19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–391 

PROTECTING MAIN STREET END-USERS FROM EXCESSIVE 

REGULATION 

FEBRUARY 8, 2012.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. LUCAS, from the Committee on Agriculture, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 3527] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Agriculture, to whom was referred the bill 

(H.R. 3527) to amend the Commodity Exchange Act to clarify the 

definition of swap dealer, having considered the same, report favorably thereon with an amendment and recommend that the bill as 

amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Protecting Main Street End-Users From Excessive 

Regulation’’. 

SEC. 2. CLARIFICATION OF THE DEFINITION OF SWAP DEALER. 

Section 1a(49) of the Commodity Exchange Act (7 U.S.C. 1a(49)) is amended to 

read as follows: 

‘‘(49) SWAP DEALER.— ‘‘(A) IN GENERAL.—The term ‘swap dealer’ means any person who— 

‘‘(i) holds itself out as a dealer in swaps; 

‘‘(ii) makes a market in swaps; 

‘‘(iii) regularly enters into swaps with counterparties as an ordinary 

course of business for its own account; or 

‘‘(iv) engages in any activity causing the person to be commonly 

known as a dealer or market maker in swaps, 

provided however, in no event shall an insured depository institution be 

considered to be a swap dealer to the extent it offers to enter into a swap 

with a customer in connection with originating a loan to the customer. 


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‘‘(B) INCLUSION.—A person may be designated as a swap dealer for a single type or single class or category of swap or activities and considered not 

to be a swap dealer for other types, classes, or categories of swaps or activities. 

‘‘(C) EXCEPTIONS.— ‘‘(i) The term ‘swap dealer’ does not include a person that enters into 

swaps for such person’s own account, either individually or in a fiduciary capacity, but not as part of regular business activities as described in subparagraph (A). 

‘‘(ii) In determining whether a person is a ‘swap dealer’ within the 

meaning of subparagraph (A), any transaction entered into for a person’s own account for the purpose of hedging or mitigating commercial 

risk shall not be considered as part of that determination. 

‘‘(iii) The Commission shall by rule adopt standards distinguishing 

the activities described in subparagraph (A) and entering into swaps 

for a person’s own account for the purpose of achieving one’s own trading objectives as determined by the Commission. 

‘‘(D) DE MINIMIS EXCEPTION.—The Commission shall exempt from designation as a swap dealer an entity that enters into swap dealing transactions with or on behalf of the person’s customers if the aggregate gross 

notional amount of the outstanding swap dealing transactions entered into 

over the course of the preceding calendar year does not exceed 

$3,000,000,000 (or such greater amount as the Commission may establish 

as market conditions warrant), multiplied by the sum of 1 and the percentage (if any) by which the Consumer Price Index for all Urban Customers 

published by the Bureau of Labor Statistics of the Department of Labor 

changed for the 12-month period ending the preceding April 30.’’. 

SEC. 3. IMPLEMENTATION. 

The amendments made by this Act 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; and 

(2) through the promulgation of an interim final rule. 

BRIEF EXPLANATION

H.R. 3527 amends Section 1a(49)(C) of the Commodity Exchange 

Act (CEA) to include 2 new exceptions to the definition of ‘‘swap 

dealer’’: an exception for transactions entered into to hedge or mitigate an entity’s commercial risk, and a directive for the Commodity 

Futures Trading Commission (CFTC) to establish, by rule, a standard for distinguishing between swap dealing activities and trading 

for one’s own account for one’s own trading objectives. 

In addition, H.R. 3527 requires the CFTC to exempt from designation as a ‘‘swap dealer’’ entities that, over the preceding calendar year, entered into less than $3 billion in aggregate gross notional swap dealing transactions with or on behalf of customers. 

