H.R. 2289 — what changed
Commodity End-User Relief Act
From Reported in House to Engrossed in House. 24 sections amended between Reported in House and Engrossed in House.
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:
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“(s) “(t) 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:
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“(t) “(u) 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:
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“(u) “(v) 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.
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“(v) “(w) 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.
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“(w) “(x) 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. 204 Office of the Chief Economist
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.”
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)”.
added
Sense of the Congress— It is the sense of the Congress that the Commodity Futures Trading Commission should take all appropriate actions to encourage applications for positions in the Office of the Chief Economist from members of minority groups, women, disabled persons, and veterans.
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—
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“(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; andfunds;
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“(ii) set forth annual goals to be accomplished and annual budgets needed to accomplish the goals.”goals; and
added “(iii) include a summary of any plan of action and milestones to address any known information security vulnerability, as identified pursuant to a widely accepted industry or Government standard, including—
added “(I) specific information about the industry or Government standard used to identify the known information security vulnerability;
added “(II) a detailed time line with specific deadlines for addressing the known information security vulnerability; and
added “(III) an update of any such time line and the rationale for any deviation from the time line.”
Sec. 213 Report on status of any application of metals exchange to register as a foreign board of trade; deadline for action on application
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—
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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; andAct;
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the status of Commission negotiations with foreign regulators regarding aluminum warehousing.warehousing; and
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the status of consultations with all United States market participants including major producers and consumers.
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.
Sec. 301 Relief for hedgers utilizing centralized risk management practices
In general—
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.”
added
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:
added “(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 hedge or mitigation of such 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 must be utilized.”
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Applicability of credit support measure requirement— The requirements in section 2(h)(7)(D)(i) of the Commodity Exchange Act, 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 section 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.
Sec. 302 Indemnification requirements
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Derivatives clearing organizations— Section 5b(k)(5) of the Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) 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.”
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Swap data repositories— Section 21(d) 21 of such Act (7 U.S.C. 24a(d)) 24a) is amended to read as follows:amended—
added
in subsection (c)(7)—
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in the matter preceding subparagraph (A), by striking “all” and inserting “swap”; and
added
in subparagraph (E)—
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in clause (ii), by striking “and” at the end; and
added
by adding at the end the following:
added “(iv) other foreign authorities; and”
added
by striking subsection (d) and inserting the following:
“(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.”
added
Security-Based swap data repositories— Section 13(n)(5) of the Securities Exchange Act of 1934 25 (15 U.S.C. 78m(n)(5)) is amended—
added
in subparagraph (G)—
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in the matter preceding clause (i), by striking “all” and inserting “security-based swap”; and
added
in subclause (v)—
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in subclause (II), by striking “; and” and inserting a semicolon;
added
in subclause (III), by striking the period at the end and inserting “; and”; and
added
by adding at the end the following:
added “(IV) other foreign authorities.”
added
by striking subparagraph (H) and inserting the following:
added “(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.”
added
Effective date— The amendments made by this section shall take effect as if enacted on July 21, 2010.
Sec. 305 Utility operations-related swap
Swap further defined— Section 1a(47)(A)(iii) of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(iii)) is amended—
by striking “and” at the end of subclause (XXI);
by adding “and” at the end of subclause (XXII); and
by adding at the end the following:
“(XXIII) a utility operations-related swap;”
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Utility operations-related 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
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.”
Commercial market participant defined—
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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) (7) through (52) as paragraphs (9) (8) through (53), respectively, and by inserting after paragraph (6) the following:
changed
“(8) “(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.”
Conforming amendments—
Section 1a of such Act (7 U.S.C. 1a) is amended—
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
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)”.
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)” .
changed
Section 4q(a)(1) of such Act (7 U.S.C. 6o-1(a)(1)) 6o–1(a)(1)) is amended by striking “1a(9)” and inserting “1a(10)”.
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)”.
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)”.
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)”.
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)”.
Section 5(e)(1) of such Act (7 U.S.C. 7(e)(1)) is amended by striking “1a(9)” and inserting “1a(10)”.
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Section 5b(k)(3)(A) of such Act (7 U.S.C. 7a-1(k)(3)(A)) 7a–1(k)(3)(A)) is amended by striking “1a(47)(A)(v)” and inserting “1a(48)(A)(v)”.
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Section 5h(f)(10)(A)(iii) of such Act (7 U.S.C. 7b-3(f)(10)(A)(iii)) 7b–3(f)(10)(A)(iii)) is amended by striking “1a(47)(A)(v)” and inserting “1a(48)(A)(v)”.
