29–006 

113TH CONGRESS REPT. 113–103 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

SWAP JURISDICTION CERTAINTY ACT 

JUNE 10, 2013.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 1256] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Service, to whom was referred the 

bill (H.R. 1256) to direct the Securities and Exchange Commission 

and the Commodity Futures Trading Commission to jointly adopt 

rules setting forth the application to cross-border swaps transactions of certain provisions relating to swaps that were enacted as 

part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, having considered the same, report favorably thereon with 

amendments and recommend that the bill as amended do pass. 

The amendments (stated in terms of the page and line numbers 

to the introduced bill) are as follows: 

Page 2, line 6, strike ‘‘180 days’’ and insert ‘‘270 days’’. 

Page 2, line 12, insert ‘‘cross-border’’ after ‘‘relating to’’. 

Page 2, line 13, strike ‘‘transacted between’’ and insert ‘‘transactions involving’’. 

Page 2, line 14, strike ‘‘and’’ and insert ‘‘or’’. 

Page 2, beginning on line 15, strike ‘‘Commission shall jointly 

issue the’’. 

Page 2, line 16, after ‘‘paragraph (1)’’ insert ‘‘shall be identical,’’. 

Page 2, line 18, strike ‘‘sections 30(c) and 36(c)’’ and insert ‘‘section 30(c)’’. 

Page 2, line 20, strike ‘‘; 78mm(c)’’. 

Page 2, line 21, before the period at the end insert ‘‘, except to 

the extent necessary to accommodate differences in other underVerDate Mar 15 2010 05:15 Jun 11, 2013 Jkt 029006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR103P1.XXX HR103P1

smartinez on DSK6TPTVN1PROD with REPORTS
2 

lying statutory requirements under such Acts, and the rules thereunder’’. 

Page 3, line 1, insert ‘‘major’’ before ‘‘security-based’’. 

Page 3, beginning on line 19, strike ‘‘G20 MEMBER NATIONS’’ and 

insert ‘‘COUNTRIES OR ADMINISTRATIVE REGIONS HAVING NINE

LARGEST MARKETS’’. 

Page 3, line 24, strike ‘‘G20 member nation’’ and insert ‘‘country 

or administrative region that has one of the nine largest combined 

swap and security-based swap markets by notional amount in the 

calendar year preceding issuance of such rules’’. 

Page 4, line 5, strike ‘‘the G20 member nation’’ and insert ‘‘such 

country or administrative region’’. 

Page 4, line 12, strike ‘‘G20 member nations’’ and insert ‘‘countries or administrative regions described in such paragraph’’. 

Page 4, line 18, add ‘‘and’’ after the semicolon. 

Page 4, strike line 19 and all that follows through page 5, line 

6, and insert the following: 

(B) the remaining countries or administrative 

regions described in such paragraph, and any 

other foreign jurisdiction as jointly determined by 

the Commissions, 1 year after the date on which 

such rules are issued. 

Page 5, line 10, strike ‘‘G20 member nation’’ and insert ‘‘country 

or administrative region described in paragraph (1)’’. 

Page 5, line 15, strike ‘‘that G20 member nation’’ and insert 

‘‘such country or administrative region’’. 

Page 5, beginning on line 17, strike ‘‘G20 member nation’’ and insert ‘‘country or administrative region described in paragraph (1)’’. 

Page 5, line 21, strike ‘‘G20 member nation’’ and insert ‘‘country 

or administrative region’’. 

Page 6, line 2, strike ‘‘after’’. 

Page 6, beginning on line 4, strike ‘‘G20 member nations’’ and insert ‘‘countries or administrative regions described in paragraph 

(1)’’. 

Page 6, line 7, strike ‘‘paragraph (3)’’ and insert ‘‘this subsection’’. 

Page 6, beginning on line 8, strike ‘‘a G20 member nation’’ and 

insert ‘‘such a country or administrative region’’. 

Page 6, line 11, insert a period at the end. 

Page 6, beginning on line 14, strike ‘‘the G20 member nation’’ 

and insert ‘‘a country or administrative region described in such 

subsection’’. 

Page 7, strike lines 4 through 7 (and redesignate subsequent provisions accordingly). 

