II

106TH CONGRESS

2D SESSION S. 2697

To reauthorize and amend the Commodity Exchange Act to promote legal

certainty, enhance competition, and reduce systemic risk in markets

for futures and over-the-counter derivatives, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 8, 2000

Mr. LUGAR (for himself, Mr. GRAMM, and Mr. FITZGERALD) introduced the

following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To reauthorize and amend the Commodity Exchange Act

to promote legal certainty, enhance competition, and reduce systemic risk in markets for futures and over-thecounter derivatives, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Commodity Futures Modernization Act of 2000’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.
2

•S 2697 IS

Sec. 2. Purposes.

Sec. 3. Definitions.

Sec. 4. Agreements, contracts, and transactions in foreign currency, government securities, and certain other commodities.

Sec. 5. Legal certainty for excluded derivative transactions.

Sec. 6. Electronic trading facilities.

Sec. 7. Hybrid instruments.

Sec. 8. Futures on securities.

Sec. 9. Finding and purposes.

Sec. 10. Prohibited transactions.

Sec. 11. Designation of boards of trade as contract markets.

Sec. 12. Derivatives transaction execution facilities.

Sec. 13. Derivatives clearing organizations.

Sec. 14. Common provisions applicable to registered entities.

Sec. 15. Exempt boards of trade.

Sec. 16. Suspension or revocation of designation as contract market.

Sec. 17. Authorization of appropriations.

Sec. 18. Preemption.

Sec. 19. Predispute resolution agreements for institutional customers.

Sec. 20. Consideration of costs and benefits and antitrust laws.

Sec. 21. Contract enforcement between eligible counterparties.

Sec. 22. Legal certainty for swap agreements.

Sec. 23. Technical and conforming amendments.

Sec. 24. Effective date.

1 SEC. 2. PURPOSES.

2 The purposes of this Act are—

3 (1) to reauthorize the Commodity Exchange Act

4 (7 U.S.C. 1 et seq.);

5 (2) to streamline and eliminate unnecessary

6 regulation for the commodity futures exchanges and

7 other entities regulated under the Commodity Ex8 change Act;

9 (3) to transform the role of the Commodity Fu10 tures Trading Commission in its oversight of the fu11 tures markets;

12 (4) to provide a legislative and regulatory

13 framework for allowing the trading of futures on se14 curities;
3

•S 2697 IS

1 (5) to clarify the jurisdiction of the Commission

2 over certain retail foreign exchange transactions and

3 bucket shops that are not otherwise regulated;

4 (6) to promote innovation for futures and de5 rivatives and to reduce systemic risk by enhancing

6 legal certainty in the markets for certain futures and

7 derivatives;

8 (7) to reduce systemic risk and provide greater

9 stability to markets during times of market disorder

10 by allowing the clearing of transactions in over-the11 counter derivatives through appropriately regulated

12 clearing organizations; and

13 (8) to enhance the competitive position of

14 United States financial institutions and financial

15 markets.

16 SEC. 3. DEFINITIONS.

17 Section 1a of the Commodity Exchange Act (7 U.S.C.

18 1a) is amended—

19 (1) by redesignating paragraphs (8) through

20 (12), (13) through (15), and (16) as paragraphs

21 (17) through (21), (23) through (25), and (29), re22 spectively;

23 (2) by inserting after paragraph (7) the fol24 lowing:

25 ‘‘(8) DERIVATIVES CLEARING ORGANIZATION.—
4

•S 2697 IS

1 ‘‘(A) IN GENERAL.—The term ‘derivatives

2 clearing organization’ means a clearinghouse,

3 clearing association, clearing corporation, or

4 similar entity, facility, system, or organization

5 that, with respect to a derivative agreement,

6 contract, or transaction (other than a secu7 rity)—

8 ‘‘(i) enables each party to the deriva9 tive agreement, contract, or transaction to

10 substitute, through novation or otherwise,

11 the credit of the derivatives clearing orga12 nization for the credit of the parties;

13 ‘‘(ii) arranges or provides, on a multi14 lateral basis, for the settlement or netting

15 of obligations resulting from such agree16 ments, contracts, or transactions executed

17 by participants in the derivatives clearing

18 organization; or

19 ‘‘(iii) otherwise provides clearing serv20 ices or arrangements that mutualize or

21 transfer among participants in the deriva22 tives clearing organization the credit risk

23 arising from such agreements, contracts,

24 or transactions executed by the partici25 pants.
5

•S 2697 IS

1 ‘‘(B) EXCLUSIONS.—The term ‘derivatives

2 clearing organization’ does not include an enti3 ty, facility, system, or organization solely be4 cause it arranges or provides for—

5 ‘‘(i) settlement, netting, or novation of

6 obligations resulting from agreements, con7 tracts, or transactions, on a bilateral basis

8 and without a centralized counterparty;

9 ‘‘(ii) settlement or netting of cash

10 payments through an interbank payment

11 system; or

12 ‘‘(iii) settlement, netting, or novation

13 of obligations resulting from a sale of a

14 commodity in a transaction in the spot

15 market for the commodity.

16 ‘‘(9) DESIGNATED FUTURE ON A SECURITY.—

17 The term ‘designated future on a security’ means a

18 contract of sale (or option on such a contract) for

19 future delivery of—

20 ‘‘(A) a single nonexempted security;

21 ‘‘(B) an index based on fewer than 5 non22 exempted securities; or

23 ‘‘(C) an index in which a single non24 exempted security accounts for 30 percent or

25 more of the value of the index.
6

•S 2697 IS

1 ‘‘(10) ELECTRONIC TRADING FACILITY.—The

2 term ‘electronic trading facility’ means a trading fa3 cility that—

4 ‘‘(A) operates by means of an electronic

5 network; and

6 ‘‘(B) maintains a real-time audit trail of

7 bids, offers, and the matching of orders or the

8 execution of transactions.

9 ‘‘(11) ELIGIBLE CONTRACT PARTICIPANT.—The

10 term ‘eligible contract participant’ means—

11 ‘‘(A) acting for its own account—

12 ‘‘(i) a financial institution;

13 ‘‘(ii) an insurance company (as de14 fined in section 2 of the Bank Holding

15 Company Act of 1956 (12 U.S.C. 1841));

16 ‘‘(iii) an investment company subject

17 to regulation under the Investment Com18 pany Act of 1940 (15 U.S.C. 80a–1 et

19 seq.) or a foreign person performing a

20 similar role or function subject as such to

21 foreign regulation (regardless of whether

22 each investor in the investment company or

23 the foreign person is itself an eligible con24 tract participant);

25 ‘‘(iv) a commodity pool that—
7

•S 2697 IS

1 ‘‘(I) has total assets exceeding

2 $5,000,000; and

3 ‘‘(II) is formed and operated by a

4 person subject to regulation under

5 this Act or a foreign person per6 forming a similar role or function sub7 ject as such to foreign regulation (re8 gardless of whether each investor in

9 the commodity pool or the foreign per10 son is itself an eligible contract partic11 ipant);

12 ‘‘(v) a corporation, partnership, pro13 prietorship, organization, trust, or other

14 entity—

15 ‘‘(I) that has total assets exceed16 ing $10,000,000;

17 ‘‘(II) the obligations of which

18 under an agreement, contract, or

19 transaction are guaranteed or other20 wise supported by a letter of credit or

21 keepwell, support, or other agreement

22 by an entity described in subclause

23 (I), in clause (i), (ii), (iii), (iv), or

24 (vii), or in subparagraph (C); or

25 ‘‘(III) that—
8

•S 2697 IS

1 ‘‘(aa) has a net worth ex2 ceeding $1,000,000; and

3 ‘‘(bb) enters into an agree4 ment, contract, or transaction in

5 connection with the conduct of

6 the entity’s business or to man7 age the risk associated with an

8 asset or liability owned or in9 curred or reasonably likely to be

10 owned or incurred by the entity

11 in the conduct of the entity’s

12 business;

13 ‘‘(vi) an employee benefit plan subject

14 to the Employee Retirement Income Secu15 rity Act of 1974 (29 U.S.C. 1001 et seq.)