PURPOSE AND NEED

A central element of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111–203) (the Dodd-Frank 

Act) is the registration and regulation of ‘‘swap dealers.’’ Registration as a swap dealer brings the most comprehensive new regulatory regime in Title VII: swap dealers are subject to clearing and 

execution requirements when they trade with counterparties other 

than non-financial end-users, reporting and recordkeeping requirements, new capital and margin requirements, the Section 716 

‘‘push-out’’ rule, and significant new business conduct standards to 

govern their sales practices and interaction with counterparties. 

Most of the derivatives activity in the U.S. is concentrated among 

several large, complex and global financial institutions. In fact, five 


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banks alone collectively hold 86% of the credit exposure and 96% 

of the total notional value of all derivatives within the U.S. banking system. As such, Congress targeted the swap dealer definition 

to those entities that hold themselves out as dealers, make markets 

or are commonly known in the market as ‘‘dealers.’’ In fact, the 

Chairman of the CFTC, Gary Gensler, described the intent of dealer regulation: 

‘‘I also think we need regulation of the institutions, that 

Congress would actually have a statutory regime for derivative dealers, somewhat like we have for banks, where you 

have capital rules which address the excess leverage, have 

business conduct rules to make sure there is not fraud and 

manipulation in the sales practices. And then, of course, 

lastly and very importantly, reporting rules. These dealers—there is about 15 or 20 around the globe that make 

up 99 percent of the market for over-the-counter derivatives.’’ 

The statutory definition of ‘‘swap dealer’’ requires the CFTC to 

further define the term, which they did jointly with the SEC in the 

proposal ‘‘Further Definition of ‘‘Swap Dealer’’, ‘‘Security-based 

Swap Dealer’’, ‘‘Major Swap Participant,’’ ‘‘Major Security-based 

Swap Participant,’’ and ‘‘Eligible Contract Participant’’ (http:// 

www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/ 

2010-31130a.pdf). It is important to note that the statutory definition of ‘‘swap dealer’’ was derived from the securities laws and the 

definition of a ‘‘dealer’’ in securities. Distinguishing dealers from 

other market participants for the purpose of securities regulation 

based upon that definition has occurred for decades in the application and interpretation of the Securities Exchange Act of 1934. 

Many end-users, particularly from the energy and agriculture 

sectors, testified in the Committee’s hearings that the CFTC’s proposed definition of ‘‘swap dealer’’ is overly broad and vague, and 

that it could result in them having to register as swap dealers and 

subsequently be subject to the most significant and costly regulations in Title VII—regulations that were generally designed for 

large financial institutions. For example, the proposed criteria used 

to identify swap dealing activity could describe the activities of 

many market participants that are not engaged in dealing activity, 

such as ‘‘dealers are generally available to enter into swaps to facilitate other parties’ interest in entering into those instruments,’’ 

and ‘‘dealers tend to accommodate demand for swaps.’’ At the same 

time, registration as a swap dealer is a self-selecting process; in 

other words, entities will need to identify themselves as dealers 

based upon the regulation and not upon an indication from the 

CFTC. This increases the need for a clear, unambiguous rule to ensure entities do not go unregistered. 

Compounded by the breadth of the definition, the CFTC proposed 

a ‘‘de minimis’’ exception that is too low (less than $100 million notional amount annually, less than 20 swaps per year, and less than 

15 counterparties) to achieve Congress’ intent in providing for the 

exception. Congress expressly granted the CFTC the authority to 

establish an exception for entities that engage in only a small 

amount of swap dealing. However, the proposed threshold would 

result in few, if any, entities that would be eligible. 


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H.R. 3527 clarifies the definition of swap dealer to avoid entities 

that are not swap dealers from having to register as such. First, 

it clarifies that the Commission should not consider swaps entered 

into for the purpose of hedging commercial risk as ‘‘dealing.’’ Second, the bill directs the CFTC to develop rules establishing standards by which to distinguish entities that are acting as dealers, and 

those that are trading for their own account to achieve their own 

trading objectives. The SEC, in applying and interpreting the securities ‘‘dealer’’ definition has long upheld a ‘‘Dealer/Trader’’ distinction to permit entities that are trading for their own investment 

objectives from having to register as dealers. The SEC also proposes to uphold this distinction in the definition of ‘‘Security-based 

Swap Dealer,’’ but the CFTC does not. The second provision in H.R. 