Page 7, strike lines 8 through 14 and insert the following: 

(2) The term ‘‘U.S. person’’— 

(A) means— 

(i) any natural person resident in the 

United States; 

(ii) any partnership, corporation, trust, or 

other legal person organized or incorporated 

under the laws of the United States or having 

its principal place of business in the United 

States; 


smartinez on DSK6TPTVN1PROD with REPORTS
3 

(iii) any account (whether discretionary or 

non-discretionary) of a U.S. person; and 

(iv) any other person as the Commissions 

may further jointly define to more effectively 

carry out the purposes of this Act; and 

(B) does not include the International Monetary 

Fund, the International Bank for Reconstruction 

and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, 

their agencies and pension plans, and any other 

similar international organizations and their 

agencies and pension plans. 

PURPOSE AND SUMMARY

H.R. 1256, the Swap Jurisdiction Certainty Act requires the Securities and Exchange Commission (SEC) and Commodity Futures 

Tradition Commission (CFTC) (collectively, the ‘‘Commissions’’) to 

jointly issue rules relating to swaps transacted between U.S. persons and non-U.S. persons. The bill exempts from U.S. swaps requirements a non-U.S. person that is in compliance with the swaps 

regulatory requirements of a country or administrative region that 

has one of the nine largest combined swap and security-based swap 

markets by notional amount in the calendar year preceding 

issuance of such rules, or other foreign jurisdiction as jointly determined by the Commissions, unless the Commissions jointly determine that the regulatory requirements of such country or administrative region or other foreign jurisdiction are not broadly equivalent to United States swaps requirements. 

BACKGROUND AND NEED FOR LEGISLATION

Title VII of the Dodd-Frank Act seeks to regulate the over-thecounter derivatives (OTC) market in much the same way that equities and futures exchanges are regulated. Because the OTC market 

is global, Title VII raises questions about the extent to which U.S. 

regulations will apply to swap and security-based swap transactions that take place outside the U.S. Title VII’s plain language 

makes clear that Congress intended it to apply outside the U.S. 

only in certain limited circumstances. Section 722 directs that provisions relating to swaps will not apply to activities outside the 

U.S. unless those activities (1) have a direct and significant connection with activities in, or effect on, commerce of the United States 

or (2) contravene anti-evasion rules promulgated by the CFTC. 

The comments and actions of U.S. regulators indicate that they 

are considering regulations that would result in Title VII being applied more broadly than Congress intended. Further, the DoddFrank Act requires both the CFTC and the SEC to issue rules on 

the extraterritorial scope of Title VII, creating the possibility of two 

different, potentially conflicting, regulatory regimes. To ensure that 

one rule is issued to govern the extraterritorial application of Title 

VII of the Dodd-Frank Act and to ensure that the CFTC and SEC 

focus their resources and regulatory efforts on jurisdictions that are 

not broadly equivalent with the U.S. swaps regime, RepresentaVerDate Mar 15 2010 05:15 Jun 11, 2013 Jkt 029006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR103P1.XXX HR103P1

smartinez on DSK6TPTVN1PROD with REPORTS
4 

tives Scott Garrett, David Scott, John Carney and Mike Conaway 

introduced H.R. 1256, the Swap Jurisdiction Certainty Act. 

H.R. 1256 harmonizes the cross-border approaches by requiring 

the CFTC and SEC to jointly issue the same rule related to the 

cross-border application of the Dodd-Frank Act within 270 days of 

the bill’s enactment. This joint rule would have to be promulgated 

in accordance with the Administrative Procedures Act. H.R. 1256 

measure ensures that operating entities in foreign countries or administrative regions with broadly equivalent regimes for swaps will 

not be subject to U.S. rules. Finally, H.R. 1256 requires that the 

SEC and CFTC jointly provide a report to Congress if they determine that a foreign regulatory regime is not broadly equivalent to 

United States swap requirements. 

HEARINGS

The Committee on Financial Services’s Subcommittee on Capital 

Markets and Government Sponsored Enterprises held a hearing on 

H.R. 1256 on April 11, 2013. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

May 7, 2013, and ordered H.R. 1256 to be reported favorably to the 

House by a recorded vote of 48 yeas to 11 nays (Record vote no. 

FC–16), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. 