16 or a foreign person performing a similar

17 role or function subject as such to foreign

18 regulation—

19 ‘‘(I) that has total assets exceed20 ing $5,000,000; or

21 ‘‘(II) the investment decisions of

22 which are made by—

23 ‘‘(aa) an investment adviser

24 subject to regulation under the

25 Investment Advisers Act of 1940
9

•S 2697 IS

1 (15 U.S.C. 80b–1 et seq.) or a

2 commodity trading advisor sub3 ject to regulation under this Act;

4 ‘‘(bb) a foreign person per5 forming a role or function similar

6 to that of such an investment ad7 viser or commodity trading advi8 sor subject to foreign regulation

9 in the performance of that role or

10 function;

11 ‘‘(cc) a financial institution;

12 or

13 ‘‘(dd) an insurance company

14 (as defined in section 2 of the

15 Bank Holding Company Act of

16 1956 (12 U.S.C. 1841));

17 ‘‘(vii)(I) a governmental entity (in18 cluding the United States, a State, or a

19 foreign government) or political subdivision

20 of a governmental entity;

21 ‘‘(II) a multinational or supranational

22 government entity; or

23 ‘‘(III) an instrumentality, agency, or

24 department of an entity described in sub25 clause (I) or (II);
10

•S 2697 IS

1 ‘‘(viii) a broker or dealer subject to

2 regulation under the Securities Exchange

3 Act of 1934 (15 U.S.C. 78a et seq.) or a

4 foreign person performing a similar role or

5 function subject as such to foreign regula6 tion, except that, if the broker or dealer or

7 foreign person is a natural person or pro8 prietorship, the broker or dealer or foreign

9 person shall not be considered to be an eli10 gible contract participant unless the broker

11 or dealer or foreign person also meets the

12 requirements of clause (v) or (xi);

13 ‘‘(ix) a futures commission merchant

14 subject to regulation under this Act or a

15 foreign person performing a similar role or

16 function subject as such to foreign regula17 tion, except that, if the futures commission

18 merchant or foreign person is a natural

19 person or proprietorship, the futures com20 mission merchant or foreign person shall

21 not be considered to be an eligible contract

22 participant unless the futures commission

23 merchant or foreign person also meets the

24 requirements of clause (v) or (xi);
11

•S 2697 IS

1 ‘‘(x) a floor broker or floor trader sub2 ject to regulation under this Act, to the ex3 tent that the floor broker or floor trader

4 trades on or through the facilities of a reg5 istered entity or exempt board of trade or

6 any affiliate of a registered entity or ex7 empt board of trade; or

8 ‘‘(xi) a natural person with total as9 sets exceeding $10,000,000;

10 ‘‘(B)(i) a person described in any of

11 clauses (i) through (x) of subparagraph (A) or

12 in subparagraph (C), acting as broker or per13 forming an equivalent agency function on behalf

14 of another person described in subparagraph

15 (A) or (C); or

16 ‘‘(ii)(I) an investment adviser subject to

17 regulation under the Investment Advisers Act of

18 1940 (15 U.S.C. 80b–1 et seq.);

19 ‘‘(II) a commodity trading advisor subject

20 to regulation under this Act;

21 ‘‘(III) a foreign person performing a role

22 or function similar to that of such an invest23 ment adviser or commodity trading advisor sub24 ject to foreign regulation in the performance of

25 that role or function; or
12

•S 2697 IS

1 ‘‘(IV) a person described in any of clauses

2 (i) through (x) of subparagraph (A) or in sub3 paragraph (C), that is acting as an investment

4 manager or fiduciary (but excluding a person

5 acting as a broker or performing an equivalent

6 agency function) for another person described

7 in subparagraph (A) or (C) and that is author8 ized by the other person to commit the other

9 person to the transaction; or

10 ‘‘(C) any other person that the Commis11 sion determines to be eligible in light of the fi12 nancial or other qualifications of the person.

13 ‘‘(12) ENERGY COMMODITY.—The term ‘energy

14 commodity’ includes crude oil, condensates, natural

15 gas, natural gas liquids, electricity, and coal.

16 ‘‘(13) EXCLUSION-ELIGIBLE COMMODITY.—

17 ‘‘(A) IN GENERAL.—The term ‘exclusion18 eligible commodity’ means—

19 ‘‘(i) a financial commodity;

20 ‘‘(ii) an energy commodity; and

21 ‘‘(iii) a commodity that has no cash

22 market.

23 ‘‘(B) EXCLUSION.—The term ‘exclusion-el24 igible commodity’ does not include any com-
13

•S 2697 IS

1 modity described in paragraph (3) that is an

2 agricultural commodity.

3 ‘‘(14) EXEMPTED SECURITY.—

4 ‘‘(A) IN GENERAL.—The term ‘exempted

5 security’ means a security that is an exempted

6 security under section 3(a) of the Securities Act

7 of 1933 (15 U.S.C. 77c(a)) or section 3(a) of

8 the Securities Exchange Act of 1934 (15

9 U.S.C. 78c(a)).

10 ‘‘(B) EXCLUSION.—The term ‘exempted

11 security’ does not include a municipal security

12 (as defined in section 3(a) of the Securities Ex13 change Act of 1934 (15 U.S.C. 78c(a))).

14 ‘‘(15) FINANCIAL COMMODITY.—The term ‘fi15 nancial commodity’ means—

16 ‘‘(A) an interest rate, exchange rate, cur17 rency, security, security index, credit risk, debt

18 or equity instrument, or index or measure of in19 flation; or

20 ‘‘(B) any other rate, differential, index, or

21 measure of economic risk, return, or value (ex22 cluding any rate, differential, index, or measure

23 based on a commodity not described in subpara24 graph (A) that has a finite supply).
14

•S 2697 IS

1 ‘‘(16) FINANCIAL INSTITUTION.—The term ‘fi2 nancial institution’ means—

3 ‘‘(A) a corporation operating under the

4 fifth undesignated paragraph of section 25 of

5 the Federal Reserve Act (12 U.S.C. 603), com6 monly known as ‘an agreement corporation’;

7 ‘‘(B) a corporation organized under section

8 25A of the Federal Reserve Act (12 U.S.C. 611

9 et seq.), commonly known as an ‘Edge Act cor10 poration’;

11 ‘‘(C) an institution that is regulated by the

12 Farm Credit Administration;

13 ‘‘(D) a Federal credit union or State credit

14 union (as defined in section 101 of the Federal

15 Credit Union Act (12 U.S.C. 1752));

16 ‘‘(E) a depository institution (as defined in

17 section 3 of the Federal Deposit Insurance Act

18 (12 U.S.C. 1813));

19 ‘‘(F) a foreign bank or a branch or agency

20 of a foreign bank (each as defined in section

21 1(b) of the International Banking Act of 1978

22 (12 U.S.C. 3101(b)));

23 ‘‘(G) a trust company; or
15

•S 2697 IS

1 ‘‘(H) a regulated subsidiary or affiliate of

2 an entity described in any of subparagraphs (A)

3 through (G).’’;

4 (3) by inserting after paragraph (21) (as redes5 ignated by paragraph (1)) the following:

6 ‘‘(22) HYBRID INSTRUMENT.—The term ‘hybrid

7 instrument’ means a deposit (as defined in section 3

8 of the Federal Deposit Insurance Act (12 U.S.C.

9 1813)) offered by a financial institution, or a secu10 rity, having 1 or more payments indexed to the

11 value, level, or rate of 1 or more commodities.’’;

12 (4) by inserting after paragraph (25) (as redes13 ignated by paragraph (1)) the following:

14 ‘‘(26) NATIONAL SECURITIES EXCHANGE.—The

15 term ‘national securities exchange’ means—

16 ‘‘(A) an exchange that is registered as a

17 national securities exchange under section 6 of

18 the Securities Exchange Act of 1934 (15

19 U.S.C. 78f); or

20 ‘‘(B) an association that is registered as a

21 national securities association under section

22 15A of the Securities Exchange Act of 1934

23 (15 U.S.C. 78o–3).

24 ‘‘(27) OPTION.—The term ‘option’ means an

25 agreement, contract, or transaction that is of the
16

•S 2697 IS

1 character of, or is commonly known to the trade as,

2 an ‘option’, ‘privilege’, ‘indemnity’, ‘bid’, ‘offer’,

3 ‘put’, ‘call’, ‘advance guaranty’, or ‘decline guar4 anty’.

5 ‘‘(28) ORGANIZED EXCHANGE.—The term ‘or6 ganized exchange’ means a trading facility that—

7 ‘‘(A) permits—

8 ‘‘(i) trading by or on behalf of a per9 son that is not an eligible contract partici10 pant; or

11 ‘‘(ii) trading by persons other than on

12 a bona fide principal-to-principal basis; or

13 ‘‘(B) has adopted (directly or through an14 other nongovernmental entity) rules that—

15 ‘‘(i) govern the conduct of partici16 pants, other than rules that govern the

17 submission of orders or execution of trans18 actions on the trading system; or

19 ‘‘(ii) include disciplinary sanctions

20 other than the exclusion of participants

21 from trading.’’; and

22 (5) by adding at the end the following:

23 ‘‘(30) REGISTERED ENTITY.—The term ‘reg24 istered entity’ means—
17

•S 2697 IS

1 ‘‘(A) a board of trade designated as a con2 tract market under section 5;

3 ‘‘(B) a derivatives transaction execution fa4 cility registered under section 5a; or

5 ‘‘(C) a derivatives clearing organization

6 registered under section 5b.

7 ‘‘(31) SECURITY.—The term ‘security’ has the

8 meaning given the term in section 3(a) of the Secu9 rities Exchange Act of 1934 (15 U.S.C. 78c(a)).

10 ‘‘(32) TRADING FACILITY.—

11 ‘‘(A) IN GENERAL.—The term ‘trading fa12 cility’ means a person or group of persons that

13 constitutes, maintains, or provides a physical or

14 electronic facility or system in which multiple

15 participants have the ability to execute or trade

16 agreements, contracts, or transactions by ac17 cepting bids and offers made by other partici18 pants that are open to multiple participants in

19 the facility or system.

