---
kind: "section"
citation: "7 U.S.C. § 7b–3"
title: "7"
title_heading: "Agriculture"
number: "7b–3"
heading: "Swap execution facilities"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/7b-3"
units:
  - "Chapter 1 — Commodity Exchanges"
---

# §7b–3. Swap execution facilities

- (a) **Registration—**
  - (1) **In general—** No [person](/usc/7/1a.md?p=38) may operate a facility for the trading or processing of [swaps](/usc/7/1a.md?p=47-A) unless the facility is registered as a [swap execution facility](/usc/7/1a.md?p=50) or as a designated contract [market](/usc/7/198.md?p=1) under this section.
  - (2) **Dual registration—** Any [person](/usc/7/1a.md?p=38) that is registered as a [swap execution facility](/usc/7/1a.md?p=50) under this section shall register with the [Commission](/usc/7/1a.md?p=8) regardless of whether the [person](/usc/7/1a.md?p=38) also is registered with the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) as a [swap execution facility](/usc/7/1a.md?p=50).
- (b) **Trading and trade processing—**
  - (1) **In general—** Except as specified in [paragraph (2)](#b-2), a [swap execution facility](/usc/7/1a.md?p=50) that is registered under [subsection (a)](#a) may—
    - (A) make available for trading any [swap](/usc/7/1a.md?p=47-A); and
    - (B) facilitate trade processing of any [swap](/usc/7/1a.md?p=47-A).
  - (2) **Agricultural swaps—** A [swap execution facility](/usc/7/1a.md?p=50) may not list for trading or confirm the execution of any [swap](/usc/7/1a.md?p=47-A) in an agricultural [commodity](/usc/7/1a.md?p=9) (as defined by the [Commission](/usc/7/1a.md?p=8)) except pursuant to a rule or regulation of the [Commission](/usc/7/1a.md?p=8) allowing the [swap](/usc/7/1a.md?p=47-A) under such terms and conditions as the [Commission](/usc/7/1a.md?p=8) shall prescribe.
- (c) **Identification of facility used to trade swaps by contract markets—** A [board of trade](/usc/7/1a.md?p=6) that operates a contract [market](/usc/7/198.md?p=1) shall, to the extent that the [board of trade](/usc/7/1a.md?p=6) also operates a [swap execution facility](/usc/7/1a.md?p=50) and uses the same electronic trade execution system for listing and executing trades of [swaps](/usc/7/1a.md?p=47-A) on or through the contract [market](/usc/7/198.md?p=1) and the [swap execution facility](/usc/7/1a.md?p=50), identify whether the electronic trading of such [swaps](/usc/7/1a.md?p=47-A) is taking place on or through the contract [market](/usc/7/198.md?p=1) or the [swap execution facility](/usc/7/1a.md?p=50).
- (d) **Rule-writing—**
  - (1) The [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) and [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) may promulgate rules defining the universe of [swaps](/usc/7/1a.md?p=47-A) that can be executed on a [swap execution facility](/usc/7/1a.md?p=50). These rules shall take into account the price and nonprice requirements of the counterparties to a [swap](/usc/7/1a.md?p=47-A) and the goal of this section as set forth in [subsection (e)](#e).
  - (2) For all [swaps](/usc/7/1a.md?p=47-A) that are not required to be executed through a [swap execution facility](/usc/7/1a.md?p=50) as defined in [paragraph (1)](#d-1), such trades may be executed through any other available means of [interstate commerce](/usc/7/1a.md?p=30).
  - (3) The [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8) and [Commodity](/usc/7/1a.md?p=9) Futures Trading [Commission](/usc/7/1a.md?p=8) shall update these rules as necessary to account for technological and other innovation.
- (e) **Rule of construction—** The goal of this section is to promote the trading of [swaps](/usc/7/1a.md?p=47-A) on [swap execution facilities](/usc/7/1a.md?p=50) and to promote pre-trade price transparency in the [swaps](/usc/7/1a.md?p=47-A) [market](/usc/7/198.md?p=1).
- (f) **Core principles for swap execution facilities—**
  - (1) **Compliance with core principles—**
    - (A) **In general—** To be registered, and maintain registration, as a [swap execution facility](/usc/7/1a.md?p=50), the [swap execution facility](/usc/7/1a.md?p=50) shall comply with—
      - (i) the core principles described in this subsection; and