1. An amendment offered by Ranking Member Waters to strike 

the bill’s presumption that the regulatory requirements of a foreign 

nation satisfy the corresponding categories of United States swaps 

requirements unless the SEC and CFTC jointly determine they do 

not, and to insert the reverse presumption, as amended, was not 

agreed to by a recorded vote of 28 yeas to 32 nays (Record vote no. 

FC–15). 

RECORD VOTE NO. FC–15 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Hensarling .......................... ......... X ............. Ms. Waters ............................... X ......... .............

Mr. Gary G. Miller (CA) ............. ......... X ............. Mrs. Maloney (NY) .................... X ......... .............

Mr. Bachus ............................... ......... X ............. Ms. Vela ́zquez .......................... X ......... .............

Mr. King (NY) ............................ ......... X ............. Mr. Watt ................................... X ......... .............

Mr. Royce .................................. ......... X ............. Mr. Sherman ............................ X ......... .............

Mr. Lucas .................................. ......... X ............. Mr. Meeks ................................. X ......... .............

Mrs. Capito ............................... ......... X ............. Mr. Capuano ............................ X ......... .............

Mr. Garrett ................................ ......... X ............. Mr. Hinojosa ............................. X ......... .............

Mr. Neugebauer ........................ ......... X ............. Mr. Clay .................................... X ......... .............

Mr. McHenry .............................. ......... X ............. Mrs. McCarthy (NY) .................. X ......... .............

Mr. Campbell ............................ ......... X ............. Mr. Lynch ................................. X ......... .............

Mrs. Bachmann ........................ ......... X ............. Mr. David Scott (GA) ................ X ......... .............

Mr. McCarthy (CA) .................... ......... X ............. Mr. Al Green (TX) ..................... X ......... .............

Mr. Pearce ................................. ......... X ............. Mr. Cleaver ............................... X ......... .............

Mr. Posey .................................. ......... X ............. Ms. Moore ................................. X ......... .............

Mr. Fitzpatrick ........................... ......... X ............. Mr. Ellison ................................ X ......... .............

Mr. Westmoreland ..................... ......... ......... ............. Mr. Perlmutter .......................... X ......... .............

Mr. Luetkemeyer ........................ ......... X ............. Mr. Himes ................................. X ......... .............


smartinez on DSK6TPTVN1PROD with REPORTS
5 

RECORD VOTE NO. FC–15—Continued 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Huizenga (MI) ..................... ......... X ............. Mr. Peters (MI) ......................... X ......... .............

Mr. Duffy ................................... ......... X ............. Mr. Carney ................................ X ......... .............

Mr. Hurt .................................... ......... X ............. Ms. Sewell (AL) ........................ X ......... .............

Mr. Grimm ................................. ......... X ............. Mr. Foster ................................. X ......... .............

Mr. Stivers ................................ ......... X ............. Mr. Kildee ................................. X ......... .............

Mr. Fincher ................................ ......... X ............. Mr. Murphy (FL) ....................... X ......... .............

Mr. Stutzman ............................ ......... X ............. Mr. Delaney .............................. X ......... .............

Mr. Mulvaney ............................ ......... X ............. Ms. Sinema .............................. X ......... .............

Mr. Hultgren .............................. ......... X ............. Mrs. Beatty ............................... X ......... .............

Mr. Ross .................................... ......... X ............. Mr. Heck (WA) .......................... X ......... .............

Mr. Pittenger ............................. ......... X .............

Mrs. Wagner .............................. ......... X .............

Mr. Barr .................................... ......... X .............

Mr. Cotton ................................. ......... X .............

Mr. Rothfus ............................... ......... X .............

2. A motion by Chairman Hensarling to report the bill to the 

House with a favorable recommendation was agreed to by a record 

vote of 48 yeas and 11 nays (Record vote no. FC–16). 

RECORD VOTE NO. FC–16 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Hensarling .......................... X ......... ............. Ms. Waters ............................... ......... X .............

Mr. Gary G. Miller (CA) ............. X ......... ............. Mrs. Maloney (NY) .................... ......... X .............

Mr. Bachus ............................... X ......... ............. Ms. Vela ́zquez .......................... ......... X .............

Mr. King (NY) ............................ X ......... ............. Mr. Watt ................................... ......... X .............

Mr. Royce .................................. X ......... ............. Mr. Sherman ............................ X ......... .............

Mr. Lucas .................................. X ......... ............. Mr. Meeks ................................. X ......... .............

