application until 
        forty-five days after the date the Commission delivers 
        the application to such agencies or until the 
        Commission receives comments from each of such agencies 
        on the application, whichever period is shorter. Any 
        comments received by the Commission from such agencies 
        shall be included as part of the public record of the 
        Commission's designation proceeding. In designating[, 
        registering,] or refusing, suspending, or revoking the 
        designation [or registration] of, a board of trade as a 
        contract market [or derivatives transaction execution 
        facility] involving transactions for future delivery 
        referred to in this clause or in considering any 
        possible action under this Act (including without 
        limitation emergency action under section 8a(9)) with 
        respect to such transactions, the Commission shall take 
        into consideration all comments it receives from the 
        Department of the Treasury and the Board of Governors 
        of the Federal Reserve System and shall consider the 
        effect that any such designation[, registration,] 
        suspension, revocation, or action may have on the debt 
        financing requirements of the United States Government 
        and the continued efficiency and integrity of the 
        underlying market for government securities.
          (iii) The provisions of this subparagraph shall not 
        create any rights, liabilities, or obligations upon 
        which actions may be brought against the Commission.
          (10)(A) Whenever the Commission submits any budget 
        estimate or request to the President or the Office of 
        Management and Budget, it shall concurrently transmit 
        copies of that estimate or request to the House and 
        Senate Appropriations Committees and the House 
        Committee on Agriculture and the Senate Committee on 
        Agriculture, Nutrition, and Forestry.
          (B) Whenever the Commission transmits any legislative 
        recommendations, or testimony, or comments on 
        legislation to the President or the Office of 
        Management and Budget, it shall concurrently transmit 
        copies thereof to the House Committee on Agriculture 
        and the Senate Committee on Agriculture, Nutrition, and 
        Forestry. No officer or agency of the United States 
        shall have any authority to require the Commission to 
        submit its legislative recommendations, or testimony, 
        or comments on legislation to any officer or agency of 
        the United States for approval, comments, or review, 
        prior to the submission of such recommendations, 
        testimony, or comments to the Congress. In instances in 
        which the Commission voluntarily seeks to obtain the 
        comments or review of any officer or agency of the 
        United States, the Commission shall include a 
        description of such actions in its legislative 
        recommendations, testimony, or comments on legislation 
        which it transmits to the Congress.
          (C) Whenever the Commission issues for official 
        publication any opinion, release, rule, order, 
        interpretation, or other determination on a matter, the 
        Commission shall provide that any dissenting, 
        concurring, or separate opinion by any Commissioner on 
        the matter be published in full along with the 
        Commission opinion, release, rule, order, 
        interpretation, or determination.
  (11) The Commission shall have an official seal, which shall 
be judicially noticed.
  [(12) The]
  (12) Rules and regulations._
          (A) In general._Subject to the other provisions of 
        this paragraph, the Commission is authorized to 
        promulgate such rules and regulations as it deems 
        necessary to govern the operating procedures and 
        conduct of the business of the Commission.
          (B) Notice to commissioners.--The Commission shall 
        develop and publish internal procedures governing the 
        issuance by any division or office of the Commission of 
        any response to a formal, written request or petition 
        from any member of the public for an exemptive, a no-
        action, or an interpretive letter and such procedures 
        shall provide that the commissioners be provided with 
        the final version of the matter to be issued with 
        sufficient notice to review the matter prior to its 
        issuance.
          (C) Internal risk controls.--The Commission, in 
        consultation with the Chief Economist, shall develop 
        comprehensive internal risk control mechanisms to 
        safeguard and govern the storage of all market data by 
        the Commission, all market data sharing agreements of 
        the Commission, and all academic research performed at 
        the Commission using market data.
          (D) Applicability of notice and comment rules to 
        guidance voted on by the commission.--The notice and 
        comment requirements of section 553 of title 5, United 
        States Code, shall also apply with respect to any 
        Commission statement or guidance, including 
        interpretive rules, general statements of policy, or 
        rules of Commission organization, procedure, or 
        practice, that has the effect of implementing, 
        interpreting or prescribing law or policy and that is 
        voted on by the Commission.
          (13) Public availability of swap transaction data.--
                  (A) Definition of real-time public 
                reporting.--In this paragraph, the term ``real-
                time public reporting'' means to report data 
                relating to a swap transaction, including price 
                and volume, as soon as technologically 
                practicable after the time at which the swap 
                transaction has been executed.
                  (B) Purpose.--The purpose of this section is 
                to authorize the Commission to make swap 
                transaction and pricing data available to the 
                public in such form and at such times as the 
                Commission determines appropriate to enhance 
                price discovery.
                  (C) General rule.-- [The Commission] Except 
                as provided in subparagraph (D), the Commission 
                is authorized and required to provide by rule 
                for the public availability of swap transaction 
                and pricing data as follows:
                          (i) With respect to those swaps that 
                        are subject to the mandatory clearing 
                        requirement described in subsection 
                        (h)(1) (including those swaps that are 
                        excepted from the requirement pursuant 
                        to subsection (h)(7)), the Commission 
                        shall require real-time public 
                        reporting for such transactions.
                          (ii) With respect to those swaps that 
                        are not subject to the mandatory 
                        clearing requirement described in 
                        subsection (h)(1), but are cleared at a 
                        registered derivatives clearing 
                        organization, the Commission shall 
                        require real-time public reporting for 
                        such transactions.
                          (iii) With respect to swaps that are 
                        not cleared at a registered derivatives 
                        clearing organization and which are 
                        reported to a swap data repository or 
                        the Commission under subsection (h)(6), 
                        the Commission shall require real-time 
                        public reporting for such transactions, 
                        in a manner that does not disclose the 
                        business transactions and market 
                        positions of any person.
                          (iv) With respect to swaps that are 
                        determined to be required to be cleared 
                        under subsection (h)(2) but are not 
                        cleared, the Commission shall require 
                        real-time public reporting for such 
                        transactions.
                  (D) Requirements for swap transactions in 
                illiquid markets.--Notwithstanding subparagraph 
                (C):
                          (i) The Commission shall provide by 
                        rule for the public reporting of swap 
                        transactions, including price and 
                        volume data, in illiquid markets that 
                        are not cleared and entered into by a 
                        non-financial entity that is hedging or 
                        mitigating commercial risk in 
                        accordance with subsection (h)(7)(A).
                          (ii) The Commission shall ensure that 
                        the swap transaction information 
                        referred to in clause (i) of this 
                        subparagraph is available to the public 
                        no sooner than 30 days after the swap 
                        transaction has been executed or at 
                        such later date as the Commission 
                        determines appropriate to protect the 
                        identity of participants and positions 
                        in illiquid markets and to prevent the 
                        elimination or reduction of market 
                        liquidity.
                          (iii) In this subparagraph, the term 
                        ``illiquid markets'' means any market 
                        in which the volume and frequency of 
                        trading in swaps is at such a level as 
                        to allow identification of individual 
                        market participants.
                  [(D)] (E) Registered entities and public 
                reporting.--The Commission may require 
                registered entities to publicly disseminate the 
                swap transaction and pricing data required to 
                be reported under this paragraph.
                  [(E)] (F) Rulemaking required.--With respect 
                to the rule providing for the public 
                availability of transaction and pricing data 
                for swaps described in clauses (i) and (ii) of 
                subparagraph (C), the rule promulgated by the 
                Commission shall contain provisions--
                          (i) to ensure such information does 
                        not identify the participants;
                          (ii) to specify the criteria for 
                        determining what constitutes a large 
                        notional swap transaction (block trade) 
                        for particular markets and contracts;
                          (iii) to specify the appropriate time 
                        delay for reporting large notional swap 
                        transactions (block trades) to the 
                        public; and
                          (iv) that take into account whether 
                        the public disclosure will materially 
                        reduce market liquidity.
                  [(F)] (G) Timeliness of reporting.--Parties 
                to a swap (including agents of the parties to a 
                swap) shall be responsible for reporting swap 
                transaction information to the appropriate 
                registered entity in a timely manner as may be 
                prescribed by the Commission.
                  [(G)] (H) Reporting of swaps to registered 
                swap data repositories.--Each swap (whether 
                cleared or uncleared) shall be reported to a 
                registered swap data repository.
          (14) Semiannual and annual public reporting of 
        aggregate swap data.--
                  (A) In general.--In accordance with 
                subparagraph (B), the Commission shall issue a 
                written report on a semiannual and annual basis 
                to make available to the public information 
                relating to--
                          (i) the trading and clearing in the 
                        major swap categories; and
                          (ii) the market participants and 
                        developments in new products.
                  (B) Use; consultation.--In preparing a report 
                under subparagraph (A), the Commission shall--
                          (i) use information from swap data 
                        repositories and derivatives clearing 
                        organizations; and
                          (ii) consult with the Office of the 
                        Comptroller of the Currency, the Bank 
                        for International Settlements, and such 
                        other regulatory bodies as may be 
                        necessary.
                  (C) Authority of the commission.--The 
                Commission may, by rule, regulation, or order, 
                delegate the public reporting responsibilities 
                of the Commission under this paragraph in 
                accordance with such terms and conditions as 
                the Commission determines to be appropriate and 
                in the public interest.
          (15) Energy and environmental markets advisory 
        committee.--
                  (A) Establishment.--
                          (i) In general.--An Energy and 
                        Environmental Markets Advisory 
                        Committee is hereby established.
                          (ii) Membership.--The Committee shall 
                        have 9 members.
                          (iii) Activities.--The Committee's 
                        objectives and scope of activities 
                        shall be--
                                  (I) to conduct public 
                                meetings;
                                  (II) to submit reports and 
                                recommendations to the 
                                Commission (including 
                                dissenting or minority views, 
                                if any); and
                                  (III) otherwise to serve as a 
                                vehicle for discussion and 
                                communication on matters of 
                                concern to exchanges, firms, 
                                end users, and regulators 
                                regarding energy and 
                                environmental markets and their 
                                regulation by the Commission.
                  (B) Requirements.--
                          (i) In general.--The Committee shall 
                        hold public meetings at such intervals 
                        as are necessary to carry out the 
                        functions of the Committee, but not 
                        less frequently than 2 times per year.
                          (ii) Members.--Members shall be 
                        appointed to 3-year terms, but may be 
                        removed for cause by vote of the 
                        Commission.
                  (C) Appointment.--The Commission shall 
                appoint members with a wide diversity of 
                opinion and who represent a broad spectrum of 
                interests, including hedgers and consumers.
                  (D) Reimbursement.--Members shall be entitled 
                to per diem and travel expense reimbursement by 
                the Commission.
                  (E) FACA.--The Committee shall not be subject 
                to the Federal Advisory Committee Act (5 U.S.C. 
                App.).
          (16) Office of the chief economist.--
                  (A) Establishment.--There is established in 
                the Commission the Office of the Chief 
                Economist.
                  (B) Head.--The Office of the Chief Economist 
                shall be headed by the Chief Economist, who 
                shall be appointed by the Commission and serve 
                at the pleasure of the Commission.
                  (C) Functions.--The Chief Economist shall 
                report directly to the Commission and perform 
                such functions and duties as the Commission may 
                prescribe.
                  (D) Professional staff.--The Commission shall 
                appoint such other economists as may be 
                necessary to assist the Chief Economist in 
                performing such economic analysis, regulatory 
                cost-benefit analysis, or research any member 
                of the Commission may request.
          (17) Strategic technology plan.--
                  (A) In general.--Every 5 years, the 
                Commission shall develop and submit to the 
                Committee on Agriculture of the House of 
                Representatives and the Committee on 
                Agriculture, Nutrition, and Forestry of the 
                Senate a detailed plan focused on the 
                acquisition and use of technology by the 
                Commission.
                  (B) Contents.--The plan shall--
                          (i) include for each related division 
                        or office a detailed technology 
                        strategy focused on market surveillance 
                        and risk detection, market data 
                        collection, aggregation, 
                        interpretation, standardization, 
                        harmonization, normalization, 
                        validation, streamlining or other data 
                        analytic processes, and internal 
                        management and protection of data 
                        collected by the Commission, including 
                        a detailed accounting of how the funds 
                        provided for technology will be used 
                        and the priorities that will apply in 
                        the use of the funds; and
                          (ii) set forth annual goals to be 
                        accomplished and annual budgets needed 
                        to accomplish the goals.
  (b) For the purposes of this Act (but not in any wise 
limiting the foregoing definition of interstate commerce) a 
transaction in respect to any article shall be considered to be 
in interstate commerce if such article is part of that current 
of commerce usual in the commodity trade whereby commodities 
and commodity products and by-products thereof are sent from 
one State with the expectation that they will end their 
transit, after purchase, in another, including, in addition to 
cases within the above general description, all cases where 
purchase or sale is either for shipment to another State, or 
for manufacture within the State and the shipment outside the 
State of the products resulting from such manufacture. Articles 
normally in such current of commerce shall not be considered 
out of such commerce through resort being had to any means or 
device intended to remove transactions in respect thereto from 
the provisions of this Act. For the purpose of this paragraph 
the word ``State'' includes Territory, the District of 
Columbia, possession of the United States, and foreign nation.
  (c) Agreements, Contracts, and Transactions in Foreign 
Currency, Government Securities, and Certain Other 
Commodities.--
          (1) In general.--Except as provided in paragraph (2), 
        nothing in this Act (other than section[,] 5b, or 
        12(e)(2)(B)) governs or applies to an agreement, 
        contract, or transaction in--
                  (A) foreign currency;
                  (B) government securities;
                  (C) security warrants;
                  (D) security rights;
                  (E) resales of installment loan contracts;
                  (F) repurchase transactions in an excluded 
                commodity; or
                  (G) mortgages or mortgage purchase 
                commitments.
          (2) Commission jurisdiction.--
                  (A) Agreements, contracts, and transactions 
                traded on an organized exchange.--This Act 
                applies to, and the Commission shall have 
                jurisdiction over, an agreement, contract, or 
                transaction described in paragraph (1) that 
                is--
                          (i) a contract of sale of a commodity 
                        for future delivery (or an option on 
                        such a contract), or an option on a 
                        commodity (other than foreign currency 
                        or a security or a group or index of 
                        securities), that is executed or traded 
                        on an organized exchange;
                          (ii) a swap; or
                          (iii) an option on foreign currency 
                        executed or traded on an organized 
                        exchange that is not a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934.
                  (B) Agreements, contracts, and transactions 
                in retail foreign currency.--
                          (i) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an agreement, contract, or 
                        transaction in foreign currency that--
                                  (I) is a contract of sale of 
                                a commodity for future delivery 
                                (or an option on such a 
                                contract) or an option (other 
                                than an option executed or 
                                traded on a national securities 
                                exchange registered pursuant to 
                                section 6(a) of the Securities 
                                Exchange Act of 1934 (15 U.S.C. 
                                78f(a))); and
                                  (II) is offered to, or 
                                entered into with, a person 
                                that is not an eligible 
                                contract participant, unless 
                                the counterparty, or the person 
                                offering to be the 
                                counterparty, of the person 
                                is--
                                          (aa) a United States 
                                        financial institution;
                                          (bb)(AA) a broker or 
                                        dealer registered under 
                                        section 15(b) (except 
                                        paragraph (11) thereof) 
                                        or 15C of the 
                                        Securities Exchange Act 
                                        of 1934 (15 U.S.C. 
                                        78o(b), 78o-5); or
                                          (BB) an associated 
                                        person of a broker or 
                                        dealer registered under 
                                        section 15(b) (except 
                                        paragraph (11) thereof) 
                                        or 15C of the 
                                        Securities Exchange Act 
                                        of 1934 (15 U.S.C. 
                                        78o(b), 78o-5) 
                                        concerning the 
                                        financial or securities 
                                        activities of which the 
                                        broker or dealer makes 
                                        and keeps records under 
                                        section 15C(b) or 17(h) 
                                        of the Securities 
                                        Exchange Act of 1934 
                                        (15 U.S.C. 78o-5(b), 
                                        78q(h));
                                          (cc)(AA) a futures 
                                        commission merchant 
                                        that is primarily or 
                                        substantially engaged 
                                        in the business 
                                        activities described in 
                                        section 1a of this Act, 
                                        is registered under 
                                        this Act, is not a 
                                        person described in 
                                        item (bb) of this 
                                        subclause, and 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph; 
                                        or
                                          (BB) an affiliated 
                                        person of a futures 
                                        commission merchant 
                                        that is primarily or 
                                        substantially engaged 
                                        in the business 
                                        activities described in 
                                        section 1a of this Act, 
                                        is registered under 
                                        this Act, and is not a 
                                        person described in 
                                        item (bb) of this 
                                        subclause, if the 
                                        affiliated person 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph 
                                        and is not a person 
                                        described in such item 
                                        (bb), and the futures 
                                        commission merchant 
                                        makes and keeps records 
                                        under section 
                                        4f(c)(2)(B) of this Act 
                                        concerning the futures 
                                        and other financial 
                                        activities of the 
                                        affiliated person;
                                          (dd) a financial 
                                        holding company (as 
                                        defined in section 2 of 
                                        the Bank Holding 
                                        Company Act of 1956); 
                                        or
                                          (ff) a retail foreign 
                                        exchange dealer that 
                                        maintains adjusted net 
                                        capital equal to or in 
                                        excess of the dollar 
                                        amount that applies for 
                                        purposes of clause (ii) 
                                        of this subparagraph 
                                        and is registered in 
                                        such capacity with the 
                                        Commission, subject to 
                                        such terms and 
                                        conditions as the 
                                        Commission shall 
                                        prescribe, and is a 
                                        member of a futures 
                                        association registered 
                                        under section 17.
                          (ii) The dollar amount that applies 
                        for purposes of this clause is--
                                  (I) $10,000,000, beginning 
                                120 days after the date of the 
                                enactment of this clause;
                                  (II) $15,000,000, beginning 
                                240 days after such date of 
                                enactment; and
                                  (III) $20,000,000, beginning 
                                360 days after such date of 
                                enactment.
                          (iii) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II) of this 
                        subparagraph, agreements, contracts, or 
                        transactions described in clause (i) of 
                        this subparagraph, and accounts or 
                        pooled investment vehicles described in 
                        clause (vi), shall be subject to 
                        subsection (a)(1)(B) of this section 
                        and sections 4(b), 4b, 4c(b), 4o, 6(c) 
                        and 6(d) (except to the extent that 
                        sections 6(c) and 6(d) prohibit 
                        manipulation of the market price of any 
                        commodity in interstate commerce, or 
                        for future delivery on or subject to 
                        the rules of any market), 6c, 6d, 8(a), 
                        13(a), and 13(b) if the agreements, 
                        contracts, or transactions are offered, 
                        or entered into, by a person that is 
                        registered as a futures commission 
                        merchant or retail foreign exchange 
                        dealer, or an affiliated person of a 
                        futures commission merchant registered 
                        under this Act that is not also a 
                        person described in any of item (aa), 
                        (bb), (ee), or (ff) of clause (i)(II) 
                        of this subparagraph.
                          (iv)(I) Notwithstanding items (cc) 
                        and (gg) of clause (i)(II), a person, 
                        unless registered in such capacity as 
                        the Commission by rule, regulation, or 
                        order shall determine and a member of a 
                        futures association registered under 
                        section 17, shall not--
                                  (aa) solicit or accept orders 
                                from any person that is not an 
                                eligible contract participant 
                                in connection with agreements, 
                                contracts, or transactions 
                                described in clause (i) entered 
                                into with or to be entered into 
                                with a person who is not 
                                described in item (aa), (bb), 
                                (ee), or (ff) of clause 
                                (i)(II);
                                  (bb) exercise discretionary 
                                trading authority or obtain 
                                written authorization to 
                                exercise discretionary trading 
                                authority over any account for 
                                or on behalf of any person that 
                                is not an eligible contract 
                                participant in connection with 
                                agreements, contracts, or 
                                transactions described in 
                                clause (i) entered into with or 
                                to be entered into with a 
                                person who is not described in 
                                item (aa), (bb), (ee), or (ff) 
                                of clause (i)(II); or
                                  (cc) operate or solicit 
                                funds, securities, or property 
                                for any pooled investment 
                                vehicle that is not an eligible 
                                contract participant in 
                                connection with agreements, 
                                contracts, or transactions 
                                described in clause (i) entered 
                                into with or to be entered into 
                                with a person who is not 
                                described in item (aa), (bb), 
                                (ee), or (ff) of clause 
                                (i)(II).
                          (II) Subclause (I) of this clause 
                        shall not apply to--
                                  (aa) any person described in 
                                any of item (aa), (bb), (ee), 
                                or (ff) of clause (i)(II);
                                  (bb) any such person's 
                                associated persons; or
                                  (cc) any person who would be 
                                exempt from registration if 
                                engaging in the same activities 
                                in connection with transactions 
                                conducted on or subject to the 
                                rules of a contract market [or 
                                a derivatives transaction 
                                execution facility].
                          (III) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II), the Commission 
                        may make, promulgate, and enforce such 
                        rules and regulations as, in the 
                        judgment of the Commission, are 
                        reasonably necessary to effectuate any 
                        of the provisions of, or to accomplish 
                        any of the purposes of, this Act in 
                        connection with the activities of 
                        persons subject to subclause (I).
                          (IV) Subclause (III) of this clause 
                        shall not apply to--
                                  (aa) any person described in 
                                any of item (aa) through (ff) 
                                of clause (i)(II);
                                  (bb) any such person's 
                                associated persons; or
                                  (cc) any person who would be 
                                exempt from registration if 
                                engaging in the same activities 
                                in connection with transactions 
                                conducted on or subject to the 
                                rules of a contract market [or 
                                a derivatives transaction 
                                execution facility].
                          (v) Notwithstanding items (cc) and 
                        (gg) of clause (i)(II), the Commission 
                        may make, promulgate, and enforce such 
                        rules and regulations as, in the 
                        judgment of the Commission, are 
                        reasonably necessary to effectuate any 
                        of the provisions of, or to accomplish 
                        any of the purposes of, this Act in 
                        connection with agreements, contracts, 
                        or transactions described in clause (i) 
                        which are offered, or entered into, by 
                        a person described in item (cc) or (gg) 
                        of clause (i)(II).
                          (vi) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an account or pooled investment 
                        vehicle that is offered for the purpose 
                        of trading, or that trades, any 
                        agreement, contract, or transaction in 
                        foreign currency described in clause 
                        (i).
                  (C)(i)(I) This subparagraph shall apply to 
                any agreement, contract, or transaction in 
                foreign currency that is--
                                  (aa) offered to, or entered 
                                into with, a person that is not 
                                an eligible contract 
                                participant (except that this 
                                subparagraph shall not apply if 
                                the counterparty, or the person 
                                offering to be the 
                                counterparty, of the person 
                                that is not an eligible 
                                contract participant is a 
                                person described in any of item 
                                (aa), (bb), (ee), or (ff) of 
                                subparagraph (B)(i)(II)); and
                                  (bb) offered, or entered 
                                into, on a leveraged or 
                                margined basis, or financed by 
                                the offeror, the counterparty, 
                                or a person acting in concert 
                                with the offeror or 
                                counterparty on a similar 
                                basis.
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) a security that is not a 
                        security futures product; or
                          (bb) a contract of sale that--
                                  (AA) results in actual 
                                delivery within 2 days; or
                                  (BB) creates an enforceable 
                                obligation to deliver between a 
                                seller and buyer that have the 
                                ability to deliver and accept 
                                delivery, respectively, in 
                                connection with their line of 
                                business.
                  (ii)(I) Agreements, contracts, or 
                transactions described in clause (i) of this 
                subparagraph, and accounts or pooled investment 
                vehicles described in clause (vii), shall be 
                subject to subsection (a)(1)(B) of this section 
                and sections 4(b), 4b, 4c(b), 4o, 6(c) and 6(d) 
                (except to the extent that sections 6(c) and 
                6(d) prohibit manipulation of the market price 
                of any commodity in interstate commerce, or for 
                future delivery on or subject to the rules of 
                any market), 6c, 6d, 8(a), 13(a), and 13(b).
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) any person described in any of 
                        item (aa), (bb), (ee), or (ff) of 
                        subparagraph (B)(i)(II); or
                          (bb) any such person's associated 
                        persons.
                  (III) The Commission may make, promulgate, 
                and enforce such rules and regulations as, in 
                the judgment of the Commission, are reasonably 
                necessary to effectuate any of the provisions 
                of or to accomplish any of the purposes of this 
                Act in connection with agreements, contracts, 
                or transactions described in clause (i) of this 
                subparagraph if the agreements, contracts, or 
                transactions are offered, or entered into, by a 
                person that is not described in item (aa) 
                through (ff) of subparagraph (B)(i)(II).
                  (iii)(I) A person, unless registered in such 
                capacity as the Commission by rule, regulation, 
                or order shall determine and a member of a 
                futures association registered under section 
                17, shall not--
                          (aa) solicit or accept orders from 
                        any person that is not an eligible 
                        contract participant in connection with 
                        agreements, contracts, or transactions 
                        described in clause (i) of this 
                        subparagraph entered into with or to be 
                        entered into with a person who is not 
                        described in item (aa), (bb), (ee), or 
                        (ff) of subparagraph (B)(i)(II);
                          (bb) exercise discretionary trading 
                        authority or obtain written 
                        authorization to exercise written 
                        trading authority over any account for 
                        or on behalf of any person that is not 
                        an eligible contract participant in 
                        connection with agreements, contracts, 
                        or transactions described in clause (i) 
                        of this subparagraph entered into with 
                        or to be entered into with a person who 
                        is not described in item (aa), (bb), 
                        (ee), or (ff) of subparagraph 
                        (B)(i)(II); or
                          (cc) operate or solicit funds, 
                        securities, or property for any pooled 
                        investment vehicle that is not an 
                        eligible contract participant in 
                        connection with agreements, contracts, 
                        or transactions described in clause (i) 
                        of this subparagraph entered into with 
                        or to be entered into with a person who 
                        is not described in item (aa), (bb), 
                        (ee), or (ff) of subparagraph 
                        (B)(i)(II).
                  (II) Subclause (I) of this clause shall not 
                apply to--
                          (aa) any person described in item 
                        (aa), (bb), (ee), or (ff) of 
                        subparagraph (B)(i)(II);
                          (bb) any such person's associated 
                        persons; or
                          (cc) any person who would be exempt 
                        from registration if engaging in the 
                        same activities in connection with 
                        transactions conducted on or subject to 
                        the rules of a contract market [or a 
                        derivatives transaction execution 
                        facility].
                  (III) The Commission may make, promulgate, 
                and enforce such rules and regulations as, in 
                the judgment of the Commission, are reasonably 
                necessary to effectuate any of the provisions 
                of, or to accomplish any of the purposes of, 
                this Act in connection with the activities of 
                persons subject to subclause (I).
                  (IV) Subclause (III) of this clause shall not 
                apply to--
                          (aa) any person described in item 
                        (aa) through (ff) of subparagraph 
                        (B)(i)(II);
                          (bb) any such person's associated 
                        persons; or
                          (cc) any person who would be exempt 
                        from registration if engaging in the 
                        same activities in connection with 
                        transactions conducted on or subject to 
                        the rules of a contract market [or a 
                        derivatives transaction execution 
                        facility].
                  (iv) Sections 4(b) and 4b shall apply to any 
                agreement, contract, or transaction described 
                in clause (i) of this subparagraph as if the 
                agreement, contract, or transaction were a 
                contract of sale of a commodity for future 
                delivery.
                  (v) This subparagraph shall not be construed 
                to limit any jurisdiction that the Commission 
                may otherwise have under any other provision of 
                this Act over an agreement, contract, or 
                transaction that is a contract of sale of a 
                commodity for future delivery.
                  (vi) This subparagraph shall not be construed 
