[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4413 Referred in Senate (RFS)]
113th CONGRESS
2d Session
H. R. 4413
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 25, 2014
Received; read twice and referred to the Committee on Agriculture,
Nutrition, and Forestry
_______________________________________________________________________
AN ACT
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Customer Protection and 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. Short title.
Sec. 102. Enhanced protections for futures customers.
Sec. 103. Electronic confirmation of customer funds.
Sec. 104. Notice and certifications providing additional customer
protections.
Sec. 105. Futures commission merchant compliance.
Sec. 106. Certainty for futures customers and market participants.
Sec. 107. Study on high-frequency trading.
TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS
Sec. 201. Short title.
Sec. 202. Extension of operations.
Sec. 203. Consideration by the Commodity Futures Trading Commission of
the costs and benefits of its regulations
and orders.
Sec. 204. Division directors.
Sec. 205. Office of the Chief Economist.
Sec. 206. Procedures governing actions taken without a commission vote.
Sec. 207. Strategic technology plan.
Sec. 208. Internal risk controls.
Sec. 209. Subpoena duration and renewal.
Sec. 210. Implementation plan for Commission rulemakings.
Sec. 211. Applicability of notice and comment requirements of the
Administrative Procedure Act to guidance
voted on by the Commission.
Sec. 212. Judicial review of Commission rules.
Sec. 213. GAO study on adequacy of CFTC resources.
Sec. 214. Disclosure of required data of other registered entities.
Sec. 215. GAO study on Commission leases.
TITLE III--END-USER RELIEF
Sec. 301. Short title.
Subtitle A--End-User Exemption From Margin Requirements
Sec. 311. End-user margin requirements.
Sec. 312. Implementation.
Subtitle B--Inter-Affiliate Swaps
Sec. 321. Treatment of affiliate transactions.
Subtitle C--Indemnification Requirements Related to Swap Data
Repositories
Sec. 331. Indemnification requirements.
Subtitle D--Relief for Municipal Utilities
Sec. 341. Transactions with utility special entities.
Sec. 342. Utility special entity defined.
Sec. 343. Utility operations-related swap.
Subtitle E--End-User Regulatory Relief
Sec. 351. End-users not treated as financial entities.
Sec. 352. Reporting of illiquid swaps so as to not disadvantage certain
non-financial end-users.
Sec. 353. Relief for grain elevator operators, farmers, agricultural
counterparties, and commercial market
participants.
Sec. 354. Relief for end-users who use physical contracts with
volumetric optionality.
Sec. 355. Commission vote required before automatic change of swap
dealer de minimis level.
Sec. 356. Capital requirements for non-bank swap dealers.
Sec. 357. Harmonization with the Jumpstart Our Business Startups Act.
Sec. 358. Bona fide hedge defined to protect end-user risk management
needs.
Sec. 359. Cross-border regulation of derivatives transactions.
Sec. 360. Report on foreign boards of trade.
Sec. 361. Treatment of certain funds.
Subtitle F--Effective Date
Sec. 371. Effective date.
TITLE I--CUSTOMER PROTECTIONS
SEC. 101. SHORT TITLE.
This title may be cited as the ``Futures Customer Protection Act''.
SEC. 102. 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. 103. ELECTRONIC CONFIRMATION OF CUSTOMER FUNDS.
Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as amended
by section 102 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,
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
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. 104. NOTICE AND CERTIFICATIONS PROVIDING ADDITIONAL CUSTOMER
PROTECTIONS.
Section 17 of the Commodity Exchange Act (7 U.S.C. 21), as amended
by sections 102 and 103 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. 105. 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 the Commodity Exchange
Act (7 U.S.C. 6d(h)) is amended by striking ``Notwithstanding
subsection (a)(2)'' and inserting ``Notwithstanding subsection
(a)(1)(B)''.
SEC. 106. 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.''.
SEC. 107. STUDY ON HIGH-FREQUENCY TRADING.
(a) In General.--Not later than one year after the date of the
enactment of this Act, the Commodity Futures Trading 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 examining the effect of the practice commonly referred to as
high-frequency trading on markets under its jurisdiction.
(b) Specific Areas Examined in Report.--In preparing the report
submitted under subsection (a), the Commission shall particularly
examine each of the following areas:
(1) The technology, personnel, or other resources the
Commission may require for purposes of monitoring the effect of
high-frequency trading.
(2) The role such trading plays in providing market
liquidity.
(3) Whether the technology creates discrepancies in the
marketplace between market participants.