Mrs. Capito ............................... X ......... ............. Mr. Capuano ............................ ......... X .............

Mr. Garrett ................................ X ......... ............. Mr. Hinojosa ............................. ......... X .............

Mr. Neugebauer ........................ X ......... ............. Mr. Clay .................................... X ......... .............

Mr. McHenry .............................. X ......... ............. Mrs. McCarthy (NY) .................. X ......... .............

Mr. Campbell ............................ X ......... ............. Mr. Lynch ................................. ......... X .............

Mrs. Bachmann ........................ X ......... ............. Mr. David Scott (GA) ................ X ......... .............

Mr. McCarthy (CA) .................... X ......... ............. Mr. Al Green (TX) ..................... ......... X .............

Mr. Pearce ................................. ......... ......... ............. Mr. Cleaver ............................... ......... X .............

Mr. Posey .................................. X ......... ............. Ms. Moore ................................. X ......... .............

Mr. Fitzpatrick ........................... X ......... ............. Mr. Ellison ................................ ......... X .............

Mr. Westmoreland ..................... ......... ......... ............. Mr. Perlmutter .......................... X ......... .............

Mr. Luetkemeyer ........................ X ......... ............. Mr. Himes ................................. X ......... .............

Mr. Huizenga (MI) ..................... X ......... ............. Mr. Peters (MI) ......................... X ......... .............

Mr. Duffy ................................... X ......... ............. Mr. Carney ................................ X ......... .............

Mr. Hurt .................................... X ......... ............. Ms. Sewell (AL) ........................ X ......... .............

Mr. Grimm ................................. X ......... ............. Mr. Foster ................................. X ......... .............

Mr. Stivers ................................ X ......... ............. Mr. Kildee ................................. X ......... .............

Mr. Fincher ................................ X ......... ............. Mr. Murphy (FL) ....................... X ......... .............

Mr. Stutzman ............................ X ......... ............. Mr. Delaney .............................. X ......... .............

Mr. Mulvaney ............................ X ......... ............. Ms. Sinema .............................. X ......... .............

Mr. Hultgren .............................. X ......... ............. Mrs. Beatty ............................... ......... X .............

Mr. Ross .................................... X ......... ............. Mr. Heck (WA) .......................... X ......... .............

Mr. Pittenger ............................. X ......... .............

Mrs. Wagner .............................. X ......... .............

Mr. Barr .................................... X ......... .............

Mr. Cotton ................................. X ......... .............

Mr. Rothfus ............................... X ......... .............

COMMITTEE OVERSIGHT FINDINGS

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

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 


smartinez on DSK6TPTVN1PROD with REPORTS
6 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 1256 will improve consideration by the SEC of the costs and benefits of its regulations and orders. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

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

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

MAY 30, 2013. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, U.S. House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1256, the Swap Jurisdiction Certainty Act. 

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, Director. 

Enclosure. 

H.R. 1256—Swap Jurisdiction Certainty Act 

H.R. 1256 would require the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission 

(SEC) to jointly issue rules that define the application of United 

States regulations to swap transactions undertaken between a U.S. 

entity and a foreign entity. (A swap is a contract that calls for the 

exchange of cash between two participants based on an underlying 

rate or index or the performance of an asset.) Foreign participants 

in such transactions that are in compliance with the swap requirements of a country or region that has one of the nine largest swap 

markets, as determined by the agencies, would be exempt from the 

new requirements under certain conditions. 


smartinez on DSK6TPTVN1PROD with REPORTS
7 

Based on information from the agencies, CBO expects that implementing H.R. 1256 would require the CFTC and the SEC to develop new rules and to review the regulations of large swap markets to determine whether exemptions would apply. CBO estimates 

that the costs to both agencies would be roughly equal—about $4 

million each. Under current law, the SEC is authorized to collect 

fees sufficient to offset the cost of its annual appropriation each 

year. Therefore, we estimate that the net cost to the SEC would be 

negligible, assuming appropriation actions consistent with that authority. CBO estimates that implementing H.R. 1256 would cost, 

on net, $4 million for the CFTC’s portion of the total cost, assuming 

appropriation of the necessary amounts. Enacting the bill would 

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

Enactment of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Public Law 111–203) required both the CFTC and 

the SEC to develop numerous regulations that affect participants 

in swap transactions, including margin, clearing, and reporting requirements as well as standards of business conduct. The law did 

not, however, direct the agencies to develop regulations specifying 

when those requirements apply to swap transactions occurring between a U.S. entity and a foreign entity. Both agencies have published proposals to provide guidance for swap participants to determine whether U.S. regulations would apply to such transactions. 