                to limit any jurisdiction that the Commission 
                or the Securities and Exchange Commission may 
                otherwise have under any other provision of 
                this Act with respect to security futures 
                products and persons effecting transactions in 
                security futures products.
                          (vii) This Act applies to, and the 
                        Commission shall have jurisdiction 
                        over, an account or pooled investment 
                        vehicle that is offered for the purpose 
                        of trading, or that trades, any 
                        agreement, contract, or transaction in 
                        foreign currency described in clause 
                        (i).
                  (D) Retail commodity transactions.--
                          (i) Applicability.--Except as 
                        provided in clause (ii), this 
                        subparagraph shall apply to any 
                        agreement, contract, or transaction in 
                        any commodity that is--
                                  (I) entered into with, or 
                                offered to (even if not entered 
                                into with), a person that is 
                                not an eligible contract 
                                participant or eligible 
                                commercial entity; and
                                  (II) entered into, or offered 
                                (even if not entered into), on 
                                a leveraged or margined basis, 
                                or financed by the offeror, the 
                                counterparty, or a person 
                                acting in concert with the 
                                offeror or counterparty on a 
                                similar basis.
                          (ii) Exceptions.--This subparagraph 
                        shall not apply to--
                                  (I) an agreement, contract, 
                                or transaction described in 
                                paragraph (1) or subparagraphs 
                                (A), (B), or (C), including any 
                                agreement, contract, or 
                                transaction specifically 
                                excluded from subparagraph (A), 
                                (B), or (C);
                                  (II) any security;
                                  (III) a contract of sale 
                                that--
                                          (aa) results in 
                                        actual delivery within 
                                        28 days or such other 
                                        longer period as the 
                                        Commission may 
                                        determine by rule or 
                                        regulation based upon 
                                        the typical commercial 
                                        practice in cash or 
                                        spot markets for the 
                                        commodity involved; or
                                          (bb) creates an 
                                        enforceable obligation 
                                        to deliver between a 
                                        seller and a buyer that 
                                        have the ability to 
                                        deliver and accept 
                                        delivery, respectively, 
                                        in connection with the 
                                        line of business of the 
                                        seller and buyer; or
                                  (IV) an agreement, contract, 
                                or transaction that is listed 
                                on a national securities 
                                exchange registered under 
                                section 6(a) of the Securities 
                                Exchange Act of 1934 (15 U.S.C. 
                                78f(a)); or
                                  (V) an identified banking 
                                product, as defined in section 
                                402(b) of the Legal Certainty 
                                for Bank Products Act of 2000 
                                (7 U.S.C.27(b)).
                          (iii) Enforcement.--Sections 4(a), 
                        4(b), and 4b apply to any agreement, 
                        contract, or transaction described in 
                        clause (i), as if the agreement, 
                        contract, or transaction was a contract 
                        of sale of a commodity for future 
                        delivery.
                          (iv) Eligible commercial entity.--For 
                        purposes of this subparagraph, an 
                        agricultural producer, packer, or 
                        handler shall be considered to be an 
                        eligible commercial entity for any 
                        agreement, contract, or transaction for 
                        a commodity in connection with the line 
                        of business of the agricultural 
                        producer, packer, or handler.
                  (E) Prohibition.--
                          (i) Definition of federal regulatory 
                        agency.--In this subparagraph, the term 
                        ``Federal regulatory agency'' means--
                                  (I) the Commission;
                                  (II) the Securities and 
                                Exchange Commission;
                                  (III) an appropriate Federal 
                                banking agency;
                                  (IV) the National Credit 
                                Union Association; and
                                  (V) the Farm Credit 
                                Administration.
                          (ii) Prohibition.--
                                  (I) In general.--Except as 
                                provided in subclause (II), a 
                                person described in 
                                subparagraph (B)(i)(II) for 
                                which there is a Federal 
                                regulatory agency shall not 
                                offer to, or enter into with, a 
                                person that is not an eligible 
                                contract participant, any 
                                agreement, contract, or 
                                transaction in foreign currency 
                                described in subparagraph 
                                (B)(i)(I) except pursuant to a 
                                rule or regulation of a Federal 
                                regulatory agency allowing the 
                                agreement, contract, or 
                                transaction under such terms 
                                and conditions as the Federal 
                                regulatory agency shall 
                                prescribe.
                                  (II) Effective date.--With 
                                regard to persons described in 
                                subparagraph (B)(i)(II) for 
                                which a Federal regulatory 
                                agency has issued a proposed 
                                rule concerning agreements, 
                                contracts, or transactions in 
                                foreign currency described in 
                                subparagraph (B)(i)(I) prior to 
                                the date of enactment of this 
                                subclause, subclause (I) shall 
                                take effect 90 days after the 
                                date of enactment of this 
                                subclause.
                          (iii) Requirements of rules and 
                        regulations.--
                                  (I) In general.--The rules 
                                and regulations described in 
                                clause (ii) shall prescribe 
                                appropriate requirements with 
                                respect to--
                                          (aa) disclosure;
                                          (bb) recordkeeping;
                                          (cc) capital and 
                                        margin;
                                          (dd) reporting;
                                          (ee) business 
                                        conduct;
                                          (ff) documentation; 
                                        and
                                          (gg) such other 
                                        standards or 
                                        requirements as the 
                                        Federal regulatory 
                                        agency shall determine 
                                        to be necessary.
                                  (II) Treatment.--The rules or 
                                regulations described in clause 
                                (ii) shall treat all 
                                agreements, contracts, and 
                                transactions in foreign 
                                currency described in 
                                subparagraph (B)(i)(I), and all 
                                agreements, contracts, and 
                                transactions in foreign 
                                currency that are functionally 
                                or economically similar to 
                                agreements, contracts, or 
                                transactions described in 
                                subparagraph (B)(i)(I), 
                                similarly.
  (d) Swaps.--Nothing in this Act (other than subparagraphs 
(A), (B), (C), (D), (G), and (H) of subsection (a)(1), 
subsections (f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 
2(e), 2(h), 4(c), 4a, 4b, and 4b-1, subsections (a), (b), and 
[(g) of] (e) of section 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 
4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, 
subsections (c) and (d) of section 6, sections 6c, 6d, 8, 8a, 
and 9, subsections (e)(2), (f), and (h) of section 12, 
subsections (a) and (b) of section 13, sections 17, 20, 21, and 
22(a)(4), and any other provision of this Act that is 
applicable to registered entities or Commission registrants) 
governs or applies to a swap.
  (e) Limitation on Participation.--It shall be unlawful for 
any person, other than an eligible contract participant, to 
enter into a swap unless the swap is entered into on, or 
subject to the rules of, a board of trade designated as a 
contract market under section 5.
  (f) Exclusion for Qualifying Hybrid Instruments.--
          (1) In general.--Nothing in this Act (other than 
        section 12(e)(2)(B)) governs or is applicable to a 
        hybrid instrument that is predominantly a security.
          (2) Predominance.--A hybrid instrument shall be 
        considered to be predominantly a security if--
                  (A) the issuer of the hybrid instrument 
                receives payment in full of the purchase price 
                of the hybrid instrument, substantially 
                contemporaneously with delivery of the hybrid 
                instrument;
                  (B) the purchaser or holder of the hybrid 
                instrument is not required to make any payment 
                to the issuer in addition to the purchase price 
                paid under subparagraph (A), whether as margin, 
                settlement payment, or otherwise, during the 
                life of the hybrid instrument or at maturity;
                  (C) the issuer of the hybrid instrument is 
                not subject by the terms of the instrument to 
                mark-to-market margining requirements; and
                  (D) the hybrid instrument is not marketed as 
                a contract of sale of a commodity for future 
                delivery (or option on such a contract) subject 
                to this Act.
          (3) Mark-to-market margining requirements.--For the 
        purposes of paragraph (2)(C), mark-to-market margining 
        requirements do not include the obligation of an issuer 
        of a secured debt instrument to increase the amount of 
        collateral held in pledge for the benefit of the 
        purchaser of the secured debt instrument to secure the 
        repayment obligations of the issuer under the secured 
        debt instrument.
  (g) Application of Commodity Futures Laws.--
          (1) No provision of this Act shall be construed as 
        implying or creating any presumption that--
                  (A) any agreement, contract, or transaction 
                that is excluded from this Act under section 
                2(c), 2(d), 2(e), 2(f), or 2(g) of this Act or 
                title IV of the Commodity Futures Modernization 
                Act of 2000, or exempted under section 2(h) or 
                4(c) of this Act; or
                  (B) any agreement, contract, or transaction, 
                not otherwise subject to this Act, that is not 
                so excluded or exempted,
        is or would otherwise be subject to this Act.
          (2) No provision of, or amendment made by, the 
        Commodity Futures Modernization Act of 2000 shall be 
        construed as conferring jurisdiction on the Commission 
        with respect to any such agreement, contract, or 
        transaction, except as expressly provided in section 5b 
        of this Act.
  (h) Clearing Requirement.--
          (1) In general.--
                  (A) Standard for clearing.--It shall be 
                unlawful for any person to engage in a swap 
                unless that person submits such swap for 
                clearing to a derivatives clearing organization 
                that is registered under this Act or a 
                derivatives clearing organization that is 
                exempt from registration under this Act if the 
                swap is required to be cleared.
                  (B) Open access.--The rules of a derivatives 
                clearing organization described in subparagraph 
                (A) shall--
                          (i) prescribe that all swaps (but not 
                        contracts of sale of a commodity for 
                        future delivery or options on such 
                        contracts) submitted to the derivatives 
                        clearing organization with the same 
                        terms and conditions are economically 
                        equivalent within the derivatives 
                        clearing organization and may be offset 
                        with each other within the derivatives 
                        clearing organization; and
                          (ii) provide for non-discriminatory 
                        clearing of a swap (but not a contract 
                        of sale of a commodity for future 
                        delivery or option on such contract) 
                        executed bilaterally or on or through 
                        the rules of an unaffiliated designated 
                        contract market or swap execution 
                        facility.
          (2) Commission review.--
                  (A) Commission-initiated review.--
                          (i) The Commission on an ongoing 
                        basis shall review each swap, or any 
                        group, category, type, or class of 
                        swaps to make a determination as to 
                        whether the swap or group, category, 
                        type, or class of swaps should be 
                        required to be cleared.
                          (ii) The Commission shall provide at 
                        least a 30-day public comment period 
                        regarding any determination made under 
                        clause (i).
                  (B) Swap submissions.--
                          (i) A derivatives clearing 
                        organization shall submit to the 
                        Commission each swap, or any group, 
                        category, type, or class of swaps that 
                        it plans to accept for clearing, and 
                        provide notice to its members (in a 
                        manner to be determined by the 
                        Commission) of the submission.
                          (ii) Any swap or group, category, 
                        type, or class of swaps listed for 
                        clearing by a derivative clearing 
                        organization as of the date of 
                        enactment of this subsection shall be 
                        considered submitted to the Commission.
                          (iii) The Commission shall--
                                  (I) make available to the 
                                public submissions received 
                                under clauses (i) and (ii);
                                  (II) review each submission 
                                made under clauses (i) and 
                                (ii), and determine whether the 
                                swap, or group, category, type, 
                                or class of swaps described in 
                                the submission is required to 
                                be cleared; and
                                  (III) provide at least a 30-
                                day public comment period 
                                regarding its determination as 
                                to whether the clearing 
                                requirement under paragraph 
                                (1)(A) shall apply to the 
                                submission.
                  (C) Deadline.--The Commission shall make its 
                determination under subparagraph (B)(iii) not 
                later than 90 days after receiving a submission 
                made under subparagraphs (B)(i) and (B)(ii), 
                unless the submitting derivatives clearing 
                organization agrees to an extension for the 
                time limitation established under this 
                subparagraph.
                  (D) Determination.--
                          (i) In reviewing a submission made 
                        under subparagraph (B), the Commission 
                        shall review whether the submission is 
                        consistent with section 5b(c)(2).
                          (ii) In reviewing a swap, group of 
                        swaps, or class of swaps pursuant to 
                        subparagraph (A) or a submission made 
                        under subparagraph (B), the Commission 
                        shall take into account the following 
                        factors:
                                  (I) The existence of 
                                significant outstanding 
                                notional exposures, trading 
                                liquidity, and adequate pricing 
                                data.
                                  (II) The availability of rule 
                                framework, capacity, 
                                operational expertise and 
                                resources, and credit support 
                                infrastructure to clear the 
                                contract on terms that are 
                                consistent with the material 
                                terms and trading conventions 
                                on which the contract is then 
                                traded.
                                  (III) The effect on the 
                                mitigation of systemic risk, 
                                taking into account the size of 
                                the market for such contract 
                                and the resources of the 
                                derivatives clearing 
                                organization available to clear 
                                the contract.
                                  (IV) The effect on 
                                competition, including 
                                appropriate fees and charges 
                                applied to clearing.
                                  (V) The existence of 
                                reasonable legal certainty in 
                                the event of the insolvency of 
                                the relevant derivatives 
                                clearing organization or 1 or 
                                more of its clearing members 
                                with regard to the treatment of 
                                customer and swap counterparty 
                                positions, funds, and property.
                          (iii) In making a determination under 
                        subparagraph (A) or (B)(iii) that the 
                        clearing requirement shall apply, the 
                        Commission may require such terms and 
                        conditions to the requirement as the 
                        Commission determines to be 
                        appropriate.
                  (E) Rules.--Not later than 1 year after the 
                date of the enactment of this subsection, the 
                Commission shall adopt rules for a derivatives 
                clearing organization's submission for review, 
                pursuant to this paragraph, of a swap, or a 
                group, category, type, or class of swaps, that 
                it seeks to accept for clearing. Nothing in 
                this subparagraph limits the Commission from 
                making a determination under subparagraph 
                (B)(iii) for swaps described in subparagraph 
                (B)(ii).
          (3) Stay of clearing requirement.--
                  (A) In general.--After making a determination 
                pursuant to paragraph (2)(B), the Commission, 
                on application of a counterparty to a swap or 
                on its own initiative, may stay the clearing 
                requirement of paragraph (1) until the 
                Commission completes a review of the terms of 
                the swap (or the group, category, type, or 
                class of swaps) and the clearing arrangement.
                  (B) Deadline.--The Commission shall complete 
                a review undertaken pursuant to subparagraph 
                (A) not later than 90 days after issuance of 
                the stay, unless the derivatives clearing 
                organization that clears the swap, or group, 
                category, type, or class of swaps agrees to an 
                extension of the time limitation established 
                under this subparagraph.
                  (C) Determination.--Upon completion of the 
                review undertaken pursuant to subparagraph (A), 
                the Commission may--
                          (i) determine, unconditionally or 
                        subject to such terms and conditions as 
                        the Commission determines to be 
                        appropriate, that the swap, or group, 
                        category, type, or class of swaps must 
                        be cleared pursuant to this subsection 
                        if it finds that such clearing is 
                        consistent with paragraph (2)(D); or
                          (ii) determine that the clearing 
                        requirement of paragraph (1) shall not 
                        apply to the swap, or group, category, 
                        type, or class of swaps.
                  (D) Rules.--Not later than 1 year after the 
                date of the enactment of the Wall Street 
                Transparency and Accountability Act of 2010, 
                the Commission shall adopt rules for reviewing, 
                pursuant to this paragraph, a derivatives 
                clearing organization's clearing of a swap, or 
                a group, category, type, or class of swaps, 
                that it has accepted for clearing.
          (4) Prevention of evasion.--
                  (A) In general.--The Commission shall 
                prescribe rules under this subsection (and 
                issue interpretations of rules prescribed under 
                this subsection) as determined by the 
                Commission to be necessary to prevent evasions 
                of the mandatory clearing requirements under 
                this Act.
                  (B) Duty of commission to investigate and 
                take certain actions.--To the extent the 
                Commission finds that a particular swap, group, 
                category, type, or class of swaps would 
                otherwise be subject to mandatory clearing but 
                no derivatives clearing organization has listed 
                the swap, group, category, type, or class of 
                swaps for clearing, the Commission shall--
                          (i) investigate the relevant facts 
                        and circumstances;
                          (ii) within 30 days issue a public 
                        report containing the results of the 
                        investigation; and
                          (iii) take such actions as the 
                        Commission determines to be necessary 
                        and in the public interest, which may 
                        include requiring the retaining of 
                        adequate margin or capital by parties 
                        to the swap, group, category, type, or 
                        class of swaps.
                  (C) Effect on authority.--Nothing in this 
                paragraph--
                          (i) authorizes the Commission to 
                        adopt rules requiring a derivatives 
                        clearing organization to list for 
                        clearing a swap, group, category, type, 
                        or class of swaps if the clearing of 
                        the swap, group, category, type, or 
                        class of swaps would threaten the 
                        financial integrity of the derivatives 
                        clearing organization; and
                          (ii) affects the authority of the 
                        Commission to enforce the open access 
                        provisions of paragraph (1)(B) with 
                        respect to a swap, group, category, 
                        type, or class of swaps that is listed 
                        for clearing by a derivatives clearing 
                        organization.
          (5) Reporting transition rules.--Rules adopted by the 
        Commission under this section shall provide for the 
        reporting of data, as follows:
                  (A) Swaps entered into before the date of the 
                enactment of this subsection shall be reported 
                to a registered swap data repository or the 
                Commission no later than 180 days after the 
                effective date of this subsection.
                  (B) Swaps entered into on or after such date 
                of enactment shall be reported to a registered 
                swap data repository or the Commission no later 
                than the later of--
                          (i) 90 days after such effective 
                        date; or
                          (ii) such other time after entering 
                        into the swap as the Commission may 
                        prescribe by rule or regulation.
          (6) Clearing transition rules.--
                  (A) Swaps entered into before the date of the 
                enactment of this subsection are exempt from 
                the clearing requirements of this subsection if 
                reported pursuant to paragraph (5)(A).
                  (B) Swaps entered into before application of 
                the clearing requirement pursuant to this 
                subsection are exempt from the clearing 
                requirements of this subsection if reported 
                pursuant to paragraph (5)(B).
          (7) Exceptions.--
                  (A) In general.--The requirements of 
                paragraph (1)(A) shall not apply to a swap if 1 
                of the counterparties to the swap--
                          (i) is not a financial entity;
                          (ii) is using swaps to hedge or 
                        mitigate commercial risk; and
                          (iii) notifies the Commission, in a 
                        manner set forth by the Commission, how 
                        it generally meets its financial 
                        obligations associated with entering 
                        into non-cleared swaps.
                  (B) Option to clear.--The application of the 
                clearing exception in subparagraph (A) is 
                solely at the discretion of the counterparty to 
                the swap that meets the conditions of clauses 
                (i) through (iii) of subparagraph (A).
                  (C) Financial entity definition.--
                          (i) In general.--For the purposes of 
                        this paragraph, the term ``financial 
                        entity'' means--
                                  (I) a swap dealer;
                                  (II) a security-based swap 
                                dealer;
                                  (III) a major swap 
                                participant;
                                  (IV) a major security-based 
                                swap participant;
                                  (V) a commodity pool;
                                  (VI) a private fund as 
                                defined in section 202(a) of 
                                the Investment Advisers Act of 
                                1940 (15 U.S.C. 80-b-2(a));
                                  (VII) an employee benefit 
                                plan as defined in paragraphs 
                                (3) and (32) of section 3 of 
                                the Employee Retirement Income 
                                Security Act of 1974 (29 U.S.C. 
                                1002);
                                  (VIII) a person predominantly 
                                engaged in activities that are 
                                in the business of banking, or 
                                in activities that are 
                                financial in nature, as defined 
                                in section 4(k) of the Bank 
                                Holding Company Act of 1956.
                          (ii) Exclusion.--The Commission shall 
                        consider whether to exempt small banks, 
                        savings associations, farm credit 
                        system institutions, and credit unions, 
                        including--
                                  (I) depository institutions 
                                with total assets of 
                                $10,000,000,000 or less;
                                  (II) farm credit system 
                                institutions with total assets 
                                of $10,000,000,000 or less; or
                                  (III) credit unions with 
                                total assets of $10,000,000,000 
                                or less.
                          [(iii) Limitation.--Such definition 
                        shall not include an entity whose 
                        primary business is providing 
                        financing, and uses derivatives for the 
                        purpose of hedging underlying 
                        commercial risks related to interest 
                        rate and foreign currency exposures, 90 
                        percent or more of which arise from 
                        financing that facilitates the purchase 
                        or lease of products, 90 percent or 
                        more of which are manufactured by the 
                        parent company or another subsidiary of 
                        the parent company.]
                          (iii) Limitation.--Such definition 
                        shall not include an entity--
                                  (I) whose primary business is 
                                providing financing, and who 
                                uses derivatives for the 
                                purpose of hedging underlying 
                                commercial risks related to 
                                interest rate and foreign 
                                currency exposures, 90 percent 
                                or more of which arise from 
                                financing that facilitates the 
                                purchase or lease of products, 
                                90 percent or more of which are 
                                manufactured by the parent 
                                company or another subsidiary 
                                of the parent company; or
                                  (II) who is not supervised by 
                                a prudential regulator, and is 
                                not described in any of 
                                subclauses (I) through (VII) of 
                                clause (i), and--
                                          (aa) is a commercial 
                                        market participant; or
                                          (bb) enters into 
                                        swaps, contracts for 
                                        future delivery, and 
                                        other derivatives on 
                                        behalf of, or to hedge 
                                        or mitigate the 
                                        commercial risk of, 
                                        whether directly or in 
                                        the aggregate, 
                                        affiliates that are not 
                                        so supervised or 
                                        described.
                          (iv) Holding companies.--A 
                        determination made by the Commission 
                        under clause (ii) shall, with respect 
                        to small banks and savings 
                        associations, also apply to their 
                        respective bank holding company (as 
                        defined in section 2 of the Bank 
                        Holding Company Act of 1956), or 
                        savings and loan holding company (as 
                        defined in section 10 of the Home 
                        Owners' Loan Act of 1933)), if the 
                        total consolidated assets of the 
                        holding company are no greater than the 
                        asset threshold set by the Commission 
                        in determining small bank and savings 
                        association eligibility under clause 
                        (ii).
                  (D) Treatment of affiliates.--
                          [(i) In general.--An affiliate of a 
                        person that qualifies for an exception 
                        under subparagraph (A) (including 
                        affiliate entities predominantly 
                        engaged in providing financing for the 
                        purchase of the merchandise or 
                        manufactured goods of the person) may 
                        qualify for the exception only if the 
                        affiliate, acting on behalf of the 
                        person and as an agent, uses the swap 
                        to hedge or mitigate the commercial 
                        risk of the person or other affiliate 
                        of the person that is not a financial 
                        entity.]
                          (i) In general.--An affiliate of a 
                        person that qualifies for an exception 
                        under subparagraph (A) (including an 
                        affiliate entity predominantly engaged 
                        in providing financing for the purchase 
                        of the merchandise or manufactured 
                        goods of the person) may qualify for 
                        the exception only if the affiliate 
                        enters into the swap to hedge or 
                        mitigate the commercial risk of the 
                        person or other affiliate of the person 
                        that is not a financial entity, 
                        provided that if the hedge or 
                        mitigation of such commercial risk is 
                        addressed by entering into a swap with 
                        a swap dealer or major swap 
                        participant, an appropriate credit 
                        support measure or other mechanism must 
                        be utilized.
                          (ii) Prohibition relating to certain 
                        affiliates.--The exception in clause 
                        (i) shall not apply if the affiliate 
                        is--
                                  (I) a swap dealer;
                                  (II) a security-based swap 
                                dealer;
                                  (III) a major swap 
                                participant;
                                  (IV) a major security-based 
                                swap participant;
                                  (V) an issuer that would be 
                                an investment company, as 
                                defined in section 3 of the 
                                Investment Company Act of 1940 
                                (15 U.S.C. 80a-3), but for 
                                paragraph (1) or (7) of 
                                subsection (c) of that Act (15 
                                U.S.C. 80a-3(c));
                                  (VI) a commodity pool; or
                                  (VII) a bank holding company 
                                with over $50,000,000,000 in 
                                consolidated assets.
                          (iii) Transition rule for 
                        affiliates.--An affiliate, subsidiary, 
                        or a wholly owned entity of a person 
                        that qualifies for an exception under 
                        subparagraph (A) and is predominantly 
                        engaged in providing financing for the 
                        purchase or lease of merchandise or 
                        manufactured goods of the person shall 
                        be exempt from the margin requirement 
                        described in section 4s(e) and the 
                        clearing requirement described in 
                        paragraph (1) with regard to swaps 
                        entered into to mitigate the risk of 
                        the financing activities for not less 
                        than a 2-year period beginning on the 
                        date of enactment of this clause.
                  (E) Election of counterparty.--
                          (i) Swaps required to be cleared.--
                        With respect to any swap that is 
                        subject to the mandatory clearing 
                        requirement under this subsection and 
                        entered into by a swap dealer or a 
                        major swap participant with a 
                        counterparty that is not a swap dealer, 
                        major swap participant, security-based 
                        swap dealer, or major security-based 
                        swap participant, the counterparty 
                        shall have the sole right to select the 
                        derivatives clearing organization at 
                        which the swap will be cleared.
                          (ii) Swaps not required to be 
                        cleared.--With respect to any swap that 
                        is not subject to the mandatory 
                        clearing requirement under this 
                        subsection and entered into by a swap 
                        dealer or a major swap participant with 
                        a counterparty that is not a swap 
                        dealer, major swap participant, 
                        security-based swap dealer, or major 
                        security-based swap participant, the 
                        counterparty--
                                  (I) may elect to require 
                                clearing of the swap; and
                                  (II) shall have the sole 
                                right to select the derivatives 
                                clearing organization at which 
                                the swap will be cleared.
                  (F) Abuse of exception.--The Commission may 
                prescribe such rules or issue interpretations 
                of the rules as the Commission determines to be 
                necessary to prevent abuse of the exceptions 
                described in this paragraph. The Commission may 
                also request information from those persons 
                claiming the clearing exception as necessary to 
                prevent abuse of the exceptions described in 
                this paragraph.
          (8) Trade execution.--
                  (A) In general.--With respect to transactions 
                involving swaps subject to the clearing 
                requirement of paragraph (1), counterparties 
                shall--
                          (i) execute the transaction on a 
                        board of trade designated as a contract 
                        market under section 5; or
                          (ii) execute the transaction on a 
                        swap execution facility registered 
                        under 5h or a swap execution facility 
                        that is exempt from registration under 
                        section [5h(f) of this Act] 5h(g).
                  (B) Exception.--The requirements of clauses 
                (i) and (ii) of subparagraph (A) shall not 
                apply if no board of trade or swap execution 
                facility makes the swap available to trade or 
                for swap transactions subject to the clearing 
                exception under paragraph (7).
  (i) Applicability.--The provisions of this Act relating to 
swaps that were enacted by the Wall Street Transparency and 
Accountability Act of 2010 (including any rule prescribed or 
regulation promulgated under that Act), shall not apply to 
activities outside the United States unless those activities--
          (1) have a direct and significant connection with 
        activities in, or effect on, commerce of the United 
        States; or
          (2) contravene such rules or regulations as the 
        Commission may prescribe or promulgate as are necessary 
        or appropriate to prevent the evasion of any provision 
        of this Act that was enacted by the Wall Street 
        Transparency and Accountability Act of 2010.
  (j) Committee Approval by Board.--Exemptions from the 
requirements of subsection (h)(1) to clear a swap and 
subsection (h)(8) to execute a swap through a board of trade or 
swap execution facility shall be available to a counterparty 
that is an issuer of securities that are registered under 
section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
78l) or that is required to file reports pursuant to section 
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o) 
only if an appropriate committee of the issuer's board or 
governing body has reviewed and approved its decision to enter 
into swaps that are subject to such exemptions.