      - (ii) any requirement that the [Commission](/usc/7/1a.md?p=8) may impose by rule or regulation pursuant to [section 12a(5) of this title](/usc/7/12a.md?p=5).
    - (B) **Reasonable discretion of swap execution facility—** Unless otherwise determined by the [Commission](/usc/7/1a.md?p=8) by rule or regulation, a [swap execution facility](/usc/7/1a.md?p=50) described in [subparagraph (A)](#f-1-A) shall have reasonable discretion in establishing the manner in which the [swap execution facility](/usc/7/1a.md?p=50) complies with the core principles described in this subsection.
  - (2) **Compliance with rules—** A [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce compliance with any rule of the [swap execution facility](/usc/7/1a.md?p=50), including—
      - (i) the terms and conditions of the [swaps](/usc/7/1a.md?p=47-A) traded or processed on or through the [swap execution facility](/usc/7/1a.md?p=50); and
      - (ii) any limitation on access to the [swap execution facility](/usc/7/1a.md?p=50);
    - (B) establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means—
      - (i) to provide [market](/usc/7/198.md?p=1) participants with impartial access to the [market](/usc/7/198.md?p=1); and
      - (ii) to capture information that may be used in establishing whether rule violations have occurred;
    - (C) establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility, including block trades; and
    - (D) provide by its rules that when a [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) enters into or facilitates a [swap](/usc/7/1a.md?p=47-A) that is subject to the mandatory clearing requirement of [section 2(h) of this title](/usc/7/2.md?p=h), the [swap dealer](/usc/7/1a.md?p=49-A) or [major swap participant](/usc/7/1a.md?p=33-A) shall be responsible for compliance with the mandatory trading requirement under [section 2(h)(8) of this title](/usc/7/2.md?p=h-8).
  - (3) **Swaps not readily susceptible to manipulation—** The [swap execution facility](/usc/7/1a.md?p=50) shall permit trading only in [swaps](/usc/7/1a.md?p=47-A) that are not readily susceptible to manipulation.
  - (4) **Monitoring of trading and trade processing—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules or terms and conditions defining, or specifications detailing—
      - (i) trading procedures to be used in entering and executing orders traded on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50); and
      - (ii) procedures for trade processing of [swaps](/usc/7/1a.md?p=47-A) on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50); and
    - (B) monitor trading in [swaps](/usc/7/1a.md?p=47-A) to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.
  - (5) **Ability to obtain information—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section;
    - (B) provide the information to the [Commission](/usc/7/1a.md?p=8) on request; and
    - (C) have the capacity to carry out such international information-sharing agreements as the [Commission](/usc/7/1a.md?p=8) may require.
  - (6) **Position limits or accountability—**
    - (A) **In general—** To reduce the potential threat of [market](/usc/7/198.md?p=1) manipulation or congestion, especially during trading in the delivery month, a [swap execution facility](/usc/7/1a.md?p=50) that is a [trading facility](/usc/7/1a.md?p=51-A) shall adopt for each of the contracts of the facility, as is necessary and appropriate, position limitations or position accountability for speculators.
    - (B) **Position limits—** For any contract that is subject to a position limitation established by the [Commission](/usc/7/1a.md?p=8) pursuant to [section 6a(a) of this title](/usc/7/6a.md?p=a), the [swap execution facility](/usc/7/1a.md?p=50) shall—
      - (i) set its position limitation at a level no higher than the [Commission](/usc/7/1a.md?p=8) limitation; and
      - (ii) monitor positions established on or through the [swap execution facility](/usc/7/1a.md?p=50) for compliance with the limit set by the [Commission](/usc/7/1a.md?p=8) and the limit, if any, set by the [swap execution facility](/usc/7/1a.md?p=50).