(4) Whether the existing authority of the Commission with
respect to such trading is sufficient to meet the Commission's
mission to--
(A) protect market participants and the public from
fraud, manipulation, abusive practices, and systemic
risk related to derivatives; and
(B) foster transparent, open, competitive, and
financially sound markets.
(5) Whether such trading increases market volatility,
including short term market swings.
TITLE II--COMMODITY FUTURES TRADING COMMISSION REFORMS
SEC. 201. SHORT TITLE.
This title may be cited as the ``Commodity Futures Trading
Commission Reform Act''.
SEC. 202. EXTENSION OF OPERATIONS.
Section 12(d) of the Commodity Exchange Act (7 U.S.C. 16(d)) is
amended by striking ``2013'' and inserting ``2018''.
SEC. 203. 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) whether, in choosing among alternative
regulatory approaches, those approaches maximize net
benefits (including potential economic and other
benefits, distributive impacts, and equity); and
``(K) 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. 204. 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, report directly to the
Commission, and perform such functions and duties as the Commission may
prescribe'' before the period.
SEC. 205. 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:
``(17) 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
as the Commission may direct.''.
(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)'' and inserting ``(4),
(5), and (17)''.
SEC. 206. PROCEDURES GOVERNING ACTIONS TAKEN WITHOUT A COMMISSION VOTE.
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 commission.--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 Commission be provided with the
final version of the matter to be issued with
sufficient notice to thoroughly review the matter prior
to its issuance.''.
SEC. 207. 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:
``(18) 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. 208. INTERNAL RISK CONTROLS.
(a) In General.--Section 2(a)(12) of the Commodity Exchange Act (7
U.S.C. 2(a)(12)), as amended by section 206 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.''.
(b) Reports to the Congress.--
(1) Content.--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
2 reports on the progress made in implementing the internal
risk controls provided for in section 2(a)(12)(C) of the
Commodity Exchange Act.
(2) Timing.--The Commission shall submit the 1st report
required by paragraph (1) within 60 days after the date of the
enactment of this Act, and the 2nd such report within 120 days
after such date of enactment.
SEC. 209. 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) Content of order.--An order of the Commission
authorizing the issuance of a subpoena in an
investigation shall state in good faith--
``(i) the legitimate purpose of the
investigation; and
``(ii) the information sought by any
subpoena order that will be reasonably relevant
to that purpose.
``(C) Duration and renewal.--An order issued under
this paragraph shall not be for an indefinite duration
and may be renewed only by Commission action.''.
SEC. 210. IMPLEMENTATION PLAN FOR COMMISSION RULEMAKINGS.
Section 2(a)(12) of the Commodity Exchange Act (7 U.S.C. 2(a)(12)),
as amended by sections 206 and 208(a) of this Act, is amended by adding
at the end the following:
``(D) Requirement to publish implementation plan
for commission rules.--The Commission shall direct its
staff to develop and publish in any proposed rule a
plan for--
``(i) when and for how long the proposed
rule will be subject to public comment; and
``(ii) by when compliance with the final
rule will be required.''.
SEC. 211. 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 206, 208(a), and 210 of this Act, is amended by
adding at the end the following:
``(E) Applicability of notice and comment rules to
guidance voted on by the commission.--The notice and
comment requirements of chapter 5 of title 5, United
States Code, shall also apply with respect to any
guidance issued by the Commission.''.
SEC. 212. 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.
``(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. 213. GAO STUDY ON ADEQUACY OF CFTC 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; and
(2) examines the prior 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,
normalization, validation, and streamlining or other
data analytic processes.
(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.
SEC. 214. 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, upon an agreement of
confidentiality; 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) 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. 215. GAO STUDY ON COMMISSION LEASES.
(a) The Comptroller General of the United States shall, in
consultation with the Commodity Futures Trading Commission Inspector
General, conduct a study and publish a report regarding achieving
efficiencies in leasing and rental costs at the Commodity Futures
Trading Commission.
(b) The report shall be published within 90 days after the date of
the enactment of this Act regarding achieving efficiencies in leasing
and rental costs of buildings occupied by the Commodity Futures Trading
Commission, and shall include recommendations to the Chairman of the
Commodity Futures Trading Commission and the congressional committees
of jurisdiction regarding the following:
(1) Average occupancy rates and leasing costs of buildings
across the Federal Government compared to those currently in
effect with respect to buildings and locations occupied by the
Commodity Futures Trading Commission.
(2) Changes to leasing authority that could achieve
efficiencies, including the revocation of independent leasing
authority and transfer of authority to the Administrator of
General Services.
(3) The recommendations and responses contained in the
report by the Commodity Futures Trading Commission Inspector
General, dated June 4, 2014.