           *       *       *       *       *       *       *

  Sec. 4. (a) Unless exempted by the Commission pursuant to 
subsection (c) or by subsection (e), it shall be unlawful for 
any person to offer to enter into, to enter into, to execute, 
to confirm the execution of, or to conduct any office or 
business anywhere in the United States, its territories or 
possessions, for the purpose of soliciting, or accepting any 
order for, or otherwise dealing in, any transaction in, or in 
connection with, a contract for the purchase or sale of a 
commodity for future delivery (other than a contract which is 
made on or subject to the rules of a board of trade, exchange, 
or market located outside the United States, its territories or 
possessions) unless--
          (1) such transaction is conducted on or subject to 
        the rules of a board of trade which has been designated 
        or registered by the Commission as a contract market 
        [or derivatives transaction execution facility] for 
        such commodity;
          (2) such contract is executed or consummated by or 
        through a contract market; and
          (3) such contract is evidenced by a record in writing 
        which shows the date, the parties to such contract and 
        their addresses, the property covered and its price, 
        and the terms of delivery: Provided, That each contract 
        market or derivatives transaction execution facility 
        member shall keep such record for a period of three 
        years from the date thereof, or for a longer period if 
        the Commission shall so direct, which record shall at 
        all times be open to the inspection of any 
        representative of the Commission or the Department of 
        Justice.
  (b)
          (1) Foreign boards of trade.--
                  (A) Registration.--The Commission may adopt 
                rules and regulations requiring registration 
                with the Commission for a foreign board of 
                trade that provides the members of the foreign 
                board of trade or other participants located in 
                the United States with direct access to the 
                electronic trading and order matching system of 
                the foreign board of trade, including rules and 
                regulations prescribing procedures and 
                requirements applicable to the registration of 
                such foreign boards of trade. For purposes of 
                this paragraph, ``direct access'' refers to an 
                explicit grant of authority by a foreign board 
                of trade to an identified member or other 
                participant located in the United States to 
                enter trades directly into the trade matching 
                system of the foreign board of trade. In 
                adopting such rules and regulations, the 
                commission shall consider--
                          (i) whether any such foreign board of 
                        trade is subject to comparable, 
                        comprehensive supervision and 
                        regulation by the appropriate 
                        governmental authorities in the foreign 
                        board of trade's home country; and
                          (ii) any previous commission findings 
                        that the foreign board of trade is 
                        subject to comparable comprehensive 
                        supervision and regulation by the 
                        appropriate government authorities in 
                        the foreign board of trade's home 
                        country.
                  (B) Linked contracts.--The Commission may not 
                permit a foreign board of trade to provide to 
                the members of the foreign board of trade or 
                other participants located in the United States 
                direct access to the electronic trading and 
                order-matching system of the foreign board of 
                trade with respect to an agreement, contract, 
                or transaction that settles against any price 
                (including the daily or final settlement price) 
                of 1 or more contracts listed for trading on a 
                registered entity, unless the Commission 
                determines that--
                          (i) the foreign board of trade makes 
                        public daily trading information 
                        regarding the agreement, contract, or 
                        transaction that is comparable to the 
                        daily trading information published by 
                        the registered entity for the 1 or more 
                        contracts against which the agreement, 
                        contract, or transaction traded on the 
                        foreign board of trade settles; and
                          (ii) the foreign board of trade (or 
                        the foreign futures authority that 
                        oversees the foreign board of trade)--
                                  (I) adopts position limits 
                                (including related hedge 
                                exemption provisions) for the 
                                agreement, contract, or 
                                transaction that are comparable 
                                to the position limits 
                                (including related hedge 
                                exemption provisions) adopted 
                                by the registered entity for 
                                the 1 or more contracts against 
                                which the agreement, contract, 
                                or transaction traded on the 
                                foreign board of trade settles;
                                  (II) has the authority to 
                                require or direct market 
                                participants to limit, reduce, 
                                or liquidate any position the 
                                foreign board of trade (or the 
                                foreign futures authority that 
                                oversees the foreign board of 
                                trade) determines to be 
                                necessary to prevent or reduce 
                                the threat of price 
                                manipulation, excessive 
                                speculation as described in 
                                section 4a, price distortion, 
                                or disruption of delivery or 
                                the cash settlement process;
                                  (III) agrees to promptly 
                                notify the Commission, with 
                                regard to the agreement, 
                                contract, or transaction that 
                                settles against any price 
                                (including the daily or final 
                                settlement price) of 1 or more 
                                contracts listed for trading on 
                                a registered entity, of any 
                                change regarding--
                                          (aa) the information 
                                        that the foreign board 
                                        of trade will make 
                                        publicly available;
                                          (bb) the position 
                                        limits that the foreign 
                                        board of trade or 
                                        foreign futures 
                                        authority will adopt 
                                        and enforce;
                                          (cc) the position 
                                        reductions required to 
                                        prevent manipulation, 
                                        excessive speculation 
                                        as described in section 
                                        4a, price distortion, 
                                        or disruption of 
                                        delivery or the cash 
                                        settlement process; and
                                          (dd) any other area 
                                        of interest expressed 
                                        by the Commission to 
                                        the foreign board of 
                                        trade or foreign 
                                        futures authority;
                                  (IV) provides information to 
                                the Commission regarding large 
                                trader positions in the 
                                agreement, contract, or 
                                transaction that is comparable 
                                to the large trader position 
                                information collected by the 
                                Commission for the 1 or more 
                                contracts against which the 
                                agreement, contract, or 
                                transaction traded on the 
                                foreign board of trade settles; 
                                and
                                  (V) provides the Commission 
                                such information as is 
                                necessary to publish reports on 
                                aggregate trader positions for 
                                the agreement, contract, or 
                                transaction traded on the 
                                foreign board of trade that are 
                                comparable to such reports on 
                                aggregate trader positions for 
                                the 1 or more contracts against 
                                which the agreement, contract, 
                                or transaction traded on the 
                                foreign board of trade settles.
                  (C) Existing foreign boards of trade.--
                Subparagraphs (A) and (B) shall not be 
                effective with respect to any foreign board of 
                trade to which, prior to the date of enactment 
                of this paragraph, the Commission granted 
                direct access permission until the date that is 
                180 days after that date of enactment.
          (2) Persons located in the united states.--
                  (A) In general.--The Commission may adopt 
                rules and regulations proscribing fraud and 
                requiring minimum financial standards, the 
                disclosure of risk, the filing of reports, the 
                keeping of books and records, the safeguarding 
                of customers' funds, and registration with the 
                Commission by any person located in the United 
                States, its territories or possessions, who 
                engages in the offer or sale of any contract of 
                sale of a commodity for future delivery that is 
                made or to be made on or subject to the rules 
                of a board of trade, exchange, or market 
                located outside the United States, its 
                territories or possessions.
                  (B) Different requirements.--Rules and 
                regulations described in subparagraph (A) may 
                impose different requirements for such persons 
                depending upon the particular foreign board of 
                trade, exchange, or market involved.
                  (C) Prohibition.--Except as provided in 
                paragraphs (1) and (2), no rule or regulation 
                may be adopted by the Commission under this 
                subsection that--
                          (i) requires Commission approval of 
                        any contract, rule, regulation, or 
                        action of any foreign board of trade, 
                        exchange, or market, or clearinghouse 
                        for such board of trade, exchange, or 
                        market; or
                          (ii) governs in any way any rule or 
                        contract term or action of any foreign 
                        board of trade, exchange, or market, or 
                        clearinghouse for such board of trade, 
                        exchange, or market.
  (c)(1) In order to promote responsible economic or financial 
innovation and fair competition, the Commission by rule, 
regulation, or order, after notice and opportunity for hearing, 
may (on its own initiative or on application of any person, 
including any board of trade designated [or registered] as a 
contract market [or derivatives transaction execution facility] 
for transactions for future delivery in any commodity under 
section 5 of this Act) exempt any agreement, contract, or 
transaction (or class thereof) that is otherwise subject to 
subsection (a) (including any person or class of persons 
offering, entering into, rendering advice or rendering other 
services with respect to, the agreement, contract, or 
transaction), either unconditionally or on stated terms or 
conditions or for stated periods and either retroactively or 
prospectively, or both, from any of the requirements of 
subsection (a), or from any other provision of this Act (except 
subparagraphs (C)(ii) and (D) of section 2(a)(1), except that--
          (A) unless the Commission is expressly authorized by 
        any provision described in this subparagraph to grant 
        exemptions, or except as necessary to effectuate the 
        purposes of the Commodity End-User Relief Act, with 
        respect to amendments made by subtitle A of the Wall 
        Street Transparency and Accountability Act of 2010--
                  (i) with respect to--
                          (I) paragraphs (2), (3), (4), (5), 
                        and [(7), paragraph (18)(A)(vii)(III), 
                        paragraphs (23), (24), (31), (32), 
                        (38), (39), (41), (42), (46), (47), 
                        (48), and (49)] (8), paragraph 
                        (19)(A)(vii)(III), paragraphs (24), 
                        (25), (32), (33), (39), (40), (42), 
                        (43), (47), (48), (49), and (50) of 
                        section 1a, and sections 2(a)(13), 
                        2(c)(1)(D), 4a(a), 4a(b), 4d(c), 4d(d), 
                        4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 
                        5b(c), 5b(i), 8e, and 21; and
                          (II) section 206(e) of the Gramm-
                        Leach-Bliley Act (Public Law 106-102; 
                        15 U.S.C. 78c note); and
                  (ii) in sections 721(c) and 742 of the Dodd-
                Frank Wall Street Reform and Consumer 
                Protection Act; and
          (B) the Commission and the Securities and Exchange 
        Commission may by rule, regulation, or order jointly 
        exclude any agreement, contract, or transaction from 
        section 2(a)(1)(D)) if the Commissions determine that 
        the exemption would be consistent with the public 
        interest.
  (2) The Commission shall not grant any exemption under 
paragraph (1) from any of the requirements of subsection (a) 
unless the Commission determines that--
          (A) the requirement should not be applied to the 
        agreement, contract, or transaction for which the 
        exemption is sought and that the exemption would be 
        consistent with the public interest and the purposes of 
        this Act; and
          (B) the agreement, contract, or transaction--
                  (i) will be entered into solely between 
                appropriate persons; and
                  (ii) will not have a material adverse effect 
                on the ability of the Commission or any 
                contract market or derivatives transaction 
                execution facility to discharge its regulatory 
                or self-regulatory duties under this Act.
  (3) For purposes of this subsection, the term ``appropriate 
person'' shall be limited to the following persons or classes 
thereof:
          (A) A bank or trust company (acting in an individual 
        or fiduciary capacity).
          (B) A savings association.
          (C) An insurance company.
          (D) An investment company subject to regulation under 
        the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
        seq.).
          (E) A commodity pool formed or operated by a person 
        subject to regulation under this Act.
          (F) A corporation, partnership, proprietorship, 
        organization, trust, or other business entity with a 
        net worth exceeding $1,000,000 or total assets 
        exceeding $5,000,000, or the obligations of which under 
        the agreement, contract or transaction are guaranteed 
        or otherwise supported by a letter of credit or 
        keepwell, support, or other agreement by any such 
        entity or by an entity referred to in subparagraph (A), 
        (B), (C), (H), (I), or (K) of this paragraph.
          (G) An employee benefit plan with assets exceeding 
        $1,000,000, or whose investment decisions are made by a 
        bank, trust company, insurance company, investment 
        adviser registered under the Investment Advisers Act of 
        1940 (15 U.S.C. 80a-1 et seq.), or a commodity trading 
        advisor subject to regulation under this Act.
          (H) Any governmental entity (including the United 
        States, any [state] State, or any foreign government) 
        or political subdivision thereof, or any multinational 
        or supranational entity or any instrumentality, agency, 
        or department of any of the foregoing.
          (I) A broker-dealer subject to regulation under the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
        acting on its own behalf or on behalf of another 
        appropriate person.
          (J) A futures commission merchant, floor broker, or 
        floor trader subject to regulation under this Act 
        acting on its own behalf or on behalf of another 
        appropriate person.
          (K) Such other persons that the Commission determines 
        to be appropriate in light of their financial or other 
        qualifications, or the applicability of appropriate 
        regulatory protections.
  (4) During the pendency of an application for an order 
granting an exemption under paragraph (1), the Commission may 
limit the public availability of any information received from 
the applicant if the applicant submits a written request to 
limit disclosure contemporaneous with the application, and the 
Commission determines that--
          (A) the information sought to be restricted 
        constitutes a trade secret; or
          (B) public disclosure of the information would result 
        in material competitive harm to the applicant.
  (5) The Commission may--
          (A) promptly following the enactment of this 
        subsection, or upon application by any person, exercise 
        the exemptive authority granted under paragraph (1) 
        with respect to classes of hybrid instruments that are 
        predominantly securities or depository instruments, to 
        the extent that such instruments may be regarded as 
        subject to the provisions of this Act; or
          (B) promptly following the enactment of this 
        subsection, or upon application by any person, exercise 
        the exemptive authority granted under paragraph (1) 
        effective as of October 23, 1974, with respect to 
        classes of swap agreements (as defined in section 101 
        of title 11, United States Code) that are not part of a 
        fungible class of agreements that are standardized as 
        to their material economic terms, to the extent that 
        such agreements may be regarded as subject to the 
        provisions of this Act.
Any exemption pursuant to this paragraph shall be subject to 
such terms and conditions as the Commission shall determine to 
be appropriate pursuant to paragraph (1).
          (6) If the Commission determines that the exemption 
        would be consistent with the public interest and the 
        purposes of this Act, the Commission shall, in 
        accordance with paragraphs (1) and (2), exempt from the 
        requirements of this Act an agreement, contract, or 
        transaction that is entered into--
                  (A) pursuant to a tariff or rate schedule 
                approved or permitted to take effect by the 
                Federal Energy Regulatory Commission;
                  (B) pursuant to a tariff or rate schedule 
                establishing rates or charges for, or protocols 
                governing, the sale of electric energy approved 
                or permitted to take effect by the regulatory 
                authority of the State or municipality having 
                jurisdiction to regulate rates and charges for 
                the sale of electric energy within the State or 
                municipality; or
                  (C) between entities described in section 
                201(f) of the Federal Power Act (16 U.S.C. 
                824(f)).
  (d) The granting of an exemption under this section shall not 
affect the authority of the Commission under any other 
provision of this Act to conduct investigations in order to 
determine compliance with the requirements or conditions of 
such exemption or to take enforcement action for any violation 
of any provision of this Act or any rule, regulation or order 
thereunder caused by the failure to comply with or satisfy such 
conditions or requirements.
  (e) Liability of Registered Persons Trading on a Foreign 
Board of Trade.--
          (1) In general.--A person registered with the 
        Commission, or exempt from registration by the 
        Commission, under this Act may not be found to have 
        violated subsection (a) with respect to a transaction 
        in, or in connection with, a contract of sale of a 
        commodity for future delivery if the person--
                  (A) has reason to believe that the 
                transaction and the contract is made on or 
                subject to the rules of a foreign board of 
                trade that is--
                          (i) legally organized under the laws 
                        of a foreign country;
                          (ii) authorized to act as a board of 
                        trade by a foreign futures authority; 
                        and
                          (iii) subject to regulation by the 
                        foreign futures authority; and
                  (B) has not been determined by the Commission 
                to be operating in violation of subsection (a).
          (2) Rule of construction.--Nothing in this subsection 
        shall be construed as implying or creating any 
        presumption that a board of trade, exchange, or market 
        is located outside the United States, or its 
        territories or possessions, for purposes of subsection 
        (a).
  Sec. 4a. (a)
          (1) In general.--Excessive speculation in any 
        commodity under contracts of sale of such commodity for 
        future delivery made on or subject to the rules of 
        contract markets [or derivatives transaction execution 
        facilities], or swaps that perform or affect a 
        significant price discovery function with respect to 
        registered entities causing sudden or unreasonable 
        fluctuations or unwarranted changes in the price of 
        such commodity, is an undue and unnecessary burden on 
        interstate commerce in such commodity. For the purpose 
        of diminishing, eliminating, or preventing such burden, 
        the Commission shall, from time to time, after due 
        notice and opportunity for hearing, by rule, 
        regulation, or order, proclaim and fix such limits on 
        the amounts of trading which may be done or positions 
        which may be held by any person, including any group or 
        class of traders, under contracts of sale of such 
        commodity for future delivery on or subject to the 
        rules of any contract market [or derivatives 
        transaction execution facility], swaps traded on or 
        subject to the rules of a designated contract market or 
        a swap execution facility, or swaps not traded on or 
        subject to the rules of a designated contract market or 
        a swap execution facility that performs a significant 
        price discovery function with respect to a registered 
        entity, as the Commission finds are necessary to 
        diminish, eliminate, or prevent such burden. In 
        determining whether any person has exceeded such 
        limits, the positions held and trading done by any 
        persons directly or indirectly controlled by such 
        person shall be included with the positions held and 
        trading done by such person; and further, such limits 
        upon positions and trading shall apply to positions 
        held by, and trading done by, two or more persons 
        acting pursuant to an expressed or implied agreement or 
        understanding, the same as if the positions were held 
        by, or the trading were done by, a single person. 
        Nothing in this section shall be construed to prohibit 
        the Commission from fixing different trading or 
        position limits for different commodities, markets, 
        futures, or delivery months, or for different number of 
        days remaining until the last day of trading in a 
        contract, or different trading limits for buying and 
        selling operations, or different limits for the 
        purposes of paragraphs (1) and (2) of subsection (b) of 
        this section, or from exempting transactions normally 
        known to the trade as ``spreads'' or ``straddles'' or 
        ``arbitrage'' or from fixing limits applying to such 
        transactions or positions different from limits fixed 
        for other transactions or positions. The word 
        ``arbitrage'' in domestic markets shall be defined to 
        mean the same as a ``spread'' or ``straddle''. The 
        Commission is authorized to define the term 
        ``international arbitrage''.
          (2) Establishment of limitations.--
                  (A) In general.--In accordance with the 
                standards set forth in paragraph (1) of this 
                subsection and consistent with the good faith 
                exception cited in subsection (b)(2), with 
                respect to physical commodities other than 
                excluded commodities as defined by the 
                Commission, the Commission shall by rule, 
                regulation, or order establish limits on the 
                amount of positions, as appropriate, other than 
                bona fide hedge positions, that may be held by 
                any person with respect to contracts of sale 
                for future delivery or with respect to options 
                on the contracts or commodities traded on or 
                subject to the rules of a designated contract 
                market.
                  (B) Timing.--
                          (i) Exempt commodities.--For exempt 
                        commodities, the limits required under 
                        subparagraph (A) shall be established 
                        within 180 days after the date of the 
                        enactment of this paragraph.
                          (ii) Agricultural commodities.--For 
                        agricultural commodities, the limits 
                        required under subparagraph (A) shall 
                        be established within 270 days after 
                        the date of the enactment of this 
                        paragraph.
                  (C) Goal.--In establishing the limits 
                required under subparagraph (A), the Commission 
                shall strive to ensure that trading on foreign 
                boards of trade in the same commodity will be 
                subject to comparable limits and that any 
                limits to be imposed by the Commission will not 
                cause price discovery in the commodity to shift 
                to trading on the foreign boards of trade.
          (3) Specific limitations.--In establishing the limits 
        required in paragraph (2), the Commission, as 
        appropriate, shall set limits--
                  (A) on the number of positions that may be 
                held by any person for the spot month, each 
                other month, and the aggregate number of 
                positions that may be held by any person for 
                all months; and
                  (B) to the maximum extent practicable, in its 
                discretion--
                          (i) to diminish, eliminate, or 
                        prevent excessive speculation as 
                        described under this section;
                          (ii) to deter and prevent market 
                        manipulation, squeezes, and corners;
                          (iii) to ensure sufficient market 
                        liquidity for bona fide hedgers; and
                          (iv) to ensure that the price 
                        discovery function of the underlying 
                        market is not disrupted.
          (4) Significant price discovery function.--In making 
        a determination whether a swap performs or affects a 
        significant price discovery function with respect to 
        regulated markets, the Commission shall consider, as 
        appropriate:
                  (A) Price linkage.--The extent to which the 
                swap uses or otherwise relies on a daily or 
                final settlement price, or other major price 
                parameter, of another contract traded on a 
                regulated market based upon the same underlying 
                commodity, to value a position, transfer or 
                convert a position, financially settle a 
                position, or close out a position.
                  (B) Arbitrage.--The extent to which the price 
                for the swap is sufficiently related to the 
                price of another contract traded on a regulated 
                market based upon the same underlying commodity 
                so as to permit market participants to 
                effectively arbitrage between the markets by 
                simultaneously maintaining positions or 
                executing trades in the swaps on a frequent and 
                recurring basis.
                  (C) Material price reference.--The extent to 
                which, on a frequent and recurring basis, bids, 
                offers, or transactions in a contract traded on 
                a regulated market are directly based on, or 
                are determined by referencing, the price 
                generated by the swap.
                  (D) Material liquidity.--The extent to which 
                the volume of swaps being traded in the 
                commodity is sufficient to have a material 
                effect on another contract traded on a 
                regulated market.
                  (E) Other material factors.--Such other 
                material factors as the Commission specifies by 
                rule or regulation as relevant to determine 
                whether a swap serves a significant price 
                discovery function with respect to a regulated 
                market.
          (5) Economically equivalent contracts.--
                  (A) Notwithstanding any other provision of 
                this section, the Commission shall establish 
                limits on the amount of positions, including 
                aggregate position limits, as appropriate, 
                other than bona fide hedge positions, that may 
                be held by any person with respect to swaps 
                that are economically equivalent to contracts 
                of sale for future delivery or to options on 
                the contracts or commodities traded on or 
                subject to the rules of a designated contract 
                market subject to paragraph (2).
                  (B) In establishing limits pursuant to 
                subparagraph (A), the Commission shall--
                          (i) develop the limits concurrently 
                        with limits established under paragraph 
                        (2), and the limits shall have similar 
                        requirements as under paragraph (3)(B); 
                        and
                          (ii) establish the limits 
                        simultaneously with limits established 
                        under paragraph (2).
          (6) Aggregate position limits.--The Commission shall, 
        by rule or regulation, establish limits (including 
        related hedge exemption provisions) on the aggregate 
        number or amount of positions in contracts based upon 
        the same underlying commodity (as defined by the 
        Commission) that may be held by any person, including 
        any group or class of traders, for each month across--
                  (A) contracts listed by designated contract 
                markets;
                  (B) with respect to an agreement contract, or 
                transaction that settles against any price 
                (including the daily or final settlement price) 
                of 1 or more contracts listed for trading on a 
                registered entity, contracts traded on a 
                foreign board of trade that provides members or 
                other participants located in the United States 
                with direct access to its electronic trading 
                and order matching system; and
                  (C) swap contracts that perform or affect a 
                significant price discovery function with 
                respect to regulated entities.
          (7) Exemptions.--The Commission, by rule, regulation, 
        or order, may exempt, conditionally or unconditionally, 
        any person or class of persons, any swap or class of 
        swaps, any contract of sale of a commodity for future 
        delivery or class of such contracts, any option or 
        class of options, or any transaction or class of 
        transactions from any requirement it may establish 
        under this section with respect to position limits.
  (b) The Commission shall, in such rule, regulation, or order, 
fix a reasonable time (not to exceed ten days) after the 
promulgation of the rule, regulation, or order; after which, 
and until such rule, regulation, or order is suspended, 
modified, or revoked, it shall be unlawful for any person--
          (1) directly or indirectly to buy or sell, or agree 
        to buy or sell, under contracts of sale of such 
        commodity for future delivery on or subject to the 
        rules of the contract market or markets, or swap 
        execution facility or facilities with respect to a 
        significant price discovery contract, to which the 
        rule, regulation, or order applies, any amount of such 
        commodity during any one business day in excess of any 
        trading limit fixed for one business day by the 
        Commission in such rule, regulation, or order for or 
        with respect to such commodity; or
          (2) directly or indirectly to hold or control a net 
        long or a net short position in any commodity for 
        future delivery on or subject to the rules of any 
        contract market or swap execution facility with respect 
        to a significant price discovery contract in excess of 
        any position limit fixed by the Commission for or with 
        respect to such commodity: Provided, That such position 
        limit shall not apply to a position acquired in good 
        faith prior to the effective date of such rule, 
        regulation, or order.
  (c)(1) No rule, regulation, or order issued under subsection 
(a) of this section shall apply to transactions or positions 
which are shown to be bona fide hedging transactions or 
positions, as such terms shall be defined by the Commission by 
rule, regulation, or order consistent with the purposes of this 
Act. Such terms [may] shall be defined to permit producers, 
purchasers, sellers, middlemen, and users of a commodity or a 
product derived therefrom to hedge their legitimate anticipated 
business needs for that period of time into the [future for 
which] future, to be determined by the Commission, for which 
either an appropriate swap is available or an appropriate 
futures contract is open and available on an exchange. To 
determine the adequacy of this Act and the powers of the 
Commission acting thereunder to prevent unwarranted price 
pressures by large hedgers, the Commission shall monitor and 
analyze the trading activities of the largest hedgers, as 
determined by the Commission, operating in the cattle, hog, or 
pork belly markets and shall report its findings and 
recommendations to the Senate Committee on Agriculture, 
Nutrition, and Forestry and the House Committee on Agriculture 
in its annual reports for at least two years following the date 
of enactment of the Futures Trading Act of 1982.
          (2) For the purposes of implementation of [subsection 
        (a)(2) for contracts of sale for future delivery or 
        options on the contracts or commodities, the Commission 
        shall define what constitutes a bona fide hedging 
        transaction or position as] paragraphs (2) and (5) of 
        subsection (a) for swaps, contracts of sale for future 
        delivery, or options on the contracts or commodities, a 
        bona fide hedging transaction or position is a 
        transaction or position that--
                  (A)(i) represents a substitute for 
                transactions made or to be made or positions 
                taken or to be taken at a later time in a 
                physical marketing channel;
                  (ii) is economically appropriate to the 
                reduction [of risks] or management of current 
                or anticipated risks in the conduct and 
                management of a commercial enterprise; and
                  (iii) arises from the potential change in the 
                value of--
                          (I) assets that a person owns, 
                        produces, manufactures, processes, or 
                        merchandises or anticipates owning, 
                        producing, manufacturing, processing, 
                        or merchandising;
                          (II) liabilities that a person owns 
                        or anticipates incurring; or
                          (III) services that a person 
                        provides, purchases, or anticipates 
                        providing or purchasing; or
                  (B) reduces risks attendant to a position 
                resulting from a swap that--
                          (i) was executed opposite a 
                        counterparty for which the transaction 
                        would qualify as a bona fide hedging 
                        transaction pursuant to subparagraph 
                        (A); or
                          (ii) meets the requirements of 
                        subparagraph (A).
          (3) The Commission may further define, by rule or 
        regulation, what constitutes a bona fide hedging 
        transaction, provided that the rule or regulation is 
        consistent with the requirements of subparagraphs (A) 
        and (B) of paragraph (2).
  (d) This section shall apply to a person that is registered 
as a futures commission merchant, an introducing broker, or a 
floor broker under authority of this Act only to the extent 
that transactions made by such person are made on behalf of or 
for the account or benefit of such person. This section shall 
not apply to transactions made by, or on behalf of, or at the 
direction of, the United States, or a duly authorized agency 
thereof.
  (e) Nothing in this section shall prohibit or impair the 
adoption by any contract market[, derivatives transaction 
execution facility,] or by any other board of trade licensed, 
designated, or registered by the Commission [or by any 
electronic trading facility] of any bylaw, rule, regulation, or 
resolution fixing limits on the amount of trading which may be 
done or positions which may be held by any person under 
contracts of sale of any commodity for future delivery traded 
on or subject to the rules of such contract market [or 
derivatives transaction execution facility] [or on an 
electronic trading facility], or under options on such 
contracts or commodities traded on or subject to the rules of 
such contract market[, derivatives transaction execution 
facility,][or electronic trading facility] or such board of 
trade: Provided, That if the Commission shall have fixed limits 
under this section for any contract or under section 4c of this 
Act for any commodity option, then the limits fixed by the 
bylaws, rules, regulations, and resolutions adopted by such 
contract market[, derivatives transaction execution 
facility,][or electronic trading facility] or such board of 
trade shall not be higher than the limits fixed by the 
Commission. It shall be a violation of this Act for any person 
to violate any bylaw, rule, regulation, or resolution of any 
contract market[, derivatives transaction execution facility,] 
or other board of trade licensed, designated, or registered by 
the Commission [or electronic trading facility with respect to 
a significant price discovery contract] fixing limits on the 
amount of trading which may be done or positions which may be 
held by any person under contracts of sale of any commodity for 
future delivery or under options on such contracts or 
commodities, if such bylaw, rule, regulation, or resolution has 
been approved by the Commission or certified by a registered 
entity pursuant to section 5c(c)(1): Provided, That the 
provisions of section 9(a)(5) of this Act shall apply only to 
those who knowingly violate such limits.

           *       *       *       *       *       *       *


SEC. 4C. PROHIBITED TRANSACTIONS.