  - (7) **Financial integrity of transactions—** The [swap execution facility](/usc/7/1a.md?p=50) shall establish and enforce rules and procedures for ensuring the financial integrity of [swaps](/usc/7/1a.md?p=47-A) entered on or through the facilities of the [swap execution facility](/usc/7/1a.md?p=50), including the clearance and settlement of the [swaps](/usc/7/1a.md?p=47-A) pursuant to [section 2(h)(1) of this title](/usc/7/2.md?p=h-1).
  - (8) **Emergency authority—** The [swap execution facility](/usc/7/1a.md?p=50) shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the [Commission](/usc/7/1a.md?p=8), as is necessary and appropriate, including the authority to liquidate or transfer open positions in any [swap](/usc/7/1a.md?p=47-A) or to suspend or curtail trading in a [swap](/usc/7/1a.md?p=47-A).
  - (9) **Timely publication of trading information—**
    - (A) **In general—** The [swap execution facility](/usc/7/1a.md?p=50) shall make public timely information on price, trading volume, and other trading data on [swaps](/usc/7/1a.md?p=47-A) to the extent prescribed by the [Commission](/usc/7/1a.md?p=8).
    - (B) **Capacity of swap execution facility—** The [swap execution facility](/usc/7/1a.md?p=50) shall be required to have the capacity to electronically capture and transmit trade information with respect to transactions executed on the facility.
  - (10) **Recordkeeping and reporting—**
    - (A) **In general—** A [swap execution facility](/usc/7/1a.md?p=50) shall—
      - (i) maintain records of all activities relating to the business of the facility, including a complete audit trail, in a form and manner acceptable to the [Commission](/usc/7/1a.md?p=8) for a period of 5 years;
      - (ii) report to the [Commission](/usc/7/1a.md?p=8), in a form and manner acceptable to the [Commission](/usc/7/1a.md?p=8), such information as the [Commission](/usc/7/1a.md?p=8) determines to be necessary or appropriate for the [Commission](/usc/7/1a.md?p=8) to perform the duties of the [Commission](/usc/7/1a.md?p=8) under this chapter; and
      - (iii) shall keep any such records relating to [swaps](/usc/7/1a.md?p=47-A) defined in [section 1a(47)(A)(v) of this title](/usc/7/1a.md?p=47-A-v) open to inspection and examination by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8).”[^1]
    - (B) **Requirements—** The [Commission](/usc/7/1a.md?p=8) shall adopt data collection and reporting requirements for [swap execution facilities](/usc/7/1a.md?p=50) that are comparable to corresponding requirements for [derivatives clearing organizations](/usc/7/1a.md?p=15-A) and [swap data repositories](/usc/7/1a.md?p=48).
  - (11) **Antitrust considerations—** Unless necessary or appropriate to achieve the purposes of this chapter, the [swap execution facility](/usc/7/1a.md?p=50) shall not—
    - (A) adopt any rules or taking[^2] any actions that result in any unreasonable restraint of trade; or
    - (B) impose any material anticompetitive burden on trading or clearing.
  - (12) **Conflicts of interest—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and enforce rules to minimize conflicts of interest in its decision-making process; and
    - (B) establish a process for resolving the conflicts of interest.
  - (13) **Financial resources—**
    - (A) **In general—** The [swap execution facility](/usc/7/1a.md?p=50) shall have adequate financial, operational, and managerial resources to discharge each responsibility of the [swap execution facility](/usc/7/1a.md?p=50).
    - (B) **Determination of resource adequacy—** The financial resources of a [swap execution facility](/usc/7/1a.md?p=50) shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the [swap execution facility](/usc/7/1a.md?p=50) to cover the operating costs of the [swap execution facility](/usc/7/1a.md?p=50) for a 1-year period, as calculated on a rolling basis.
  - (14) **System safeguards—** The [swap execution facility](/usc/7/1a.md?p=50) shall—
    - (A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that—
      - (i) are reliable and secure; and
      - (ii) have adequate scalable capacity;
    - (B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for—
      - (i) the timely recovery and resumption of operations; and