3527 directs the CFTC to adopt a similar standard to be applied 

within the ‘‘swap dealer’’ definition. 

These important clarifications to the swap dealer definition are 

critical to ensuring that end-users, the very entities Congress intended to exempt from many of the new regulations in Title VII, 

are not subject to the most burdensome and costly new regulatory 

regime in Title VII. For example, a recent study by the National 

Economic Research Associates estimates that for non-financial commercial energy firms, designation as a swap dealer would impose 

incremental costs of $388 million. 

Lastly, the bill increases the ‘‘de minimis’’ threshold to $3 billion 

average aggregate gross notional to ensure entities that are engaged in only a small amount of swap dealing will not be regulated 

as such. As a reference, this is less than 5/10,000 of 1% of the notional value of the entire U.S. swaps market. 

On February 10, 2011, Edward Gallagher of Dairy Farmers of 

America, testified to the breadth of the definition and the impact 

it would have on farmer cooperatives, summarizing well the need 

to clarify the definition: 

‘‘We believe that by applying the ‘‘interpretive approach 

for identifying whether a person is a swap dealer,’’ as outlined in the proposed rule, CFTC would likely capture a 

number of entities that were never intended to be regulated as swap dealers, including farmer cooperatives. This 

is because cooperatives engage in activities that look very 

similar to those of a dealer when they enter into swaps 

with farmers, local elevators, and customers as they provide risk mitigation services and products throughout the 

agriculture and energy sector. If farmer cooperatives were 

to be regulated as dealers, increased requirements for 

posting capital and margin, complying with reporting, 

record keeping and other regulatory requirements intended for large systemically important institutions could 

make providing those services uneconomical to our members. Such action would result in the unintended consequence of increasing the very risk the law intends to 

mitigation.’’ 

SECTION-BY-SECTION

Section 1 is the short title, ‘‘Protecting Main Street End-Users 

from Excessive Regulation’’. 


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Section 2 amends the Commodity Exchange Act to modify the 

definition of swap dealer in the Dodd-Frank Act to prohibit the 

CFTC from considering an entity’s transactions entered into for the 

purpose of hedging or mitigating commercial risk. It also directs 

the commission by rule to adopt standards distinguishing swap 

dealing activities from trading of swaps. 

The amendment in section 2 (amendment to 1a(49)(D)) requires 

the CFTC to exempt from the designation of a swap dealer anyone 

who enters into swap dealing transactions with or on behalf of customers if the total amount of outstanding swap dealing transactions is less than $3 billion, indexed to inflation, over the last 

calendar year. 

Section 3 excludes the amendments made by this bill from the 

requirements of the Paperwork Reduction Act and from notice and 

comment requirements of the Administrative Procedure Act. 

COMMITTEE CONSIDERATION

I. HEARINGS

In the 112th Congress, the Committee has held seven hearings, 

four Full Committee and two General Farm Commodities and Risk 

Management Subcommittee hearings to examine the implementation of Title VII of the Dodd-Frank Act and one Full Committee 

hearing to examine legislative proposals related thereto, including 

a discussion draft of H.R. 3527. The Committee took testimony 

from witnesses that represented a broad spectrum of participants 

in the derivatives markets. 