  (a) In General.--
          (1) Prohibition.--It shall be unlawful for any person 
        to offer to enter into, enter into, or confirm the 
        execution of a transaction described in paragraph (2) 
        involving the purchase or sale of any commodity for 
        future delivery (or any option on such a transaction or 
        option on a commodity) or swap if the transaction is 
        used or may be used to--
                  (A) hedge any transaction in interstate 
                commerce in the commodity or the product or 
                byproduct of the commodity;
                  (B) determine the price basis of any such 
                transaction in interstate commerce in the 
                commodity; or
                  (C) deliver any such commodity sold, shipped, 
                or received in interstate commerce for the 
                execution of the transaction.
          (2) Transaction.--A transaction referred to in 
        paragraph (1) is a transaction that--
                  (A)(i) is, of the character of, or is 
                commonly known to the trade as, a ``wash sale'' 
                or ``accommodation trade''; or
                  (ii) is a fictitious sale; or
                  (B) is used to cause any price to be 
                reported, registered, or recorded that is not a 
                true and bona fide price.
          (3) Contract of sale.--It shall be unlawful for any 
        employee or agent of any department or agency of the 
        Federal Government or any Member of Congress or 
        employee of Congress (as such terms are defined under 
        section 2 of the STOCK Act) or any judicial officer or 
        judicial employee (as such terms are defined, 
        respectively, under section 2 of the STOCK Act) who, by 
        virtue of the employment or position of the Member, 
        officer, employee or agent, acquires information that 
        may affect or tend to affect the price of any commodity 
        in interstate commerce, or for future delivery, or any 
        swap, and which information has not been disseminated 
        by the department or agency of the Federal Government 
        holding or creating the information or by Congress or 
        by the judiciary in a manner which makes it generally 
        available to the trading public, or disclosed in a 
        criminal, civil, or administrative hearing, or in a 
        congressional, administrative, or Government 
        Accountability Office report, hearing, audit, or 
        investigation, to use the information in his personal 
        capacity and for personal gain to enter into, or offer 
        to enter into--
                  (A) a contract of sale of a commodity for 
                future delivery (or option on such a contract);
                  (B) an option (other than an option executed 
                or traded on a national securities exchange 
                registered pursuant to section 6(a) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 
                78f(a)); or
                  (C) a swap.
          (4) Nonpublic information.--
                  (A) Imparting of nonpublic information.--It 
                shall be unlawful for any employee or agent of 
                any department or agency of the Federal 
                Government or any Member of Congress or 
                employee of Congress or any judicial officer or 
                judicial employee who, by virtue of the 
                employment or position of the Member, officer, 
                employee or agent, acquires information that 
                may affect or tend to affect the price of any 
                commodity in interstate commerce, or for future 
                delivery, or any swap, and which information 
                has not been disseminated by the department or 
                agency of the Federal Government holding or 
                creating the information or by Congress or by 
                the judiciary in a manner which makes it 
                generally available to the trading public, or 
                disclosed in a criminal, civil, or 
                administrative hearing, or in a congressional, 
                administrative, or Government Accountability 
                Office report, hearing, audit, or 
                investigation, to impart the information in his 
                personal capacity and for personal gain with 
                intent to assist another person, directly or 
                indirectly, to use the information to enter 
                into, or offer to enter into--
                          (i) a contract of sale of a commodity 
                        for future delivery (or option on such 
                        a contract);
                          (ii) an option (other than an option 
                        executed or traded on a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78f(a)); or
                          (iii) a swap.
                  (B) Knowing use.--It shall be unlawful for 
                any person who receives information imparted by 
                any employee or agent of any department or 
                agency of the Federal Government or any Member 
                of Congress or employee of Congress or any 
                judicial officer or judicial employee as 
                described in subparagraph (A) to knowingly use 
                such information to enter into, or offer to 
                enter into--
                          (i) a contract of sale of a commodity 
                        for future delivery (or option on such 
                        a contract);
                          (ii) an option (other than an option 
                        executed or traded on a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78f(a)); or
                          (iii) a swap.
                  (C) Theft of nonpublic information.--It shall 
                be unlawful for any person to steal, convert, 
                or misappropriate, by any means whatsoever, 
                information held or created by any department 
                or agency of the Federal Government or by 
                Congress or by the judiciary that may affect or 
                tend to affect the price of any commodity in 
                interstate commerce, or for future delivery, or 
                any swap, where such person knows, or acts in 
                reckless disregard of the fact, that such 
                information has not been disseminated by the 
                department or agency of the Federal Government 
                holding or creating the information or by 
                Congress or by the judiciary in a manner which 
                makes it generally available to the trading 
                public, or disclosed in a criminal, civil, or 
                administrative hearing, or in a congressional, 
                administrative, or Government Accountability 
                Office report, hearing, audit, or 
                investigation, and to use such information, or 
                to impart such information with the intent to 
                assist another person, directly or indirectly, 
                to use such information to enter into, or offer 
                to enter into--
                          (i) a contract of sale of a commodity 
                        for future delivery (or option on such 
                        a contract);
                          (ii) an option (other than an option 
                        executed or traded on a national 
                        securities exchange registered pursuant 
                        to section 6(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78f(a)); or
                          (iii) a swap, provided, however, that 
                        nothing in this subparagraph shall 
                        preclude a person that has provided 
                        information concerning, or generated 
                        by, the person, its operations or 
                        activities, to any employee or agent of 
                        any department or agency of the Federal 
                        Government, to Congress, any Member of 
                        Congress, any employee of Congress, any 
                        judicial officer, or any judicial 
                        employee, voluntarily or as required by 
                        law, from using such information to 
                        enter into, or offer to enter into, a 
                        contract of sale, option, or swap 
                        described in clauses (i), (ii), or 
                        (iii).
          (5) Disruptive practices.--It shall be unlawful for 
        any person to engage in any trading, practice, or 
        conduct on or subject to the rules of a registered 
        entity that--
                  (A) violates bids or offers;
                  (B) demonstrates intentional or reckless 
                disregard for the orderly execution of 
                transactions during the closing period; or
                  (C) is, is of the character of, or is 
                commonly known to the trade as, ``spoofing'' 
                (bidding or offering with the intent to cancel 
                the bid or offer before execution).
          (6) Rulemaking authority.--The Commission may make 
        and promulgate such rules and regulations as, in the 
        judgment of the Commission, are reasonably necessary to 
        prohibit the trading practices described in paragraph 
        (5) and any other trading practice that is disruptive 
        of fair and equitable trading.
          (7) Use of swaps to defraud.--It shall be unlawful 
        for any person to enter into a swap knowing, or acting 
        in reckless disregard of the fact, that its 
        counterparty will use the swap as part of a device, 
        scheme, or artifice to defraud any third party.
  (b) No person shall offer to enter into, enter into or 
confirm the execution of, any transaction involving any 
commodity regulated under this Act which is of the character 
of, or is commonly known to the trade as, an ``option'', 
``privilege'', ``indemnity'', ``bid'', ``offer'', ``put'', 
``call'', ``advance guaranty'', or ``decline guaranty'', 
contrary to any rule, regulation, or order of the Commission 
prohibiting any such transaction or allowing any such 
transaction under such terms and conditions as the Commission 
shall prescribe. Any such order, rule, or regulation may be 
made only after notice and opportunity for hearing, and the 
Commission may set different terms and conditions for different 
markets.
  [(c) Not later than 90 days after the date of the enactment 
of the Futures Trading Act of 1986, the Commission shall issue 
regulations--
          [(1) to eliminate the pilot status of its program for 
        commodity option transactions involving the trading of 
        options on contract markets, including any numerical 
        restrictions on the number of commodities or option 
        contracts for which a contract market may be 
        designated; and
          [(2) otherwise to continue to permit the trading of 
        such commodity options under such terms and conditions 
        that the Commission from time to time may prescribe.
  [(d) Notwithstanding the provisions of subsection (c) of this 
section--
          [(1) any person domiciled in the United States who on 
        May 1, 1978, was in the business of granting an option 
        on a physical commodity, other than a commodity 
        specifically set forth in section 2(a) of this Act 
        prior to enactment of the Commodity Futures Trading 
        Commission Act of 1974, and was in the business of 
        buying, selling, producing, or otherwise using that 
        commodity, may continue to grant or issue options on 
        that commodity in accordance with Commission 
        regulations in effect on August 17, 1978, until thirty 
        days after the effective date of regulations issued by 
        the Commission under clause (2) of this subsection: 
        Provided, That if such person files an application for 
        registration under the regulations issued under clause 
        (2) of this subsection within thirty days after the 
        effective date of such regulations, that person may 
        continue to grant or issue options pending a final 
        determination by the Commission on the application; and
          [(2) the Commission shall issue regulations that 
        permit grantors and futures commission merchants to 
        offer to enter into, enter into, or confirm the 
        execution of, any commodity option transaction on a 
        physical commodity subject to the provisions of 
        subsection (b) of this section, other than a commodity 
        specifically set forth in section 2(a) of this Act 
        prior to enactment of the Commodity Futures Trading 
        Commission Act of 1974, if--
                  [(A) the grantor is a person domiciled in the 
                United States who--
                          [(i) is in the business of buying, 
                        selling, producing, or otherwise using 
                        the underlying commodity;
                          [(ii) at all times has a net worth of 
                        at least $5,000,000 certified annually 
                        by an independent public accountant 
                        using generally accepted accounting 
                        principles;
                          [(iii) notifies the Commission and 
                        every futures commission merchant 
                        offering the grantor's option if the 
                        grantor knows or has reason to believe 
                        that the grantor's net worth has fallen 
                        below $5,000,000;
                          [(iv) segregates daily, exclusively 
                        for the benefit of purchasers, money, 
                        exempted securities (within the meaning 
                        of section 3(a)(12) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(12)), commercial paper, bankers' 
                        acceptances, commercial bills, or 
                        unencumbered warehouse receipts, equal 
                        to an amount by which the value of each 
                        transaction exceeds the amount received 
                        or to be received by the grantor for 
                        such transaction;
                          [(v) provides an identification 
                        number for each transaction; and
                          [(vi) provides confirmation of all 
                        orders for such transactions executed, 
                        including the execution price and a 
                        transaction identification number;
                  [(B) the futures commission merchant is a 
                person who--
                          [(i) has evidence that the grantor 
                        meets the requirements specified in 
                        subclause (A) of this clause;
                          [(ii) treats and deals with all 
                        money, securities, or property received 
                        from its customers as payment of the 
                        purchase price in connection with such 
                        transactions, as belonging to such 
                        customers until the expiration of the 
                        term of the option, or, if the customer 
                        exercises the option, until all rights 
                        of the customer under the commodity 
                        option transaction have been fulfilled;
                          [(iii) records each transaction in 
                        its customer's name by the transaction 
                        identification number provided by the 
                        grantor;
                          [(iv) provides a disclosure statement 
                        to its customers, under regulations of 
                        the Commission, that discloses, among 
                        other things, all costs, including any 
                        markups or commissions involved in such 
                        transaction; and
                  [(C) the grantor and futures commission 
                merchant comply with any additional uniform and 
                reasonable terms and conditions the Commission 
                may prescribe, including registration with the 
                Commission.
The Commission may permit persons not domiciled in the United 
States to grant options under this subsection, other than 
options on a commodity specifically set forth in section 2(a) 
of this Act prior to enactment of the Commodity Futures Trading 
Commission Act of 1974, under such additional rules, 
regulations, and orders as the Commission may adopt to provide 
protection to purchasers that are substantially the equivalent 
of those applicable to grantors domiciled in the United States. 
The Commission may terminate the right of any person to grant, 
offer, or sell options under this subsection only after a 
hearing, including a finding that the continuation of such 
right is contrary to the public interest: Provided, That 
pending the completion of such termination proceedings, the 
Commission may suspend the right to grant, offer, or sell 
options of any person whose activities in the Commission's 
judgment present a substantial risk to the public interest.
  [(e) The Commission may adopt rules and regulations, after 
public notice and opportunity for a hearing on the record, 
prohibiting the granting, issuance, or sale of options 
permitted under subsection (d) of this section if the 
Commission determines that such options are contrary to the 
public interest.]
  (c) The Commission shall issue regulations to continue to 
permit the trading of options on contract markets under such 
terms and conditions that the Commission from time to time may 
prescribe.
  [(f)] (d) Nothing in this Act shall be deemed to govern or in 
any way be applicable to any transaction in an option on 
foreign currency traded on a national securities exchange.
  [(g)] (e) The Commission shall adopt rules requiring that a 
contemporaneous written record be made, as practicable, of all 
orders for execution on the floor or subject to the rules of 
each contract market [or derivatives transaction execution 
facility] placed by a member of the contract market [or 
derivatives transaction execution facility] who is present on 
the floor at the time such order is placed.
  Sec. 4d. (a) (1) It shall be unlawful for any person to be a 
futures commission merchant unless--
                  [(1)] (A) such person shall have registered, 
                under this Act, with the Commission as such 
                futures commission merchant and such 
                registration shall not have expired nor been 
                suspended nor revoked; and
                  [(2)] (B) such person shall, whether a member 
                or nonmember of a contract market [or 
                derivatives transaction execution facility], 
                treat and deal with all money, securities, and 
                property received by such person to margin, 
                guarantee, or secure the trades or contracts of 
                any customer of such person, or accruing to 
                such customer as the result of such trades or 
                contracts, as belonging to such customer. Such 
                money, securities, and property shall be 
                separately accounted for and shall not be 
                commingled with the funds of such commission 
                merchant or be used to margin or guarantee the 
                trades or contracts, or to secure or extend the 
                credit, of any customer or person other than 
                the one for whom the same are held: Provided, 
                however, That such money, securities, and 
                property of the customers of such futures 
                commission merchant may, for convenience, be 
                commingled and deposited in the same account or 
                accounts with any bank or trust company or with 
                the clearing house organization of such 
                contract market [or derivatives transaction 
                execution facility], and that such share 
                thereof as in the normal course of business 
                shall be necessary to margin, guarantee, 
                secure, transfer, adjust, or settle the 
                contracts or trades of such customers, or 
                resulting market positions, with the clearing-
                house organization of such contract market [or 
                derivatives transaction execution facility] or 
                with any member of such contract market [or 
                derivatives transaction execution facility], 
                may be withdrawn and applied to such purposes, 
                including the payment of commissions, 
                brokerage, interest, taxes, storage, and other 
                charges, lawfully accruing in connection with 
                such contracts and trades: Provided further, 
                That in accordance with such terms and 
                conditions as the Commission may prescribe by 
                rule, regulation, or order, such money, 
                securities, and property of the customers of 
                such futures commission merchant may be 
                commingled and deposited as provided in this 
                section with any other money, securities, and 
                property received by such futures commission 
                merchant and required by the Commission to be 
                separately accounted for and treated and dealt 
                with as belonging to the customers of such 
                futures commission merchant: Provided further, 
                That such money may be invested in obligations 
                of the United States, in general obligations of 
                any State or of any political subdivision 
                thereof, and in obligations fully guaranteed as 
                to principal and interest by the United States, 
                such investments to be made in accordance with 
                such rules and regulations and subject to such 
                conditions as the Commission may prescribe.
          (2) Any rules or regulations requiring a futures 
        commission merchant to maintain a residual interest in 
        accounts held for the benefit of customers in amounts 
        at least sufficient to exceed the sum of all 
        uncollected margin deficits of such customers shall 
        provide that a futures commission merchant shall meet 
        its residual interest requirement as of the end of each 
        business day calculated as of the close of business on 
        the previous business day.
  (b) It shall be unlawful for any person, including but not 
limited to any clearing agency of a contract market [or 
derivatives transaction execution facility] and any depository, 
that has received any money, securities, or property for 
deposit in a separate account as provided in [paragraph (2) of 
this section] subsection (a)(2), to hold, dispose of, or use 
any such money, securities, or property as belonging to the 
depositing futures commission merchant or any person other than 
the customers of such futures commission merchant.
  (c) Conflicts of Interest.--The Commission shall require that 
futures commission merchants and introducing brokers implement 
conflict-of-interest systems and procedures that--
          (1) establish structural and institutional safeguards 
        to ensure that the activities of any person within the 
        firm relating to research or analysis of the price or 
        market for any commodity are separated by appropriate 
        informational partitions within the firm from the 
        review, pressure, or oversight of persons whose 
        involvement in trading or clearing activities might 
        potentially bias the judgment or supervision of the 
        persons; and
          (2) address such other issues as the Commission 
        determines to be appropriate.
  (d) Designation of Chief Compliance Officer.--Each futures 
commission merchant shall designate an individual to serve as 
its Chief Compliance Officer and perform such duties and 
responsibilities as shall be set forth in regulations to be 
adopted by the Commission or rules to be adopted by a futures 
association registered under section 17.
  (e) Consistent with this Act, the Commission, in consultation 
with the Securities and Exchange Commission, shall issue such 
rules, regulations, or orders as are necessary to avoid 
duplicative or conflicting regulations applicable to any 
futures commission merchant registered with the Commission 
pursuant to section 4f(a) (except paragraph (2) thereof), that 
is also registered with the Securities and Exchange Commission 
pursuant to section 15(b) of the Securities Exchange Act 
(except paragraph (11) thereof), involving the application of--
          (1) section 8, section 15(c)(3), and section 17 of 
        the Securities Exchange Act of 1934 and the rules and 
        regulations thereunder related to the treatment of 
        customer funds, securities, or property, maintenance of 
        books and records, financial reporting or other 
        financial responsibility rules (as defined in section 
        3(a)(40) of the Securities Exchange Act of 1934), 
        involving security futures products; and
          (2) similar provisions of this Act and the rules and 
        regulations thereunder involving security futures 
        products.
  (f) Swaps.--
          (1) Registration requirement.--It shall be unlawful 
        for any person to accept any money, securities, or 
        property (or to extend any credit in lieu of money, 
        securities, or property) from, for, or on behalf of a 
        swaps customer to margin, guarantee, or secure a swap 
        cleared by or through a derivatives clearing 
        organization (including money, securities, or property 
        accruing to the customer as the result of such a swap), 
        unless the person shall have registered under this Act 
        with the Commission as a futures commission merchant, 
        and the registration shall not have expired nor been 
        suspended nor revoked.
          (2) Cleared swaps.--
                  (A) Segregation required.--A futures 
                commission merchant shall treat and deal with 
                all money, securities, and property of any 
                swaps customer received to margin, guarantee, 
                or secure a swap cleared by or though a 
                derivatives clearing organization (including 
                money, securities, or property accruing to the 
                swaps customer as the result of such a swap) as 
                belonging to the swaps customer.
                  (B) Commingling prohibited.--Money, 
                securities, and property of a swaps customer 
                described in subparagraph (A) shall be 
                separately accounted for and shall not be 
                commingled with the funds of the futures 
                commission merchant or be used to margin, 
                secure, or guarantee any trades or contracts of 
                any swaps customer or person other than the 
                person for whom the same are held.
          (3) Exceptions.--
                  (A) Use of funds.--
                          (i) In general.--Notwithstanding 
                        paragraph (2), money, securities, and 
                        property of swap customers of a futures 
                        commission merchant described in 
                        paragraph (2) may, for convenience, be 
                        commingled and deposited in the same 
                        account or accounts with any bank or 
                        trust company or with a derivatives 
                        clearing organization.
                          (ii) Withdrawal.--Notwithstanding 
                        paragraph (2), such share of the money, 
                        securities, and property described in 
                        clause (i) as in the normal course of 
                        business shall be necessary to margin, 
                        guarantee, secure, transfer, adjust, or 
                        settle a cleared swap with a 
                        derivatives clearing organization, or 
                        with any member of the derivatives 
                        clearing organization, may be withdrawn 
                        and applied to such purposes, including 
                        the payment of commissions, brokerage, 
                        interest, taxes, storage, and other 
                        charges, lawfully accruing in 
                        connection with the cleared swap.
                  (B) Commission action.--Notwithstanding 
                paragraph (2), in accordance with such terms 
                and conditions as the Commission may prescribe 
                by rule, regulation, or order, any money, 
                securities, or property of the swaps customers 
                of a futures commission merchant described in 
                paragraph (2) may be commingled and deposited 
                in customer accounts with any other money, 
                securities, or property received by the futures 
                commission merchant and required by the 
                Commission to be separately accounted for and 
                treated and dealt with as belonging to the 
                swaps customer of the futures commission 
                merchant.
          (4) Permitted investments.--Money described in 
        paragraph (2) may be invested in obligations of the 
        United States, in general obligations of any State or 
        of any political subdivision of a State, and in 
        obligations fully guaranteed as to principal and 
        interest by the United States, or in any other 
        investment that the Commission may by rule or 
        regulation prescribe, and such investments shall be 
        made in accordance with such rules and regulations and 
        subject to such conditions as the Commission may 
        prescribe.
          (5) Commodity contract.--A swap cleared by or through 
        a derivatives clearing organization shall be considered 
        to be a commodity contract as such term is defined in 
        section 761 of title 11, United States Code, with 
        regard to all money, securities, and property of any 
        swaps customer received by a futures commission 
        merchant or a derivatives clearing organization to 
        margin, guarantee, or secure the swap (including money, 
        securities, or property accruing to the customer as the 
        result of the swap).
          (6) Prohibition.--It shall be unlawful for any 
        person, including any derivatives clearing organization 
        and any depository institution, that has received any 
        money, securities, or property for deposit in a 
        separate account or accounts as provided in paragraph 
        (2) to hold, dispose of, or use any such money, 
        securities, or property as belonging to the depositing 
        futures commission merchant or any person other than 
        the swaps customer of the futures commission merchant.
  (g) It shall be unlawful for any person to be an introducing 
broker unless such person shall have registered under this Act 
with the Commission as an introducing broker and such 
registration shall not have expired nor been suspended nor 
revoked.
  (h) [Notwithstanding subsection (a)(2)] Notwithstanding 
subsection (a)(1)(B) or the rules and regulations thereunder, 
and pursuant to an exemption granted by the Commission under 
section 4(c) of this Act or pursuant to a rule or regulation, a 
futures commission merchant that is registered pursuant to 
section 4f(a)(1) of this Act and also registered as a broker or 
dealer pursuant to section 15(b)(1) of the Securities Exchange 
Act of 1934 may, pursuant to a portfolio margining program 
approved by the Securities and Exchange Commission pursuant to 
section 19(b) of the Securities Exchange Act of 1934, hold in a 
portfolio margining account carried as a securities account 
subject to section 15(c)(3) of the Securities Exchange Act of 
1934 and the rules and regulations thereunder, a contract for 
the purchase or sale of a commodity for future delivery or an 
option on such a contract, and any money, securities or other 
property received from a customer to margin, guarantee or 
secure such a contract, or accruing to a customer as the result 
of such a contract. The Commission shall consult with the 
Securities and Exchange Commission to adopt rules to ensure 
that such transactions and accounts are subject to comparable 
requirements to the extent practical for similar products.
  Sec. 4e. It shall be unlawful for any person to act as floor 
trader in executing purchases and sales, or as floor broker in 
executing any orders for the purchase or sale, of any commodity 
for future delivery, or involving any contracts of sale of any 
commodity for future delivery, on or subject to the rules of 
any contract market [or derivatives transaction execution 
facility] unless such person shall have registered, under this 
Act, with the Commission as such floor trader or floor broker 
and such registration shall not have expired nor been suspended 
nor revoked.
  Sec. 4f. (a)(1) Any person desiring to register as a futures 
commission merchant, introducing broker, floor broker, or floor 
trader hereunder shall be registered upon application to the 
Commission. The application shall be made in such form and 
manner as prescribed by the Commission, giving such information 
and facts as the Commission may deem necessary concerning the 
business in which the applicant is or will be engaged, 
including in the case of an application of a futures commission 
merchant or an introducing broker, the names and addresses of 
the managers of all branch offices, and the names of such 
officers and partners, if a partnership, and of such officers, 
directors, and stockholders, if a corporation, as the 
Commission may direct. Such person, when registered hereunder, 
shall likewise continue to report and furnish to the Commission 
the above-mentioned information and such other information 
pertaining to such person's business as the Commission may 
require. Each registration shall expire on December 31 of the 
year for which issued or at such other time, not less than one 
year from the date of issuance, as the Commission may by rule, 
regulation, or order prescribe, and shall be renewed upon 
application therefor unless the registration has been suspended 
(and the period of such suspension has not expired) or revoked 
pursuant to the provisions of this Act.
  (2) Notwithstanding paragraph (1), and except as provided in 
paragraph (3), any broker or dealer that is registered with the 
Securities and Exchange Commission shall be registered as a 
futures commission merchant or introducing broker, as 
applicable, if--
          (A) the broker or dealer limits its solicitation of 
        orders, acceptance of orders, or execution of orders, 
        or placing of orders on behalf of others involving any 
        contracts of sale of any commodity for future delivery, 
        on or subject to the rules of any contract market or 
        registered derivatives transaction execution facility 
        to security futures products;
          (B) the broker or dealer files written notice with 
        the Commission in such form as the Commission, by rule, 
        may prescribe containing such information as the 
        Commission, by rule, may prescribe as necessary or 
        appropriate in the public interest or for the 
        protection of investors;
          (C) the registration of the broker or dealer is not 
        suspended pursuant to an order of the Securities and 
        Exchange Commission; and
          (D) the broker or dealer is a member of a national 
        securities association registered pursuant to section 
        15A(a) of the Securities Exchange Act of 1934.
The registration shall be effective contemporaneously with the 
submission of notice, in written or electronic form, to the 
Commission.
  (3) A floor broker or floor trader shall be exempt from the 
registration requirements of section 4e and paragraph (1) of 
this subsection if--
          (A) the floor broker or floor trader is a broker or 
        dealer registered with the Securities and Exchange 
        Commission;
          (B) the floor broker or floor trader limits its 
        solicitation of orders, acceptance of orders, or 
        execution of orders, or placing of orders on behalf of 
        others involving any contracts of sale of any commodity 
        for future delivery, on or subject to the rules of any 
        contract market to security futures products; and
          (C) the registration of the floor broker or floor 
        trader is not suspended pursuant to an order of the 
        Securities and Exchange Commission.
  (4)(A) A broker or dealer that is registered as a futures 
commission merchant or introducing broker pursuant to paragraph 
(2), or that is a floor broker or floor trader exempt from 
registration pursuant to paragraph (3), shall be exempt from 
the following provisions of this Act and the rules thereunder:
          (i) Subsections (b)[, (d), (e), and (g)] and (e) of 
        section 4c.
          (ii) Sections 4d, 4e, and 4h.
          (iii) Subsections (b) and (c) of this section.
          (iv) Section 4j.
          (v) Section 4k(1).
          (vi) Section 4p.
          (vii) Section 6d.
          (viii) Subsections (d) and (g) of section 8.
          (ix) Section 16.
  (B)(i) Except as provided in clause (ii) of this 
subparagraph, but notwithstanding any other provision of this 
Act, the Commission, by rule, regulation, or order, may 
conditionally or unconditionally exempt any broker or dealer 
subject to the registration requirement of paragraph (2), or 
any broker or dealer exempt from registration pursuant to 
paragraph (3), from any provision of this Act or of any rule or 
regulation thereunder, to the extent the exemption is necessary 
or appropriate in the public interest and is consistent with 
the protection of investors.
  (ii) The Commission shall, by rule or regulation, determine 
the procedures under which an exemptive order under this 
section shall be granted and may, in its sole discretion, 
decline to entertain any application for an order of exemption 
under this section.
  (C)(i) A broker or dealer that is registered as a futures 
commission merchant or introducing broker pursuant to paragraph 
(2) or an associated person thereof, or that is a floor broker 
or floor trader exempt from registration pursuant to paragraph 
(3), shall not be required to become a member of any futures 
association registered under section 17.
  (ii) No futures association registered under section 17 shall 
limit its members from carrying an account, accepting an order, 
or transacting business with a broker or dealer that is 
registered as a futures commission merchant or introducing 
broker pursuant to paragraph (2) or an associated person 
thereof, or that is a floor broker or floor trader exempt from 
registration pursuant to paragraph (3).
  (b) Notwithstanding any other provisions of this Act, no 
person desiring to register as futures commission merchant or 
as introducing broker shall be so registered unless he meets 
such minimum financial requirements as the Commission may by 
regulation prescribe as necessary to insure his meeting his 
obligations as a registrant, and each person so registered 
shall at all times continue to meet such prescribed minimum 
financial requirements: Provided, That such minimum financial 
requirements will be considered met if the applicant for 
registration or registrant is a member of a contract market [or 
derivatives transaction execution facility] and conforms to 
minimum financial standards and related reporting requirements 
set by such contract market [or derivatives transaction 
execution facility] in its bylaws, rules, regulations, or 
resolutions and approved by the Commission as adequate to 
effectuate the purposes of this subsection.
  (c)(1) As used in this subsection:
          (i) The term ``affiliated person'' means any person 
        directly or indirectly controlling, controlled by, or 
        under common control with a futures commission 
        merchant, as the Commission, by rule or regulation, may 
        determine will effectuate the purposes of this 
        subsection.
          (ii) The term ``Federal banking agency'' shall have 
        the same meaning as the term ``appropriate Federal 
        banking agency'' in section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)).
  (2)(A) Each registered futures commission merchant shall 
obtain such information and make and keep such records as the 
Commission, by rule or regulation, prescribes concerning the 
registered futures commission merchant's policies, procedures, 
or systems for monitoring and controlling financial and 
operational risks to it resulting from the activities of any of 
its affiliated persons, other than a natural person.
  (B) The records required under subparagraph (A) shall 
describe, in the aggregate, each of the futures and other 
financial activities conducted by, and the customary sources of 
capital and funding of, those of its affiliated persons whose 
business activities are reasonably likely to have a material 
impact on the financial or operational condition of the futures 
commission merchant, including its adjusted net capital, its 
liquidity, or its ability to conduct or finance its operations.
  (C) The Commission, by rule or regulation, may require 
summary reports of such information to be filed by the futures 
commission merchant with the Commission no more frequently than 
quarterly.
  (3)(A) [,] If, as a result of adverse market conditions or 
based on reports provided to the Commission pursuant to 
paragraph (2) or other available information, the Commission 
reasonably concludes that the Commission has concerns regarding 
the financial or operational condition of any registered 
futures commission merchant, the Commission may require the 
futures commission merchant to make reports concerning the 
futures and other financial activities of any of such person's 
affiliated persons, other than a natural person, whose business 
activities are reasonably likely to have a material impact on 
the financial or operational condition of the futures 
commission merchant.
  (B) The Commission, in requiring reports pursuant to this 
paragraph, shall specify the information required, the period 
for which it is required, the time and date on which the 
information must be furnished, and whether the information is 
to be furnished directly to the Commission or to a contract 
market or derivatives transaction execution facility or other 
self-regulatory organization with primary responsibility for 
examining the registered futures commission merchant's 
financial and operational condition.
  (4)(A) [in developing] In developing and implementing 
reporting requirements pursuant to paragraph (2) with respect 
to affiliated persons subject to examination by or reporting 
requirements of a Federal banking agency, the Commission shall 
consult with and consider the views of each such Federal 
banking agency. If a Federal banking agency comments in writing 
on a proposed rule of the Commission under this subsection that 
has been published for comment, the Commission shall respond in 
writing to the written comment before adopting the proposed 
rule. The Commission shall, at the request of the Federal 
banking agency, publish the comment and response in the Federal 
Register at the time of publishing the adopted rule.
  (B)(i) Except as provided in clause (ii), a registered 
futures commission merchant shall be considered to have 
complied with a recordkeeping or reporting requirement adopted 
pursuant to paragraph (2) concerning an affiliated person that 
is subject to examination by, or reporting requirements of, a 
Federal banking agency if the futures commission merchant 
utilizes for the recordkeeping or reporting requirement copies 
of reports filed by the affiliated person with the Federal 
banking agency pursuant to section 5211 of the Revised Statutes 
(12 U.S.C. 161), section 9 of the Federal Reserve Act (12 
U.S.C. 321 et seq.), section 7(a) of the Federal Deposit 
Insurance Act (12 U.S.C. [1817(a)] 1817(a)), section 10(b) of 
the Home Owners' Loan Act (12 U.S.C. 1467a(b)), or section 5 of 
the Bank Holding Company Act of 1956 (12 U.S.C. 1844).
  (ii) The Commission may, by rule adopted pursuant to 
paragraph (2), require any futures commission merchant filing 
the reports with the Commission to obtain, maintain, or report 
supplemental information if the Commission makes an explicit 
finding that the supplemental information is necessary to 
inform the Commission regarding potential risks to the futures 
commission merchant. Prior to requiring any such supplemental 
information, the Commission shall first request the Federal 
banking agency to expand its reporting requirements to include 
the information.
  (5) Prior to making a request pursuant to paragraph (3) for 
information with respect to an affiliated person that is 
subject to examination by or reporting requirements of a 
Federal banking agency, the Commission shall--
          (A) notify the agency of the information required 
        with respect to the affiliated person; and
          (B) consult with the agency to determine whether the 
        information required is available from the agency and 
        for other purposes, unless the Commission determines 
        that any delay resulting from the consultation would be 
        inconsistent with ensuring the financial and 
        operational condition of the futures commission 
        merchant or the stability or integrity of the futures 
        markets.
  (6) Nothing in this subsection shall be construed to permit 
the Commission to require any futures commission merchant to 
obtain, maintain, or furnish any examination report of any 
Federal banking agency or any supervisory recommendations or 
analysis contained in the report.
  (7) No information provided to or obtained by the Commission 
from any Federal banking agency pursuant to a request under 
paragraph (5) regarding any affiliated person that is subject 
to examination by or reporting requirements of a Federal 
banking agency may be disclosed to any other person (other than 
as provided in section 8 or section 8a(6)), without the prior 
written approval of the Federal banking agency.
  (8) The Commission shall notify a Federal banking agency of 
any concerns of the Commission regarding significant financial 
or operational risks resulting from the activities of any 
futures commission merchant to any affiliated person thereof 
that is subject to examination by or reporting requirements of 
the Federal banking agency.
  (9) The Commission, by rule, regulation, or order, may exempt 
any person or class of persons under such terms and conditions 
and for such periods as the Commission shall provide in the 
rule, regulation, or order, from this subsection and the rules 
and regulations issued under this subsection. In granting the 
exemption, the Commission shall consider, among other factors--
          (A) whether information of the type required under 
        this subsection is available from a supervisory agency 
        (as defined in section 1101(7) of the Right to 
        Financial Privacy Act of 1978 (12 U.S.C. 3401(7))), a 
        State insurance commission or similar State agency, the 
        Securities and Exchange Commission, or a similar 
        foreign regulator;
          (B) the primary business of any affiliated person;
          (C) the nature and extent of domestic or foreign 
        regulation of the affiliated person's activities;
          (D) the nature and extent of the registered futures 
        commission merchant's commodity futures and options 
        activities; and
          (E) with respect to the registered futures commission 
        merchant and its affiliated persons, on a consolidated 
        basis, the amount and proportion of assets devoted to, 
        and revenues derived from activities in the United 
        States futures markets.
  (10) Information required to be provided pursuant to this 
subsection shall be subject to section 8. Except as 
specifically provided in section 8 and notwithstanding any 
other provision of law, the Commission shall not be compelled 
to disclose any information required to be reported under this 
subsection, or any information supplied to the Commission by 
any domestic or foreign regulatory agency that relates to the 
financial or operational condition of any affiliated person of 
a registered futures commission merchant.
  (11) Nothing in paragraphs (1) through (10) shall be 
construed to supersede or to limit in any way the authority or 
powers of the Commission pursuant to any other provision of 
this Act or regulations issued under this Act.
  Sec. 4g. (a) Every person registered hereunder as futures 
commission merchant, introducing broker, floor broker, or floor 
trader shall make such reports as are required by the 
Commission regarding the transactions and positions of such 
person, and the transactions and positions of the customer 
thereof, in commodities for future delivery on any board of 
trade in the United States or elsewhere, and in [any 
significant price discovery contract traded or executed on an 
electronic trading facility or] any agreement, contract, or 
transaction that is treated by a derivatives clearing 
organization, whether registered or not registered, as fungible 
with a significant price discovery contract; shall keep books 
and records pertaining to such transactions and positions in 
such form and manner and for such period as may be required by 
the Commission; and shall keep such books and records open to 
inspection by any representative of the Commission or the 
United States Department of Justice.
  (b) Every registered entity shall maintain daily trading 
records. The daily trading records shall include such 
information as the Commission shall prescribe by rule.
  (c) Floor brokers, introducing brokers, and futures 
commission merchants shall maintain daily trading records for 
each customer in such manner and form as to be identifiable 
with the trades referred to in subsection (b).
  (d) Daily trading records shall be maintained in a form 
suitable to the Commission for such period as may be required 
by the Commission. Reports shall be made from the records 
maintained at such times and at such places and in such form as 
the Commission may prescribe by rule, order, or regulation in 
order to protect the public interest and the interest of 
persons trading in commodity futures.
  (e) Before the beginning of trading each day, the [exchange] 
each designated contract market and swap execution facility 
shall, insofar as is practicable and under terms and conditions 
specified by the Commission, make public the volume of trading 
on each type of contract for the previous day and such other 
information as the Commission deems necessary in the public 
interest and prescribes by rule, order, or regulation.
  (f) Nothing contained in this section shall be construed to 
prohibit the Commission from making separate determinations for 
different registered entities when such determinations are 
warranted in the judgment of the Commission.

           *       *       *       *       *       *       *

  Sec. 4i. It shall be unlawful for any person to make any 
contract for the purchase or sale of any commodity for future 
delivery on or subject to the rules of any contract market [or 
derivatives transaction execution facility, or any significant 
price discovery contract traded or executed on an electronic 
trading facility or any agreement, contract, or transaction 
that is treated by a derivatives clearing organization, whether 
registered or not registered, as fungible with a significant 
price discovery contract]--
          (1) if such person shall directly or indirectly make 
        such contracts with respect to any commodity or any 
        future of such commodity during any one day in an 
        amount equal to or in excess of such amount as shall be 
        fixed from time to time by the Commission, and
          (2) if such person shall directly or indirectly have 
        or obtain a long or short position in any commodity or 
        any future of such commodity equal to or in excess of 
        such amount as shall be fixed from time to time by the 
        Commission,
unless such person files or causes to be filed with the 
properly designated officer of the Commission such reports 
regarding any transactions or positions described in clauses 
(1) and (2) hereof as the Commission may by rule or regulation 
require and unless, in accordance with rules and regulations of 
the Commission, such person shall keep books and records of all 
such transactions and positions and transactions and positions 
in any such commodity traded on or subject to the rules of any 
other board of trade [or electronic trading facility], and of 
cash or spot transactions in, and inventories and purchase and 
sale commitments of such commodity. Such books and records 
shall show complete details concerning all such transactions, 
positions, inventories, and commitments, including the names 
and addresses of all persons having any interest therein, and 
shall be open at all times to inspection by any representative 
of the Commission or the Department of Justice. For the 
purposes of this section, the futures and cash or spot 
transactions and positions of any person shall include such 
transactions and positions of any persons directly or 
indirectly controlled by such person.

SEC. 4J. RESTRICTIONS ON DUAL TRADING IN SECURITY FUTURES PRODUCTS ON 
                    DESIGNATED CONTRACT MARKETS AND REGISTERED 
                    DERIVATIVES TRANSACTION EXECUTION FACILITIES.