20 ‘‘(B) EXCLUSIONS.—The term ‘trading fa21 cility’ does not include—

22 ‘‘(i) a person or group of persons sole23 ly because the person or group of

24 persons—
18

•S 2697 IS

1 ‘‘(I) constitutes, maintains, or

2 provides an electronic facility or sys3 tem that enables participants to nego4 tiate the terms of and enter into bilat5 eral transactions with other partici6 pants as a result of the communica7 tions exchanged between the partici8 pants and not from interaction of

9 multiple orders within a centralized,

10 predetermined, nondiscretionary, auto11 mated trade matching algorithm; or

12 ‘‘(II)(aa) is a derivatives clearing

13 organization; or

14 ‘‘(bb) permits participants to

15 submit agreements, contracts, or

16 transactions to a derivatives clearing

17 organization;

18 ‘‘(ii) a government securities dealer or

19 government securities broker, to the extent

20 that the dealer or broker executes or

21 trades agreements, contracts, or trans22 actions in government securities, or assists

23 persons in communicating about, negoti24 ating, entering into, executing, or trading

25 an agreement, contract, or transaction in
19

•S 2697 IS

1 government securities (as the terms ‘gov2 ernment securities dealer’, ‘government se3 curities broker’, and ‘government securi4 ties’ are defined in section 3(a) of the Se5 curities Exchange Act of 1934 (15 U.S.C.

6 78c(a))); or

7 ‘‘(iii) a facility on which bids and of8 fers and acceptances of bids and offers ef9 fected on the facility are not binding.’’.

10 SEC. 4. AGREEMENTS, CONTRACTS, AND TRANSACTIONS IN

11 FOREIGN CURRENCY, GOVERNMENT SECURI12 TIES, AND CERTAIN OTHER COMMODITIES.

13 Section 2 of the Commodity Exchange Act (7 U.S.C.

14 2, 2a, 3, 4, 4a) is amended by adding at the end the fol15 lowing:

16 ‘‘(c) AGREEMENTS, CONTRACTS, AND TRANSACTIONS

17 IN FOREIGN CURRENCY, GOVERNMENT SECURITIES, AND

18 CERTAIN OTHER COMMODITIES.—

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), nothing in this Act (other than section 5b

21 or 12(e)(2)(B)) governs or applies to an agreement,

22 contract, or transaction in—

23 ‘‘(A) foreign currency;

24 ‘‘(B) government securities;

25 ‘‘(C) security warrants;
20

•S 2697 IS

1 ‘‘(D) security rights;

2 ‘‘(E) resales of installment loan contracts;

3 ‘‘(F) repurchase transactions in a financial

4 commodity; or

5 ‘‘(G) mortgages or mortgage purchase

6 commitments.

7 ‘‘(2) COMMISSION JURISDICTION.—

8 ‘‘(A) AGREEMENTS, CONTRACTS, AND

9 TRANSACTIONS THAT ARE FUTURES TRADED

10 ON AN ORGANIZED EXCHANGE.—This Act ap11 plies to, and the Commission shall have juris12 diction over, an agreement, contract, or trans13 action described in paragraph (1) that—

14 ‘‘(i)(I) is a contract of sale of a com15 modity for future delivery (or an option on

16 such a contract); and

17 ‘‘(II) is executed or traded on an or18 ganized exchange;

19 ‘‘(ii)(I) is an option on a commodity

20 other than foreign currency or a security;

21 and

22 ‘‘(II is executed or traded on an orga23 nized exchange; or

24 ‘‘(iii)(I) is an option on foreign cur25 rency; and
21

•S 2697 IS

1 ‘‘(II) is executed or traded on an or2 ganized exchange that is not a national se3 curities exchange.

4 ‘‘(B) AGREEMENTS, CONTRACTS, AND

5 TRANSACTIONS IN RETAIL FOREIGN CUR6 RENCY.—This Act applies to, and the Commis7 sion shall have jurisdiction over, an agreement,

8 contract, or transaction in foreign currency

9 that—

10 ‘‘(i) is—

11 ‘‘(I) a contract of sale for future

12 delivery; or

13 ‘‘(II) an option; and

14 ‘‘(ii) is offered to, or entered into

15 with, a person that is not an eligible con16 tract participant, unless the counterparty,

17 or the person offering to be the

18 counterparty, of the person is—

19 ‘‘(I) a financial institution;

20 ‘‘(II) a broker or dealer reg21 istered under section 15(b) or 15C of

22 the Securities Exchange Act of 1934

23 (15 U.S.C. 78o(b), 78o–5);

24 ‘‘(III) an associated person of a

25 broker or dealer registered under sec-
22

•S 2697 IS

1 tion 15(b) or 15C of the Securities

2 Exchange Act of 1934 (15 U.S.C.

3 78o(b), 78o–5) concerning the finan4 cial or securities activities of which

5 the registered person makes and

6 keeps records under section 15C(b) or

7 17(h) of the Securities Exchange Act

8 of 1934 (15 U.S.C. 78o–5(b), 78q(h));

9 ‘‘(IV) an insurance company (as

10 defined in section 2 of the Bank Hold11 ing Company Act of 1956 (12 U.S.C.

12 1841));

13 ‘‘(V) a financial holding company

14 (as defined in section 2 of the Bank

15 Holding Company Act of 1956 (12

16 U.S.C. 1841)); or

17 ‘‘(VI) an investment bank hold18 ing company (as defined in section

19 17(i) of the Securities Exchange Act

20 of 1934 (15 U.S.C. 78q(i))).’’.

21 SEC. 5. LEGAL CERTAINTY FOR EXCLUDED DERIVATIVE

22 TRANSACTIONS.

23 Section 2 of the Commodity Exchange Act (7 U.S.C.

24 2, 2a, 3, 4, 4a) (as amended by section 4) is amended

25 by adding at the end the following:
23

•S 2697 IS

1 ‘‘(d) EXCLUDED DERIVATIVE TRANSACTIONS.—

2 ‘‘(1) IN GENERAL.—Nothing in this Act (other

3 than section 5b or 12(e)(2)(B)) governs or applies to

4 an agreement, contract, or transaction in an exclu5 sion-eligible commodity if—

6 ‘‘(A) the agreement, contract, or trans7 action is entered into only between persons that

8 are eligible contract participants at the time at

9 which the persons enter into the agreement,

10 contract, or transaction; and

11 ‘‘(B) the agreement, contract, or trans12 action is not executed or traded on a trading fa13 cility.

14 ‘‘(2) ELECTRONIC TRADING FACILITY EXCLU15 SION.—Nothing in this Act (other than section 5b or

16 12(e)(2)(B)) governs or applies to an agreement,

17 contract, or transaction in an exclusion-eligible com18 modity if—

19 ‘‘(A) the agreement, contract, or trans20 action is entered into on a bona fide principal21 to-principal basis between parties trading for

22 their own accounts or as described in section

23 1a(11)(B)(ii);

24 ‘‘(B) the agreement, contract, or trans25 action is entered into only between persons that
24

•S 2697 IS

1 are eligible contract participants (as defined in

2 subparagraph (A), (B)(ii), or (C) of section

3 1a(11)) at the time at which the persons enter

4 into the agreement, contract, or transaction;

5 and

6 ‘‘(C) the agreement, contract, or trans7 action is executed or traded on an electronic

8 trading facility.

9 ‘‘(3) EXCEPTION TO PREVENT MANIPULA10 TION.—Notwithstanding paragraphs (1) and (2),

11 any agreement, contract, or transaction in an exclu12 sion-eligible commodity (other than a financial com13 modity) that is an energy commodity or is suscep14 tible to a material risk of manipulation shall be sub15 ject to sections 6(c) and 9(a)(2).’’.

16 SEC. 6. ELECTRONIC TRADING FACILITIES.

17 Section 2 of the Commodity Exchange Act (7 U.S.C.

18 2, 2a, 3, 4, 4a) (as amended by section 5) is amended

19 by adding at the end the following:

20 ‘‘(e) ELECTRONIC TRADING FACILITIES.—

21 ‘‘(1) IN GENERAL.—Nothing in this Act (other

22 than section 12(e)(2)(B)) governs or is applicable to

23 an electronic trading facility that limits transactions

24 authorized to be conducted on the facility to trans-
25

•S 2697 IS

1 actions that satisfy the requirements of subsection

2 (d)(2).

3 ‘‘(2) EFFECT ON AUTHORITY TO ESTABLISH

4 AND OPERATE.—Nothing in this Act shall prohibit a

5 board of trade designated by the Commission as a

6 contract market or derivatives transaction execution

7 facility, or an exempt board of trade, from estab8 lishing and operating an electronic trading facility

9 excluded under this Act by paragraph (1).’’.

10 SEC. 7. HYBRID INSTRUMENTS.

11 Section 2 of the Commodity Exchange Act (7 U.S.C.

12 2, 2a, 3, 4, 4a) (as amended by section 6) is amended

13 by adding at the end the following:

14 ‘‘(f) EXCLUSION FOR QUALIFYING HYBRID INSTRU15 MENTS.—

16 ‘‘(1) IN GENERAL.—Nothing in this Act (other

17 than section 12(e)(2)(B)) governs or is applicable to

18 a hybrid instrument that is predominantly a security

19 or depository instrument.

20 ‘‘(2) PREDOMINANCE.—A hybrid instrument

21 shall be considered to be predominantly a security or

22 depository instrument if—

23 ‘‘(A) the issuer of the hybrid instrument

24 receives payment in full of the purchase price of

25 the hybrid instrument, substantially contem-
26

•S 2697 IS

1 poraneously with delivery of the hybrid instru2 ment;

3 ‘‘(B) the purchaser or holder of the hybrid

4 instrument is not required to make any pay5 ment to the issuer in addition to the purchase

6 price paid under subparagraph (A), whether as

7 margin, settlement payment, or otherwise, dur8 ing the life of the hybrid instrument or at ma9 turity;

10 ‘‘(C) the issuer of the hybrid instrument is

11 not subject by the terms of the instrument to

12 mark-to-market margining requirements; and

13 ‘‘(D) the hybrid instrument is not mar14 keted as a contract of sale for future delivery

15 of a commodity (or option on such a contract)

16 subject to this Act.