In the following hearings, witnesses testified to the CFTC’s overly broad definition of ‘‘swap dealer’’ and the importance of ensuring 

that end-users are not unnecessarily miscategorized as swap dealers: 

Public hearing to review implementation of title VII of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act: February 10, 2011 

Defining the Market: Entity and Product Classifications 

Under Title VII of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act: March 31, 2011 

Derivatives Reform: The View from Main Street: July 21, 

2011 

To review legislative proposals amending Title VII of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act: October 12, 2011 

For example, on July 21, 2011 the Honorable Glenn English, 

CEO of the National Rural Electric Cooperative Association testified: 

‘‘The regulators have suggested they might interpret this 

definition broadly enough to sweep in our not-for-profit 

members. If so, such an interpretation has the potential to 

be one of the more damaging unintended consequences of 

the Dodd-Frank Act. If our members were considered 

‘‘swap dealers,’’ those cooperatives would be subject to a 

slew of new capital-draining requirements, business pracVerDate Mar 15 2010 06:24 Feb 10, 2012 Jkt 019006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR391.XXX HR391

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tices, and financial markets regulations that Congress intended to impose on Wall Street derivatives dealers. To 

put it bluntly—it would be an incredible regulatory overreach for the CFTC to apply the definition of ‘‘swap dealer’’ 

to rural electric cooperatives—who are obviously not in the 

business of derivatives dealing, but instead are not-forprofit end-users of nonfinancial energy derivatives to 

hedge commercial risk and protect consumers from price 

volatility in wholesale power markets. The rural electric 

cooperatives’ core mission is keeping the lights on for 

farmers, families and small businesses in rural America, 

not dealing in the global swaps markets. There are no 

‘‘Wall Street derivatives dealers’’ in our membership.’’ 

Also on July 21, 2011, Mr. Randy Howard testified on behalf of 

the City of Los Angeles, Department of Water and Power and the 

Large Public Power Council stating: 

‘‘In particular, we are concerned that individual LPPC 

members could be considered a ‘‘swap dealer’’ due to certain transactions we use to hedge our costs. LADWP and 

the members of LPPC do not belong within this definition, 

as we hedge strictly to minimize commercial risk and do 

not contribute to systemic risk of the market. If our utility 

systems were regulated as swap dealers, our ratepayers— 

the residents and businesses which we are obligated to 

serve—would be swept into the same regulatory regime 

meant to target financial speculation.’’ 

On October 12, Mr. Scott Cordes, President of Country Hedging 

testified on behalf of the National Council of Farmer Cooperatives: 

‘‘The uncertainty created by the ‘‘definitions’’ rules is 

NCFC’s greatest concern as implementation continues. As 

the rule was proposed, some activities of cooperatives such 

as those previously mentioned would appear to push cooperatives into the ‘‘swap dealer’’ category. Regulating 

farmer cooperatives as dealers would increase requirements for posting capital and margin on swaps it uses 

with other dealers to offset the risk of providing risk management products and services to its members and customers. This requirement, combined with the cost of complying with other regulatory requirements intended for 

large financial institutions, could make providing those 

services to a cooperative’s member-owners uneconomical. 

Such action would result in the unintended consequence of 

increasing risk in the agricultural sector.’’ 

II. FULL COMMITTEE

The Committee on Agriculture met, pursuant to notice, with a 

quorum present, on January 25, 2012, to consider H.R. 3527, to 

amend the Commodity Exchange Act to clarify the definition of 

swap dealer, and other pending business. Chairman Lucas offered 

an opening statement, as did Ranking Member Peterson and 

Hultgren. 

The bill, H.R. 3527 was placed before the Committee for consideration and without objection a first reading of the bill was waived 


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and it was opened for amendment at any point. The Chairman offered an Amendment in the Nature of a Substitute to the bill, and 

counsel provided a brief explanation of the amendment. 

Mr. Costa was recognized to offer and explain an amendment 

that would clarify that actions undertaken to comply with state or 

local laws or regulations are specifically excluded in determining 

whether an entity is a swap dealer. Discussion occurred and without objection the amendment was withdrawn. 

Mr. Walz as then recognized to offer and explain an amendment 

that clarifies that clarifies that none of the exceptions in section (c) 

of the ‘‘Protecting Main Street End-Users from Excessive Regulation Act’’ should apply to financial institutions. Discussion occurred 

and without objection the amendment was withdrawn. 