  (a) The Commission shall issue regulations to prohibit the 
privilege of dual trading in security futures products on each 
contract market [and registered derivatives transaction 
execution facility]. The regulations issued by the Commission 
under this section--
          (1) shall provide that the prohibition of dual 
        trading thereunder shall take effect upon issuance of 
        the regulations; and
          (2) shall provide exceptions, as the Commission 
        determines appropriate, to ensure fairness and orderly 
        trading in security futures product markets, 
        including--
                  (A) exceptions for spread transactions and 
                the correction of trading errors;
                  (B) allowance for a customer to designate in 
                writing not less than once annually a named 
                floor broker to execute orders for such 
                customer, notwithstanding the regulations to 
                prohibit the privilege of dual trading required 
                under this section; and
                  (C) other measures reasonably designed to 
                accommodate unique or special characteristics 
                of individual boards of trade or contract 
                markets, to address emergency or unusual market 
                conditions, or otherwise to further the public 
                interest consistent with the promotion of 
                market efficiency, innovation, and expansion of 
                investment opportunities, the protection of 
                investors, and with the purposes of this 
                section.
  (b) As used in this section, the term ``dual trading'' means 
the execution of customer orders by a floor broker during the 
same trading session in which the floor broker executes any 
trade in the same contract market or registered derivatives 
transaction execution facility for--
          (1) the account of such floor broker;
          (2) an account for which such floor broker has 
        trading discretion; or
          (3) an account controlled by a person with whom such 
        floor broker has a relationship through membership in a 
        broker association.
  (c) As used in this section, the term ``broker association'' 
shall include two or more contract market members or registered 
derivatives transaction execution facility members with floor 
trading privileges of whom at least one is acting as a floor 
broker, who--
          (1) engage in floor brokerage activity on behalf of 
        the same employer,
          (2) have an employer and employee relationship which 
        relates to floor brokerage activity,
          (3) share profits and losses associated with their 
        brokerage or trading activity, or
          (4) regularly share a deck of orders.
  Sec. 4k. (1) It shall be unlawful for any person to be 
associated with a futures commission merchant as a partner, 
officer, or employee, or to be associated with an introducing 
broker as a partner, officer, employee, or agent (or any person 
occupying a similar status or performing similar functions), in 
any capacity that involves (i) the solicitation or acceptance 
of customers' orders (other than in a clerical capacity) or 
(ii) the supervision of any person or persons so engaged, 
unless such person is registered with the Commission under this 
Act as an associated person of such futures commission merchant 
or of such introducing broker and such registration shall not 
have expired, been suspended (and the period of suspension has 
not expired), or been revoked. It shall be unlawful for a 
futures commission merchant or introducing broker to permit 
such a person to become or remain associated with the futures 
commission merchant or introducing broker in any such capacity 
if such futures commission merchant or introducing broker knew 
or should have known that such person was not so registered or 
that such registration had expired, been suspended (and the 
period of suspension has not expired), or been revoked. Any 
individual who is registered as a floor broker, futures 
commission merchant, or introducing broker (and such 
registration is not suspended or revoked) need not also 
register under this subsection.
  (2) It shall be unlawful for any person to be associated with 
a commodity pool operator as a partner, officer, employee, 
consultant, or agent (or any person occupying a similar status 
or performing similar functions), in any capacity that involves 
(i) the solicitation of funds, securities, or property for a 
participation in a commodity pool or (ii) the supervision of 
any person or persons so engaged, unless such person is 
registered with the Commission under this Act as an associated 
person of such commodity pool operator and such registration 
shall not have expired, been suspended (and the period of 
suspension has not expired), or been revoked. It shall be 
unlawful for a commodity pool operator to permit such a person 
to become or remain associated with the commodity pool operator 
in any such capacity if the commodity pool operator knew or 
should have known that such person was not so registered or 
that such registration had expired, been suspended (and the 
period of suspension has not expired), or been revoked. Any 
individual who is registered as a floor broker, futures 
commission merchant, introducing broker, commodity pool 
operator, or as an associated person of another category of 
registrant under this section (and such registration is not 
suspended or revoked) need not also register under this 
subsection. The Commission may exempt any person or class of 
persons from having to register under this subsection by rule, 
regulation, or order.
  (3) It shall be unlawful for any person to be associated with 
a commodity trading advisor as a partner, officer, employee, 
consultant, or agent (or any person occupying a similar status 
or performing similar functions), in any capacity which 
involves (i) the solicitation of a client's or prospective 
client's discretionary account or (ii) the supervision of any 
person or persons so engaged, unless such person is registered 
with the Commission under this Act as an associated person of 
such commodity trading advisor and such registration shall not 
have expired, been suspended (and the period of suspension has 
not expired), or been revoked. It shall be unlawful for a 
commodity trading advisor to permit such a person to become or 
remain associated with the commodity trading advisor in any 
such capacity if the commodity trading advisor knew or should 
have known that such person was not so registered or that such 
registration had expired, been suspended (and the period of 
suspension has not expired), or been revoked. Any individual 
who is registered as a floor broker, futures commission 
merchant, introducing broker, commodity trading advisor, or as 
an associated person of another category of registrant under 
this section (and such registration is not suspended or 
revoked) need not also register under this subsection. The 
Commission may exempt any person or class of persons from 
having to register under this subsection by rule, regulation, 
or order.
  (4) Any person desiring to be registered as an associated 
person of a futures commission merchant, of an introducing 
broker, of a commodity pool operator, or of a commodity trading 
advisor shall make application to the Commission in the form 
and manner prescribed by the Commission, giving such 
information and facts as the Commission may deem necessary 
concerning the applicant. Such person, when registered 
hereunder, shall likewise continue to report and furnish to the 
Commission such information as the Commission may require. Such 
registration shall expire at such time as the Commission may by 
rule, regulation, or order prescribe.
  (5) Any associated person of a broker or dealer that is 
registered with the Securities and Exchange Commission, and who 
limits its solicitation of orders, acceptance of orders, or 
execution of orders, or placing of orders on behalf of others 
involving any contracts of sale of any commodity for future 
delivery or any option on such a contract, on or subject to the 
rules of any contract market or registered derivatives 
transaction execution facility to security futures products, 
shall be exempt from the following provisions of this Act and 
the rules thereunder:
          (A) Subsections (b)[, (d), (e), and (g)] and (e) of 
        section 4c.
          (B) Sections 4d, 4e, and 4h.
          (C) Subsections (b) and (c) of section 4f.
          (D) Section 4j.
          (E) Paragraph (1) of this section.
          (F) Section 4p.
          (G) Section 6d.
          (H) Subsections (d) and (g) of section 8.
          (I) Section 16.
  (6) It shall be unlawful for any registrant to permit a 
person to become or remain an associated person of such 
registrant, if the registrant knew or should have known of 
facts regarding such associated person that are set forth as 
statutory disqualifications in section 8a(2) of this Act, 
unless such registrant has notified the Commission of such 
facts and the Commission has determined that such person should 
be registered or temporarily licensed.

           *       *       *       *       *       *       *

  Sec. 4m. (1) It shall be unlawful for any commodity trading 
advisor or commodity pool operator, unless registered under 
this Act, to make use of the mails or any means or 
instrumentality of interstate commerce in connection with his 
business as such commodity trading advisor or commodity pool 
operator: Provided, That the provisions of this section shall 
not apply to any commodity trading advisor who, during the 
course of the preceding twelve months, has not furnished 
commodity trading advice to more than fifteen persons and who 
does not hold himself out generally to the public as a 
commodity trading advisor. The provisions of this section shall 
not apply to any commodity trading advisor who is a (1) dealer, 
processor, broker, or seller in cash market transactions of any 
commodity specifically set forth in section 2(a) of this Act 
prior to the enactment of the Commodity Futures Trading 
Commission Act of 1974 (or products thereof) or (2) nonprofit, 
voluntary membership, general farm organization, who provides 
advice on the sale or purchase of any commodity specifically 
set forth in section 2(a) of this Act prior to the enactment of 
the Commodity Futures Trading Commission Act of 1974; if the 
advice by the person described in clause (1) or (2) of this 
sentence as a commodity trading advisor is solely incidental to 
the conduct of that person's business: Provided, That such 
person shall be subject to proceedings under section 14 of this 
Act: Provided further, That the provisions of this section 
shall not apply to any commodity trading advisor that is: (A) a 
charitable organization, as defined in section 3(c)(10)(D) of 
the Investment Company Act of 1940, or a trustee, director, 
officer, employee, or volunteer of such a charitable 
organization acting within the scope of the employment or 
duties of the person with the organization, whose trading 
advice is provided only to, or with respect to, 1 or more of 
the following: (i) any such charitable organization, or (ii) an 
investment trust, syndicate or similar form of enterprise 
excluded from the definition of ``investment company'' pursuant 
to section 3(c)(10) of the Investment Company Act of 1940; or 
(B) any plan, company, or account described in section 3(c)(14) 
of the Investment Company Act of 1940, any person or entity who 
establishes or maintains such a plan, company, or account, or 
any trustee, director, officer, employee, or volunteer for any 
of the foregoing plans, persons, or entities acting within the 
scope of the employment or duties of the person with the 
organization, whose trading advice is provided only to, or with 
respect to, any investment trust, syndicate, or similar form of 
enterprise excluded from the definition of ``investment 
company'' pursuant to section 3(c)(14) of the Investment 
Company Act of 1940.
  (2) Nothing in this Act shall relieve any person of any 
obligation or duty, or affect the availability of any right or 
remedy available to the Securities and Exchange Commission or 
any private party arising under the Securities Act of 1933 or 
the Securities Exchange Act of 1934 governing the issuance, 
offer, purchase, or sale of securities of a commodity pool, or 
of persons engaged in transactions with respect to such 
securities, or reporting by a commodity pool.
  (3) Exception.--
          (A) In general.--Paragraph (1) shall not apply to any 
        commodity trading advisor that is registered with the 
        Securities and Exchange Commission as an investment 
        adviser whose business does not consist primarily of 
        acting as a commodity trading advisor, as defined in 
        section 1a, and that does not act as a commodity 
        trading advisor to any commodity pool that is engaged 
        primarily in trading commodity interests.
          (B) Engaged primarily.--For purposes of subparagraph 
        (A), a commodity trading advisor or a commodity pool 
        shall be considered to be ``engaged primarily'' in the 
        business of being a commodity trading advisor or 
        commodity pool if it is or holds itself out to the 
        public as being engaged primarily, or proposes to 
        engage primarily, in the business of advising on 
        commodity interests or investing, reinvesting, owning, 
        holding, or trading in commodity interests, 
        respectively.
          (C) Commodity interests.--For purposes of this 
        paragraph, commodity interests shall include contracts 
        of sale of a commodity for future delivery, options on 
        such contracts, security futures, swaps, leverage 
        contracts, foreign exchange, spot and forward contracts 
        on physical commodities, and any monies held in an 
        account used for trading commodity interests.
  (4) Disclosure Concerning Excluded Charitable 
Organizations.--The operator of or advisor to any investment 
trust, syndicate, or similar form of enterprise excluded from 
the definition of ``commodity pool'' by reason of section 
1a(10)(C) shall provide, to each donor to the fund, trust, 
syndicate, or similar form of enterprise, at the time of the 
donation or within 90 days after the date of the enactment of 
this subsection, whichever is later, written information 
describing the material terms of the operation of the fund, 
trust, syndicate, or similar form of enterprise.

           *       *       *       *       *       *       *

  Sec. 4p. (a) The Commission may specify by rules and 
regulations appropriate standards with respect to training, 
experience, and such other qualifications as the Commission 
finds necessary or desirable to insure the fitness of persons 
required to be registered with the Commission. In connection 
therewith, the Commission may prescribe by rules and 
regulations the adoption of written proficiency examinations to 
be given to applicants for registration and the establishment 
of reasonable fees to be charged to such applicants to cover 
the administration of such examinations. The Commission may 
further prescribe by rules and regulations that, in lieu of 
examinations administered by the Commission, futures 
associations registered under section 17 of this Act, contract 
markets[, or derivatives transaction execution facilities] may 
adopt written proficiency examinations to be given to 
applicants for registration and charge reasonable fees to such 
applicants to cover the administration of such examinations. 
Notwithstanding any other provision of this section, the 
Commission may specify by rules and regulations such terms and 
conditions as it deems appropriate to protect the public 
interest wherein exception to any written proficiency 
examination shall be made with respect to individuals who have 
demonstrated, through training and experience, the degree of 
proficiency and skill necessary to protect the interests of 
customers, clients, pool participants, or other members of the 
public with whom such individuals deal.
  (b) The Commission shall issue regulations to require new 
registrants, within six months after receiving such 
registration, to attend a training session, and all other 
registrants to attend periodic training sessions, to ensure 
that registrants understand their responsibilities to the 
public under this Act, including responsibilities to observe 
just and equitable principles of trade, any rule or regulation 
of the Commission, any rule of any appropriate contract market, 
[derivatives transaction execution facility,] registered 
futures association, or other self-regulatory organization, or 
any other applicable Federal or state law, rule or regulation.

SEC. 4Q. SPECIAL PROCEDURES TO ENCOURAGE AND FACILITATE BONA FIDE 
                    HEDGING BY AGRICULTURAL PRODUCERS.

  (a) Authority.--The Commission shall consider issuing rules 
or orders which--
          (1) prescribe procedures under which each contract 
        market is to provide for orderly delivery, including 
        temporary storage costs, of any agricultural commodity 
        enumerated in section [1a(9)] 1a(10) which is the 
        subject of a contract for purchase or sale for future 
        delivery;
          (2) increase the ease with which domestic 
        agricultural producers may participate in contract 
        markets, including by addressing cost and margin 
        requirements, so as to better enable the producers to 
        hedge price risk associated with their production;
          (3) provide flexibility in the minimum quantities of 
        such agricultural commodities that may be the subject 
        of a contract for purchase or sale for future delivery 
        that is traded on a contract market, to better allow 
        domestic agricultural producers to hedge such price 
        risk; and
          (4) encourage contract markets to provide information 
        and otherwise facilitate the participation of domestic 
        agricultural producers in contract markets.
  (b) Report.--Within 1 year after the date of the enactment of 
this section, the Commission shall submit to the Committee on 
Agriculture of the House of Representatives and the Committee 
on Agriculture, Nutrition, and Forestry of the Senate a report 
on the steps it has taken to implement this section and on the 
activities of contract markets pursuant to this section.

           *       *       *       *       *       *       *


SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP 
                    PARTICIPANTS.

  (a) Registration.--
          (1) Swap dealers.--It shall be unlawful for any 
        person to act as a swap dealer unless the person is 
        registered as a swap dealer with the Commission.
          (2) Major swap participants.--It shall be unlawful 
        for any person to act as a major swap participant 
        unless the person is registered as a major swap 
        participant with the Commission.
  (b) Requirements.--
          (1) In general.--A person shall register as a swap 
        dealer or major swap participant by filing a 
        registration application with the Commission.
          (2) Contents.--
                  (A) In general.--The application shall be 
                made in such form and manner as prescribed by 
                the Commission, and shall contain such 
                information, as the Commission considers 
                necessary concerning the business in which the 
                applicant is or will be engaged.
                  (B) Continual reporting.--A person that is 
                registered as a swap dealer or major swap 
                participant shall continue to submit to the 
                Commission reports that contain such 
                information pertaining to the business of the 
                person as the Commission may require.
          (3) Expiration.--Each registration under this section 
        shall expire at such time as the Commission may 
        prescribe by rule or regulation.
          (4) Rules.--Except as provided in subsections (d) and 
        (e), the Commission may prescribe rules applicable to 
        swap dealers and major swap participants, including 
        rules that limit the activities of swap dealers and 
        major swap participants.
          (5) Transition.--Rules under this section shall 
        provide for the registration of swap dealers and major 
        swap participants not later than 1 year after the date 
        of enactment of the Wall Street Transparency and 
        Accountability Act of 2010.
          (6) Statutory disqualification.--Except to the extent 
        otherwise specifically provided by rule, regulation, or 
        order, it shall be unlawful for a swap dealer or a 
        major swap participant to permit any person associated 
        with a swap dealer or a major swap participant who is 
        subject to a statutory disqualification to effect or be 
        involved in effecting swaps on behalf of the swap 
        dealer or major swap participant, if the swap dealer or 
        major swap participant knew, or in the exercise of 
        reasonable care should have known, of the statutory 
        disqualification.
  (c) Dual Registration.--
          (1) Swap dealer.--Any person that is required to be 
        registered as a swap dealer under this section shall 
        register with the Commission regardless of whether the 
        person also is a depository institution or is 
        registered with the Securities and Exchange Commission 
        as a security-based swap dealer.
          (2) Major swap participant.--Any person that is 
        required to be registered as a major swap participant 
        under this section shall register with the Commission 
        regardless of whether the person also is a depository 
        institution or is registered with the Securities and 
        Exchange Commission as a major security-based swap 
        participant.
  (d) Rulemakings.--
          (1) In general.--The Commission shall adopt rules for 
        persons that are registered as swap dealers or major 
        swap participants under this section.
          (2) Exception for prudential requirements.--
                  (A) In general.--The Commission may not 
                prescribe rules imposing prudential 
                requirements on swap dealers or major swap 
                participants for which there is a prudential 
                regulator.
                  (B) Applicability.--Subparagraph (A) does not 
                limit the authority of the Commission to 
                prescribe rules as directed under this section.
  (e) Capital and Margin Requirements.--
          (1) In general.--
                  (A) Swap dealers and major swap participants 
                that are banks.--Each registered swap dealer 
                and major swap participant for which there is a 
                prudential regulator shall meet such minimum 
                capital requirements and minimum initial and 
                variation margin requirements as the prudential 
                regulator shall by rule or regulation prescribe 
                under paragraph (2)(A).
                  (B) Swap dealers and major swap participants 
                that are not banks.--Each registered swap 
                dealer and major swap participant for which 
                there is not a prudential regulator shall meet 
                such minimum capital requirements and minimum 
                initial and variation margin requirements as 
                the Commission shall by rule or regulation 
                prescribe under paragraph (2)(B).
          (2) Rules.--
                  (A) Swap dealers and major swap participants 
                that are banks.--The prudential regulators, in 
                consultation with the Commission and the 
                Securities and Exchange Commission, shall 
                jointly adopt rules for swap dealers and major 
                swap participants, with respect to their 
                activities as a swap dealer or major swap 
                participant, for which there is a prudential 
                regulator imposing--
                          (i) capital requirements; and
                          (ii) both initial and variation 
                        margin requirements on all swaps that 
                        are not cleared by a registered 
                        derivatives clearing organization.
                  (B) Swap dealers and major swap participants 
                that are not banks.--The Commission in 
                consultation with the prudential regulators and 
                the Securities and Exchange Commission shall 
                adopt rules for swap dealers and major swap 
                participants, with respect to their activities 
                as a swap dealer or major swap participant, for 
                which there is not a prudential regulator 
                imposing--
                          (i) capital requirements; and
                          (ii) both initial and variation 
                        margin requirements on all swaps that 
                        are not cleared by a registered 
                        derivatives clearing organization.
                  (C) Capital.--In setting capital requirements 
                for a person that is designated as a swap 
                dealer or a major swap participant for a single 
                type or single class or category of swap or 
                activities, the prudential regulator and the 
                Commission shall take into account the risks 
                associated with other types of swaps or classes 
                of swaps or categories of swaps engaged in and 
                the other activities conducted by that person 
                that are not otherwise subject to regulation 
                applicable to that person by virtue of the 
                status of the person as a swap dealer or a 
                major swap participant.
          (3) Standards for capital and margin.--
                  (A) In general.--To offset the greater risk 
                to the swap dealer or major swap participant 
                and the financial system arising from the use 
                of swaps that are not cleared, the requirements 
                imposed under paragraph (2) shall--
                          (i) help ensure the safety and 
                        soundness of the swap dealer or major 
                        swap participant; and
                          (ii) be appropriate for the risk 
                        associated with the non-cleared swaps 
                        held as a swap dealer or major swap 
                        participant.
                  (B) Rule of construction.--
                          (i) In general.--Nothing in this 
                        section shall limit, or be construed to 
                        limit, the authority--
                                  (I) of the Commission to set 
                                financial responsibility rules 
                                for a futures commission 
                                merchant or introducing broker 
                                registered pursuant to section 
                                4f(a) (except for section 
                                4f(a)(3)) in accordance with 
                                section 4f(b); or
                                  (II) of the Securities and 
                                Exchange Commission to set 
                                financial responsibility rules 
                                for a broker or dealer 
                                registered pursuant to section 
                                15(b) of the Securities 
                                Exchange Act of 1934 (15 U.S.C. 
                                78o(b)) (except for section 
                                15(b)(11) of that Act (15 
                                U.S.C. 78o(b)(11)) in 
                                accordance with section 
                                15(c)(3) of the Securities 
                                Exchange Act of 1934 (15 U.S.C. 
                                78o(c)(3)).
                          (ii) Futures commission merchants and 
                        other dealers.--A futures commission 
                        merchant, introducing broker, broker, 
                        or dealer shall maintain sufficient 
                        capital to comply with the stricter of 
                        any applicable capital requirements to 
                        which such futures commission merchant, 
                        introducing broker, broker, or dealer 
                        is subject to under this Act or the 
                        Securities Exchange Act of 1934 (15 
                        U.S.C. 78a et seq.).
                  (C) Margin requirements.--In prescribing 
                margin requirements under this subsection, the 
                prudential regulator with respect to swap 
                dealers and major swap participants for which 
                it is the prudential regulator and the 
                Commission with respect to swap dealers and 
                major swap participants for which there is no 
                prudential regulator shall permit the use of 
                noncash collateral, as the regulator or the 
                Commission determines to be consistent with--
                          (i) preserving the financial 
                        integrity of markets trading swaps; and
                          (ii) preserving the stability of the 
                        United States financial system.
                  (D) Comparability of capital and margin 
                requirements.--
                          (i) In general.--The prudential 
                        regulators, the Commission, and the 
                        Securities and Exchange Commission 
                        shall periodically (but not less 
                        frequently than annually) consult on 
                        minimum capital requirements and 
                        minimum initial and variation margin 
                        requirements.
                          (ii) Comparability.--The entities 
                        described in clause (i) [shall, to the 
                        maximum extent practicable,] shall 
                        establish and maintain comparable 
                        minimum capital requirements and 
                        minimum initial and variation margin 
                        requirements, including the use of non 
                        cash collateral, for--
                                  (I) swap dealers; and
                                  (II) major swap participants.
                          (iii) Financial models.--To the 
                        extent that swap dealers and major swap 
                        participants that are banks are 
                        permitted to use financial models 
                        approved by the prudential regulators 
                        or the Securities and Exchange 
                        Commission to calculate minimum capital 
                        requirements and minimum initial and 
                        variation margin requirements, 
                        including the use of non-cash 
                        collateral, the Commission shall, in 
                        consultation with the prudential 
                        regulators and the Securities and 
                        Exchange Commission, permit the use of 
                        comparable financial models by swap 
                        dealers and major swap participants 
                        that are not banks.
          (4) Applicability with respect to counterparties.--
        The requirements of paragraphs (2)(A)(ii) and 
        (2)(B)(ii), including the initial and variation margin 
        requirements imposed by rules adopted pursuant to 
        paragraphs (2)(A)(ii) and (2)(B)(ii), shall not apply 
        to a swap in which a counterparty qualifies for an 
        exception under section 2(h)(7)(A), or an exemption 
        issued under section 4(c)(1) from the requirements of 
        section 2(h)(1)(A) for cooperative entities as defined 
        in such exemption, or satisfies the criteria in section 
        2(h)(7)(D).
  (f) Reporting and Recordkeeping.--
          (1) In general.--Each registered swap dealer and 
        major swap participant--
                  (A) shall make such reports as are required 
                by the Commission by rule or regulation 
                regarding the transactions and positions and 
                financial condition of the registered swap 
                dealer or major swap participant;
                  (B)(i) for which there is a prudential 
                regulator, shall keep books and records of all 
                activities related to the business as a swap 
                dealer or major swap participant in such form 
                and manner and for such period as may be 
                prescribed by the Commission by rule or 
                regulation; and
                  (ii) for which there is no prudential 
                regulator, shall keep books and records in such 
                form and manner and for such period as may be 
                prescribed by the Commission by rule or 
                regulation;
                  (C) shall keep books and records described in 
                subparagraph (B) open to inspection and 
                examination by any representative of the 
                Commission; and
                  (D) shall keep any such books and records 
                relating to swaps defined in section 
                [1a(47)(A)(v)] 1a(48)(A)(v) open to inspection 
                and examination by the Securities and Exchange 
                Commission.
          (2) Rules.--The Commission shall adopt rules 
        governing reporting and recordkeeping for swap dealers 
        and major swap participants.
  (g) Daily Trading Records.--
          (1) In general.--Each registered swap dealer and 
        major swap participant shall maintain daily trading 
        records of the swaps of the registered swap dealer and 
        major swap participant and all related records 
        (including related cash or forward transactions) and 
        recorded communications, including electronic mail, 
        instant messages, and recordings of telephone calls, 
        for such period as may be required by the Commission by 
        rule or regulation.
          (2) Information requirements.--The daily trading 
        records shall include such information as the 
        Commission shall require by rule or regulation.
          (3) Counterparty records.--Each registered swap 
        dealer and major swap participant shall maintain daily 
        trading records for each counterparty in a manner and 
        form that is identifiable with each swap transaction.
          (4) Audit trail.--Each registered swap dealer and 
        major swap participant shall maintain a complete audit 
        trail for conducting comprehensive and accurate trade 
        reconstructions.
          (5) Rules.--The Commission shall adopt rules 
        governing daily trading records for swap dealers and 
        major swap participants.
  (h) Business Conduct Standards.--
          (1) In general.--Each registered swap dealer and 
        major swap participant shall conform with such business 
        conduct standards as prescribed in paragraph (3) and as 
        may be prescribed by the Commission by rule or 
        regulation that relate to--
                  (A) fraud, manipulation, and other abusive 
                practices involving swaps (including swaps that 
                are offered but not entered into);
                  (B) diligent supervision of the business of 
                the registered swap dealer and major swap 
                participant;
                  (C) adherence to all applicable position 
                limits; and
                  (D) such other matters as the Commission 
                determines to be appropriate.
          (2) Responsibilities with respect to special 
        entities.--
                  (A) Advising special entities.--A swap dealer 
                or major swap participant that acts as an 
                advisor to a special entity regarding a swap 
                shall comply with the requirements of 
                subparagraph (4) with respect to such Special 
                Entity.
                  (B) Entering of swaps with respect to special 
                entities.--A swap dealer that enters into or 
                offers to enter into swap with a Special Entity 
                shall comply with the requirements of 
                subparagraph (5) with respect to such Special 
                Entity.
                  (C) Special entity defined.--For purposes of 
                this subsection, the term ``special entity'' 
                means--
                          (i) a Federal agency;
                          (ii) a State, State agency, city, 
                        county, municipality, or other 
                        political subdivision of a State;
                          (iii) any employee benefit plan, as 
                        defined in section 3 of the Employee 
                        Retirement Income Security Act of 1974 
                        (29 U.S.C. 1002);
                          (iv) any governmental plan, as 
                        defined in section 3 of the Employee 
                        Retirement Income Security Act of 1974 
                        (29 U.S.C. 1002); or
                          (v) any endowment, including an 
                        endowment that is an organization 
                        described in section 501(c)(3) of the 
                        Internal Revenue Code of 1986.
                  (D) Utility special entity.--For purposes of 
                this Act, the term ``utility special entity'' 
                means a special entity, or any instrumentality, 
                department, or corporation of or established by 
                a State or political subdivision of a State, 
                that--
                          (i) owns or operates, or anticipates 
                        owning or operating, an electric or 
                        natural gas facility or an electric or 
                        natural gas operation;
                          (ii) supplies, or anticipates 
                        supplying, natural gas and or electric 
                        energy to another utility special 
                        entity;
                          (iii) has, or anticipates having, 
                        public service obligations under 
                        Federal, State, or local law or 
                        regulation to deliver electric energy 
                        or natural gas service to customers; or
                          (iv) is a Federal power marketing 
                        agency, as defined in section 3 of the 
                        Federal Power Act.
          (3) Business conduct requirements.--Business conduct 
        requirements adopted by the Commission shall--
                  (A) establish a duty for a swap dealer or 
                major swap participant to verify that any 
                counterparty meets the eligibility standards 
                for an eligible contract participant;
                  (B) require disclosure by the swap dealer or 
                major swap participant to any counterparty to 
                the transaction (other than a swap dealer, 
                major swap participant, security-based swap 
                dealer, or major security-based swap 
                participant) of--
                          (i) information about the material 
                        risks and characteristics of the swap;
                          (ii) any material incentives or 
                        conflicts of interest that the swap 
                        dealer or major swap participant may 
                        have in connection with the swap; and
                          (iii)(I) for cleared swaps, upon the 
                        request of the counterparty, receipt of 
                        the daily mark of the transaction from 
                        the appropriate derivatives clearing 
                        organization; and
                          (II) for uncleared swaps, receipt of 
                        the daily mark of the transaction from 
                        the swap dealer or the major swap 
                        participant;
                  (C) establish a duty for a swap dealer or 
                major swap participant to communicate in a fair 
                and balanced manner based on principles of fair 
                dealing and good faith; and
                  (D) establish such other standards and 
                requirements as the Commission may determine 
                are appropriate in the public interest, for the 
                protection of investors, or otherwise in 
                furtherance of the purposes of this Act.
          (4) Special requirements for swap dealers acting as 
        advisors.--
                  (A) In general.--It shall be unlawful for a 
                swap dealer or major swap participant--
                          (i) to employ any device, scheme, or 
                        artifice to defraud any Special Entity 
                        or prospective customer who is a 
                        Special Entity;
                          (ii) to engage in any transaction, 
                        practice, or course of business that 
                        operates as a fraud or deceit on any 
                        Special Entity or prospective customer 
                        who is a Special Entity; or
                          (iii) to engage in any act, practice, 
                        or course of business that is 
                        fraudulent, deceptive or manipulative.
                  (B) Duty.--Any swap dealer that acts as an 
                advisor to a Special Entity shall have a duty 
                to act in the best interests of the Special 
                Entity.
                  (C) Reasonable efforts.--Any swap dealer that 
                acts as an advisor to a Special Entity shall 
                make reasonable efforts to obtain such 
                information as is necessary to make a 
                reasonable determination that any swap 
                recommended by the swap dealer is in the best 
                interests of the Special Entity, including 
                information relating to--
                          (i) the financial status of the 
                        Special Entity;
                          (ii) the tax status of the Special 
                        Entity;
                          (iii) the investment or financing 
                        objectives of the Special Entity; and
                          (iv) any other information that the 
                        Commission may prescribe by rule or 
                        regulation.
          (5) Special requirements for swap dealers as 
        counterparties to special entities.--
                  (A) Any swap dealer or major swap participant 
                that offers to enter or enters into a swap with 
                a Special Entity shall--
                          (i) comply with any duty established 
                        by the Commission for a swap dealer or 
                        major swap participant, with respect to 
                        a counterparty that is an eligible 
                        contract participant within the meaning 
                        of subclause (I) or (II) of clause 
                        (vii) of section [1a(18)] 1a(19) of 
                        this Act, that requires the swap dealer 
                        or major swap participant to have a 
                        reasonable basis to believe that the 
                        counterparty that is a Special Entity 
                        has an independent representative 
                        that--
                                  (I) has sufficient knowledge 
                                to evaluate the transaction and 
                                risks;
                                  (II) is not subject to a 
                                statutory disqualification;
                                  (III) is independent of the 
                                swap dealer or major swap 
                                participant;
                                  (IV) undertakes a duty to act 
                                in the best interests of the 
                                counterparty it represents;
                                  (V) makes appropriate 
                                disclosures;
                                  (VI) will provide written 
                                representations to the Special 
                                Entity regarding fair pricing 
                                and the appropriateness of the 
                                transaction; and
                                  (VII) in the case of employee 
                                benefit plans subject to the 
                                Employee Retirement Income 
                                Security act of 1974, is a 
                                fiduciary as defined in section 
                                3 of that Act (29 U.S.C. 1002); 
                                and
                          (ii) before the initiation of the 
                        transaction, disclose to the Special 
                        Entity in writing the capacity in which 
                        the swap dealer is acting; and
                  (B) the Commission may establish such other 
                standards and requirements as the Commission 
                may determine are appropriate in the public 
                interest, for the protection of investors, or 
                otherwise in furtherance of the purposes of 
                this Act.
          (6) Rules.--The Commission shall prescribe rules 
        under this subsection governing business conduct 
        standards for swap dealers and major swap participants.
          (7) Applicability.--This section shall not apply with 
        respect to a transaction that is--
                  (A) initiated by a Special Entity on an 
                exchange or swap execution facility; and
                  (B) one in which the swap dealer or major 
                swap participant does not know the identity of 
                the counterparty to the transaction.
  (i) Documentation Standards.--
          (1) In general.--Each registered swap dealer and 
        major swap participant shall conform with such 
        standards as may be prescribed by the Commission by 
        rule or regulation that relate to timely and accurate 
        confirmation, processing, netting, documentation, and 
        valuation of all swaps.
          (2) Rules.--The Commission shall adopt rules 
        governing documentation standards for swap dealers and 
        major swap participants.
  (j) Duties.--Each registered swap dealer and major swap 
participant at all times shall comply with the following 
requirements:
          (1) Monitoring of trading.--The swap dealer or major 
        swap participant shall monitor its trading in swaps to 
        prevent violations of applicable position limits.
          (2) Risk management procedures.--The swap dealer or 
        major swap participant shall establish robust and 
        professional risk management systems adequate for 
        managing the day-to-day business of the swap dealer or 
        major swap participant.
          (3) Disclosure of general information.--The swap 
        dealer or major swap participant shall disclose to the 
        Commission and to the prudential regulator for the swap 
        dealer or major swap participant, as applicable, 
        information concerning--
                  (A) terms and conditions of its swaps;
                  (B) swap trading operations, mechanisms, and 
                practices;
                  (C) financial integrity protections relating 
                to swaps; and
                  (D) other information relevant to its trading 
                in swaps.
          (4) Ability to obtain information.--The swap dealer 
        or major swap participant shall--
                  (A) establish and enforce internal systems 
                and procedures to obtain any necessary 
                information to perform any of the functions 
                described in this section; and
                  (B) provide the information to the Commission 
                and to the prudential regulator for the swap 
                dealer or major swap participant, as 
                applicable, on request.
          (5) Conflicts of interest.--The swap dealer and major 
        swap participant shall implement conflict-of-interest 
        systems and procedures that--
                  (A) establish structural and institutional 
                safeguards to ensure that the activities of any 
                person within the firm relating to research or 
                analysis of the price or market for any 
                commodity or swap or acting in a role of 
                providing clearing activities or making 
                determinations as to accepting clearing 
                customers are separated by appropriate 
                informational partitions within the firm from 
                the review, pressure, or oversight of persons 
                whose involvement in pricing, trading, or 
                clearing activities might potentially bias 
                their judgment or supervision and contravene 
                the core principles of open access and the 
                business conduct standards described in this 
                Act; and
                  (B) address such other issues as the 
                Commission determines to be appropriate.
          (6) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a swap 
        dealer or major swap participant shall not--
                  (A) adopt any process or take any action that 
                results in any unreasonable restraint of trade; 
                or
                  (B) impose any material anticompetitive 
                burden on trading or clearing.
          (7) Rules.--The Commission shall prescribe rules 
        under this subsection governing duties of swap dealers 
        and major swap participants.
  (k) Designation of Chief Compliance Officer.--
          (1) In general.--Each swap dealer and major swap 
        participant shall designate an individual to serve as a 
        chief compliance officer.
          (2) Duties.--The chief compliance officer shall--
                  (A) report directly to the board or to the 
                senior officer of the swap dealer or major swap 
                participant;
                  (B) review the compliance of the swap dealer 
                or major swap participant with respect to the 
                swap dealer and major swap participant 
                requirements described in this section;
                  (C) in consultation with the board of 
                directors, a body performing a function similar 
                to the board, or the senior officer of the 
                organization, resolve any conflicts of interest 
                that may arise;
                  (D) be responsible for administering each 
                policy and procedure that is required to be 
                established pursuant to this section;
                  (E) ensure compliance with this Act 
                (including regulations) relating to swaps, 
                including each rule prescribed by the 
                Commission under this section;
                  (F) establish procedures for the remediation 
                of noncompliance issues identified by the chief 
                compliance officer through any--
                          (i) compliance office review;
                          (ii) look-back;
                          (iii) internal or external audit 
                        finding;
                          (iv) self-reported error; or
                          (v) validated complaint; and
                  (G) establish and follow appropriate 
                procedures for the handling, management 
                response, remediation, retesting, and closing 
                of noncompliance issues.
          (3) Annual reports.--
                  (A) In general.--In accordance with rules 
                prescribed by the Commission, the chief 
                compliance officer shall annually prepare and 
                sign a report that contains a description of--
                          (i) the compliance of the swap dealer 
                        or major swap participant with respect 
                        to this Act (including regulations); 
                        and
                          (ii) each policy and procedure of the 
                        swap dealer or major swap participant 
                        of the chief compliance officer 
                        (including the code of ethics and 
                        conflict of interest policies).
                  [(B) Requirements.--A compliance report under 
                subparagraph (A) shall--
                          [(i) accompany each appropriate 
                        financial report of the swap dealer or 
                        major swap participant that is required 
                        to be furnished to the Commission 
                        pursuant to this section; and
                          [(ii) include a certification that, 
                        under penalty of law, the compliance 
                        report is accurate and complete.]
                  (B) Requirements.--A compliance report under 
                subparagraph (A) shall--
                          (i) include a certification that, 
                        under penalty of law, the compliance 
                        report is materially accurate and 
                        complete; and
                          (ii) be furnished at such time as the 
                        Commission determines by rule, 
                        regulation, or order, to be 
                        appropriate.
  (l) Segregation Requirements.--
          (1) Segregation of assets held as collateral in 
        uncleared swap transactions.--
                  (A) Notification.--A swap dealer or major 
                swap participant shall be required to notify 
                the counterparty of the swap dealer or major 
                swap participant at the beginning of a swap 
                transaction that the counterparty has the right 
                to require segregation of the funds or other 
                property supplied to margin, guarantee, or 
                secure the obligations of the counterparty.
                  (B) Segregation and maintenance of funds.--At 
                the request of a counterparty to a swap that 
                provides funds or other property to a swap 
                dealer or major swap participant to margin, 
                guarantee, or secure the obligations of the 
                counterparty, the swap dealer or major swap 
                participant shall--
                          (i) segregate the funds or other 
                        property for the benefit of the 
                        counterparty; and
                          (ii) in accordance with such rules 
                        and regulations as the Commission may 
                        promulgate, maintain the funds or other 
                        property in a segregated account 
                        separate from the assets and other 
                        interests of the swap dealer or major 
                        swap participant.
          (2) Applicability.--The requirements described in 
        paragraph (1) shall--
                  (A) apply only to a swap between a 
                counterparty and a swap dealer or major swap 
                participant that is not submitted for clearing 
                to a derivatives clearing organization; and
                  (B)(i) not apply to variation margin 
                payments; or
                  (ii) not preclude any commercial arrangement 
                regarding--
                          (I) the investment of segregated 
                        funds or other property that may only 
                        be invested in such investments as the 
                        Commission may permit by rule or 
                        regulation; and
                          (II) the related allocation of gains 
                        and losses resulting from any 
                        investment of the segregated funds or 
                        other property.
          (3) Use of independent third-party custodians.--The 
        segregated account described in paragraph (1) shall 
        be--
                  (A) carried by an independent third-party 
                custodian; and
                  (B) designated as a segregated account for 
                and on behalf of the counterparty.
          (4) Reporting requirement.--If the counterparty does 
        not choose to require segregation of the funds or other 
        property supplied to margin, guarantee, or secure the 
        obligations of the counterparty, the swap dealer or 
        major swap participant shall report to the counterparty 
        of the swap dealer or major swap participant on a 
        quarterly basis that the back office procedures of the 
        swap dealer or major swap participant relating to 
        margin and collateral requirements are in compliance 
        with the agreement of the counterparties.