17 ‘‘(3) MARK-TO-MARKET MARGINING REQUIRE18 MENTS.—For the purposes of paragraph (2)(C),

19 mark-to-market margining requirements do not in20 clude the obligation of an issuer of a secured debt

21 instrument to increase the amount of collateral held

22 in pledge for the benefit of the purchaser of the se23 cured debt instrument to secure the repayment obli24 gations of the issuer under the secured debt instru25 ment.’’.
27

•S 2697 IS

1 SEC. 8. FUTURES ON SECURITIES.

2 Section 2 of the Commodity Exchange Act (7 U.S.C.

3 2, 2a, 3, 4, 4a) (as amended by section 7) is amended

4 by adding at the end the following:

5 ‘‘(g) FUTURES ON SECURITIES.—

6 ‘‘(1) EXCLUSIONS.—

7 ‘‘(A) EXCLUSION OF OVER-THE-COUNTER

8 EQUITY INSTRUMENTS.—Nothing in this sub9 section governs or applies to—

10 ‘‘(i) an agreement, contract, or trans11 action in a commodity that is excluded

12 under subsection (c) or (d);

13 ‘‘(ii) an electronic trading facility that

14 is excluded under subsection (e); or

15 ‘‘(iii) a hybrid instrument that is cov16 ered by an exclusion under subsection (f)

17 or an exemption granted by the Commis18 sion under section 4(c) (whether or not the

19 hybrid instrument is otherwise subject to

20 this Act).

21 ‘‘(B) EXCLUSION OF SECURITY OPTIONS.—

22 This Act does not apply to, and the Commission

23 shall have no jurisdiction to designate a board

24 of trade as a contract market or register a de25 rivatives transaction execution facility for, any

26 transaction under which a party to the trans-
28

•S 2697 IS

1 action acquires an option on 1 or more securi2 ties, group or index of securities, or interest in,

3 or interest that is based on the value of, a secu4 rity.

5 ‘‘(2) INCLUSION OF TRADING OF NONDES6 IGNATED FUTURES ON SECURITIES ON A CONTRACT

7 MARKET.—

8 ‘‘(A) IN GENERAL.—This Act applies to,

9 and the Commission shall have exclusive juris10 diction with respect to and may designate a

11 board of trade as a contract market in, ac12 counts, agreements, and transactions involving

13 a contract of sale (or option on such a contract)

14 for future delivery of a group or index of non15 exempted securities (or an interest in, or inter16 est that is based on the value of, such securi17 ties), none of which is a designated future on

18 a security.

19 ‘‘(B) REQUIREMENTS FOR DESIGNA20 TION.—

21 ‘‘(i) IN GENERAL.—No board of trade

22 shall be designated as a contract market

23 with respect to any contract of sale (or op24 tion on such a contract) for future delivery

25 under subparagraph (A) unless—
29

•S 2697 IS

1 ‘‘(I) the board of trade files with

2 the Commission an application for

3 designation; and

4 ‘‘(II) the board of trade dem5 onstrates and the Commission ex6 pressly finds that the specific contract

7 (or option on such a contract) with re8 spect to which the application is made

9 meets the minimum requirements of

10 clauses (ii) and (iii).

11 ‘‘(ii) MEANS OF EFFECTUATION OF

12 SETTLEMENT OR DELIVERY.—Settlement

13 of or delivery on a contract (or option on

14 such a contract) described in subparagraph

15 (A) shall be effected in cash or by means

16 other than the transfer or receipt of a se17 curity other than an exempted security.

18 ‘‘(iii) SUSCEPTIBILITY TO PRICE MA19 NIPULATION.—Trading in a contract (or

20 option on such a contract) described in

21 subparagraph (A) shall not be readily sus22 ceptible to—

23 ‘‘(I) manipulation of the price of

24 the contract (or option on such a con25 tract); or
30

•S 2697 IS

1 ‘‘(II) causing or being used in

2 the manipulation of the price of any

3 underlying security, option on a secu4 rity, or option on a group or index

5 that includes a security.

6 ‘‘(3) TRADING OF DESIGNATED FUTURES ON

7 SECURITIES ON A CONTRACT MARKET OR NATIONAL

8 SECURITIES EXCHANGE.—No person shall offer to

9 enter into, enter into, or confirm the execution of a

10 designated future on a security, or an interest in or

11 interest that is based on the value of a designated

12 future on a security, unless—

13 ‘‘(A) the contract—

14 ‘‘(i) is transacted on or subject to the

15 rules of a board of trade that has been

16 designated by the Commission as a con17 tract market for the commodity that is the

18 subject of the contract; and

19 ‘‘(ii) meets the requirements of para20 graph (4); or

21 ‘‘(B) the contract is transacted on or sub22 ject to the rules of a securities exchange that is

23 registered with the Securities and Exchange

24 Commission as a national securities exchange.
31

•S 2697 IS

1 ‘‘(4) MINIMUM REQUIREMENTS FOR DES2 IGNATED FUTURES ON SECURITIES TRADED ON A

3 CONTRACT MARKET.—

4 ‘‘(A) IN GENERAL.—Subject to paragraph

5 (5), this Act applies to, and the Commission

6 shall have jurisdiction with respect to and may

7 designate a board of trade as a contract market

8 in, accounts, agreements, and transactions in9 volving a designated future on a security.

10 ‘‘(B) REQUIREMENTS FOR DESIGNA11 TION.—

12 ‘‘(i) IN GENERAL.—No board of trade

13 shall be designated as a contract market

14 with respect to any contract of sale (or op15 tion on such a contract) under subpara16 graph (A) unless—

17 ‘‘(I) the board of trade files with

18 the Commission an application for

19 designation; and

20 ‘‘(II) the board of trade dem21 onstrates and the Commission ex22 pressly finds that the specific contract

23 (or option on such a contract) with re24 spect to which the application is made
32

•S 2697 IS

1 meets the minimum requirements of

2 clauses (ii) through (viii).

3 ‘‘(ii) MEANS OF EFFECTUATION OF

4 SETTLEMENT OR DELIVERY.—Settlement

5 of or delivery on a contract (or option on

6 such a contract) described in subparagraph

7 (A) shall be effected in cash or by means

8 other than the transfer or receipt of a se9 curity other than an exempted security.

10 ‘‘(iii) REAL-TIME AUDIT TRAIL.—

11 Trading in a contract (or option on such a

12 contract) described in subparagraph (A)

13 shall occur on a contract market that exe14 cutes trades by means of a system that

15 provides a real-time audit trail.

16 ‘‘(iv) SUSCEPTIBILITY TO PRICE MA17 NIPULATION.—Trading in a contract (or

18 option on such a contract) described in

19 subparagraph (A) shall not be readily sus20 ceptible to—

21 ‘‘(I) manipulation of the price of

22 the contract (or option on such a con23 tract); or

24 ‘‘(II) causing or being used in

25 the manipulation of the price of any
33

•S 2697 IS

1 underlying security, option on a secu2 rity, or option on a group or index

3 that includes a security.

4 ‘‘(v) UNDERLYING SECURITY AP5 PROVED FOR LISTING ON NATIONAL SECU6 RITIES EXCHANGE.—Each security that

7 underlies a designated future on a security

8 shall—

9 ‘‘(I) meet all requirements for

10 the listing of an option on that secu11 rity on a national securities exchange:

12 or

13 ‘‘(II) be the subject of options

14 trading on a national securities ex15 change.

16 ‘‘(vi) MARGINS FOR FUTURES CON17 TRACTS.—The contract described in sub18 paragraph (A) shall be traded on a board

19 of trade that establishes and maintains

20 margin levels for designated futures on se21 curities that are consistent with the mar22 gin levels established and maintained on an

23 option contract on the same underlying se24 curity that is listed on any national securi25 ties exchange.
34

•S 2697 IS

1 ‘‘(vii) CONFLICTS OF INTEREST.—The

2 contract described in subparagraph (A)

3 shall be traded on a board of trade that es4 tablishes and enforces rules that protect

5 the customer from conflicts of interest and

6 related trading abuses on the part of bro7 kers or any other person performing simi8 lar roles or functions.

9 ‘‘(viii) PROVISION OF INFORMATION

10 NECESSARY FOR ENFORCEMENT.—The

11 contract described in subparagraph (A)

12 shall be traded on a board of trade that,

13 in accordance with regulations promul14 gated by the Commission, collects, main15 tains, and promptly provides to the Securi16 ties and Exchange Commission on request

17 such information as the Commission and

18 the Securities and Exchange Commission

19 jointly determine to be appropriate for the

20 performance of the enforcement respon21 sibilities described in paragraph (5).

22 ‘‘(5) SEC ENFORCEMENT AUTHORITY FOR DES23 IGNATED FUTURES ON SECURITIES CONTRACTS

24 LISTED ON A CONTRACT MARKET.—
35

•S 2697 IS

1 ‘‘(A) IN GENERAL.—With the concurrence

2 of the Commission, the Securities and Ex3 change Commission may enforce the provisions

4 of the securities laws specified in subparagraph

5 (B) against any person that purchases or sells

6 a designated future on a security to the same

7 extent as if the person had purchased or sold

8 an option on a security.