      - (ii) the fulfillment of the responsibilities and obligations of the [swap execution facility](/usc/7/1a.md?p=50); and
    - (C) periodically conduct tests to verify that the backup resources of the [swap execution facility](/usc/7/1a.md?p=50) are sufficient to ensure continued—
      - (i) order processing and trade matching;
      - (ii) price reporting;
      - (iii) [market](/usc/7/198.md?p=1) surveillance and
      - (iv) maintenance of a comprehensive and accurate audit trail.
  - (15) **Designation of chief compliance officer—**
    - (A) **In general—** Each [swap execution facility](/usc/7/1a.md?p=50) shall designate an individual to serve as a chief compliance officer.
    - (B) **Duties—** The chief compliance officer shall—
      - (i) report directly to the [board](/usc/7/1a.md?p=5) or to the senior officer of the facility;
      - (ii) review compliance with the core principles in this subsection;
      - (iii) in consultation with the [board](/usc/7/1a.md?p=5) of the facility, a body performing a function similar to that of a [board](/usc/7/1a.md?p=5), or the senior officer of the facility, resolve any conflicts of interest that may arise;
      - (iv) be responsible for establishing and administering the policies and procedures required to be established pursuant to this section;
      - (v) ensure compliance with this chapter and the rules and regulations issued under this chapter, including rules prescribed by the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
      - (vi) establish procedures for the remediation of noncompliance issues found during compliance office reviews, look backs, internal or external audit findings, self-reported errors, or through validated complaints.
    - (C) **Requirements for procedures—** In establishing procedures under [subparagraph (B)(vi)](#f-15-B-vi), the chief compliance officer shall design the procedures to establish the handling, management response, remediation, retesting, and closing of noncompliance issues.
    - (D) **Annual reports—**
      - (i) **In general—** In accordance with rules prescribed by the [Commission](/usc/7/1a.md?p=8), the chief compliance officer shall annually prepare and sign a report that contains a description of—
        - (I) the compliance of the [swap execution facility](/usc/7/1a.md?p=50) with this chapter; and
        - (II) the policies and procedures, including the code of ethics and conflict of interest policies, of the [swap execution facility](/usc/7/1a.md?p=50).
      - (ii) **Requirements—** The chief compliance officer shall—
        - (I) submit each report described in [clause (i)](#f-15-D-i) with the appropriate financial report of the [swap execution facility](/usc/7/1a.md?p=50) that is required to be submitted to the [Commission](/usc/7/1a.md?p=8) pursuant to this section; and
        - (II) include in the report a certification that, under penalty of law, the report is accurate and complete.
- (g) **Exemptions—** The [Commission](/usc/7/1a.md?p=8) may exempt, conditionally or unconditionally, a [swap execution facility](/usc/7/1a.md?p=50) from registration under this section if the [Commission](/usc/7/1a.md?p=8) finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the [Securities](/usc/7/1a.md?p=41) and [Exchange](/usc/7/1a.md?p=1-D) [Commission](/usc/7/1a.md?p=8), a [prudential regulator](/usc/7/1a.md?p=39), or the appropriate governmental authorities in the home country of the facility.
- (h) **Rules—** The [Commission](/usc/7/1a.md?p=8) shall prescribe rules governing the regulation of alternative [swap execution facilities](/usc/7/1a.md?p=50) under this section.

## Footnotes

[^1]: So in original. The closing quotation marks probably should not appear.
[^2]: So in original. Probably should be “take”.

## Source credit

(Sept. 21, 1922, ch. 369, § 5h, as added Pub. L. 111–203, title VII, § 733, July 21, 2010, 124 Stat. 1712.)

## Notes

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A (§§ 711–754) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see section 754 of Pub. L. 111–203, set out as an Effective Date of 2010 Amendment note under section 1a of this title.