SEC. 4T. LARGE SWAP TRADER REPORTING.

  (a) Prohibition.--
          (1) In general.--Except as provided in paragraph (2), 
        it shall be unlawful for any person to enter into any 
        swap that the Commission determines to perform a 
        significant price discovery function with respect to 
        registered entities if--
                  (A) the person directly or indirectly enters 
                into the swap during any 1 day in an amount 
                equal to or in excess of such amount as shall 
                be established periodically by the Commission; 
                and
                  (B) the person directly or indirectly has or 
                obtains a position in the swap equal to or in 
                excess of such amount as shall be established 
                periodically by the Commission.
          (2) Exception.--Paragraph (1) shall not apply if--
                  (A) the person files or causes to be filed 
                with the properly designated officer of the 
                Commission such reports regarding any 
                transactions or positions described in 
                subparagraphs (A) and (B) of paragraph (1) as 
                the Commission may require by rule or 
                regulation; and
                  (B) in accordance with the rules and 
                regulations of the Commission, the person keeps 
                books and records of all such swaps and any 
                transactions and positions in any related 
                commodity traded on or subject to the rules of 
                any designated contract market or swap 
                execution facility, and of cash or spot 
                transactions in, inventories of, and purchase 
                and sale commitments of, such a commodity.
  (b) Requirements.--
          (1) In general.--Books and records described in 
        subsection (a)(2)(B) shall--
                  (A) show such complete details concerning all 
                transactions and positions as the Commission 
                may prescribe by rule or regulation;
                  (B) be open at all times to inspection and 
                examination by any representative of the 
                Commission; and
                  (C) be open at all times to inspection and 
                examination by the Securities and Exchange 
                Commission, to the extent such books and 
                records relate to transactions in swaps (as 
                that term is defined in section [1a(47)(A)(v)] 
                1a(48)(A)(v)), and consistent with the 
                confidentiality and disclosure requirements of 
                section 8.
          (2) Jurisdiction.--Nothing in paragraph (1) shall 
        affect the exclusive jurisdiction of the Commission to 
        prescribe recordkeeping and reporting requirements for 
        large swap traders under this section.
  (c) Applicability.--For purposes of this section, the swaps, 
futures, and cash or spot transactions and positions of any 
person shall include the swaps, futures, and cash or spot 
transactions and positions of any persons directly or 
indirectly controlled by the person.
  (d) Significant Price Discovery Function.--In making a 
determination as to whether a swap performs or affects a 
significant price discovery function with respect to registered 
entities, the Commission shall consider the factors described 
in section 4a(a)(3).

SEC. 4U. RECORDKEEPING REQUIREMENTS APPLICABLE TO NON-REGISTERED 
                    MEMBERS OF CERTAIN REGISTERED ENTITIES.

  Except as provided in section 4(a)(3), a member of a 
designated contract market or a swap execution facility that is 
not registered with the Commission and not required to be 
registered with the Commission in any capacity shall satisfy 
the recordkeeping requirements of this Act and any 
recordkeeping rule, order, or regulation under this Act by 
maintaining a written record of each transaction in a contract 
for future delivery, option on a future, swap, swaption, trade 
option, or related cash or forward transaction. The written 
record shall be sufficient if it includes the final agreement 
between the parties and the material economic terms of the 
transaction.

SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.

  (a) Applications.--A board of trade applying to the 
Commission for designation as a contract market shall submit an 
application to the Commission that includes any relevant 
materials and records the Commission may require consistent 
with this Act.
  [(c)] (b) Existing Contract Markets.--A board of trade that 
is designated as a contract market on the date of the enactment 
of the Commodity Futures Modernization Act of 2000 shall be 
considered to be a designated contract market under this 
section.
  [(d)] (c) Core Principles for Contract Markets.--
          (1) Designation as contract market.--
                  (A) In general.--To be designated, and 
                maintain a designation, as a contract market, a 
                board of trade shall comply with--
                          (i) any core principle described in 
                        this subsection; and
                          (ii) any requirement that the 
                        Commission may impose by rule or 
                        regulation pursuant to section 8a(5).
                  (B) Reasonable discretion of contract 
                market.--Unless otherwise determined by the 
                Commission by rule or regulation, a board of 
                trade described in subparagraph (A) shall have 
                reasonable discretion in establishing the 
                manner in which the board of trade complies 
                with the core principles described in this 
                subsection.
          (2) Compliance with rules.--
                  (A) In general.--The board of trade shall 
                establish, monitor, and enforce compliance with 
                the rules of the contract market, including--
                          (i) access requirements;
                          (ii) the terms and conditions of any 
                        contracts to be traded on the contract 
                        market; and
                          (iii) rules prohibiting abusive trade 
                        practices on the contract market.
                  (B) Capacity of contract market.--The board 
                of trade shall have the capacity to detect, 
                investigate, and apply appropriate sanctions to 
                any person that violates any rule of the 
                contract market.
                  (C) Requirement of rules.--The rules of the 
                contract market shall provide the board of 
                trade with the ability and authority to obtain 
                any necessary information to perform any 
                function described in this subsection, 
                including the capacity to carry out such 
                international information-sharing agreements as 
                the Commission may require.
          (3) Contracts not readily subject to manipulation.--
        The board of trade shall list on the contract market 
        only contracts that are not readily susceptible to 
        manipulation.
          (4) Prevention of market disruption.--The board of 
        trade shall have the capacity and responsibility to 
        prevent manipulation, price distortion, and disruptions 
        of the delivery or cash-settlement process through 
        market surveillance, compliance, and enforcement 
        practices and procedures, including--
                  (A) methods for conducting real-time 
                monitoring of trading; and
                  (B) comprehensive and accurate trade 
                reconstructions.
          (5) Position limitations or accountability.--
                  (A) In general.--To reduce the potential 
                threat of market manipulation or congestion 
                (especially during trading in the delivery 
                month), the board of trade shall adopt for each 
                contract of the board of trade, as is necessary 
                and appropriate, position limitations or 
                position accountability for speculators.
                  (B) Maximum allowable position limitation.--
                For any contract that is subject to a position 
                limitation established by the Commission 
                pursuant to section 4a(a), the board of trade 
                shall set the position limitation of the board 
                of trade at a level not higher than the 
                position limitation established by the 
                Commission.
          (6) Emergency authority.--The board of trade, in 
        consultation or cooperation with the Commission, shall 
        adopt rules to provide for the exercise of emergency 
        authority, as is necessary and appropriate, including 
        the authority--
                  (A) to liquidate or transfer open positions 
                in any contract;
                  (B) to suspend or curtail trading in any 
                contract; and
                  (C) to require market participants in any 
                contract to meet special margin requirements.
          (7) Availability of general information.--The board 
        of trade shall make available to market authorities, 
        market participants, and the public accurate 
        information concerning--
                  (A) the terms and conditions of the contracts 
                of the contract market; and
                  (B)(i) the rules, regulations, and mechanisms 
                for executing transactions on or through the 
                facilities of the contract market; and
                  (ii) the rules and specifications describing 
                the operation of the contract market's--
                          (I) electronic matching platform; or
                          (II) trade execution facility.
          (8) Daily publication of trading information.--The 
        board of trade shall make public daily information on 
        settlement prices, volume, open interest, and opening 
        and closing ranges for actively traded contracts on the 
        contract market.
          (9) Execution of transactions.--
                  (A) In general.--The board of trade shall 
                provide a competitive, open, and efficient 
                market and mechanism for executing transactions 
                that protects the price discovery process of 
                trading in the centralized market of the board 
                of trade.
                  (B) Rules.--The rules of the board of trade 
                may authorize, for bona fide business 
                purposes--
                          (i) transfer trades or office trades;
                          (ii) an exchange of--
                                  (I) futures in connection 
                                with a cash commodity 
                                transaction;
                                  (II) futures for cash 
                                commodities; or
                                  (III) futures for swaps; or
                          (iii) a futures commission merchant, 
                        acting as principal or agent, to enter 
                        into or confirm the execution of a 
                        contract for the purchase or sale of a 
                        commodity for future delivery if the 
                        contract is reported, recorded, or 
                        cleared in accordance with the rules of 
                        the contract market or a derivatives 
                        clearing organization.
          (10) Trade information.--The board of trade shall 
        maintain rules and procedures to provide for the 
        recording and safe storage of all identifying trade 
        information in a manner that enables the contract 
        market to use the information--
                  (A) to assist in the prevention of customer 
                and market abuses; and
                  (B) to provide evidence of any violations of 
                the rules of the contract market.
          (11) Financial integrity of transactions.--The board 
        of trade shall establish and enforce--
                  (A) rules and procedures for ensuring the 
                financial integrity of transactions entered 
                into on or through the facilities of the 
                contract market (including the clearance and 
                settlement of the transactions with a 
                derivatives clearing organization); and
                  (B) rules to ensure--
                          (i) the financial integrity of any--
                                  (I) futures commission 
                                merchant; and
                                  (II) introducing broker; and
                          (ii) the protection of customer 
                        funds.
          (12) Protection of markets and market participants.--
        The board of trade shall establish and enforce rules--
                  (A) to protect markets and market 
                participants from abusive practices committed 
                by any party, including abusive practices 
                committed by a party acting as an agent for a 
                participant; and
                  (B) to promote fair and equitable trading on 
                the contract market.
          (13) Disciplinary procedures.--The board of trade 
        shall establish and enforce disciplinary procedures 
        that authorize the board of trade to discipline, 
        suspend, or expel members or market participants that 
        violate the rules of the board of trade, or similar 
        methods for performing the same functions, including 
        delegation of the functions to third parties.
          (14) Dispute resolution.--The board of trade shall 
        establish and enforce rules regarding, and provide 
        facilities for alternative dispute resolution as 
        appropriate for, market participants and any market 
        intermediaries.
          (15) Governance fitness standards.--The board of 
        trade shall establish and enforce appropriate fitness 
        standards for directors, members of any disciplinary 
        committee, members of the contract market, and any 
        other person with direct access to the facility 
        (including any party affiliated with any person 
        described in this paragraph).
          (16) Conflicts of interest.--The board of trade shall 
        establish and enforce rules--
                  (A) to minimize conflicts of interest in the 
                decision-making process of the contract market; 
                and
                  (B) to establish a process for resolving 
                conflicts of interest described in subparagraph 
                (A).
          (17) Composition of governing boards of contract 
        markets.--The governance arrangements of the board of 
        trade shall be designed to permit consideration of the 
        views of market participants.
          (18) Recordkeeping.--The board of trade shall 
        maintain records of all activities relating to the 
        business of the contract market--
                  (A) in a form and manner that is acceptable 
                to the Commission; and
                  (B) for a period of at least 5 years.
          (19) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, the 
        board of trade shall not--
                  (A) adopt any rule or taking any action that 
                results in any unreasonable restraint of trade; 
                or
                  (B) impose any material anticompetitive 
                burden on trading on the contract market.
          (20) System safeguards.--The board of trade shall--
                  (A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize 
                sources of operational risk, through the 
                development of appropriate controls and 
                procedures, and the development of automated 
                systems, that are reliable, secure, and have 
                adequate scalable capacity;
                  (B) establish and maintain emergency 
                procedures, backup facilities, and a plan for 
                disaster recovery that allow for the timely 
                recovery and resumption of operations and the 
                fulfillment of the responsibilities and 
                obligations of the board of trade; and
                  (C) periodically conduct tests to verify that 
                backup resources are sufficient to ensure 
                continued order processing and trade matching, 
                price reporting, market surveillance, and 
                maintenance of a comprehensive and accurate 
                audit trail.
          (21) Financial resources.--
                  (A) In general.--The board of trade shall 
                have adequate financial, operational, and 
                managerial resources to discharge each 
                responsibility of the board of trade.
                  (B) Determination of adequacy.--The financial 
                resources of the board of trade shall be 
                considered to be adequate if the value of the 
                financial resources exceeds the total amount 
                that would enable the contract market to cover 
                the operating costs of the contract market for 
                a 1-year period, as calculated on a rolling 
                basis.
          (22) Diversity of board of directors.--The board of 
        trade, if a publicly traded company, shall endeavor to 
        recruit individuals to serve on the board of directors 
        and the other decision-making bodies (as determined by 
        the Commission) of the board of trade from among, and 
        to have the composition of the bodies reflect, a broad 
        and culturally diverse pool of qualified candidates.
          (23) Securities and exchange commission.--The board 
        of trade shall keep any such records relating to swaps 
        defined in section [1a(47)(A)(v)] 1a(48)(A)(v) open to 
        inspection and examination by the Securities and 
        Exchange Commission.
  [(e)] (d) Current Agricultural Commodities.--
          (1) Subject to paragraph (2) of this subsection, a 
        contract for purchase or sale for future delivery of an 
        agricultural commodity enumerated in section [1a(9)] 
        1a(10) that is available for trade on a contract 
        market, as of the date of the enactment of this 
        subsection, may be traded only on a contract market 
        designated under this section.
          (2) In order to promote responsible economic or 
        financial innovation and fair competition, the 
        Commission, on application by any person, after notice 
        and public comment and opportunity for hearing, may 
        prescribe rules and regulations to provide for the 
        offer and sale of contracts for future delivery or 
        options on such contracts to be conducted on a 
        derivatives transaction execution facility.

SEC. 5B. DERIVATIVES CLEARING ORGANIZATIONS.