9 ‘‘(B) PROVISIONS OF THE SECURITIES

10 LAWS.—The provisions of the securities laws re11 ferred to in subparagraph (A) are—

12 ‘‘(i) section 16 of the Securities Ex13 change Act of 1934 (15 U.S.C. 78p); and

14 ‘‘(ii) section 10(b) of the Securities

15 Exchange Act of 1934 (15 U.S.C. 78j(b)).

16 ‘‘(C) AUTHORITY OF SEC.—Nothing in this

17 paragraph expands the authority of the Securi18 ties and Exchange Commission with respect to

19 registered entities or contracts of sale of a com20 modity for future delivery (or options on such

21 contracts) except as specifically provided in this

22 paragraph.

23 ‘‘(D) REPORT.—Not earlier than the date

24 that is 3 years after the date of enactment of

25 this subsection, the Commission and the Securi-
36

•S 2697 IS

1 ties and Exchange Commission shall begin to

2 compile, and not later than the date that is 4

3 years after the date of enactment of this sub4 section, the Commission and the Securities and

5 Exchange Commission shall submit to Con6 gress, a report on the implementation of this

7 subsection.

8 ‘‘(6) CFTC ENFORCEMENT AUTHORITY FOR

9 DESIGNATED FUTURES ON SECURITIES LISTED ON A

10 NATIONAL SECURITIES EXCHANGE.—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 subparagraph (B), the Securities and Exchange

13 Commission shall have jurisdiction over a des14 ignated future on a security to the extent that

15 the designated future on a security is traded on

16 a national securities exchange.

17 ‘‘(B) LARGE TRADER REPORTING, ANTI18 FRAUD, AND ANTIMANIPULATION AUTHORITY.—

19 With the concurrence of the Securities and Ex20 change Commission, the Commission shall en21 force sections 4b, 4i, 4o, 6(c), and 9(a)(2)

22 against any person that purchases or sells a

23 designated future on a security on a national

24 securities exchange.
37

•S 2697 IS

1 ‘‘(C) PROVISION OF INFORMATION NEC2 ESSARY FOR ENFORCEMENT.—A designated fu3 ture on a security shall be traded on a national

4 securities exchange that, in accordance with

5 regulations promulgated by the Securities and

6 Exchange Commission, collects, maintains, and

7 promptly provides to the Commission on re8 quest such information as the Securities and

9 Exchange Commission and the Commission

10 jointly determine to be appropriate for the per11 formance of the enforcement responsibilities de12 scribed in subparagraph (B).

13 ‘‘(7) PROCESS FOR LISTING FUTURES ON A SE14 CURITY.—

15 ‘‘(A) CONTRACT MARKET PROCESS.—

16 ‘‘(i) IN GENERAL.—The Commission

17 shall transmit to the Securities and Ex18 change Commission a copy of any applica19 tion that is submitted by a board of trade

20 for designation as a contract market with

21 respect to a contract of sale (or option on

22 such a contract) for future delivery of a

23 nonexempted security or a group or index

24 of nonexempted securities.

25 ‘‘(ii) HEARING.—
38

•S 2697 IS

1 ‘‘(I) OBJECTION BY SEC.—If, not

2 later than 15 days following trans3 mittal of an application under clause

4 (i), the Securities and Exchange Com5 mission submits to the Commission an

6 objection to designation of the board

7 of trade as a contract market in the

8 contract (or option on such a con9 tract) based on evidence (including an

10 economic analysis of relevant factors

11 including benefits and costs) that any

12 minimum requirement under para13 graph (2)(B) or (4)(B) is not met, the

14 Commission shall afford the Securities

15 and Exchange Commission an oppor16 tunity for a hearing on the record be17 fore the Commission.

18 ‘‘(II) TIMING.—A hearing under

19 subclause (I) shall be held before the

20 Commission takes action on the appli21 cation, and not less than 30 nor more

22 than 45 days after the Securities and

23 Exchange Commission submits the ob24 jection.
39

•S 2697 IS

1 ‘‘(B) NATIONAL SECURITIES EXCHANGE

2 PROCESS.—

3 ‘‘(i) IN GENERAL.—The Securities

4 and Exchange Commission shall transmit

5 to the Commission a copy of any applica6 tion that is submitted by a person for list7 ing of a designated future on a security on

8 a national securities exchange.

9 ‘‘(ii) OBJECTION BY THE COMMIS10 SION.—If, not later than 15 days following

11 transmittal of an application under clause

12 (i), the Commission submits to the Securi13 ties and Exchange Commission an objec14 tion to listing of a designated future on a

15 security on a national securities exchange

16 based on evidence (including an economic

17 analysis of relevant factors including bene18 fits and costs) that any minimum require19 ment under paragraph (4)(B) is not met,

20 the Securities and Exchange Commission

21 shall afford the Commission an oppor22 tunity for a hearing on the record before

23 the Securities and Exchange Commission.

24 ‘‘(8) MARGIN.—
40

•S 2697 IS

1 ‘‘(A) IN GENERAL.—Notwithstanding any

2 other provision of this Act, any designated con3 tract market in a contract for sale of future de4 livery of a nonexempted security or non5 exempted securities index (or option on such a

6 contract) shall file with the Board of Governors

7 of the Federal Reserve System any rule estab8 lishing or changing the level of initial margin or

9 maintenance margin for the nonexempted secu10 rity or nonexempted securities index futures

11 contract (or option on such a contract).

12 ‘‘(B) REQUEST TO SET MARGIN.—

13 ‘‘(i) IN GENERAL.—The Board may at

14 any time request a contract market to set

15 the margin for a nonexempted security or

16 nonexempted securities index futures con17 tract (or option on a nonexempted security

18 or nonexempted securities index futures

19 contract) at a level that the Board deter20 mines is appropriate to—

21 ‘‘(I) preserve the financial integ22 rity of the contract market or of the

23 clearing system of the contract mar24 ket; or

25 ‘‘(II) prevent systemic risk.
41

•S 2697 IS

1 ‘‘(ii) FAILURE TO SET MARGIN.—If

2 the contract market fails to comply with a

3 request under clause (i) within the time

4 specified by the Board in the request, the

5 Board may direct the contract market to

6 alter or supplement the rules of the con7 tract market as specified in the request.

8 ‘‘(C) DELEGATION OF AUTHORITY TO THE

9 COMMISSION.—Subject to such conditions as

10 the Board may determine, the Board may dele11 gate any or all of its authority with respect to

12 margin levels—

13 ‘‘(i) in the case of a designated future

14 on a security or other stock index futures

15 contract or related option, to the Commis16 sion, if the contract or option is traded on

17 a designated contract market or derivatives

18 transaction execution facility; or

19 ‘‘(ii) in the case of a designated future

20 on a security—

21 ‘‘(I) to the Securities and Ex22 change Commission, if the designated

23 future on a security is listed on a na24 tional securities exchange; or
42

•S 2697 IS

1 ‘‘(II) to the intermarket margin

2 board established under subparagraph

3 (D).

4 ‘‘(D) INTERMARKET MARGIN BOARD.—

5 ‘‘(i) ESTABLISHMENT.—With the con6 currence of the Securities and Exchange

7 Commission and the Commission, the

8 Board may establish an intermarket mar9 gin board consisting of representatives of

10 each of those 3 entities.

11 ‘‘(ii) DUTIES.—The intermarket mar12 gin board established under clause (i) may

13 set and maintain margin levels and rules

14 pertaining to margin for a designated fu15 ture on a security listed on a contract mar16 ket or on a national securities exchange.

17 ‘‘(E) RELATIONSHIP TO OTHER AUTHOR18 ITY.—Nothing in this section supersedes or lim19 its the authority of the Commission under sec20 tion 8a(9).

21 ‘‘(F) JUDICIAL REVIEW.—

22 ‘‘(i) IN GENERAL.—Any action taken

23 by the Board (or by the Commission acting

24 under the delegation of authority under

25 subparagraph (C) or by the intermarket
43

•S 2697 IS

1 margin board established under subpara2 graph (D)) under this paragraph directing

3 a contract market to alter or supplement

4 a contract market rule shall be subject to

5 review only in the United States Court of

6 Appeals for the judicial circuit in which the

7 party seeking review resides or has its

8 principal place of business, or in the

9 United States Court of Appeals for the

10 District of Columbia Circuit.

11 ‘‘(ii) BASIS FOR REVIEW.—Review

12 under clause (i) shall be based on the ex13 amination of all information before the

14 Board (or the Commission, Securities and

15 Exchange Commission, or intermarket

16 margin board) at the time at which the ac17 tion was taken.

18 ‘‘(iii) STANDARD OF REVIEW.—The

19 court reviewing an action of the Board (or

20 the Commission, Securities and Exchange

21 Commission, or intermarket margin board)

22 shall not enter a stay or order of man23 damus unless the court determines, after

24 notice and hearing, that the action was ar-
44

•S 2697 IS

1 bitrary, capricious, an abuse of discretion,

2 or otherwise not in accordance with law.’’.

3 SEC. 9. FINDING AND PURPOSES.

4 The Commodity Exchange Act is amended by striking

5 section 3 (7 U.S.C. 5) and inserting the following:

6 ‘‘SEC. 3. FINDING AND PURPOSES.

7 ‘‘(a) FINDING.—Congress finds that the futures con8 tracts and options contracts that are subject to this Act

9 are entered into regularly in interstate and international

10 commerce and are affected with a national public interest,

11 in that such futures contracts and options contracts pro12 vide a means for managing and assuming price risks, dis13 covering prices, and disseminating pricing information

14 through trading in liquid, fair, and financially secure trad15 ing facilities.