Mr. Peterson was recognized to offer and explain an amendment 

to expedite implementation by excluding the amendments made by 

the bill from the requirements of the Paperwork Reduction Act and 

from notice and comment requirements of the Administrative Procedure Act. By a voice vote the Peterson amendment was adopted. 

There being no further amendments, the Peterson motion to approve the Amendment in the Nature of a Substitute to H.R. 3527, 

as amended was adopted by a voice vote. 

By a voice vote, the Peterson motion to report the bill favorably 

to the House with the recommendation that it do pass was adopted. 

The Committee then moved onto other pending business, where 

at the conclusion of the meeting, Chairman Lucas advised Members that pursuant to the rules of the House of Representatives 

that Members have 2 calendar days to file such views with the 

Committee. 

Without objection, staff was given permission to make any necessary clerical, technical or conforming changes to reflect the intent 

of the Committee. 

Chairman Lucas thanked all the Members and adjourned the 

meeting. 

REPORTING THE BILL—ROLL CALL VOTES

In compliance with clause 3(b) of rule XIII of the House of Representatives, H.R. 3527 was reported by voice vote with a majority 

quorum present. There was no request for a recorded vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee on Agriculture’s oversight findings and recommendations are reflected in the body of this report. 

BUDGET ACT COMPLIANCE (SECTIONS 308, 402, AND 423) 

The provisions of clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives and section 308(a)(1) of the Congressional 

Budget Act of 1974 (relating to estimates of new budget authority, 

new spending authority, new credit authority, or increased or decreased revenues or tax expenditures) are not considered applicable. The estimate and comparison required to be prepared by the 

Director of the Congressional Budget Office under clause 3(c)(3) of 

rule XIII of the Rules of the House of Representatives and sections 


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402 and 423 of the Congressional Budget Act of 1974 submitted to 

the Committee prior to the filing of this report are as follows: 

FEBRUARY 6, 2012. 

Hon. FRANK D. LUCAS, 

Chairman, Committee on Agriculture, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3527, Protecting Main 

Street End-Users from Excessive Regulation. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 3527—Protecting Main Street End-Users from Excessive Regulation 

H.R. 3527 would prevent the Commodity Futures Trading Commission (CFTC) from considering certain transactions undertaken 

by an entity when determining whether the entity should be considered a swap dealer. Current law defines a swap dealer as a person who, among other things, buys and sells swaps in the regular 

course of business to earn a profit on the transactions. (A swap is 

a contract that calls for an exchange of cash between two participants based on an underlying rate or index, or on the performance 

of an asset.) Under H.R. 3527, the CFTC would be directed to exclude swap transactions undertaken to mitigate business-related 

risk (for instance, an airline entering into a swap transaction to 

hedge the risk of rising fuel prices) when determining whether a 

person or entity would meet the definition of a swap dealer. 

The CFTC is developing regulations relating to swap dealers as 

the result of the enactment of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (Public Law 111–203), however, the 

agency has not finalized such regulations. Based on information 

from the agency, CBO expects that incorporating the provisions of 

H.R. 3527 at this point in the regulatory process would not require 

a significant increase in the agency’s workload. Therefore, CBO estimates that any change in discretionary spending to implement 

the legislation, which would be subject to the availability of appropriated funds, would not be significant. Enacting H.R. 3527 would 

not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply. 

H.R. 3527 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

The CBO staff contact for this estimate is Susan Willie. The estimate was approved by Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

PERFORMANCE GOALS AND OBJECTIVES

With respect to the requirement of clause 3(c)(4) of rule XIII of 

the Rules of the House of Representatives, the performance goals 


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and objectives of this legislation are to amend the Commodity Exchange Act to clarify the definition of swap dealer. 

CONSTITUTIONAL AUTHORITY STATEMENT

The Committee finds the Constitutional authority for this legislation in Article I, section 8, clause 18, that grants Congress the 

power to make all laws necessary and proper for carrying out the 

powers vested in Congress by the Constitution of the United States 

or in any department or officer thereof. 