(4) Other related recommendations that would achieve
efficiencies in leasing and rental costs of buildings currently
occupied by the Commodity Futures Trading Commission.
(5) Is the Commodity Futures Trading Commission violating
any laws, including the Anti-Deficiency Act, by entering into
these leases, particularly those with more than 5-year terms,
and if so, how they can avoid violating Federal law in the
future.
(c) The Chairman of the Commodity Futures Trading Commission shall
report to the congressional committees of jurisdiction within 60 days
after receipt of the report as to whether the Chairman accepts or
rejects each of the recommendations of the Comptroller General, and an
explanation for each decision.
TITLE III--END-USER RELIEF
SEC. 301. SHORT TITLE.
This title may be cited as the ``End-User Relief and Market
Certainty Act''.
Subtitle A--End-User Exemption From Margin Requirements
SEC. 311. END-USER MARGIN REQUIREMENTS.
(a) Commodity Exchange Act Amendment.--Section 4s(e) of the
Commodity Exchange Act (7 U.S.C. 6s(e)) is amended by adding at the end
the following new paragraph:
``(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).''.
(b) Securities Exchange Act of 1934 Amendment.--Section 15F(e) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)) is amended by
adding at the end the following new paragraph:
``(4) Applicability with respect to counterparties.--The
requirements of paragraphs (2)(A)(ii) and (2)(B)(ii) shall not
apply to a security-based swap in which a counterparty
qualifies for an exception under section 3C(g)(1) or satisfies
the criteria in section 3C(g)(4).''.
SEC. 312. IMPLEMENTATION.
The amendment made to the Commodity Exchange Act by this subtitle
shall be implemented--
(1) without regard to--
(A) chapter 35 of title 44, United States Code; and
(B) the notice and comment provisions of section
553 of title 5, United States Code;
(2) through the promulgation of an interim final rule,
pursuant to which public comment will be sought before a final
rule is issued; and
(3) such that paragraph (1) shall apply solely to changes
to rules and regulations, or proposed rules and regulations,
that are limited to and directly a consequence of the
amendment.
Subtitle B--Inter-Affiliate Swaps
SEC. 321. TREATMENT OF AFFILIATE TRANSACTIONS.
(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 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 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 transfer of
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 is utilized.''.
(2) Securities exchange act of 1934 amendment.--Section
3C(g)(4)(A) of the Securities Exchange Act of 1934 (15 U.S.C.
78c-3(g)(4)(A)) is amended to read as follows:
``(A) In general.--An affiliate of a person that
qualifies for an exception under paragraph (1)
(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 enters into the
security-based 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
transfer of commercial risk is addressed by entering
into a security-based swap with a security-based swap
dealer or major security-based swap participant, an
appropriate credit support measure or other mechanism
is utilized.''.
(b) Applicability of Credit Support Measure Requirement.--
Notwithstanding section 371 of this Act, the requirements in section
2(h)(7)(D)(i) of the Commodity Exchange Act and section 3C(g)(4)(A) of
the Securities Exchange Act of 1934, 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 sections is
addressed by entering into a swap with a swap dealer or major swap
participant or a security-based swap with a security-based swap dealer
or major security-based swap participant, as appropriate, shall not
apply with respect to swaps or security-based swaps, as appropriate,
entered into before the date of the enactment of this Act.
Subtitle C--Indemnification Requirements Related to Swap Data
Repositories
SEC. 331. 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.''.
(c) Security-Based Swap Data Repositories.--Section 13(n)(5)(H) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(n)(5)(H)) is amended
to read as follows:
``(H) Confidentiality agreement.--Before the
security-based swap data repository may share
information with any entity described in subparagraph
(G), the security-based swap data repository shall
receive a written agreement from each entity stating
that the entity shall abide by the confidentiality
requirements described in section 24 relating to the
information on security-based swap transactions that is
provided.''.
Subtitle D--Relief for Municipal Utilities
SEC. 341. 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. 342. 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 an electric or
natural gas facility or an electric or natural
gas operation;
``(ii) supplies natural gas and or electric
energy to another utility special entity;
``(iii) has 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. 343. 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 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; or
``(ii) a metal, agricultural commodity, or
crude oil or gasoline commodity of any grade,
except as used as fuel for electric energy
generation; 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) all 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.''.
Subtitle E--End-User Regulatory Relief
SEC. 351. 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 and is
considered a financial entity
under clause (i)(VIII) because
the entity predominantly
engages in physical delivery
contracts; 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 343(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:
``(7) 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 5c(c)(4)(B) of such Act (7 U.S.C. 7a-
2(c)(4)(B)) is amended by striking ``1a(10)'' and
inserting ``1a(11)''.