  (a) Registration Requirement.--
          (1) In general.--Except as provided in paragraph (2), 
        it shall be unlawful for a derivatives clearing 
        organization, directly or indirectly, to make use of 
        the mails or any means or instrumentality of interstate 
        commerce to perform the functions of a derivatives 
        clearing organization with respect to--
                  (A) a contract of sale of a commodity for 
                future delivery (or an option on the contract 
                of sale) or option on a commodity, in each 
                case, unless the contract or option is--
                          (i) excluded from this Act by 
                        subsection (a)(1)(C)(i), (c), or (f) of 
                        section 2; or
                          (ii) a security futures product 
                        cleared by a clearing agency registered 
                        with the Securities and Exchange 
                        Commission under the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78a et 
                        seq.); or
                  (B) a swap.
          (2) Exception.--Paragraph (1) shall not apply to a 
        derivatives clearing organization that is registered 
        with the Commission.
  (b) Voluntary Registration.--A person that clears 1 or more 
agreements, contracts, or transactions that are not required to 
be cleared under this Act may register with the Commission as a 
derivatives clearing organization.
  (c) Registration of Derivatives Clearing Organizations.--
          (1) Application.--A person desiring to register as a 
        derivatives clearing organization shall submit to the 
        Commission an application in such form and containing 
        such information as the Commission may require for the 
        purpose of making the determinations required for 
        approval under paragraph (2).
          (2) Core principles for derivatives clearing 
        organizations.--
                  (A) Compliance.--
                          (i) In general.--To be registered and 
                        to maintain registration as a 
                        derivatives clearing organization, a 
                        derivatives clearing organization shall 
                        comply with each core principle 
                        described in this paragraph and any 
                        requirement that the Commission may 
                        impose by rule or regulation pursuant 
                        to section 8a(5).
                          (ii) Discretion of derivatives 
                        clearing organization.--Subject to any 
                        rule or regulation prescribed by the 
                        Commission, a derivatives clearing 
                        organization shall have reasonable 
                        discretion in establishing the manner 
                        by which the derivatives clearing 
                        organization complies with each core 
                        principle described in this paragraph.
                  (B) Financial resources.--
                          (i) In general.--Each derivatives 
                        clearing organization shall have 
                        adequate financial, operational, and 
                        managerial resources, as determined by 
                        the Commission, to discharge each 
                        responsibility of the derivatives 
                        clearing organization.
                          (ii) Minimum amount of financial 
                        resources.--Each derivatives clearing 
                        organization shall possess financial 
                        resources that, at a minimum, exceed 
                        the total amount that would--
                                  (I) enable the organization 
                                to meet its financial 
                                obligations to its members and 
                                participants notwithstanding a 
                                default by the member or 
                                participant creating the 
                                largest financial exposure for 
                                that organization in extreme 
                                but plausible market 
                                conditions; and
                                  (II) enable the derivatives 
                                clearing organization to cover 
                                the operating costs of the 
                                derivatives clearing 
                                organization for a period of 1 
                                year (as calculated on a 
                                rolling basis).
                  (C) Participant and product eligibility.--
                          (i) In general.--Each derivatives 
                        clearing organization shall establish--
                                  (I) appropriate admission and 
                                continuing eligibility 
                                standards (including sufficient 
                                financial resources and 
                                operational capacity to meet 
                                obligations arising from 
                                participation in the 
                                derivatives clearing 
                                organization) for members of, 
                                and participants in, the 
                                derivatives clearing 
                                organization; and
                                  (II) appropriate standards 
                                for determining the eligibility 
                                of agreements, contracts, or 
                                transactions submitted to the 
                                derivatives clearing 
                                organization for clearing.
                          (ii) Required procedures.--Each 
                        derivatives clearing organization shall 
                        establish and implement procedures to 
                        verify, on an ongoing basis, the 
                        compliance of each participation and 
                        membership requirement of the 
                        derivatives clearing organization.
                          (iii) Requirements.--The 
                        participation and membership 
                        requirements of each derivatives 
                        clearing organization shall--
                                  (I) be objective;
                                  (II) be publicly disclosed; 
                                and
                                  (III) permit fair and open 
                                access.
                  (D) Risk management.--
                          (i) In general.--Each derivatives 
                        clearing organization shall ensure that 
                        the derivatives clearing organization 
                        possesses the ability to manage the 
                        risks associated with discharging the 
                        responsibilities of the derivatives 
                        clearing organization through the use 
                        of appropriate tools and procedures.
                          (ii) Measurement of credit 
                        exposure.--Each derivatives clearing 
                        organization shall--
                                  (I) not less than once during 
                                each business day of the 
                                derivatives clearing 
                                organization, measure the 
                                credit exposures of the 
                                derivatives clearing 
                                organization to each member and 
                                participant of the derivatives 
                                clearing organization; and
                                  (II) monitor each exposure 
                                described in subclause (I) 
                                periodically during the 
                                business day of the derivatives 
                                clearing organization.
                          (iii) Limitation of exposure to 
                        potential losses from defaults.--Each 
                        derivatives clearing organization, 
                        through margin requirements and other 
                        risk control mechanisms, shall limit 
                        the exposure of the derivatives 
                        clearing organization to potential 
                        losses from defaults by members and 
                        participants of the derivatives 
                        clearing organization to ensure that--
                                  (I) the operations of the 
                                derivatives clearing 
                                organization would not be 
                                disrupted; and
                                  (II) nondefaulting members or 
                                participants would not be 
                                exposed to losses that 
                                nondefaulting members or 
                                participants cannot anticipate 
                                or control.
                          (iv) Margin requirements.--The margin 
                        required from each member and 
                        participant of a derivatives clearing 
                        organization shall be sufficient to 
                        cover potential exposures in normal 
                        market conditions.
                          (v) Requirements regarding models and 
                        parameters.--Each model and parameter 
                        used in setting margin requirements 
                        under clause (iv) shall be--
                                  (I) risk-based; and
                                  (II) reviewed on a regular 
                                basis.
                  (E) Settlement procedures.--Each derivatives 
                clearing organization shall--
                          (i) complete money settlements on a 
                        timely basis (but not less frequently 
                        than once each business day);
                          (ii) employ money settlement 
                        arrangements to eliminate or strictly 
                        limit the exposure of the derivatives 
                        clearing organization to settlement 
                        bank risks (including credit and 
                        liquidity risks from the use of banks 
                        to effect money settlements);
                          (iii) ensure that money settlements 
                        are final when effected;
                          (iv) maintain an accurate record of 
                        the flow of funds associated with each 
                        money settlement;
                          (v) possess the ability to comply 
                        with each term and condition of any 
                        permitted netting or offset arrangement 
                        with any other clearing organization;
                          (vi) regarding physical settlements, 
                        establish rules that clearly state each 
                        obligation of the derivatives clearing 
                        organization with respect to physical 
                        deliveries; and
                          (vii) ensure that each risk arising 
                        from an obligation described in clause 
                        (vi) is identified and managed.
                  (F) Treatment of funds.--
                          (i) Required standards and 
                        procedures.--Each derivatives clearing 
                        organization shall establish standards 
                        and procedures that are designed to 
                        protect and ensure the safety of member 
                        and participant funds and assets.
                          (ii) Holding of funds and assets.--
                        Each derivatives clearing organization 
                        shall hold member and participant funds 
                        and assets in a manner by which to 
                        minimize the risk of loss or of delay 
                        in the access by the derivatives 
                        clearing organization to the assets and 
                        funds.
                          (iii) Permissible investments.--Funds 
                        and assets invested by a derivatives 
                        clearing organization shall be held in 
                        instruments with minimal credit, 
                        market, and liquidity risks.
                  (G) Default rules and procedures.--
                          (i) In general.--Each derivatives 
                        clearing organization shall have rules 
                        and procedures designed to allow for 
                        the efficient, fair, and safe 
                        management of events during which 
                        members or participants--
                                  (I) become insolvent; or
                                  (II) otherwise default on the 
                                obligations of the members or 
                                participants to the derivatives 
                                clearing organization.
                          (ii) Default procedures.--Each 
                        derivatives clearing organization 
                        shall--
                                  (I) clearly state the default 
                                procedures of the derivatives 
                                clearing organization;
                                  (II) make publicly available 
                                the default rules of the 
                                derivatives clearing 
                                organization; and
                                  (III) ensure that the 
                                derivatives clearing 
                                organization may take timely 
                                action--
                                          (aa) to contain 
                                        losses and liquidity 
                                        pressures; and
                                          (bb) to continue 
                                        meeting each obligation 
                                        of the derivatives 
                                        clearing organization.
                  (H) Rule enforcement.--Each derivatives 
                clearing organization shall--
                          (i) maintain adequate arrangements 
                        and resources for--
                                  (I) the effective monitoring 
                                and enforcement of compliance 
                                with the rules of the 
                                derivatives clearing 
                                organization; and
                                  (II) the resolution of 
                                disputes;
                          (ii) have the authority and ability 
                        to discipline, limit, suspend, or 
                        terminate the activities of a member or 
                        participant due to a violation by the 
                        member or participant of any rule of 
                        the derivatives clearing organization; 
                        and
                          (iii) report to the Commission 
                        regarding rule enforcement activities 
                        and sanctions imposed against members 
                        and participants as provided in clause 
                        (ii).
                  (I) System safeguards.--Each derivatives 
                clearing organization shall--
                          (i) establish and maintain a program 
                        of risk analysis and oversight to 
                        identify and minimize sources of 
                        operational risk through the 
                        development of appropriate controls and 
                        procedures, and automated systems, that 
                        are reliable, secure, and have adequate 
                        scalable capacity;
                          (ii) establish and maintain emergency 
                        procedures, backup facilities, and a 
                        plan for disaster recovery that allows 
                        for--
                                  (I) the timely recovery and 
                                resumption of operations of the 
                                derivatives clearing 
                                organization; and
                                  (II) the fulfillment of each 
                                obligation and responsibility 
                                of the derivatives clearing 
                                organization; and
                          (iii) periodically conduct tests to 
                        verify that the backup resources of the 
                        derivatives clearing organization are 
                        sufficient to ensure daily processing, 
                        clearing, and settlement.
                  (J) Reporting.--Each derivatives clearing 
                organization shall provide to the Commission 
                all information that the Commission determines 
                to be necessary to conduct oversight of the 
                derivatives clearing organization.
                  (K) Recordkeeping.--Each derivatives clearing 
                organization shall maintain records of all 
                activities related to the business of the 
                derivatives clearing organization as a 
                derivatives clearing organization--
                          (i) in a form and manner that is 
                        acceptable to the Commission; and
                          (ii) for a period of not less than 5 
                        years.
                  (L) Public information.--
                          (i) In general.--Each derivatives 
                        clearing organization shall provide to 
                        market participants sufficient 
                        information to enable the market 
                        participants to identify and evaluate 
                        accurately the risks and costs 
                        associated with using the services of 
                        the derivatives clearing organization.
                          (ii) Availability of information.--
                        Each derivatives clearing organization 
                        shall make information concerning the 
                        rules and operating and default 
                        procedures governing the clearing and 
                        settlement systems of the derivatives 
                        clearing organization available to 
                        market participants.
                          (iii) Public disclosure.--Each 
                        derivatives clearing organization shall 
                        disclose publicly and to the Commission 
                        information concerning--
                                  (I) the terms and conditions 
                                of each contract, agreement, 
                                and transaction cleared and 
                                settled by the derivatives 
                                clearing organization;
                                  (II) each clearing and other 
                                fee that the derivatives 
                                clearing organization charges 
                                the members and participants of 
                                the derivatives clearing 
                                organization;
                                  (III) the margin-setting 
                                methodology, and the size and 
                                composition, of the financial 
                                resource package of the 
                                derivatives clearing 
                                organization;
                                  (IV) daily settlement prices, 
                                volume, and open interest for 
                                each contract settled or 
                                cleared by the derivatives 
                                clearing organization; and
                                  (V) any other matter relevant 
                                to participation in the 
                                settlement and clearing 
                                activities of the derivatives 
                                clearing organization.
                  (M) Information-sharing.--Each derivatives 
                clearing organization shall--
                          (i) enter into, and abide by the 
                        terms of, each appropriate and 
                        applicable domestic and international 
                        information-sharing agreement; and
                          (ii) use relevant information 
                        obtained from each agreement described 
                        in clause (i) in carrying out the risk 
                        management program of the derivatives 
                        clearing organization.
                  (N) Antitrust considerations.--Unless 
                necessary or appropriate to achieve the 
                purposes of this Act, a derivatives clearing 
                organization shall not--
                          (i) adopt any rule or take any action 
                        that results in any unreasonable 
                        restraint of trade; or
                          (ii) impose any material 
                        anticompetitive burden.
                  (O) Governance fitness standards.--
                          (i) Governance arrangements.--Each 
                        derivatives clearing organization shall 
                        establish governance arrangements that 
                        are transparent--
                                  (I) to fulfill public 
                                interest requirements; and
                                  (II) to permit the 
                                consideration of the views of 
                                owners and participants.
                          (ii) Fitness standards.--Each 
                        derivatives clearing organization shall 
                        establish and enforce appropriate 
                        fitness standards for--
                                  (I) directors;
                                  (II) members of any 
                                disciplinary committee;
                                  (III) members of the 
                                derivatives clearing 
                                organization;
                                  (IV) any other individual or 
                                entity with direct access to 
                                the settlement or clearing 
                                activities of the derivatives 
                                clearing organization; and
                                  (V) any party affiliated with 
                                any individual or entity 
                                described in this clause.
                  (P) Conflicts of interest.--Each derivatives 
                clearing organization shall--
                          (i) establish and enforce rules to 
                        minimize conflicts of interest in the 
                        decision-making process of the 
                        derivatives clearing organization; and
                          (ii) establish a process for 
                        resolving conflicts of interest 
                        described in clause (i).
                  (Q) Composition of governing boards.--Each 
                derivatives clearing organization shall ensure 
                that the composition of the governing board or 
                committee of the derivatives clearing 
                organization includes market participants.
                  (R) Legal risk.--Each derivatives clearing 
                organization shall have a well-founded, 
                transparent, and enforceable legal framework 
                for each aspect of the activities of the 
                derivatives clearing organization.''.
          (3) Orders concerning competition.--A derivatives 
        clearing organization may request the Commission to 
        issue an order concerning whether a rule or practice of 
        the applicant is the least anticompetitive means of 
        achieving the objectives, purposes, and policies of 
        this Act.
  (d) Existing Derivatives Clearing Organizations.--A 
derivatives clearing organization shall be deemed to be 
registered under this section to the extent that the 
derivatives clearing organization clears agreements, contracts, 
or transactions for a board of trade that has been designated 
by the Commission as a contract market for such agreements, 
contracts, or transactions before the date of the enactment of 
this section.
  (e) Appointment of Trustee.--
          (1) In general.--If a proceeding under section 5e 
        results in the suspension or revocation of the 
        registration of a derivatives clearing organization, or 
        if a derivatives clearing organization withdraws from 
        registration, the Commission, on notice to the 
        derivatives clearing organization, may apply to the 
        appropriate United States district court where the 
        derivatives clearing organization is located for the 
        appointment of a trustee.
          (2) Assumption of jurisdiction.--If the Commission 
        applies for appointment of a trustee under paragraph 
        (1)--
                  (A) the court may take exclusive jurisdiction 
                over the derivatives clearing organization and 
                the records and assets of the derivatives 
                clearing organization, wherever located; and
                  (B) if the court takes jurisdiction under 
                subparagraph (A), the court shall appoint the 
                Commission, or a person designated by the 
                Commission, as trustee with power to take 
                possession and continue to operate or terminate 
                the operations of the derivatives clearing 
                organization in an orderly manner for the 
                protection of participants, subject to such 
                terms and conditions as the court may 
                prescribe.
  (f) Linking of Regulated Clearing Facilities.--
          (1) In general.--The Commission shall facilitate the 
        linking or coordination of derivatives clearing 
        organizations registered under this Act with other 
        regulated clearance facilities for the coordinated 
        settlement of cleared transactions. In order to 
        minimize systemic risk, under no circumstances shall a 
        derivatives clearing organization be compelled to 
        accept the counterparty credit risk of another clearing 
        organization.
          (2) Coordination.--In carrying out paragraph (1), the 
        Commission shall coordinate with the Federal banking 
        agencies and the Securities and Exchange Commission.
  (g) Existing Depository Institutions and Clearing Agencies.--
          (1) In general.--A depository institution or clearing 
        agency registered with the Securities and Exchange 
        Commission under the Securities Exchange Act of 1934 
        (15 U.S.C. 78a et seq.) that is required to be 
        registered as a derivatives clearing organization under 
        this section is deemed to be registered under this 
        section to the extent that, before the date of 
        enactment of this subsection--
                  (A) the depository institution cleared swaps 
                as a multilateral clearing organization; or
                  (B) the clearing agency cleared swaps.
          (2) Conversion of depository institutions.--A 
        depository institution to which this subsection applies 
        may, by the vote of the shareholders owning not less 
        than 51 percent of the voting interests of the 
        depository institution, be converted into a State 
        corporation, partnership, limited liability company, or 
        similar legal form pursuant to a plan of conversion, if 
        the conversion is not in contravention of applicable 
        State law.
          (3) Sharing of information.--The Securities and 
        Exchange Commission shall make available to the 
        Commission, upon request, all information determined to 
        be relevant by the Securities and Exchange Commission 
        regarding a clearing agency deemed to be registered 
        with the Commission under paragraph (1).
  (h) Exemptions.--The Commission may exempt, conditionally or 
unconditionally, a derivatives clearing organization from 
registration under this section for the clearing of swaps if 
the Commission determines that the derivatives clearing 
organization is subject to comparable, comprehensive 
supervision and regulation by the Securities and Exchange 
Commission or the appropriate government authorities in the 
home country of the organization. Such conditions may include, 
but are not limited to, requiring that the derivatives clearing 
organization be available for inspection by the Commission and 
make available all information requested by the Commission.
  (i) Designation of Chief Compliance Officer.--
          (1) In general.--Each derivatives clearing 
        organization shall designate an individual to serve as 
        a chief compliance officer.
          (2) Duties.--The chief compliance officer shall--
                  (A) report directly to the board or to the 
                senior officer of the derivatives clearing 
                organization;
                  (B) review the compliance of the derivatives 
                clearing organization with respect to the core 
                principles described in subsection (c)(2);
                  (C) in consultation with the board of the 
                derivatives clearing organization, a body 
                performing a function similar to the board of 
                the derivatives clearing organization, or the 
                senior officer of the derivatives clearing 
                organization, resolve any conflicts of interest 
                that may arise;
                  (D) be responsible for administering each 
                policy and procedure that is required to be 
                established pursuant to this section;
                  (E) ensure compliance with this Act 
                (including regulations) relating to agreements, 
                contracts, or transactions, including each rule 
                prescribed by the Commission under this 
                section;
                  (F) establish procedures for the remediation 
                of noncompliance issues identified by the 
                compliance officer through any--
                          (i) compliance office review;
                          (ii) look-back;
                          (iii) internal or external audit 
                        finding;
                          (iv) self-reported error; or
                          (v) validated complaint; and
                  (G) establish and follow appropriate 
                procedures for the handling, management 
                response, remediation, retesting, and closing 
                of noncompliance issues.
          (3) Annual reports.--
                  (A) In general.--In accordance with rules 
                prescribed by the Commission, the chief 
                compliance officer shall annually prepare and 
                sign a report that contains a description of--
                          (i) the compliance of the derivatives 
                        clearing organization of the compliance 
                        officer with respect to this Act 
                        (including regulations); and
                          (ii) each policy and procedure of the 
                        derivatives clearing organization of 
                        the compliance officer (including the 
                        code of ethics and conflict of interest 
                        policies of the derivatives clearing 
                        organization).
                  (B) Requirements.--A compliance report under 
                subparagraph (A) shall--
                          (i) accompany each appropriate 
                        financial report of the derivatives 
                        clearing organization that is required 
                        to be furnished to the Commission 
                        pursuant to this section; and
                          (ii) include a certification that, 
                        under penalty of law, the compliance 
                        report is accurate and complete.
  [(k)] (j) Reporting Requirements.--
          (1) Duty of derivatives clearing organizations.--Each 
        derivatives clearing organization that clears swaps 
        shall provide to the Commission all information that is 
        determined by the Commission to be necessary to perform 
        each responsibility of the Commission under this Act.
          (2) Data collection and maintenance requirements.--
        The Commission shall adopt data collection and 
        maintenance requirements for swaps cleared by 
        derivatives clearing organizations that are comparable 
        to the corresponding requirements for--
                  (A) swaps data reported to swap data 
                repositories; and
                  (B) swaps traded on swap execution 
                facilities.
          (3) Reports on security-based swap agreements to be 
        shared with the securities and exchange commission.--
                  (A) In general.--A derivatives clearing 
                organization that clears security-based swap 
                agreements (as defined in section 
                [1a(47)(A)(v)] 1a(48)(A)(v)) shall, upon 
                request, open to inspection and examination to 
                the Securities and Exchange Commission all 
                books and records relating to such security-
                based swap agreements, consistent with the 
                confidentiality and disclosure requirements of 
                section 8.
                  (B) Jurisdiction.--Nothing in this paragraph 
                shall affect the exclusive jurisdiction of the 
                Commission to prescribe recordkeeping and 
                reporting requirements for a derivatives 
                clearing organization that is registered with 
                the Commission.
          (4) Information sharing.--Subject to section 8, and 
        upon request, the Commission shall share information 
        collected under paragraph (2) with--
                  (A) the Board;
                  (B) the Securities and Exchange Commission;
                  (C) each appropriate prudential regulator;
                  (D) the Financial Stability Oversight 
                Council;
                  (E) the Department of Justice; and
                  (F) any other person that the Commission 
                determines to be appropriate, including--
                          (i) foreign financial supervisors 
                        (including foreign futures 
                        authorities);
                          (ii) foreign central banks; and
                          (iii) foreign ministries.
          [(5) Confidentiality and indemnification agreement.--
        Before the Commission may share information with any 
        entity described in paragraph (4)--
                  [(A) the Commission shall receive a written 
                agreement from each entity stating that the 
                entity shall abide by the confidentiality 
                requirements described in section 8 relating to 
                the information on swap transactions that is 
                provided; and
                  [(B) each entity shall agree to indemnify the 
                Commission for any expenses arising from 
                litigation relating to the information provided 
                under section 8.]
          (5) Confidentiality agreement.--Before the Commission 
        may share information with any entity described in 
        paragraph (4), the Commission shall receive a written 
        agreement from each entity stating that the entity 
        shall abide by the confidentiality requirements 
        described in section 8 relating to the information on 
        swap transactions that is provided.
          (6) Public information.--Each derivatives clearing 
        organization that clears swaps shall provide to the 
        Commission (including any designee of the Commission) 
        information under paragraph (2) in such form and at 
        such frequency as is required by the Commission to 
        comply with the public reporting requirements contained 
        in section 2(a)(13).

SEC. 5C. COMMON PROVISIONS APPLICABLE TO REGISTERED ENTITIES.

  (a) Acceptable Business Practices Under Core Principles.--
          (1) In general.--Consistent with the purposes of this 
        Act, the Commission may issue interpretations, or 
        approve interpretations submitted to the Commission, of 
        sections 5(d) and 5b(c)(2), to describe what would 
        constitute an acceptable business practice under such 
        sections.
          (2) Effect of interpretation.--An interpretation 
        issued under paragraph (1) may provide the exclusive 
        means for complying with each section described in 
        paragraph (1).
  (b) Delegation of Functions Under Core Principles.--
          (1) In general.--A [contract market, derivatives 
        transaction execution facility, or electronic trading 
        facility] registered entity with respect to a 
        significant price discovery contract may comply with 
        any applicable core principle through delegation of any 
        relevant function to a registered futures association 
        or a registered entity that is not an electronic 
        trading facility.
          (2) Responsibility.--A [contract market, derivatives 
        transaction execution facility, or electronic trading 
        facility] registered entity that delegates a function 
        under paragraph (1) shall remain responsible for 
        carrying out the function.
          (3) Noncompliance.--If a [contract market, 
        derivatives transaction execution facility, or 
        electronic trading facility] registered entity that 
        delegates a function under paragraph (1) becomes aware 
        that a delegated function is not being performed as 
        required under this Act, the [contract market, 
        derivatives transaction execution facility, or 
        electronic trading facility] registered entity shall 
        promptly take steps to address the noncompliance.
  (c) New Contracts, New Rules, and Rule Amendments.--
          (1) In general.--A registered entity may elect to 
        list for trading or accept for clearing any new 
        contract, or other instrument, or may elect to approve 
        and implement any new rule or rule amendment, by 
        providing to the Commission (and the Secretary of the 
        Treasury, in the case of a contract of sale of a 
        government security for future delivery (or option on 
        such a contract) or a rule or rule amendment 
        specifically related to such a contract) a written 
        certification that the new contract or instrument or 
        clearing of the new contract or instrument, new rule, 
        or rule amendment complies with this Act (including 
        regulations under this Act).
          (2) Rule review.--The new rule or rule amendment 
        described in paragraph (1) shall become effective, 
        pursuant to the certification of the registered entity 
        and notice of such certification to its members (in a 
        manner to be determined by the Commission), on the date 
        that is 10 business days after the date on which the 
        Commission receives the certification (or such shorter 
        period as determined by the Commission by rule or 
        regulation) unless the Commission notifies the 
        registered entity within such time that it is staying 
        the certification because there exist novel or complex 
        issues that require additional time to analyze, an 
        inadequate explanation by the submitting registered 
        entity, or a potential inconsistency with this Act 
        (including regulations under this Act).
          (3) Stay of certification for rules.--
                  (A) A notification by the Commission pursuant 
                to paragraph (2) shall stay the certification 
                of the new rule or rule amendment for up to an 
                additional 90 days from the date of the 
                notification.
                  (B) A rule or rule amendment subject to a 
                stay pursuant to subparagraph (A) shall become 
                effective, pursuant to the certification of the 
                registered entity, at the expiration of the 
                period described in subparagraph (A) unless the 
                Commission--
                          (i) withdraws the stay prior to that 
                        time; or
                          (ii) notifies the registered entity 
                        during such period that it objects to 
                        the proposed certification on the 
                        grounds that it is inconsistent with 
                        this Act (including regulations under 
                        this Act).
                  (C) The Commission shall provide a not less 
                than 30-day public comment period, within the 
                90-day period in which the stay is in effect as 
                described in subparagraph (A), whenever the 
                Commission reviews a rule or rule amendment 
                pursuant to a notification by the Commission 
                under this paragraph.
          (4) Prior approval.--
                  (A) In general.--A registered entity may 
                request that the Commission grant prior 
                approval to any new contract or other 
                instrument, new rule, or rule amendment.
                  (B) Prior approval required.--Notwithstanding 
                any other provision of this section, a 
                designated contract market shall submit to the 
                Commission for prior approval each rule 
                amendment that materially changes the terms and 
                conditions, as determined by the Commission, in 
                any contract of sale for future delivery of a 
                commodity specifically enumerated in section 
                1a(10) (or any option thereon) traded through 
                its facilities if the rule amendment applies to 
                contracts and delivery months which have 
                already been listed for trading and have open 
                interest.
                  (C) Deadline.--If prior approval is requested 
                under subparagraph (A), the Commission shall 
                take final action on the request not later than 
                90 days after submission of the request, unless 
                the person submitting the request agrees to an 
                extension of the time limitation established 
                under this subparagraph.
          (5) Approval.--
                  (A) Rules.--The Commission shall approve a 
                new rule, or rule amendment, of a registered 
                entity unless the Commission finds that the new 
                rule, or rule amendment, is inconsistent with 
                this subtitle (including regulations).
                  (B) Contracts and instruments.--The 
                Commission shall approve a new contract or 
                other instrument unless the Commission finds 
                that the new contract or other instrument would 
                violate this Act (including regulations).
                  (C) Special rule for review and approval of 
                event contracts and swaps contracts.--
                          (i) Event contracts.--In connection 
                        with the listing of agreements, 
                        contracts, transactions, or swaps in 
                        excluded commodities that are based 
                        upon the occurrence, extent of an 
                        occurrence, or contingency (other than 
                        a change in the price, rate, value, or 
                        levels of a commodity described in 
                        section [1a(2)(i))] 1a(19)(i)), by a 
                        designated contract market or swap 
                        execution facility, the Commission may 
                        determine that such agreements, 
                        contracts, or transactions are contrary 
                        to the public interest if the 
                        agreements, contracts, or transactions 
                        involve--
                                  (I) activity that is unlawful 
                                under any Federal or State law;
                                  (II) terrorism;
                                  (III) assassination;
                                  (IV) war;
                                  (V) gaming; or
                                  (VI) other similar activity 
                                determined by the Commission, 
                                by rule or regulation, to be 
                                contrary to the public 
                                interest.
                          (ii) Prohibition.--No agreement, 
                        contract, or transaction determined by 
                        the Commission to be contrary to the 
                        public interest under clause (i) may be 
                        listed or made available for clearing 
                        or trading on or through a registered 
                        entity.
                          (iii) Swaps contracts.--
                                  (I) In general.--In 
                                connection with the listing of 
                                a swap for clearing by a 
                                derivatives clearing 
                                organization, the Commission 
                                shall determine, upon request 
                                or on its own motion, the 
                                initial eligibility, or the 
                                continuing qualification, of a 
                                derivatives clearing 
                                organization to clear such a 
                                swap under those criteria, 
                                conditions, or rules that the 
                                Commission, in its discretion, 
                                determines.
                                  (II) Requirements.--Any such 
                                criteria, conditions, or rules 
                                shall consider--
                                          (aa) the financial 
                                        integrity of the 
                                        derivatives clearing 
                                        organization; and
                                          (bb) any other 
                                        factors which the 
                                        Commission determines 
                                        may be appropriate.
                          (iv) Deadline.--The Commission shall 
                        take final action under clauses (i) and 
                        (ii) in not later than 90 days from the 
                        commencement of its review unless the 
                        party seeking to offer the contract or 
                        swap agrees to an extension of this 
                        time limitation.
  (e) Reservation of Emergency Authority.--Nothing in this 
section shall limit or in any way affect the emergency powers 
of the Commission provided in section 8a(9).
  (f) Consistent with this Act, each designated contract market 
[and registered derivatives transaction execution facility] 
shall issue such rules as are necessary to avoid duplicative or 
conflicting rules applicable to any futures commission merchant 
registered with the Commission pursuant to section 4f(a) of 
this Act (except paragraph (2) thereof), that is also 
registered with the Securities and Exchange Commission pursuant 
to section 15(b) of the Securities Exchange Act of 1934 (except 
paragraph (11) thereof) with respect to the application of--
          (1) rules of such designated contract market [or 
        registered derivatives transaction execution facility] 
        of the type specified in section 4d(e) involving 
        security futures products; and
          (2) similar rules of national securities associations 
        registered pursuant to section 15A(a) of the Securities 
        Exchange Act of 1934 and national securities exchanges 
        registered pursuant to section 6(g) of such Act 
        involving security futures products.

           *       *       *       *       *       *       *


SEC. 5F. DESIGNATION OF SECURITIES EXCHANGES AND ASSOCIATIONS AS 
                    CONTRACT MARKETS.

  (a) Any board of trade that is registered with the Securities 
and Exchange Commission as a national securities exchange, is a 
national securities association registered pursuant to section 
15A(a) of the Securities Exchange Act of 1934, or is an 
alternative trading system shall be a designated contract 
market in security futures products if--
          (1) such national securities exchange, national 
        securities association, or alternative trading system 
        lists or trades no other contracts of sale for future 
        delivery, except for security futures products;
          (2) such national securities exchange, national 
        securities association, or alternative trading system 
        files written notice with the Commission in such form 
        as the Commission, by rule, may prescribe containing 
        such information as the Commission, by rule, may 
        prescribe as necessary or appropriate in the public 
        interest or for the protection of customers; and
          (3) the registration of such national securities 
        exchange, national securities association, or 
        alternative trading system is not suspended pursuant to 
        an order by the Securities and Exchange Commission.
Such designation shall be effective contemporaneously with the 
submission of notice, in written or electronic form, to the 
Commission.
  (b)(1) A national securities exchange, national securities 
association, or alternative trading system that is designated 
as a contract market pursuant to [section 5f] this section 
shall be exempt from the following provisions of this Act and 
the rules thereunder:
          (A) Subsections (c)[, (e), and (g)] and (e) of 
        section 4c.
          (B) Section 4j.
          (C) Section 5.
          (D) Section 5c.
          (E) Section 6a.
          (F) Section 8(d).
          (G) Section 9(f).
          (H) Section 16.
  (2) An alternative trading system that is a designated 
contract market under this section shall be required to be a 
member of a futures association registered under section 17 and 
shall be exempt from any provision of this Act that would 
require such alternative trading system to--
          (A) set rules governing the conduct of subscribers 
        other than the conduct of such subscribers' trading on 
        such alternative trading system; or
          (B) discipline subscribers other than by exclusion 
        from trading.
  (3) To the extent that an alternative trading system is 
exempt from any provision of this Act pursuant to paragraph (2) 
of this subsection, the futures association registered under 
section 17 of which the alternative trading system is a member 
shall set rules governing the conduct of subscribers to the 
alternative trading system and discipline the subscribers.
  (4)(A) Except as provided in subparagraph (B), but 
notwithstanding any other provision of this Act, the 
Commission, by rule, regulation, or order, may conditionally or 
unconditionally exempt any designated contract market in 
security futures subject to the designation requirement of this 
section from any provision of this Act or of any rule or 
regulation thereunder, to the extent such exemption is 
necessary or appropriate in the public interest and is 
consistent with the protection of investors.
  (B) The Commission shall, by rule or regulation, determine 
the procedures under which an exemptive order under this 
section is granted and may, in its sole discretion, decline to 
entertain any application for an order of exemption under this 
section.
  (C) An alternative trading system shall not be deemed to be 
an exchange for any purpose as a result of the designation of 
such alternative trading system as a contract market under this 
section.

           *       *       *       *       *       *       *


SEC. 5H. SWAP EXECUTION FACILITIES.