16 ‘‘(b) PURPOSES.—The purposes of this Act are—

17 ‘‘(1) to serve the public interest described in

18 subsection (a) through a system of effective self-reg19 ulation of trading facilities, clearing systems, market

20 participants, and market professionals under the

21 oversight of the Commission; and

22 ‘‘(2) to authorize the Commission—

23 ‘‘(A) to deter and prevent price manipula24 tion or any other disruptions to market integ25 rity;
45

•S 2697 IS

1 ‘‘(B) to ensure the financial integrity of all

2 transactions subject to this Act and the avoid3 ance of systemic risk;

4 ‘‘(C) to protect all market participants

5 from fraudulent or other abusive sales practices

6 and misuse of customer assets; and

7 ‘‘(D) to promote responsible innovation

8 and fair competition among boards of trade,

9 other markets, and market participants.’’.

10 SEC. 10. PROHIBITED TRANSACTIONS.

11 Section 4c of the Commodity Exchange Act (7 U.S.C.

12 6c) is amended by striking ‘‘SEC. 4c.’’ and all that follows

13 through subsection (a) and inserting the following:

14 ‘‘SEC. 4c. PROHIBITED TRANSACTIONS.

15 ‘‘(a) IN GENERAL.—

16 ‘‘(1) PROHIBITION.—It shall be unlawful for

17 any person to offer to enter into, enter into, or con18 firm the execution of a transaction described in

19 paragraph (2) involving any commodity if the trans20 action is used or may be used to—

21 ‘‘(A) hedge any transaction in interstate

22 commerce in the commodity or the product or

23 byproduct of the commodity;
46

•S 2697 IS

1 ‘‘(B) determine the price basis of any such

2 transaction in interstate commerce in the com3 modity; or

4 ‘‘(C) deliver any such commodity sold,

5 shipped, or received in interstate commerce for

6 the execution of the transaction.

7 ‘‘(2) TRANSACTION.—A transaction referred to

8 in paragraph (1) is a transaction that—

9 ‘‘(A)(i) is, is of the character of, or is com10 monly known to the trade as, a ‘wash sale’,

11 ‘cross trade’, or ‘accommodation trade’; or

12 ‘‘(ii) is a fictitious sale; or

13 ‘‘(B) is used to cause any price to be re14 ported, registered, or recorded that is not a

15 true and bona fide price.

16 ‘‘(3) EFFECT OF SUBSECTION.—Nothing in this

17 subsection—

18 ‘‘(A) makes unlawful an exchange of—

19 ‘‘(i) futures in connection with a cash

20 commodity transaction;

21 ‘‘(ii) futures for cash commodities;

22 ‘‘(iii) transfer trades or office trades;

23 or

24 ‘‘(iv) futures for swaps;
47

•S 2697 IS

1 if the exchange is made in accordance with

2 rules of the contract market or derivatives

3 transaction execution facility that apply to such

4 transactions, and those rules have been ap5 proved by the Commission; or

6 ‘‘(B) makes it unlawful for a futures com7 mission merchant, acting as principal or agent,

8 to enter into, execute, or confirm the execution

9 of a contract for the purchase or sale of a com10 modity for future delivery if the contract is en11 tered into, executed, reported, recorded, or

12 cleared in accordance with the rules of a con13 tract market or derivatives transaction execu14 tion facility.’’.

15 SEC. 11. DESIGNATION OF BOARDS OF TRADE AS CON16 TRACT MARKETS.

17 The Commodity Exchange Act is amended—

18 (1) by redesignating section 5b (7 U.S.C. 7b)

19 as section 5e; and

20 (2) by striking sections 5 and 5a (7 U.S.C. 7,

21 7a) and inserting the following:

22 ‘‘SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CON23 TRACT MARKETS.

24 ‘‘(a) APPLICATIONS.—A board of trade applying to

25 the Commission for designation as a contract market shall
48

•S 2697 IS

1 submit an application to the Commission that includes any

2 relevant materials and records the Commission may re3 quire consistent with this Act.

4 ‘‘(b) CRITERIA FOR DESIGNATION.—

5 ‘‘(1) IN GENERAL.—To be designated as a con6 tract market, the board of trade shall demonstrate

7 to the Commission that the board of trade meets the

8 criteria specified in this subsection.

9 ‘‘(2) PREVENTION OF MARKET MANIPULA10 TION.—The board of trade shall have the capacity to

11 prevent market manipulation through market sur12 veillance, compliance, and enforcement practices and

13 procedures, including methods for conducting real14 time monitoring of trading and comprehensive and

15 accurate trade reconstructions.

16 ‘‘(3) FAIR AND EQUITABLE TRADING.—The

17 board of trade shall establish and enforce trading

18 rules to ensure fair and equitable trading through

19 the facilities of the contract market, and the capac20 ity to detect, investigate, and discipline any person

21 that violates the rules.

22 ‘‘(4) TRADE EXECUTION FACILITY.—The board

23 of trade shall—

24 ‘‘(A) establish and enforce rules defining,

25 or specifications detailing, the manner of oper-
49

•S 2697 IS

1 ation of the trade execution facility maintained

2 by the board of trade, including rules or speci3 fications describing the operation of any elec4 tronic matching platform; and

5 ‘‘(B) demonstrate that the trading facility

6 operates in accordance with the rules or speci7 fications.

8 ‘‘(5) FINANCIAL INTEGRITY OF TRANS9 ACTIONS.—The board of trade shall establish and

10 enforce rules and procedures for ensuring the finan11 cial integrity of transactions entered into by or

12 through the facilities of the contract market.

13 ‘‘(6) DISCIPLINARY PROCEDURES.—The board

14 of trade shall establish and enforce disciplinary pro15 cedures that authorize the board of trade to dis16 cipline, suspend, or expel members or market par17 ticipants that violate the rules of the board of trade,

18 or similar methods for performing the same func19 tions, including delegation of the functions to third

20 parties.

21 ‘‘(7) PUBLIC ACCESS.—The board of trade shall

22 provide the public with access to the rules, regula23 tions, and contract specifications of the board of

24 trade.
50

•S 2697 IS

1 ‘‘(8) ABILITY TO OBTAIN INFORMATION.—The

2 board of trade shall establish and enforce rules that

3 will allow the board of trade to obtain any necessary

4 information to perform any of the functions de5 scribed in this subsection, including the capacity to

6 carry out such international information-sharing

7 agreements as the Commission may require.

8 ‘‘(c) EXISTING CONTRACT MARKETS.—A designated

9 contract market on the effective date of the Commodity

10 Futures Modernization Act of 2000 shall be considered to

11 be a designated contract market under this section.

12 ‘‘(d) CORE PRINCIPLES FOR CONTRACT MARKETS.—

13 ‘‘(1) IN GENERAL.—To maintain the designa14 tion of a board of trade as a contract market, a

15 board of trade shall comply with the core principles

16 specified in this subsection.

17 ‘‘(2) COMPLIANCE WITH RULES.—The board of

18 trade shall monitor and enforce compliance with the

19 rules of the contract market, including the terms

20 and conditions of any contracts to be traded and any

21 limitations on access to the contract market.

22 ‘‘(3) CONTRACTS NOT READILY SUBJECT TO

23 MANIPULATION.—The board of trade shall list on

24 the contract market only contracts that are not

25 readily susceptible to manipulation.
51

•S 2697 IS

1 ‘‘(4) MONITORING OF TRADING.—The board of

2 trade shall monitor trading to prevent manipulation,

3 price distortion, and disruptions of the delivery or

4 cash-settlement process.

5 ‘‘(5) POSITION LIMITATIONS OR ACCOUNT6 ABILITY.—To reduce the potential threat of market

7 manipulation or congestion, especially during trading

8 in the delivery month, the board of trade shall adopt

9 position limitations or position accountability for

10 speculators, where necessary and appropriate.

11 ‘‘(6) EMERGENCY AUTHORITY.—The board of

12 trade shall adopt rules to provide for the exercise of

13 emergency authority, in consultation or cooperation

14 with the Commission, where necessary and appro15 priate, including the authority to—

16 ‘‘(A) liquidate or transfer open positions in

17 any contract;

18 ‘‘(B) suspend or curtail trading in any con19 tract; and

20 ‘‘(C) require market participants in any

21 contract to meet special margin requirements.

22 ‘‘(7) AVAILABILITY OF GENERAL INFORMA23 TION.—The board of trade shall make available to

24 market authorities, market participants, and the

25 public information concerning—
52

•S 2697 IS

1 ‘‘(A) the terms and conditions of the con2 tracts of the contract market; and

3 ‘‘(B) the mechanisms for executing trans4 actions on or through the facilities of the con5 tract market.

6 ‘‘(8) DAILY PUBLICATION OF TRADING INFOR7 MATION.—The board of trade shall make public

8 daily information on settlement prices, volume, open

9 interest, and opening and closing ranges for actively

10 traded contracts on the contract market.

11 ‘‘(9) EXECUTION OF TRANSACTIONS.—The

12 board of trade shall provide a competitive, open, and

13 efficient market and mechanism for executing trans14 actions.

15 ‘‘(10) TRADE INFORMATION.—The board of

16 trade shall maintain rules and procedures to provide

17 for the recording and safe storage of all identifying

18 data entry and trade information in a manner that

19 enables the contract market to use the information

20 for purposes of assisting in the prevention of cus21 tomer and market abuses and providing evidence of

22 any violations of the rules of the contract market.