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. 311 Capital requirements for non-bank swap dealers
Commodity exchange act— Section 4s(e) of the Commodity Exchange Act (7 U.S.C. 6s(e)) is amended—
changed
in paragraph (2)(B), by striking “shall” and inserting “in consultation with the prudential regulators and following: “and the Securities and Exchange Commission” before “shall”; Commission, in consultation with the prudential regulators, shall jointly”; and
in paragraph (3)(D)—
in clause (ii), by striking “shall, to the maximum extent practicable,” and inserting “shall”; and
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.”
added
Securities exchange act of 1934— Section 15F(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–10(e)) is amended—
added
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
added
in paragraph (3)(D)—
added
in clause (ii), by striking “shall, to the maximum extent practicable,” and inserting “shall”; and
added
by adding at the end the following:
added “(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. 314 Cross-border regulation of derivatives transactions
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—
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the nature of the connections to the United States that require a non-U.S. non-United States person to register as a swap dealer or a major swap participant under the Commodity Exchange Act and the regulations issued under such Act;
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which of the United States swaps requirements apply to the swap activities of non-U.S. non-United States persons and U.S. United States persons and their branches, agencies, subsidiaries, and affiliates outside of the United States, and the extent to which the requirements apply; and
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the circumstances under which a U.S. United States person or non-U.S. non-United States person in compliance with the swaps regulatory requirements of a foreign jurisdiction shall be exempt from United States swaps requirements.
Content of the rule—
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—
the scope and objectives of the swaps regulatory requirements of the foreign jurisdiction;
the effectiveness of the supervisory compliance program administered;
the enforcement authority exercised by the foreign jurisdiction; and
such other factors as the Commission, by rule, determines to be necessary or appropriate in the public interest.
Comparability— In the rule, the Commission shall—
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provide that any non-U.S. non-United States person or any transaction between two non-U.S. 2 non-United States 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
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set forth the circumstances in which a U.S. United States person or a transaction between a U.S. United States person and a non-U.S. non-United States 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.
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.
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.
No part of any rulemaking under this section shall limit the Commission’s antifraud or antimanipulation authority.
Application of the rule—
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.
Substituted compliance for unassessed major markets— Beginning 18 months after the date of enactment of this Act—
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
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a non-U.S. non-United States person or a transaction between 2 non-U.S. non-United States 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.
Suspension of substituted compliance— If the Commission determines, by rule or by order, that—
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);
changed
the foreign jurisdiction does not exempt from its swaps regulatory requirements U.S. United States persons who are in compliance with United States swaps requirements; or
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,
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.
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.
Definitions— As used in this Act and for purposes of the rules issued pursuant to this Act, the following definitions apply:
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U.S. United States person— The term “U.S. “United States person”—
means—
any natural person resident in the United States;
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;
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any account (whether discretionary or non-discretionary) of a U.S. United States person; and
any other person as the Commission may further define to more effectively carry out the purposes of this section; and
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.
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.
Foreign jurisdiction— The term “foreign jurisdiction” means any national or supranational political entity with common rules governing swaps transactions.
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.
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
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:
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“(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 section 3(c)(10) or 3(c)(14) of the Investment Company Act of 1940.”
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—
changed
in paragraph (1), in the 2nd second 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, 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
by adding at the end the following:
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“(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 Act pursuant to section 3(c)(10) of the operation Investment Company Act of 1940 shall provide disclosure in accordance with section 7(e) of the fund, trust, syndicate, or similar form Investment Company Act of enterprise.”1940.”
Sec. 317 Core principle certainty
Section 5h(f) of the Commodity Exchange Act (7 U.S.C. 7b–3(f)) is amended—
in paragraph (1)(B), by inserting “except as described in this subsection” after “Commission by rule or regulation”;
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.”
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.”;
in paragraph (6)(B)—
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
by adding at the end the following: “A swap execution facility shall be responsible for monitoring positions only on its own facility.”;
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.”;
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in paragraph (13)(B), by striking “cover the operating costs of the swap execution facility for a 1-year “1-year period, as calculated on a rolling basis” and inserting “conduct “90-day period, as calculated on a rolling basis, or conduct an orderly wind-down of its operations”; operations, whichever is greater”; and
in paragraph (15)—
in subparagraph (A), by adding at the end the following: “The individual may also perform other responsibilities for the swap execution facility.”;
in subparagraph (B)—
in clause (i), by inserting “, a committee of the board,” after “directly to the board”;
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”
by redesignating clause (vi) as clause (v);
in subparagraph (C), by striking “(B)(vi)” and inserting “(B)(v)”; and
in subparagraph (D)—
in clause (i)—
by striking “In accordance with rules prescribed by the Commission, the” and inserting “The”; and
by striking “and sign”; and
in clause (ii)—
in the matter preceding subclause (I), by inserting “or senior officer” after “officer”;
by amending subclause (I) to read as follows:
“(I) submit each report described in clause (i) to the Commission; and”
in subclause (II), by inserting “materially” before “accurate”.