CBO estimates that implementing H.R. 1256 would increase the 

workload of both agencies to undertake a new rulemaking effort 

and an assessment of the regulations of the large swap markets. 

In addition, CBO expects that the agencies would incur costs to 

translate the regulations and supporting laws and reports for the 

large swap markets where English versions are not available. 

H.R. 1256 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. Assuming that the SEC 

increases fees to offset the costs of implementing the additional 

regulatory activities required by the bill, H.R. 1256 would increase 

the cost of an existing mandate on private entities required to pay 

those fees. Based on information from the SEC, CBO estimates 

that the aggregate cost of the mandate would fall well below the 

annual threshold for private-sector mandates established in UMRA 

($150 million in 2013, adjusted annually for inflation). 

On May 3, 2013, CBO published an estimate for H.R. 1256, the 

Swap Jurisdiction Certainty Act, as ordered reported by the House 

Committee on Agriculture on March 20, 2013. The two versions of 

the bill are similar, and the CBO cost estimates are the same. 

The CBO staff contacts for this estimate are Susan Willie (for 

federal costs) and Paige Piper/Bach (for the private-sector impact). 

The estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts 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. 


smartinez on DSK6TPTVN1PROD with REPORTS
8 

ADVISORY COMMITTEE STATEMENT

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

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO 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 the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 1256 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), the 

Committee states that no provision of H.R. 1256 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or a program 

related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), the 

Committee states that H.R. 1256 requires the Securities and Exchange Commission (SEC) and the Commodity Futures Trading 

Commission (CFTC) to jointly issue identical rules pursuant to the 

Administrative Procedure Act setting forth the application of 

United States swaps requirements of the Securities Exchange Act 

of 1934 and the Commodity Exchange Act relating to cross-border 

swaps and security-based swaps transactions involving U.S. persons or non-U.S. persons, not later than 270 days after the date of 

enactment of this Act. 

This bill requires that SEC and CFTC to jointly issue identical 

rules, notwithstanding any difference in the authorities granted the 

Commissions in section 30(c) of the Securities Exchange Act of 

1934 (15 U.S.C. 78dd(c)) and section 2(i) of the Commodity Exchange Act (7 U.S.C. 2(i)), respectively, except to the extent necessary to accommodate differences in other underlying statutory requirements under such Acts, and the rules thereunder. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section states that the Act may be cited as the Swap Jurisdiction Certainty Act. 

Section 2. Joint rulemaking on cross-border swaps 

This section requires the Securities and Exchange Commission 

(SEC) and the Commodity Futures Trading Commission (CFTC) 


smartinez on DSK6TPTVN1PROD with REPORTS
9 

(collectively, the ‘‘Commissions’’) to jointly issue identical rules pursuant to the Administrative Procedure Act setting forth the application of United States swaps requirements of the Securities Exchange Act of 1934 and the Commodity Exchange Act relating to 

cross-border swaps and security-based swaps transactions involving 

U.S. persons or non-U.S. persons, not later than 270 days after the 

date of enactment of this Act. 

This section requires that SEC and CFTC to jointly issue identical rules, notwithstanding any difference in the authorities granted the Commissions in section 30(c) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78dd(c)) and section 2(i) of the Commodity Exchange Act (7 U.S.C. 2(i)), respectively, except to the extent necessary to accommodate differences in other underlying statutory requirements under such Acts, and the rules thereunder. 

The section prohibits the Commissions from issuing guidance, 

memorandum of understanding, or any such other agreement to 

satisfy the requirement to issue a joint rule. 

The section requires the two Commissions shall jointly issue 

rules that address the nature of the connections to the United 

States that require a non-U.S. person to register as a swap dealer, 

major swap participant, security-based swap dealer, or major security-based swap participant under each Commission’s respective 

Acts and the regulations issued under such Acts; which of the 

United States swaps requirements shall apply to the swap and security-based swap activities of non-U.S. persons, U.S. persons, and 

their branches, agencies, subsidiaries, and affiliates outside of the 

United States and the extent to which such requirements shall 

apply; and the circumstances under which a non-U.S. person in 

compliance with the regulatory requirements of a foreign jurisdiction shall be exempt from United States swaps requirements. 