COMMITTEE COST ESTIMATE

Pursuant to clause 3(d)(2) of rule XIII of the Rules of the House 

of Representatives, the Committee report incorporates the cost estimate prepared by the Director of the Congressional Budget Office 

pursuant to sections 402 and 423 of the Congressional Budget Act 

of 1974. 

ADVISORY COMMITTEE STATEMENT

No advisory committee within the meaning of section 5(b) of the 

Federal Advisory Committee Act was created by this legislation. 

APPLICABILITY TO THE LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act (Public Law 104–1). 

FEDERAL MANDATES STATEMENT

The Committee adopted as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act 

(Public Law 104–4). 

EARMARK STATEMENT REQUIRED BY CLAUSE 9 OF RULE XXI OF THE

RULES OF THE HOUSE OF REPRESENTATIVES

H.R. 3527 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9(e), 9(f), 

or 9(g) of rule XXI of the Rules of the House Representatives. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

COMMODITY EXCHANGE ACT 

* * * * * * * 

SEC. 1a. DEFINITIONS. 

As used in this Act: 


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(1) * * * 

* * * * * * * 

ø(49) SWAP DEALER.— ø(A) IN GENERAL.—The term ‘‘swap dealer’’ means any 

person who— 

ø(i) holds itself out as a dealer in swaps; 

ø(ii) makes a market in swaps; 

ø(iii) regularly enters into swaps with counterparties 

as an ordinary course of business for its own account; 

or 

ø(iv) engages in any activity causing the person to 

be commonly known in the trade as a dealer or market 

maker in swaps, 

provided however, in no event shall an insured depository 

institution be considered to be a swap dealer to the extent 

it offers to enter into a swap with a customer in connection 

with originating a loan with that customer. 

ø(B) INCLUSION.—A person may be designated as a swap 

dealer for a single type or single class or category of swap 

or activities and considered not to be a swap dealer for 

other types, classes, or categories of swaps or activities. 

ø(C) EXCEPTION.—The term ‘‘swap dealer’’ does not include a person that enters into swaps for such person’s 

own account, either individually or in a fiduciary capacity, 

but not as a part of a regular business. 

ø(D) DE MINIMIS EXCEPTION.—The Commission shall exempt from designation as a swap dealer an entity that engages in a de minimis quantity of swap dealing in connection with transactions with or on behalf of its customers. 

The Commission shall promulgate regulations to establish 

factors with respect to the making of this determination to 

exempt.¿ 

(49) SWAP DEALER.— (A) IN GENERAL.—The term ‘‘swap dealer’’ means any 

person who— 

(i) holds itself out as a dealer in swaps; 

(ii) makes a market in swaps; 

(iii) regularly enters into swaps with counterparties 

as an ordinary course of business for its own account; 

or 

(iv) engages in any activity causing the person to be 

commonly known as a dealer or market maker in 

swaps, 

provided however, in no event shall an insured depository 

institution be considered to be a swap dealer to the extent 

it offers to enter into a swap with a customer in connection 

with originating a loan to the customer. 

(B) INCLUSION.—A person may be designated as a swap 

dealer for a single type or single class or category of swap 

or activities and considered not to be a swap dealer for 

other types, classes, or categories of swaps or activities. 

(C) EXCEPTIONS.— (i) The term ‘‘swap dealer’’ does not include a person 

that enters into swaps for such person’s own account, 

either individually or in a fiduciary capacity, but not 


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as part of regular business activities as described in 

subparagraph (A). 

(ii) In determining whether a person is a ‘‘swap dealer’’ within the meaning of subparagraph (A), any transaction entered into for a person’s own account for the 

purpose of hedging or mitigating commercial risk shall 

not be considered as part of that determination. 

(iii) The Commission shall by rule adopt standards 

distinguishing the activities described in subparagraph 

(A) and entering into swaps for a person’s own account 

for the purpose of achieving one’s own trading objectives as determined by the Commission. 