Sec. 318 Treatment of Federal Home Loan Bank products
added
Section 1a(2) of the Commodity Exchange Act (7 U.S.C. 1a(2)) is amended—
removed
Section 1a(2) of the Commodity Exchange Act (7 U.S.C. 1a(2)) is amended—
renumbered
was (3)
in subparagraph (B), by striking “and”;
renumbered
was (4)
in subparagraph (C), by striking the period and inserting “; and”; and
renumbered
was (5)
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).”
added
Section 402(a) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(a)) is amended—
added
by striking “or” at the end of paragraph (6);
added
by striking the period at the end of paragraph (7) and inserting “; or”; and
added
by adding at the end the following:
added “(8) any Federal Home Loan Bank (as defined in section 2 of the Federal Home Loan Bank Act).”
Sec. 319 Treatment of certain funds
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.”
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:
changed
“(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) (12)(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.”
Sec. 401 Correction of references
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)”.
changed
Section 5c(c)(5)(C)(i) of such Act (7 U.S.C. 7a-2(c)(5)(C)(i)) 7a–2(c)(5)(C)(i)) is amended by striking “1a(2)(i))” and inserting “1a(19)(i))”.
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
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.
Conforming amendments—
Section 2(d) of such Act (7 U.S.C. 2(d)) is amended by striking “(g) of” and inserting “(e) of”.
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)”.
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)”.
changed
Section 5f(b)(1)(A) of such Act (7 U.S.C. 7b-1(b)(1)(A)) 7b–1(b)(1)(A)) is amended by striking “, (e) (e), and (g)” and inserting “and (e)”.
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. 404 Flexibility for registered entities
changed
Section 5c(b) of the Commodity Exchange Act (7 U.S.C. 7a-2(b)) 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
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)”.
changed
Section 1a(41) 1a(40) of such Act (7 U.S.C. 1a(40)), 1a(41)), as so redesignated by section 306(b)(1) of this Act, is amended—
by adding “and” at the end of subparagraph (D); and
by striking all that follows “section 21” and inserting a period.
Section 4a(e) of such Act (7 U.S.C. 6a(e)) is amended—
changed
in the 1st first sentence—
by striking “or by any electronic trading facility”;
by striking “or on an electronic trading facility”; and
by striking “or electronic trading facility” each place it appears; and
changed
in the 2nd second sentence, by striking “or electronic trading facility with respect to a significant price discovery contract”.
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”.
Section 4i of such Act (7 U.S.C. 6i) is amended—
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
changed
by striking “or electronic trading facility”facility”.
Section 6(b) of such Act (7 U.S.C. 8(b)) is amended by striking “or electronic trading facility” each place it appears.
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
changed
Section 5h(h) of the Commodity Exchange Act (7 U.S.C. 7b-3(h)) 7b–3(h)) is amended by striking “alternative” before “swap”.
Sec. 407 Elimination of redundant references to types of registered entities
changed
Section 6b of the Commodity Exchange Act (7 U.S.C. 13a) is amended in the 1st first sentence by striking “as set forth in sections 5 through 5c”.
Sec. 410 Elimination of obsolete references to derivative transaction execution facilities
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”.
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.
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”.
Section 2(a)(1)(C)(ii) of such Act (7 U.S.C. 2(a)(1)(C)(ii)) is amended—
by striking “, or register a derivatives transaction execution facility that trades or executes,”;
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
by striking “or the derivatives transaction execution facility,”.
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,”.
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.
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”.
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)—
by striking “in, or register a derivatives transaction execution facility”; and
by striking “, or registered as a derivatives transaction execution facility for,”.
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.
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”
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”.
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”.
Section 2(a)(9)(B)(ii) of such Act (7 U.S.C. 2(a)(9)(B)(ii)) is amended—
by striking “or registration” each place it appears;
by striking “or derivatives transaction execution facility” each place it appears;
by striking “or register”;
by striking “, registering,”; and
changed
by striking “, registration,”.“registration,”.
changed
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.facility”.
changed
Section 4(a)(1) of such Act (7 U.S.C. 6(a)(1)) is amended by striking “or derivatives transaction execution facility”.facility” each place it appears.