This section requires the Commissions shall provide that a nonU.S. person in compliance with the swaps regulatory requirements 

of a country or administrative region that has one of the nine largest combined swap and security-based swap markets by notional 

amount in the calendar year preceding issuance of such rules, or 

other foreign jurisdiction as jointly determined by the Commissions, shall be exempt from United States swaps requirements in 

accordance unless the Commissions jointly determine that the regulatory requirements of such country or administrative region or 

other foreign jurisdiction are not broadly equivalent to United 

States swaps requirements. 

This section requires that the exemptions that are to be issued 

by the Commissions shall apply to persons or transactions relating 

to or involving countries or administrative regions described, or 

any other foreign jurisdiction as jointly determined by the Commissions, accounting for the five largest combined swap and securitybased swap markets by notional amount in the calendar year preceding issuance of such rules, on the date on which final rules are 

issued under this section; and the remaining countries or administrative regions, and any other foreign jurisdiction as jointly determined by the Commissions, 1 year after the date on which such 

rules are issued. 

This section requires that in issuing such rules, the Commissions 

shall jointly establish criteria for determining that one or more categories of regulatory requirements of a country or administrative 


smartinez on DSK6TPTVN1PROD with REPORTS
10 

region or other foreign jurisdiction is not broadly equivalent to 

United States swaps requirements and shall jointly determine the 

appropriate application of certain United States swap requirements 

to persons or transactions relating to or involving such country or 

administrative region or other foreign jurisdiction. 

Such criteria shall include the scope and objectives of the regulatory requirements of a country or administrative region described 

or other foreign jurisdiction as well as the effectiveness of the supervisory compliance program administered, and the enforcement 

authority exercised, by such country or administrative region or 

other foreign jurisdiction, and such other factors as the Commissions, by rule, jointly determine to be necessary or appropriate in 

the public interest. 

This section requires the Commissions to jointly assess the regulatory requirements of countries or administrative regions described, as the Commissions jointly determine appropriate, in accordance with the criteria established pursuant to this section, to 

determine if one or more categories of regulatory requirements of 

such a country or administrative region or other foreign jurisdiction 

is not broadly equivalent to United States swaps requirements. 

This section requires that if the Commissions make the joint determination that the regulatory requirements of a country or administrative region described in such subsection or other foreign jurisdiction are not broadly equivalent to United States swaps requirements, the Commissions shall articulate the basis for such a 

determination in a written report to be transmitted to the Committee on Financial Services and the Committee on Agriculture of 

the House of Representatives and the Committee on Banking, 

Housing, and Urban Affairs and the Committee on Agriculture, 

Nutrition, and Forestry of the Senate within 30 days of the determination. The determination shall not be effective until the transmission of such report. 

This section defines the term ‘‘U.S. person’’ and the term ‘‘United 

States swaps requirements.’’ 

This section also makes conforming to the Securities Exchange 

Act of 1934 and to the Commodity Exchange Act. 

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 (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

SEC. 36. GENERAL EXEMPTIVE AUTHORITY. 

(a) * * * 

* * * * * * * 

(c) DERIVATIVES.—Unless the Commission is expressly authorized 

by any provision described in this subsection to grant exemptions, 

or except as necessary to effectuate the purposes of the Swap JurisVerDate Mar 15 2010 05:31 Jun 11, 2013 Jkt 029006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6601 E:\HR\OC\HR103P1.XXX HR103P1

smartinez on DSK6TPTVN1PROD with REPORTS
11 

diction Certainty Act, the Commission shall not grant exemptions, 

with respect to amendments made by subtitle B of the Wall Street 

Transparency and Accountability Act of 2010, with respect to paragraphs (65), (66), (68), (69), (70), (71), (72), (73), (74), (75), (76), and 

(79) of section 3(a), and sections 10B(a), 10B(b), 10B(c), 13A, 15F, 

17A(g), 17A(h), 17A(i), 17A(j), 17A(k), and 17A(l); provided that the 

Commission shall have exemptive authority under this title with 

respect to security-based swaps as to the same matters that the 

Commodity Futures Trading Commission has under the Wall 

Street Transparency and Accountability Act of 2010 with respect to 

swaps, including under section 4(c) of the Commodity Exchange 

Act. 