(D) DE MINIMIS EXCEPTION.—The Commission shall exempt from designation as a swap dealer an entity that enters into swap dealing transactions with or on behalf of the 

person’s customers if the aggregate gross notional amount 

of the outstanding swap dealing transactions entered into 

over the course of the preceding calendar year does not exceed $3,000,000,000 (or such greater amount as the Commission may establish as market conditions warrant), multiplied by the sum of 1 and the percentage (if any) by which 

the Consumer Price Index for all Urban Customers published by the Bureau of Labor Statistics of the Department 

of Labor changed for the 12-month period ending the preceding April 30. 

* * * * * * * 


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ADDITIONAL VIEWS 

For the past year, our Committee has held several hearings and 

listened to a host of stakeholders who are concerned about how the 

Dodd-Frank Act is being implemented with regard to improving 

oversight and accountability in derivative markets. Looking at the 

Dodd-Frank rules that have already been finalized by the CFTC, 

it is safe to say that, so far, the CFTC has done a pretty good job. 

Of all the bills considered during the mark-up on January 25, 

2012, H.R. 3527 is the one that would benefit the most from a 

delay. The CFTC is very close to finalizing the rule defining a swap 

dealer. Given their past record, it is probable that the CFTC will 

satisfactorily address the concerns represented by this legislation 

when the Commission approves this definition. 

The final rule defining swap dealer is particularly important considering the scope of regulation that would apply to such an entity. 

By acting too precipitously on H.R. 3527, Congress may unintentionally do more harm than good. While the final definition could 

raise concerns and issues for some market participants, it may provide a good outcome for others, resolving concerns to their satisfaction. 

If the CFTC does get something wrong in the final rule, we 

should work to correct it. But we should tailor our efforts narrowly 

just toward that correction. We must not jeopardize the certainty 

and security of those market participants who finally know they 

will not be considered swap dealers under the final rule. In a similar vein, what happens if new and unique issues arise out of the 

final rule? Moving H.R. 3527 to the House floor too quickly may 

limit the ability of the House to address such new issues without 

resorting to brand new legislation. 

The bill as amended and approved by the Committee is a reasonable compromise; neither the Majority nor Minority got exactly 

what they originally wanted. It is a good faith effort and allows us 

to move forward in a bipartisan manner. 

Still, there are lingering concerns regarding the legislation’s use 

of the phrase, ‘‘for the purpose of achieving one’s own trading objectives.’’ Companies and firms have made clear their concerns about 

the CFTC’s proposed rule and how it distinguishes dealing from 

trading. As we crafted the Dodd-Frank derivative title, we strove 

to distinguish the dealing activities of the larger banks with the 

trading practices of other market participants who may be trying 

to speculate or take a view of the market in a manner that does 

not create legal loopholes where ‘‘dealing activity’’ can squeeze into 

‘‘trading objective’’ activity. Misinterpretation of this language 

could lead to the creation of such loopholes. 

In a colloquy, the Chairman and Ranking Member agreed to 

work together to improve the bill and ensure that end users are not 


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unnecessarily burdened by regulations without creating loopholes. 

That effort should and will continue. 

Finally, the Committee approved the Peterson amendment, 

which includes language that should look very familiar to Farm 

Bill veterans. It is the exact same provisions that we incorporate 

in each Farm Bill for implementation of the Title I commodity programs. In that context, it exempts USDA from provisions of the Paperwork Reduction Act and notice and comment provisions of the 

Administrative Procedures Act. 

With this change, comments can still be sent to the CFTC. Anyone would still be able to meet with CFTC officials to share their 

thoughts on how these bills should be implemented. Farm groups 

certainly did not have any trouble sharing their views on Farm Bill 

implementation. Given the openness the CFTC has already demonstrated, this provision will not hurt anyone’s ability to provide 

input to the CFTC. 

COLLIN C. PETERSON. JOE COURTNEY. JAMES P. MCGOVERN. CHELLIE PINGREE. TIMOTHY J. WALZ. 

Æ 


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