Section 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is amended—
by striking “or registered” after “designated”; and
by striking “or derivatives transaction execution facility”.
Section 4a(a)(1) of such Act (7 U.S.C. 6a(a)(1)) is amended—
by striking “or derivatives transaction execution facilities”; and
changed
by striking“or striking “or derivatives transaction execution facility”.
Section 4a(e) of such Act (7 U.S.C. 6a(e)) is amended—
by striking “, derivatives transaction execution facility,” each place it appears; and
by striking “or derivatives transaction execution facility”.
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.
Section 4d of such Act (7 U.S.C. 6d) is amended by striking “or derivatives transaction execution facility” each place it appears.
Section 4e of such Act (7 U.S.C. 6e) is amended by striking “or derivatives transaction execution facility”.
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.
Section 4i of such Act (7 U.S.C. 6i) is amended by striking “or derivatives transaction execution facility”.
Section 4j(a) of such Act (7 U.S.C. 6j(a)) is amended by striking “and registered derivatives transaction execution facility”.
Section 4p(a) of such Act (7 U.S.C. 6p(a)) is amended by striking “, or derivatives transaction execution facilities”.
Section 4p(b) of such Act (7 U.S.C. 6p(b)) is amended by striking “derivatives transaction execution facility,”.
changed
Section 5c(f) of such Act (7 U.S.C. 7a-2(f)) 7a–2(f)) is amended by striking “and registered derivatives transaction execution facility”.
changed
Section 5c(f)(1) of such Act (7 U.S.C. 7a-2(f)(1)) 7a–2(f)(1)) is amended by striking “or registered derivatives transaction execution facility”.
Section 6 of such Act (7 U.S.C. 8) is amended—
by striking “or registered”;
by striking “or derivatives transaction execution facility” each place it appears; and
by striking “or registration” each place it appears.
Section 6a(a) of such Act (7 U.S.C. 10a(a)) is amended—
by striking “or registered”;
by striking “or a derivatives transaction execution facility”; and
changed
by inserting “shall” before “exclude” the first place such term it appears.
Section 6a(b) of such Act (7 U.S.C. 10a(b)) is amended—
by striking “or registered”; and
by striking “or a derivatives transaction execution facility”.
changed
Section 6d(1) of such Act (7 U.S.C. 13a-2(1)) 13a–2(1)) is amended by striking “derivatives transaction execution facility,”.
Sec. 414 Miscellaneous corrections
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.
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.
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.
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”.
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.
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)”.
changed
Section 2(c)(1) of such Act (7 U.S.C. 2(c)(1)) is amended by striking the 2nd second comma.
Section 4(c)(3)(H) of such Act (7 U.S.C. 6(c)(3)(H)) is amended by striking “state” and inserting “State”.
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.”
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)”.
changed
Section 4f(c)(3)(A) of such Act (7 U.S.C. 6f(c)(3)(A)) is amended by striking the 1st first comma.
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”.
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))”.
Section 5 of such Act (7 U.S.C. 7) is amended by redesignating subsections (c) through (e) as subsections (b) through (d), respectively.
changed
Section 5b of such Act (7 U.S.C. 7a-1) 7a–1) is amended by redesignating subsection (k) as subsection (j).
changed
Section 5f(b)(1) of such Act (7 U.S.C. 7b-1(b)(1)) 7b–1(b)(1)) is amended by striking “section 5f” and inserting “this section”.
Section 6(a) of such Act (7 U.S.C. 8(a)) is amended by striking “the the” and inserting “the”.
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”.
Section 9(a)(2) of such Act (7 U.S.C. 13(a)(2)) is amended by striking “subsection 4c” and inserting “section 4c”.
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.
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.
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.
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.
Section 17(b)(11) of such Act (7 U.S.C. 21(b)(11)) is amended by striking the period and inserting a semicolon.
Section 17(b)(12) of such Act (7 U.S.C. 21(b)(12)) is amended—
by striking “(A)”; and
by striking the period and inserting “; and”.
Section 17(b)(13) of such Act (7 U.S.C. 21(b)(13)) is amended by striking “A” and inserting “a”.
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.
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”.
Section 22(b)(4) of such Act (7 U.S.C. 25(b)(4)) is amended by inserting a comma after “entity”.