* * * * * * * 

COMMODITY EXCHANGE ACT 

* * * * * * * 

SEC. 4. (a) * * * 

* * * * * * * 

(c)(1) In order to promote responsible economic or financial innovation and fair competition, the Commission by rule, regulation, or 

order, after notice and opportunity for hearing, may (on its own initiative or on application of any person, including any board of trade 

designated or registered as a contract market or derivatives transaction execution facility for transactions for future delivery in any 

commodity under section 5 of this Act) exempt any agreement, contract, or transaction (or class thereof) that is otherwise subject to 

subsection (a) (including any person or class of persons offering, entering into, rendering advice or rendering other services with respect to, the agreement, contract, or transaction), either unconditionally or on stated terms or conditions or for stated periods and 

either retroactively or prospectively, or both, from any of the requirements of subsection (a), or from any other provision of this Act 

(except subparagraphs (C)(ii) and (D) of section 2(a)(1), except 

that— 

(A) unless the Commission is expressly authorized by any 

provision described in this subparagraph to grant exemptions, 

or except as necessary to effectuate the purposes of the Swap Jurisdiction Certainty Act, with respect to amendments made by 

subtitle A of the Wall Street Transparency and Accountability 

Act of 2010— 

(i) * * * 

* * * * * * * 


smartinez on DSK6TPTVN1PROD with REPORTS
(12) 

MINORITY VIEWS ON H.R. 1256 

The Swap Jurisdiction Certainty Act as introduced was an improvement over the bill introduced last year with the same title, 

recognizing the importance of providing the regulators with discretion to appropriately tailor U.S. swaps rules to fit within the $700 

trillion global derivatives market. We continue to have concerns, 

however, about the presumption included in the bill that transactions involving some jurisdictions will be exempt, even if those 

jurisdictions will lack comparable rules for years to come. 

The financial crisis of 2008 was exacerbated by the largely unregulated international market for over-the-counter derivatives, or 

swaps. Congress sought to prevent this market from ever threatening the U.S. in the future by passing the Dodd-Frank Wall Street 

Reform and Consumer Protection Act. While the U.S. was not alone 

in those concerns, it is years ahead of other jurisdictions. The G– 

20, a group of the 20 largest national economies, agreed to a broad 

set of international principles to improve regulation of the financial 

sector, including imposing new requirements on swaps. We hope 

that those jurisdictions ultimately will adopt similar rules to effectively monitor and oversee swaps transactions, but that is far from 

certain at present. While Europe’s framework for clearing is nearing completion, for example, its rules on trade execution are years 

away. Other jurisdictions like Singapore and Japan are also expected to lag the U.S. by several years. As a result, many market 

observers are concerned that, our institutions and economy may be 

at risk from overseas swaps activity. 

For these reasons, our regulators should continue to be empowered to appropriately apply U.S. law overseas to protect the U.S. 

economy, including in the interim period while other jurisdictions 

catch up to the U.S. H.R. 1256, however, presumes that G–20 countries will have swaps rules at the same time as the U.S., and that 

they will be comparable. This is a mistake. 

At the same time, others have noted that if regulators overextend their reach, we may put U.S. institutions at a competitive 

disadvantage without providing additional benefits for the U.S. 

economy. For these reasons, we are supportive of the bill’s goal to 

harmonize rules between our two derivatives regulators, but we 

have strong concerns with presuming that some jurisdictions are 

already comparable to the U.S. To make this presumption also 

would ease pressure on other jurisdictions to implement robust 

rules of their own. 


smartinez on DSK6TPTVN1PROD with REPORTS
13 

We have made considerable progress towards promoting transparency, accountability and stability in the derivatives markets. 

We oppose H.R. 1256 to continue that progress. 

MAXINE WATERS. 

RUBE ́ N HINOJOSA. 

MELVIN L. WATT. 

KEITH ELLISON. 

EMANUEL CLEAVER. 

STEPHEN F. LYNCH. 

CAROLYN B. MALONEY. 

MICHAEL E. CAPUANO. 

Æ 


smartinez on DSK6TPTVN1PROD with REPORTS