  (a) Registration.--
          (1) In general.--No person may operate a facility for 
        the trading or processing of swaps unless the facility 
        is registered as a swap execution facility or as a 
        designated contract market under this section.
          (2) Dual registration.--Any person that is registered 
        as a swap execution facility under this section shall 
        register with the Commission regardless of whether the 
        person also is registered with the Securities and 
        Exchange Commission as a swap execution facility.
  (b) Trading and Trade Processing.--
          (1) In general.--Except as specified in paragraph 
        (2), a swap execution facility that is registered under 
        subsection (a) may--
                  (A) make available for trading any swap; and
                  (B) facilitate trade processing of any swap.
          (2) Agricultural swaps.--A swap execution facility 
        may not list for trading or confirm the execution of 
        any swap in an agricultural commodity (as defined by 
        the Commission) except pursuant to a rule or regulation 
        of the Commission allowing the swap under such terms 
        and conditions as the Commission shall prescribe.
  (c) Identification of Facility Used To Trade Swaps by 
Contract Markets.--A board of trade that operates a contract 
market shall, to the extent that the board of trade also 
operates a swap execution facility and uses the same electronic 
trade execution system for listing and executing trades of 
swaps on or through the contract market and the swap execution 
facility, identify whether the electronic trading of such swaps 
is taking place on or through the contract market or the swap 
execution facility.
  (d) Rule-writing.--
          (1) The Securities and Exchange Commission and 
        Commodity Futures Trading Commission may promulgate 
        rules defining the universe of swaps that can be 
        executed on a swap execution facility. These rules 
        shall take into account the price and nonprice 
        requirements of the counterparties to a swap and the 
        goal of this section as set forth in subsection (e).
          (2) For all swaps that are not required to be 
        executed through a swap execution facility as defined 
        in paragraph (1), such trades may be executed through 
        any other available means of interstate commerce.
          (3) The Securities and Exchange Commission and 
        Commodity Futures Trading Commission shall update these 
        rules as necessary to account for technological and 
        other innovation.
  (e) Rule of Construction.--The goal of this section is to 
promote the trading of swaps on swap execution facilities and 
to promote pre-trade price transparency in the swaps market.
  (f) Core Principles for Swap Execution Facilities.--
          (1) Compliance with core principles.--
                  (A) In general.--To be registered, and 
                maintain registration, as a swap execution 
                facility, the swap execution facility shall 
                comply with--
                          (i) the core principles described in 
                        this subsection; and
                          (ii) any requirement that the 
                        Commission may impose by rule or 
                        regulation pursuant to section 8a(5).
                  (B) Reasonable discretion of swap execution 
                facility.--Unless otherwise determined by the 
                Commission by rule or regulation except as 
                described in this subsection, a swap execution 
                facility described in subparagraph (A) shall 
                have reasonable discretion in establishing the 
                manner in which the swap execution facility 
                complies with the core principles described in 
                this subsection.
          (2) Compliance with rules.--A swap execution facility 
        shall--
                  (A) establish and enforce compliance with any 
                rule of the swap execution facility, 
                including--
                          (i) the terms and conditions of the 
                        swaps traded or processed on or through 
                        the swap execution facility; and
                          (ii) any limitation on access to the 
                        swap execution facility;
                  (B) establish and enforce trading, trade 
                processing, and participation rules that will 
                deter abuses and have the capacity to detect, 
                investigate, and enforce those rules, including 
                means--
                          (i) to provide market participants 
                        with impartial access to the market; 
                        and
                          (ii) to capture information that may 
                        be used in establishing whether rule 
                        violations have occurred;
                  (C) establish rules governing the operation 
                of the facility, including rules specifying 
                trading procedures to be used in entering and 
                executing orders traded or posted on the 
                facility, including block trades; and
                  [(D) provide by its rules that when a swap 
                dealer or major swap participant enters into or 
                facilitates a swap that is subject to the 
                mandatory clearing requirement of section 2(h), 
                the swap dealer or major swap participant shall 
                be responsible for compliance with the 
                mandatory trading requirement under section 
                2(h)(8).]
                  (D) have reasonable discretion in 
                establishing and enforcing its rules related to 
                trade practice surveillance, market 
                surveillance, real-time marketing monitoring, 
                and audit trail given that a swap execution 
                facility may offer a trading system or platform 
                to execute or trade swaps through any means of 
                interstate commerce. A swap execution facility 
                shall be responsible for monitoring trading in 
                swaps only on its own facility.
          (3) Swaps not readily susceptible to manipulation.--
        The swap execution facility shall permit trading only 
        in swaps that are not readily susceptible to 
        manipulation.
          (4) Monitoring of trading and trade processing.--The 
        swap execution facility shall--
                  (A) establish and enforce rules or terms and 
                conditions defining, or specifications 
                detailing--
                          (i) trading procedures to be used in 
                        entering and executing orders traded on 
                        or through the facilities of the swap 
                        execution facility; and
                          (ii) procedures for trade processing 
                        of swaps on or through the facilities 
                        of the swap execution facility; and
                  (B) monitor trading in swaps to prevent 
                manipulation, price distortion, and disruptions 
                of the delivery or cash settlement process 
                through surveillance, compliance, and 
                disciplinary practices and procedures, 
                including methods for conducting real-time 
                monitoring of trading and comprehensive and 
                accurate trade reconstructions. A swap 
                execution facility shall be responsible for 
                monitoring trading in swaps only on its own 
                facility.
          (5) Ability to obtain information.--The swap 
        execution facility shall--
                  (A) establish and enforce rules that will 
                allow the facility to obtain any necessary 
                information to perform any of the functions 
                described in this section;
                  (B) provide the information to the Commission 
                on request; and
                  (C) have the capacity to carry out such 
                international information-sharing agreements as 
                the Commission may require.
          (6) Position limits or accountability.--
                  (A) In general.--To reduce the potential 
                threat of market manipulation or congestion, 
                especially during trading in the delivery 
                month, a swap execution facility that is a 
                trading facility shall adopt for each of the 
                contracts of the facility, as is necessary and 
                appropriate, position limitations or position 
                accountability for speculators.
                  (B) Position limits.--For any contract that 
                is subject to a position limitation established 
                by the Commission pursuant to section 4a(a), 
                the swap execution facility [shall--]
                          [(i) set its position limitation at a 
                        level no higher than the Commission 
                        limitation; and]
                          [(ii) monitor positions established 
                        on or through the swap execution 
                        facility for compliance with the] shall 
                        monitor the trading activity on its 
                        facility for compliance with any  limit 
                        set by the Commission and the limit, if 
                        any, set by the swap execution 
                        facility. A swap execution facility 
                        shall be responsible for monitoring 
                        positions only on its own facility.
          (7) Financial integrity of transactions.--The swap 
        execution facility shall establish and enforce rules 
        and procedures for ensuring the financial integrity of 
        swaps entered on or through the facilities of the swap 
        execution facility, including the clearance and 
        settlement of the swaps pursuant to section 2(h)(1).
          (8) Emergency authority.--The swap execution facility 
        shall adopt rules to provide for the exercise of 
        emergency authority, in consultation or cooperation 
        with the Commission, as is necessary and appropriate, 
        including the authority [to liquidate or transfer open 
        positions in any swap or to suspend or curtail trading 
        in a swap.] to suspend or curtail trading in a swap on 
        its own facility.
          (9) Timely publication of trading information.--
                  (A) In general.--The swap execution facility 
                shall make public timely information on price, 
                trading volume, and other trading data on swaps 
                to the extent prescribed by the Commission.
                  (B) Capacity of swap execution facility.--The 
                swap execution facility shall be required to 
                have the capacity to electronically capture and 
                transmit trade information with respect to 
                transactions executed on the facility.
          (10) Recordkeeping and reporting.--
                  (A) In general.--A swap execution facility 
                shall--
                          (i) maintain records of all 
                        activities relating to the business of 
                        the facility, including a complete 
                        audit trail, in a form and manner 
                        acceptable to the Commission for a 
                        period of 5 years;
                          (ii) report to the Commission, in a 
                        form and manner acceptable to the 
                        Commission, such information as the 
                        Commission determines to be necessary 
                        or appropriate for the Commission to 
                        perform the duties of the Commission 
                        under this Act; and
                          (iii) shall keep any such records 
                        relating to swaps defined in section 
                        [1a(47)(A)(v)] 1a(48)(A)(v) open to 
                        inspection and examination by the 
                        Securities and Exchange Commission.''
                  (B) Requirements.--The Commission shall adopt 
                data collection and reporting requirements for 
                swap execution facilities that are comparable 
                to corresponding requirements for derivatives 
                clearing organizations and swap data 
                repositories.
          (11) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, the 
        swap execution facility shall not--
                  (A) adopt any rules or taking any actions 
                that result in any unreasonable restraint of 
                trade; or
                  (B) impose any material anticompetitive 
                burden on trading or clearing.
          (12) Conflicts of interest.--The swap execution 
        facility shall--
                  (A) establish and enforce rules to minimize 
                conflicts of interest in its decision-making 
                process; and
                  (B) establish a process for resolving the 
                conflicts of interest.
          (13) Financial resources.--
                  (A) In general.--The swap execution facility 
                shall have adequate financial, operational, and 
                managerial resources to discharge each 
                responsibility of the swap execution facility.
                  (B) Determination of resource adequacy.--The 
                financial resources of a swap execution 
                facility shall be considered to be adequate if 
                the value of the financial resources exceeds 
                the total amount that would enable the swap 
                execution facility to [cover the operating 
                costs of the swap execution facility for a 1-
                year period, as calculated on a rolling basis] 
                conduct an orderly wind-down of its operations.
          (14) System safeguards.--The swap execution facility 
        shall--
                  (A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize 
                sources of operational risk, through the 
                development of appropriate controls and 
                procedures, and automated systems, that--
                          (i) are reliable and secure; and
                          (ii) have adequate scalable capacity;
                  (B) establish and maintain emergency 
                procedures, backup facilities, and a plan for 
                disaster recovery that allow for--
                          (i) the timely recovery and 
                        resumption of operations; and
                          (ii) the fulfillment of the 
                        responsibilities and obligations of the 
                        swap execution facility; and
                  (C) periodically conduct tests to verify that 
                the backup resources of the swap execution 
                facility are sufficient to ensure continued--
                          (i) order processing and trade 
                        matching;
                          (ii) price reporting;
                          (iii) market surveillance and
                          (iv) maintenance of a comprehensive 
                        and accurate audit trail.
          (15) Designation of chief compliance officer.--
                  (A) In general.--Each swap execution facility 
                shall designate an individual to serve as a 
                chief compliance officer. The individual may 
                also perform other responsibilities for the 
                swap execution facility.
                  (B) Duties.--The chief compliance officer 
                shall--
                          (i) report directly to the board, a 
                        committee of the board, or to the 
                        senior officer of the facility;
                          (ii) review compliance with the core 
                        principles in this subsection;
                          [(iii) in consultation with the board 
                        of the facility, a body performing a 
                        function similar to that of a board, or 
                        the senior officer of the facility, 
                        resolve any conflicts of interest that 
                        may arise;
                          [(iv) be responsible for establishing 
                        and administering the policies and 
                        procedures required to be established 
                        pursuant to this section;
                          [(v) ensure compliance with this Act 
                        and the rules and regulations issued 
                        under this Act, including rules 
                        prescribed by the Commission pursuant 
                        to this section; and]
                          (iii) establish and administer 
                        policies and procedures that are 
                        reasonably designed to resolve any 
                        conflicts of interest that may arise;
                          (iv) establish and administer 
                        policies and procedures that reasonably 
                        ensure compliance with this Act and the 
                        rules and regulations issued under this 
                        Act, including rules prescribed by the 
                        Commission pursuant to this section; 
                        and
                          [(vi)] (v) establish procedures for 
                        the remediation of noncompliance issues 
                        found during compliance office reviews, 
                        look backs, internal or external audit 
                        findings, self-reported errors, or 
                        through validated complaints.
                  (C) Requirements for procedures.--In 
                establishing procedures under subparagraph 
                [(B)(vi)] (B)(v), the chief compliance officer 
                shall design the procedures to establish the 
                handling, management response, remediation, 
                retesting, and closing of noncompliance issues.
                  (D) Annual reports.--
                          (i) In general.-- [In accordance with 
                        rules prescribed by the Commission, 
                        the] The chief compliance officer shall 
                        annually prepare [and sign] a report 
                        that contains a description of--
                                  (I) the compliance of the 
                                swap execution facility with 
                                this Act; and
                                  (II) the policies and 
                                procedures, including the code 
                                of ethics and conflict of 
                                interest policies, of the swap 
                                execution facility.
                          (ii) Requirements.--The chief 
                        compliance officer or senior officer 
                        shall--
                                  [(I) submit each report 
                                described in clause (i) with 
                                the appropriate financial 
                                report of the swap execution 
                                facility that is required to be 
                                submitted to the Commission 
                                pursuant to this section; and]
                                  (I) submit each report 
                                described in clause (i) to the 
                                Commission; and
                                  (II) include in the report a 
                                certification that, under 
                                penalty of law, the report is 
                                materially accurate and 
                                complete.
  (g) Exemptions.--The Commission may exempt, conditionally or 
unconditionally, a swap execution facility from registration 
under this section if the Commission finds that the facility is 
subject to comparable, comprehensive supervision and regulation 
on a consolidated basis by the Securities and Exchange 
Commission, a prudential regulator, or the appropriate 
governmental authorities in the home country of the facility.
  (h) Rules.--The Commission shall prescribe rules governing 
the regulation of [alternative] swap execution facilities under 
this section.
  Sec. 6. (a) Any person desiring to be designated [or 
registered] as a contract market [or derivatives transaction 
execution facility] shall make application to the Commission 
for the designation [or registration] and accompany the same 
with a showing that it complies with the conditions set forth 
in this Act, and with a sufficient assurance that it will 
continue to comply with [the the] the requirements of this Act. 
The Commission shall approve or deny an application for 
designation [or registration] as a contract market [or 
derivatives transaction execution facility] within 180 days of 
the filing of the application. If the Commission notifies the 
person that its application is materially incomplete and 
specifies the deficiencies in the application, the running of 
the 180-day period shall be stayed from the time of such 
notification until the application is resubmitted in completed 
form: Provided, That the Commission shall have not less than 
sixty days to approve or deny the application from the time the 
application is resubmitted in completed form. If the Commission 
denies an application, it shall specify the grounds for the 
denial. In the event of a refusal to designate or register as a 
contract market [or derivatives transaction execution facility] 
any person that has made application therefor, the person shall 
be afforded an opportunity for a hearing on the record before 
the Commission, with the right to appeal an adverse decision 
after such hearing to the court of appeals as provided for in 
other cases in subsection (b) of this section.
  (b) The Commission is authorized to suspend for a period not 
to exceed 6 months or to revoke the designation [or 
registration] of any contract market [or derivatives 
transaction execution facility] on a showing that the contract 
market [or derivatives transaction execution facility] is not 
enforcing or has not enforced its rules of government, made a 
condition of its designation [or registration] as set forth in 
sections 5 through 5b or section 5f, or that the contract 
market [or derivatives transaction execution facility] [or 
electronic trading facility], or any director, officer, agent, 
or employee thereof, otherwise is violating or has violated any 
of the provisions of this Act or any of the rules, regulations, 
or orders of the Commission thereunder. Such suspension or 
revocation shall only be made after a notice to the officers of 
the contract market [or derivatives transaction execution 
facility] [or electronic trading facility] affected and upon a 
hearing on the record: Provided, That such suspension or 
revocation shall be final and conclusive, unless within fifteen 
days after such suspension or revocation by the Commission such 
person appeals to the court of appeals for the circuit in which 
it has its principal place of business, by filing with the 
clerk of such court a written petition praying that the order 
of the Commission be set aside or modified in the manner stated 
in the petition, together with a bond in such sum as the court 
may determine, conditioned that such person will pay the costs 
of the proceedings if the court so directs. The clerk of the 
court in which such a petition is filed shall immediately cause 
a copy thereof to be delivered to the Commission and file in 
the court the record in such proceedings, as provided in 
section 2112 of title 28, United States Code. The testimony and 
evidence taken or submitted before the Commission, duly filed 
as aforesaid as a part of the record, shall be considered by 
the court of appeals as the evidence in the case. Such a court 
may affirm or set aside the order of the Commission or may 
direct it to modify its order. No such order of the Commission 
shall be modified or set aside by the court of appeals unless 
it is shown by the person that the order is unsupported by the 
weight of the evidence or was issued without due notice and a 
reasonable opportunity having been afforded to such person for 
a hearing, or infringes the Constitution of the United States, 
or is beyond the jurisdiction of the Commission.
  (c) Prohibition Regarding Manipulation and False 
Information.--
          (1) Prohibition against manipulation.--It shall be 
        unlawful for any person, directly or indirectly, to use 
        or employ, or attempt to use or employ, in connection 
        with any swap, or a contract of sale of any commodity 
        in interstate commerce, or for future delivery on or 
        subject to the rules of any registered entity, any 
        manipulative or deceptive device or contrivance, in 
        contravention of such rules and regulations as the 
        Commission shall promulgate by not later than 1 year 
        after the date of enactment of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act, provided no 
        rule or regulation promulgated by the Commission shall 
        require any person to disclose to another person 
        nonpublic information that may be material to the 
        market price, rate, or level of the commodity 
        transaction, except as necessary to make any statement 
        made to the other person in or in connection with the 
        transaction not misleading in any material respect.
                  (A) Special provision for manipulation by 
                false reporting.--Unlawful manipulation for 
                purposes of this paragraph shall include, but 
                not be limited to, delivering, or causing to be 
                delivered for transmission through the mails or 
                interstate commerce, by any means of 
                communication whatsoever, a false or misleading 
                or inaccurate report concerning crop or market 
                information or conditions that affect or tend 
                to affect the price of any commodity in 
                interstate commerce, knowing, or acting in 
                reckless disregard of the fact that such report 
                is false, misleading or inaccurate.
                  (B) Effect on other law.--Nothing in this 
                paragraph shall affect, or be construed to 
                affect, the applicability of section 9(a)(2).
                  (C) Good faith mistakes.--Mistakenly 
                transmitting, in good faith, false or 
                misleading or inaccurate information to a price 
                reporting service would not be sufficient to 
                violate subsection (c)(1)(A).
          (2) Prohibition regarding false information.--It 
        shall be unlawful for any person to make any false or 
        misleading statement of a material fact to the 
        Commission, including in any registration application 
        or any report filed with the Commission under this Act, 
        or any other information relating to a swap, or a 
        contract of sale of a commodity, in interstate 
        commerce, or for future delivery on or subject to the 
        rules of any registered entity, or to omit to state in 
        any such statement any material fact that is necessary 
        to make any statement of a material fact made not 
        misleading in any material respect, if the person knew, 
        or reasonably should have known, the statement to be 
        false or misleading.
          (3) Other manipulation.--In addition to the 
        prohibition in paragraph (1), it shall be unlawful for 
        any person, directly or indirectly, to manipulate or 
        attempt to manipulate the price of any swap, or of any 
        commodity in interstate commerce, or for future 
        delivery on or subject to the rules of any registered 
        entity.
          (4) Enforcement.--
                  (A) Authority of commission.--If the 
                Commission has reason to believe that any 
                person (other than a registered entity) is 
                violating or has violated this subsection, or 
                any other provision of this Act (including any 
                rule, regulation, or order of the Commission 
                promulgated in accordance with this subsection 
                or any other provision of this Act), the 
                Commission may serve upon the person a 
                complaint.
                  (B) Contents of complaint.--A complaint under 
                subparagraph (A) shall--
                          (i) contain a description of the 
                        charges against the person that is the 
                        subject of the complaint; and
                          (ii) have attached or contain a 
                        notice of hearing that specifies the 
                        date and location of the hearing 
                        regarding the complaint.
                  (C) Hearing.--A hearing described in 
                subparagraph (B)(ii)--
                          (i) shall be held not later than 3 
                        days after service of the complaint 
                        described in subparagraph (A);
                          (ii) shall require the person to show 
                        cause regarding why--
                                  (I) an order should not be 
                                made--
                                          (aa) to prohibit the 
                                        person from trading on, 
                                        or subject to the rules 
                                        of, any registered 
                                        entity; and
                                          (bb) to direct all 
                                        registered entities to 
                                        refuse all privileges 
                                        to the person until 
                                        further notice of the 
                                        Commission; and
                                  (II) the registration of the 
                                person, if registered with the 
                                Commission in any capacity, 
                                should not be suspended or 
                                revoked; and
                          (iii) may be held before--
                                  (I) the Commission; or
                                  (II) an administrative law 
                                judge designated by the 
                                Commission, under which the 
                                administrative law judge shall 
                                ensure that all evidence is 
                                recorded in written form and 
                                submitted to the Commission.
          [(5) Subpoena.--For]
          (5) Subpoena._
                  (A) In general._For the purpose of securing 
                effective enforcement of the provisions of this 
                Act, for the purpose of any investigation or 
                proceeding under this Act, and for the purpose 
                of any action taken under section 12(f), any 
                member of the Commission or any Administrative 
                Law Judge or other officer designated by the 
                Commission (except as provided in paragraph 
                (7)) may administer oaths and affirmations, 
                subpoena witnesses, compel their attendance, 
                take evidence, and require the production of 
                any books, papers, correspondence, memoranda, 
                or other records that the Commission deems 
                relevant or material to the inquiry.
                  (B) Omnibus orders of investigation.--
                          (i) Duration and renewal.--An omnibus 
                        order of investigation shall not be for 
                        an indefinite duration and may be 
                        renewed only by Commission action.
                          (ii) Definition.--In clause (i), the 
                        term ``omnibus order of investigation'' 
                        means an order of the Commission 
                        authorizing 1 of more members of the 
                        Commission or its staff to issue 
                        subpoenas under subparagraph (A) to 
                        multiple persons in relation to a 
                        particular subject matter area.
          (6) Witnesses.--The attendance of witnesses and the 
        production of any such records may be required from any 
        place in the United States, any State, or any foreign 
        country or jurisdiction at any designated place of 
        hearing.
          (7) Service.--A subpoena issued under this section 
        may be served upon any person who is not to be found 
        within the territorial jurisdiction of any court of the 
        United States in such manner as the Federal Rules of 
        Civil Procedure prescribe for service of process in a 
        foreign country, except that a subpoena to be served on 
        a person who is not to be found within the territorial 
        jurisdiction of any court of the United States may be 
        issued only on the prior approval of the Commission.
          (8) Refusal to obey.--In case of contumacy by, or 
        refusal to obey a subpoena issued to, any person, the 
        Commission may invoke the aid of any court of the 
        United States within the jurisdiction in which the 
        investigation or proceeding is conducted, or where such 
        person resides or transacts business, in requiring the 
        attendance and testimony of witnesses and the 
        production of books, papers, correspondence, memoranda, 
        and other records. Such court may issue an order 
        requiring such person to appear before the Commission 
        or member or Administrative Law Judge or other officer 
        designated by the Commission, there to produce records, 
        if so ordered, or to give testimony touching the matter 
        under investigation or in question.
          (9) Failure to obey.--Any failure to obey such order 
        of the court may be punished by the court as a contempt 
        thereof. All process in any such case may be served in 
        the judicial district wherein such person is an 
        inhabitant or transacts business or wherever such 
        person may be found.
          (10) Evidence.--On the receipt of evidence under 
        paragraph (4)(C)(iii), the Commission may--
                  (A) prohibit the person that is the subject 
                of the hearing from trading on, or subject to 
                the rules of, any registered entity and require 
                all registered entities to refuse the person 
                all privileges on the registered entities for 
                such period as the Commission may require in 
                the order;
                  (B) if the person is registered with the 
                Commission in any capacity, suspend, for a 
                period not to exceed 180 days, or revoke, the 
                registration of the person;
                  (C) assess such person--
                          (i) a civil penalty of not more than 
                        an amount equal to the greater of--
                                  (I) $140,000; or
                                  (II) triple the monetary gain 
                                to such person for each such 
                                violation; or
                          (ii) in any case of manipulation or 
                        attempted manipulation in violation of 
                        this subsection or section 9(a)(2), a 
                        civil penalty of not more than an 
                        amount equal to the greater of--
                                  (I) $1,000,000; or
                                  (II) triple the monetary gain 
                                to the person for each such 
                                violation; and
                  (D) require restitution to customers of 
                damages proximately caused by violations of the 
                person.
          (11) Orders.--
                  (A) Notice.--The Commission shall provide to 
                a person described in paragraph (10) and the 
                appropriate governing board of the registered 
                entity notice of the order described in 
                paragraph (10) by--
                          (i) registered mail;
                          (ii) certified mail; or
                          (iii) personal delivery.
                  (B) Review.--
                          (i) In general.--A person described 
                        in paragraph (10) may obtain a review 
                        of the order or such other equitable 
                        relief as determined to be appropriate 
                        by a court described in clause (ii).
                          (ii) Petition.--To obtain a review or 
                        other relief under clause (i), a person 
                        may, not later than 15 days after 
                        notice is given to the person under 
                        clause (i), file a written petition to 
                        set aside the order with the United 
                        States Court of Appeals--
                                  (I) for the circuit in which 
                                the petitioner carries out the 
                                business of the petitioner; or
                                  (II) in the case of an order 
                                denying registration, the 
                                circuit in which the principal 
                                place of business of the 
                                petitioner is located, as 
                                listed on the application for 
                                registration of the petitioner.
                  (C) Procedure.--
                          (i) Duty of clerk of appropriate 
                        court.--The clerk of the appropriate 
                        court under subparagraph (B)(ii) shall 
                        transmit to the Commission a copy of a 
                        petition filed under subparagraph 
                        (B)(ii).
                          (ii) Duty of commission.--In 
                        accordance with section 2112 of title 
                        28, United States Code, the Commission 
                        shall file in the appropriate court 
                        described in subparagraph (B)(ii) the 
                        record theretofore made.
                          (iii) Jurisdiction of appropriate 
                        court.--Upon the filing of a petition 
                        under subparagraph (B)(ii), the 
                        appropriate court described in 
                        subparagraph (B)(ii) may affirm, set 
                        aside, or modify the order of the 
                        Commission.
  (d) If any person (other than a registered entity), is 
violating or has violated subsection (c) or any other 
provisions of this Act or of the rules, regulations, or orders 
of the Commission thereunder, the Commission may, upon notice 
and hearing, and subject to appeal as in other cases provided 
for in subsection (c), make and enter an order directing that 
such person shall cease and desist therefrom and, if such 
person thereafter and after the lapse of the period allowed for 
appeal of such order or after the affirmance of such order, 
shall knowingly fail or refuse to obey or comply with such 
order, such person, upon conviction thereof, shall be fined not 
more than the higher of $140,000 or triple the monetary gain to 
such person, or imprisoned for not more than 1 year, or both, 
except that if such knowing failure or refusal to obey or 
comply with such order involves any offense within subsection 
(a) or (b) of section 9, such person, upon conviction thereof, 
shall be subject to the penalties of said subsection (a) or 
(b):  Provided, That any such cease and desist order under this 
subsection against any respondent in any case of manipulation 
shall be issued only in conjunction with an order issued 
against such respondent under subsection (c).
  (e)(1) In determining the amount of the money penalty 
assessed under subsection (c), the Commission shall consider 
the appropriateness of such penalty to the gravity of the 
violation.
  (2) Unless the person against whom a money penalty is 
assessed under subsection (c) shows to the satisfaction of the 
Commission within fifteen days from the expiration of the 
period allowed for payment of such penalty that either an 
appeal as authorized by subsection (c) has been taken or 
payment of the full amount of the penalty then due has been 
made, at the end of such fifteen-day period and until such 
person shows to the satisfaction of the Commission that payment 
of such amount with interest thereon to date of payment has 
been made--
          (A) such person shall be prohibited automatically 
        from the privileges of all registered entities; and
          (B) if such person is registered with the Commission, 
        such registration shall be suspended automatically.
  (3) If a person against whom a money penalty is assessed 
under subsection (c) takes an appeal and if the Commission 
prevails or the appeal is dismissed, unless such person shows 
to the satisfaction of the Commission that payment of the full 
amount of the penalty then due has been made by the end of 
thirty days from the date of entry of judgment on the appeal--
          (A) such person shall be prohibited automatically 
        from the privileges of all registered entities; and
          (B) if such person is registered with the Commission, 
        such registration shall be suspended automatically.
If the person against whom the money penalty is assessed fails 
to pay such penalty after the lapse of the period allowed for 
appeal or after the affirmance of such penalty, the Commission 
may refer the matter to the Attorney General who shall recover 
such penalty by action in the appropriate United States 
district court.
          (4) Any designated clearing organization that 
        knowingly or recklessly evades or participates in or 
        facilitates an evasion of the requirements of section 
        2(h) shall be liable for a civil money penalty in twice 
        the amount otherwise available for a violation of 
        section 2(h).
          (5) Any swap dealer or major swap participant that 
        knowingly or recklessly evades or participates in or 
        facilitates an evasion of the requirements of section 
        2(h) shall be liable for a civil money penalty in twice 
        the amount otherwise available for a violation of 
        section 2(h).
  (f)(1) Except as provided in paragraph (2), not later than 
six months after the effective date of rules promulgated by the 
Federal Trade Commission under section 3(a) of the 
Telemarketing and Consumer Fraud and Abuse Prevention Act, the 
Commission shall promulgate, or require each registered futures 
association to promulgate, rules substantially similar to such 
rules to prohibit deceptive and other abusive telemarketing 
acts or practices by any person registered or exempt from 
registration under this Act in connection with such person's 
business as a futures commission merchant, introducing broker, 
commodity trading advisor, commodity pool operator, leverage 
transaction merchant, floor broker, or floor trader, or a 
person associated with any such person.
  (2) The Commission is not required to promulgate rules under 
paragraph (1) if it determines that--
          (A) rules adopted by the Commission under this Act 
        provide protection from deceptive and abusive 
        telemarketing by persons described under paragraph (1) 
        substantially similar to that provided by rules 
        promulgated by the Federal Trade Commission under 
        section 3(a) of the Telemarketing and Consumer Fraud 
        and Abuse Prevention Act; or
          (B) such a rule promulgated by the Commission is not 
        necessary or appropriate in the public interest, or for 
        the pro- tection of customers in the futures and 
        options markets, or would be inconsistent with the 
        maintenance of fair and orderly markets.
If the Commission determines that an exception described in 
subparagraph (A) or (B) applies, the Commission shall publish 
in the Federal Register its determination with the reasons for 
it.
  (g) The Commission shall provide the Securities and Exchange 
Commission with notice of the commencement of any proceeding 
and a copy of any order entered by the Commission pursuant to 
subsections (c) and (d) of this section against any futures 
commission merchant or introducing broker registered pursuant 
to section 4f(a)(2), any floor broker or floor trader exempt 
from registration pursuant to section 4f(a)(3), any associated 
person exempt from registration pursuant to section 4k(6), or 
any board of trade designated as a contract market pursuant to 
section 5f.
  Sec. 6a. (a) No board of trade which has been designated [or 
registered] as a contract market [or a derivatives transaction 
execution facility] shall exclude from membership in, and all 
privileges on, such board of trade, any association or 
corporation engaged in cash commodity business having adequate 
financial responsibility which is organized under the 
cooperative laws of any State, or which has been recognized as 
a cooperative association of producers by the United States 
Government or by any agency thereof, if such association or 
corporation complies and agrees to comply with such terms and 
conditions as are or may be imposed lawfully upon other members 
of such board, and as are or may be imposed lawfully upon a 
cooperative association of producers engaged in cash commodity 
business, unless such board of trade is authorized by the 
Commission to exclude such association or corporation from 
membership and privileges after hearing held upon at least 
three days' notice subsequent to the filing of complaint by the 
board of trade: Provided, however, That if any such association 
or corporation shall fail to meet its obligations with any 
established clearing house or clearing agency of any contract 
market, such association or corporation shall be ipso facto 
debarred from further trading on such contract market, except 
such trading as may be necessary to close open trades and to 
discharge existing contracts in accordance with the rules of 
such contract market applicable in such cases. Such Commission 
may prescribe that such association or corporation shall have 
and retain membership and privileges, with or without imposing 
conditions, or it may permit such board of trade immediately to 
bar such association or corporation from membership and 
privileges. Any order of said Commission entered hereunder 
shall be reviewable by the court of appeals for the circuit in 
which such association or corporation, or such board of trade, 
has its principal place of business, on written petition either 
of such association or corporation, or of such board of trade, 
under the procedure provided in section 6(b) of this Act, but 
such order shall not be stayed by the court pending review.
  (b) No rule of any board of trade designated [or registered] 
as a contract market [or a derivatives transaction execution 
facility] shall forbid or be construed to forbid the payment of 
compensation on a commodity-unit basis, or otherwise, by any 
federated cooperative association to its regional member-
associations for services rendered or to be rendered in 
connection with any organization work, educational activity, or 
procurement of patronage, provided no part of any such 
compensation is returned to patrons (whether members or 
nonmembers) of such cooperative association, or of its regional 
or local member-associations, otherwise than as a dividend on 
capital stock or as a patronage dividend out of the net 
earnings or surplus of such federated cooperative association.
  Sec. 6b. If any registered entity is not enforcing or has not 
enforced its rules of government made a condition of its 
designation or registration [as set forth in sections 5 through 
5c], or if any registered entity, or any director, officer, 
agent, or employee of any registered entity otherwise is 
violating or has violated any of the provisions of this Act or 
any of the rules, regulations, or orders of the Commission 
thereunder, the Commission may, upon notice and hearing on the 
record and subject to appeal as in other cases provided for in 
section 6(b) of this Act, make and enter an order directing 
that such registered entity, director, officer, agent, or 
employee shall cease and desist from such violation, and assess 
a civil penalty of not more than $500,000 for each such 
violation, or, in any case of manipulation or attempted 
manipulation in violation of section 6(c), 6(d), or 9(a)(2), a 
civil penalty of not more than $1,000,000 for each such 
violation. If such registered entity, director, officer, agent, 
or employee, after the entry of such a cease and desist order 
and the lapse of the period allowed for appeal of such order or 
after the affirmance of such order, shall fail or refuse to 
obey or comply with such order, such registered entity, 
director, officer, agent, or employee shall be guilty of a 
misdemeanor and, upon conviction thereof, shall be fined not 
more than $500,000 or imprisoned for not less than six months 
nor more than one year, or both, except that if the failure or 
refusal to obey or comply with the order involved any offense 
under section 9(a)(2), the registered entity, director, 
officer, agent, or employee shall be guilty of a felony and, on 
conviction, shall be subject to penalties under section 
9(a)(2). Each day during which such failure or refusal to obey 
such cease and desist order continues shall be deemed a 
separate offense. If the offending registered entity or other 
person upon whom such penalty is imposed, after the lapse of 
the period allowed for appeal or after the affirmance of such 
penalty, shall fail to pay such penalty, the Commission shall 
refer the matter to the Attorney General who shall recover such 
penalty by action in the appropriate United States district 
court. In determining the amount of the money penalty assessed 
under this section, the Commission shall consider the gravity 
of the offense, and in the case of a registered entity shall 
further consider whether the amount of the penalty will 
materially impair the ability of the registered entity to carry 
on its operations and duties.

           *       *       *       *       *       *       *

  Sec. 6d. (1) Whenever it shall appear to the attorney general 
of any State, the administrator of the securities laws of any 
State, or such other official as a State may designate, that 
the interests of the residents of that State have been, are 
being, or may be threatened or adversely affected because any 
person (other than a contract market, [derivatives transaction 
execution facility,] clearinghouse, floor broker, or floor 
trader) has engaged in, is engaging or is about to engage in, 
any act or practice constituting a violation of any provision 
of this Act or any rule, regulation, or order of the Commission 
thereunder, the State may bring a suit in equity or an action 
at law on behalf of its residents to enjoin such act or 
practice, to enforce compliance with this Act, or any rule, 
regulation, or order of the Commission thereunder, to obtain 
damages on behalf of their residents, or to obtain such further 
and other relief as the court may deem appropriate.
  (2) The district courts of the United States, the United 
States courts of any territory, and the District Court of the 
United States for the District of Columbia, shall have 
jurisdiction of all suits in equity and actions at law brought 
under this section to enforce any liability or duty created by 
this Act or any rule, regulation, or order of the Commission 
thereunder, or to obtain damages or other relief with respect 
thereto. Upon proper application, such courts shall also have 
jurisdiction to issue writs of mandamus, or orders affording 
like relief, commanding the defendant to comply with the 
provisions of this Act, or any rul