23 ‘‘(11) FINANCIAL INTEGRITY OF CONTRACTS.—

24 The board of trade shall establish and enforce rules

25 providing for the financial integrity of any contracts
53

•S 2697 IS

1 traded on the contract market, including rules to en2 sure the financial integrity of any futures commis3 sion merchants and introducing brokers and the pro4 tection of customer funds.

5 ‘‘(12) PROTECTION OF MARKET PARTICI6 PANTS.—The board of trade shall establish and en7 force rules to protect market participants from abu8 sive practices committed by any party (including a

9 party acting as an agent for the participants).

10 ‘‘(13) DISPUTE RESOLUTION.—The board of

11 trade shall establish and enforce rules regarding and

12 provide facilities for alternative dispute resolution as

13 appropriate for market participants and any market

14 intermediaries.

15 ‘‘(14) GOVERNANCE FITNESS STANDARDS.—

16 The board of trade shall establish and enforce ap17 propriate fitness standards for directors, members of

18 any disciplinary committee, members of the board of

19 trade, and any other persons with direct access to

20 the facility (including any parties affiliated with any

21 of the persons described in this paragraph).

22 ‘‘(15) CONFLICTS OF INTEREST.—The board of

23 trade shall establish and enforce rules to minimize

24 conflicts of interest in the decisionmaking process of
54

•S 2697 IS

1 the contract market and establish a process for re2 solving such conflicts of interest.

3 ‘‘(16) COMPOSITION OF BOARDS OF MUTUALLY

4 OWNED CONTRACT MARKETS.—In the case of a mu5 tually owned contract market, the board of trade

6 shall ensure that the composition of the governing

7 board reflects market participants.

8 ‘‘(17) RECORDKEEPING.—The board of trade

9 shall—

10 ‘‘(A) maintain full records of all activities

11 related to the business of the contract market

12 in a form and manner acceptable to the Com13 mission for a period of 5 years;

14 ‘‘(B) make the records readily available

15 during at least the first 2-years of the 5-year

16 period and provide the records to the Commis17 sion during that 2-year period at the expense of

18 the person required to maintain the records;

19 and

20 ‘‘(C) keep the records open to inspection

21 by any representative of the Commission or the

22 Department of Justice.

23 ‘‘(18) ANTITRUST CONSIDERATIONS.—Unless

24 appropriate to achieve the purposes of this Act, the

25 board of trade shall avoid—
55

•S 2697 IS

1 ‘‘(A) adopting any rule or taking any ac2 tion that results in any unreasonable restraint

3 of trade; or

4 ‘‘(B) imposing any material anticompeti5 tive burden on trading on the contract mar6 ket.’’.

7 SEC. 12. DERIVATIVES TRANSACTION EXECUTION FACILI8 TIES.

9 The Commodity Exchange Act (7 U.S.C. 1 et seq.)

10 is amended by inserting after section 5 (as amended by

11 section 11(2)) the following:

12 ‘‘SEC. 5a. DERIVATIVES TRANSACTION EXECUTION FACILI13 TIES.

14 ‘‘(a) IN GENERAL.—In lieu of compliance with the

15 contract market designation requirements of section 5, a

16 board of trade may elect to operate as a registered deriva17 tives transaction execution facility if the facility is—

18 ‘‘(1) designated as a contract market and meets

19 the requirements of this section; or

20 ‘‘(2) registered as a derivatives transaction exe21 cution facility under subsection (c).

22 ‘‘(b) REQUIREMENTS FOR TRADING FUTURES CON23 TRACTS OR OTHER DERIVATIVES TRANSACTIONS.—

24 ‘‘(1) IN GENERAL.—A registered derivatives

25 transaction execution facility under subsection (a)
56

•S 2697 IS

1 may trade any futures contract (or option on such

2 a contract) that is not a designated future on a se3 curity on or through the facility only by satisfying

4 the requirements of this section.

5 ‘‘(2) REQUIREMENTS FOR UNDERLYING COM6 MODITIES.—A registered derivatives transaction exe7 cution facility may trade any futures contract only

8 if—

9 ‘‘(A) the underlying commodity has a near10 ly inexhaustible deliverable supply;

11 ‘‘(B) the underlying commodity has a de12 liverable supply that is sufficiently large that

13 the contract is highly unlikely to be susceptible

14 to manipulation;

15 ‘‘(C) the underlying commodity has no

16 cash market; or

17 ‘‘(D) the Commission determines, based on

18 the market characteristics, surveillance history,

19 self-regulatory record, and capacity of the facil20 ity that trading in the futures contract is highly

21 unlikely to be susceptible to manipulation.

22 ‘‘(3) ELIGIBLE TRADERS.—To trade on a reg23 istered derivatives transaction execution facility, a

24 person shall—
57

•S 2697 IS

1 ‘‘(A) be authorized by the board of trade

2 to trade on the facility; and

3 ‘‘(B)(i) be an eligible contract participant;

4 or

5 ‘‘(ii) be a person trading through a futures

6 commission merchant that—

7 ‘‘(I) is registered with the Commis8 sion;

9 ‘‘(II) is a member of a futures self10 regulatory organization;

11 ‘‘(III) is a clearing member of a de12 rivatives clearing organization; and

13 ‘‘(IV) has adjusted net capital of at

14 least $20,000,000.

15 ‘‘(4) TRADING BY CONTRACT MARKETS.—A

16 board of trade that is designated as a contract mar17 ket shall, to the extent that the contract market also

18 operates a registered derivatives transaction execu19 tion facility—

20 ‘‘(A) provide a physical location for the

21 contract market trading of the board of trade

22 that is separate from trading on the derivatives

23 transaction execution facility of the board of

24 trade; or
58

•S 2697 IS

1 ‘‘(B) if the board of trade uses the same

2 electronic trading system for trading on the

3 contract market and derivatives transaction

4 execution facility of the board of trade, identify

5 whether the electronic trading is taking place

6 on the contract market or the derivatives trans7 action execution facility.

8 ‘‘(c) CRITERIA FOR REGISTRATION.—

9 ‘‘(1) IN GENERAL.—To be registered as a reg10 istered derivatives transaction execution facility, the

11 board of trade shall demonstrate to the Commission

12 that the board of trade meets the criteria specified

13 in this paragraph.

14 ‘‘(2) DETERRENCE OF ABUSES.—The board of

15 trade shall establish and enforce trading rules that

16 will deter abuses and has the capacity to detect, in17 vestigate, and enforce those rules, including means

18 to—

19 ‘‘(A) obtain information necessary to per20 form the functions required under this section;

21 or

22 ‘‘(B) use technological means to—

23 ‘‘(i) provide market participants with

24 impartial access to the market; and
59

•S 2697 IS

1 ‘‘(ii) capture information that may be

2 used in establishing whether rule violations

3 have occurred.

4 ‘‘(3) TRADING PROCEDURES.—The board of

5 trade shall establish and enforce rules or terms and

6 conditions defining, or specifications detailing, trad7 ing procedures to be used in entering and executing

8 orders traded on the facilities of the board of trade.

9 ‘‘(4) FINANCIAL INTEGRITY OF TRANS10 ACTIONS.—The board of trade shall establish and

11 enforce rules or terms and conditions providing for

12 the financial integrity of transactions entered on or

13 through the facilities of the board of trade, including

14 rules or terms and conditions to ensure the financial

15 integrity of any futures commission merchants and

16 introducing brokers and the protection of customer

17 funds.

18 ‘‘(d) CORE PRINCIPLES FOR REGISTERED DERIVA19 TIVES TRANSACTION EXECUTION FACILITIES.—

20 ‘‘(1) IN GENERAL.—To maintain the registra21 tion of a board of trade as a derivatives transaction

22 execution facility, a board of trade shall comply with

23 the core principles specified in this subsection.

24 ‘‘(2) COMPLIANCE WITH RULES.—The board of

25 trade shall monitor and enforce the rules of the fa-
60

•S 2697 IS

1 cility, including any terms and conditions of any

2 contracts traded on or through the facility and any

3 limitations on access to the facility.

4 ‘‘(3) MONITORING OF TRADING.—The board of

5 trade shall monitor trading in the contracts of the

6 facility to ensure orderly trading in the contract and

7 to maintain an orderly market while providing any

8 necessary trading information to the Commission to

9 allow the Commission to discharge the responsibil10 ities of the Commission under the Act.

11 ‘‘(4) DISCLOSURE OF GENERAL INFORMA12 TION.—The board of trade shall disclose publicly

13 and to the Commission information concerning—

14 ‘‘(A) contract terms and conditions;

15 ‘‘(B) trading conventions, mechanisms, and

16 practices;

17 ‘‘(C) financial integrity protections; and

18 ‘‘(D) other information relevant to partici19 pation in trading on the facility.

20 ‘‘(5) PROVISION OF TRADING INFORMATION.—

21 The board of trade shall provide to market partici22 pants on a fair, equitable, and timely basis—

23 ‘‘(A) information regarding prices, bids,

24 and offers; and
61

•S 2697 IS

1 ‘‘(B) for actively traded contracts, daily in2 formation on settlement prices, volume, open in3 terest, and opening and closing ranges.

4 ‘‘(6) FITNESS STANDARDS.—The board of trade

5 shall establish and enforce appropriate fitness stand6 ards for directors, members of any disciplinary com7 mittee, members, and any other persons with direct

8 access to the facility, including any parties affiliated

9 with any of the persons described in this paragraph.