(K) 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)''.
(L) 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. 352. 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. 353. 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 and is identifiable and
searchable by transaction.''.
SEC. 354. RELIEF FOR END-USERS WHO USE PHYSICAL CONTRACTS WITH
VOLUMETRIC OPTIONALITY.
Section 1a(47)(B)(ii) of the Commodity Exchange Act (7 U.S.C.
1a(47)(B)(ii)) 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--
``(I) for which exercise results in
a physical delivery obligation;
``(II) that cannot be severed or
marketed separately from the overall
transaction for the purpose of
financial settlement; and
``(III) for which both parties are
commercial market participants;''.
SEC. 355. COMMISSION VOTE REQUIRED BEFORE AUTOMATIC CHANGE OF SWAP
DEALER DE MINIMIS LEVEL.
Section 1a(49)(D) of the Commodity Exchange Act (7 U.S.C.
1a(49)(D)) is amended--
(1) by striking all that precedes ``shall exempt'' and
inserting the following:
``(D) De minimis exception.--
``(i) In general.--The Commission''; and
(2) by adding after and below the end the following new
clause:
``(ii) Special rule.--The de minimis
quantity of swap dealing as described in clause
(i) that is currently set at a quantity of
$8,000,000,000 shall only be amended or reduced
through a new affirmative action of the
Commission undertaken by rule or regulation.''.
SEC. 356. 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 striking ``shall'' and
inserting the following: ``and the Securities and Exchange
Commission, in consultation with the prudential regulators,
shall jointly''; 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.''.
(b) Securities Exchange Act of 1934.--Section 15F(e) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)) is amended--
(1) in paragraph (2)(B), by striking ``shall'' and
inserting the following: ``and the Commodity Futures Trading
Commission, in consultation with the prudential regulators,
shall jointly''; 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 security-based swap dealers and major
security-based swap participants that are banks
are permitted to use financial models approved
by the prudential regulators or the Commodity
Futures Trading 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 Commodity
Futures Trading Commission, permit the use of
comparable financial models by security-based
swap dealers and major security-based swap
participants that are not banks.''.
SEC. 357. 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. 358. 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. 359. CROSS-BORDER REGULATION OF DERIVATIVES TRANSACTIONS.
(a) Joint Rulemaking Required.--
(1) In general.--Not later than 270 days after the date of
enactment of this Act, the Securities and Exchange Commission
and the Commodity Futures Trading Commission shall jointly
issue rules setting forth the application of United States
swaps requirements of the Securities Exchange Act of 1934 and
the Commodity Exchange Act relating to cross-border swaps and
security-based swaps transactions involving U.S. persons or
non-U.S. persons.
(2) Construction.--The rules required under paragraph (1)
shall be identical, notwithstanding any difference in the
authorities granted the Commissions in section 30(c) of the
Securities Exchange Act of 1934 (15 U.S.C. 78dd(c)) and section
2(i) of the Commodity Exchange Act (7 U.S.C. 2(i)),
respectively, except to the extent necessary to accommodate
differences in other underlying statutory requirements under
such Acts, and the rules thereunder.
(b) Considerations.--The Commissions shall jointly issue rules that
address--
(1) the nature of the connections to the United States that
require a non-U.S. person to register as a swap dealer, major
swap participant, security-based swap dealer, or major
security-based swap participant under each Commission's
respective Acts and the regulations issued under such Acts;
(2) which of the United States swaps requirements shall
apply to the swap and security-based swap activities of non-
U.S. persons, U.S. persons, and their branches, agencies,
subsidiaries, and affiliates outside of the United States and
the extent to which such requirements shall apply; and
(3) the circumstances under which a non-U.S. person in
compliance with the regulatory requirements of a foreign
jurisdiction shall be exempt from United States swaps
requirements.
(c) Rule in Accordance With APA Required.--No guidance, memorandum
of understanding, or any such other agreement may satisfy the
requirement to issue a joint rule from the Commissions in accordance
with section 553 of title 5, United States Code.
(d) General Application to Countries or Administrative Regions
Having Nine Largest Markets.--
(1) General application.--In issuing rules under this
section, the Commissions shall provide that a non-U.S. person
in compliance with the swaps regulatory requirements of a
country or administrative region that has one of the nine
largest combined swap and security-based swap markets by
notional amount in the calendar year preceding issuance of such
rules, or other foreign jurisdiction as jointly determined by
the Commissions, shall be exempt from United States swaps
requirements in accordance with the schedule set forth in
paragraph (2), unless the Commissions jointly determine that
the regulatory requirements of such country or administrative
region or other foreign jurisdiction are not broadly equivalent
to United States swaps requirements.
(2) Effective date schedule.--The exemption described in
paragraph (1) and set forth under the rules required by this
section shall apply to persons or transactions relating to or
involving--
(A) countries or administrative regions described
in such paragraph, or any other foreign jurisdiction as
jointly determined by the Commissions, accounting for
the five largest combined swap and security-based swap
markets by notional amount in the calendar year
preceding issuance of such rules, on the date on which
final rules are issued under this section; and
(B) the remaining countries or administrative
regions described in such paragraph, and any other
foreign jurisdiction as jointly determined by the
Commissions, 1 year after the date on which such rules
are issued.
(3) Criteria.--In such rules, the Commissions shall jointly
establish criteria for determining that one or more categories
of regulatory requirements of a country or administrative
region described in paragraph (1) or other foreign jurisdiction
is not broadly equivalent to United States swaps requirements
and shall jointly determine the appropriate application of
certain United States swap requirements to persons or
transactions relating to or involving such country or
administrative region or other foreign jurisdiction. Such
criteria shall include the scope and objectives of the
regulatory requirements of a country or administrative region
described in paragraph (1) or other foreign jurisdiction as
well as the effectiveness of the supervisory compliance program
administered, and the enforcement authority exercised, by such
country or administrative region or other foreign jurisdiction,
and such other factors as the Commissions, by rule, jointly
determine to be necessary or appropriate in the public
interest.
(4) Required assessment.--Beginning on the date on which
final rules are issued under this section, the Commissions
shall begin to jointly assess the regulatory requirements of
countries or administrative regions described in paragraph (1),
as the Commissions jointly determine appropriate, in accordance
with the criteria established pursuant to this subsection, to
determine if one or more categories of regulatory requirements
of such a country or administrative region or other foreign
jurisdiction is not broadly equivalent to United States swaps
requirements.
(e) Report to Congress.--If the Commissions make the joint
determination described in subsection (d)(1) that the regulatory
requirements of a country or administrative region described in such
subsection or other foreign jurisdiction are not broadly equivalent to
United States swaps requirements, the Commissions shall articulate the
basis for such a determination in a written report transmitted to the
Committee on Financial Services and the Committee on Agriculture of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry
of the Senate within 30 days of the determination. The determination
shall not be effective until the transmission of such report.
(f) Definitions.--As used in this Act and for purposes of the rules
issued pursuant to this Act, the following definitions apply:
(1) 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 Commissions
may further jointly define to more effectively
carry out the purposes of this Act; 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 and pension plans,
and any other similar international organizations and
their agencies and pension plans.
(2) The term ``United States swaps requirements'' means
the provisions relating to swaps and security-based swaps
contained in the Commodity Exchange Act (7 U.S.C. 1a et seq.)
and the Securities Exchange Act of 1934 (15 U.S.C. 78a 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 Securities and
Exchange Commission and the Commodity Futures Trading
Commission pursuant to such provisions.
(g) Conforming Amendments.--
(1) Securities exchange act of 1934.--Section 36(c) of the
Securities Exchange Act of 1934 (15 U.S.C. 78mm(c)) is amended
by inserting ``or except as necessary to effectuate the
purposes of the Customer Protection and End-User Relief Act,''
after ``to grant exemptions,''.
(2) Commodity exchange act.--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 Customer Protection and End-User Relief Act,'' after
``to grant exemptions,''.
SEC. 360. REPORT ON FOREIGN BOARDS OF TRADE.
Within 1 year after the date of the enactment of this Act, the
Commodity Futures Trading Commission shall prepare and submit to the
Committee on Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of the Senate a
written report reviewing the standards and rules of foreign boards of
trade related to the physical delivery of base metals, including
warehousing facilities, as compared to the standards and rules for
domestic designated contract markets and related warehouses for base
metals.
SEC. 361. TREATMENT OF CERTAIN FUNDS.
(a) Amendment to the Definition of Commodity Pool Operator.--
Section 1a(11) of the Commodity Exchange Act (7 U.S.C. 1a(11)) 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(12) of such Act (7 U.S.C. 1a(12)) 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.''.
Subtitle F--Effective Date
SEC. 371. EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments made by
this title shall take effect as if enacted on July 21, 2010.
Passed the House of Representatives June 24, 2014.
Attest:
KAREN L. HAAS,
Clerk.