10 ‘‘(7) CONFLICTS OF INTEREST.—The board of

11 trade shall establish and enforce rules to minimize

12 conflicts of interest in the decisionmaking process of

13 the derivatives transaction execution facility and es14 tablish a process for resolving such conflicts of inter15 est.

16 ‘‘(8) RECORDKEEPING.—The board of trade

17 shall—

18 ‘‘(A) maintain full records of all activities

19 related to the business of the derivatives trans20 action execution facility in a form and manner

21 acceptable to the Commission for a period of at

22 least 5 years;

23 ‘‘(B) make the records readily available

24 during at least the first 2 years of the 5-year

25 period and provide the records to the Commis-
62

•S 2697 IS

1 sion at the expense of the person required to

2 maintain the records; and

3 ‘‘(C) keep the records open to inspection

4 by any representative of the Commission or the

5 Department of Justice.

6 ‘‘(9) ANTITRUST CONSIDERATIONS.—Unless ap7 propriate to achieve the purposes of this Act, the

8 board of trade shall avoid—

9 ‘‘(A) adopting any rule or taking any ac10 tion that results in any unreasonable restraint

11 of trade; or

12 ‘‘(B) imposing any material anticompeti13 tive burden on trading on the derivatives trans14 action execution facility.

15 ‘‘(e) USE OF BROKER-DEALERS AND DEPOSITORY

16 INSTITUTIONS AS INTERMEDIARIES.—

17 ‘‘(1) IN GENERAL.—A registered derivatives

18 transaction execution facility may by rule allow a

19 broker-dealer or depository institution that meets

20 the requirements of paragraph (2) to—

21 ‘‘(A) act as an intermediary in trans22 actions executed on the facility on behalf of cus23 tomers of the broker-dealer or depository insti24 tution; and
63

•S 2697 IS

1 ‘‘(B) receive funds of customers to serve as

2 margin or security for such transactions.

3 ‘‘(2) REQUIREMENTS.—The requirements re4 ferred to in paragraph (1) are that—

5 ‘‘(A) a broker-dealer be in good standing

6 with the Securities and Exchange Commission

7 and a depository institution be in good stand8 ing, as determined by the appropriate Federal

9 banking agency (as defined in section 3 of the

10 Federal Deposit Insurance Act (12 U.S.C.

11 1813)) (including the Farm Credit Administra12 tion), as applicable; and

13 ‘‘(B) if a broker-dealer or depository insti14 tution carries or holds customer accounts or

15 funds for transactions on the derivatives trans16 action execution facility for more than 1 busi17 ness day, the broker-dealer or depository insti18 tution is registered as a futures commission

19 merchant and is a member of a registered fu20 tures association.

21 ‘‘(3) IMPLEMENTATION.—The Commission shall

22 cooperate and coordinate with the Securities and Ex23 change Commission and Federal banking regulatory

24 agencies (including the Farm Credit Administration)

25 in adopting rules and taking any other appropriate
64

•S 2697 IS

1 action to facilitate the implementation of this sub2 section.

3 ‘‘(f) SEGREGATION OF CUSTOMER FUNDS.—Not

4 later than 180 days after the effective date of the Com5 modity Futures Modernization Act of 2000, consistent

6 with regulations adopted by the Commission, a registered

7 derivatives transaction execution facility may authorize a

8 futures commission merchant to offer any customer of the

9 futures commission merchant that is an eligible contract

10 participant the right to not segregate the customer funds

11 of the futures commission merchant for purposes of trad12 ing on or through the facilities of the registered derivatives

13 transaction execution facility.

14 ‘‘(g) ELECTION TO TRADE EXCLUDED TRANS15 ACTIONS.—

16 ‘‘(1) IN GENERAL.—A board of trade that is a

17 registered derivatives transaction execution facility

18 may trade on the facility any agreements, contracts,

19 or transactions that are excluded from this Act

20 under subsection (c) or (d) of section 2.

21 ‘‘(2) EXCLUSIVE JURISDICTION OF THE COM22 MISSION.—The Commission shall have exclusive ju23 risdiction over agreements, contracts, or transactions

24 described in paragraph (1) to the extent that the
65

•S 2697 IS

1 agreements, contracts, or transactions are traded on

2 a derivatives transaction execution facility.’’.

3 SEC. 13. DERIVATIVES CLEARING ORGANIZATIONS.

4 The Commodity Exchange Act (7 U.S.C. 1 et seq.)

5 is amended by inserting after section 5a (as added by sec6 tion 12) the following:

7 ‘‘SEC. 5b. DERIVATIVES CLEARING ORGANIZATIONS.

8 ‘‘(a) REGISTRATION REQUIREMENT.—Except as pro9 vided in subsection (b), it shall be unlawful for a deriva10 tives clearing organization, unless registered with the

11 Commission, directly or indirectly to make use of the mails

12 or any means or instrumentality of interstate commerce

13 to perform the functions of a derivatives clearing organiza14 tion described in section 1a(8).

15 ‘‘(b) EXCLUSION OF DERIVATIVES CLEARING ORGA16 NIZATIONS SUBJECT TO OTHER REGULATORY AUTHORI17 TIES.—A derivatives clearing organization shall not be re18 quired to register with the Commission, and the Commis19 sion shall have no jurisdiction with respect to the deriva20 tives clearing organization, if the derivatives clearing

21 organization—

22 ‘‘(1)(A) is registered as a clearing agency under

23 the Securities Exchange Act of 1934 (15 U.S.C. 78a

24 et seq.);
66

•S 2697 IS

1 ‘‘(B) is subject to the supervisory jurisdiction of

2 a Federal banking agency (as defined in section 3 of

3 the Federal Deposit Insurance Act (12 U.S.C.

4 1813)) or the National Credit Union Administration;

5 or

6 ‘‘(C) is subject to the supervisory jurisdiction of

7 a foreign regulatory authority that is recognized by

8 the Securities and Exchange Commission, the Board

9 of Governors of the Federal Reserve System, the

10 Comptroller of the Currency, or the Commission as

11 overseeing a system of consolidated supervision com12 parable to that provided under applicable United

13 States law; and

14 ‘‘(2) does not clear a contract of sale for future

15 delivery, option on a contract of sale for future deliv16 ery, or option on a commodity that is not a security

17 (unless the contract or option is excluded under sub18 section (c) or (d) of section 2).

19 ‘‘(c) VOLUNTARY REGISTRATION.—A derivatives

20 clearing organization that is exempt from registration

21 under subsection (b) may register with the Commission

22 as a derivatives clearing organization.

23 ‘‘(d) REGISTRATION OF DERIVATIVES CLEARING OR24 GANIZATIONS.—
67

•S 2697 IS

1 ‘‘(1) APPLICATION.—A person desiring to reg2 ister as a derivatives clearing organization shall sub3 mit to the Commission an application in such form

4 and containing such information as the Commission

5 may require for the purpose of making the deter6 minations required for approval under paragraph

7 (2).

8 ‘‘(2) CORE PRINCIPLES.—

9 ‘‘(A) IN GENERAL.—To be registered and

10 to maintain registration as a derivatives clear11 ing organization, an applicant shall demonstrate

12 to the Commission that the applicant complies

13 with the core principles specified in this para14 graph.

15 ‘‘(B) FINANCIAL RESOURCES.—The appli16 cant shall demonstrate that the applicant has

17 adequate financial, operational, and managerial

18 resources to discharge the responsibilities of a

19 derivatives clearing organization without inter20 ruption in various market conditions.

21 ‘‘(C) PARTICIPANT AND PRODUCT ELIGI22 BILITY.—The applicant shall establish—

23 ‘‘(i) appropriate admission and con24 tinuing eligibility standards (including ap25 propriate minimum financial requirements)
68

•S 2697 IS

1 for members of and participants in the or2 ganization; and

3 ‘‘(ii) appropriate standards for deter4 mining eligibility of agreements, contracts,

5 or transactions submitted to the applicant.

6 ‘‘(D) RISK MANAGEMENT.—The applicant

7 shall have the ability to manage the risks asso8 ciated with discharging the responsibilities of a

9 derivatives clearing organization through the

10 use of appropriate tools and procedures.

11 ‘‘(E) SETTLEMENT PROCEDURES.—The

12 applicant shall have the ability to—

13 ‘‘(i) complete settlements on a timely

14 basis under varying circumstances;

15 ‘‘(ii) maintain an adequate record of

16 the flow of funds associated with each

17 transaction that the applicant clears; and

18 ‘‘(iii) comply with the terms and con19 ditions of any permitted netting or offset

20 arrangements with other clearing organiza21 tions.

22 ‘‘(F) TREATMENT OF FUNDS.—The appli23 cant shall have standards and procedures de24 signed to protect and ensure the safety of mem25 ber and participant funds.
69

•S 2697 IS

1 ‘‘(G) DEFAULT RULES AND PROCE2 DURES.—The applicant shall have rules and

3 procedures designed to allow for efficient, fair,

4 and safe management of events when members

5 or participants become insolvent or otherwise

6 default on their obligations to the derivatives

7 clearing organization.

8 ‘‘(H) RULE ENFORCEMENT.—The appli9 cant shall—

10 ‘‘(i) maintain adequate arrangements

11 and resources for the effective monitoring

12 and enforcement of compliance with rules

13 of the applicant and for resolution of dis14 putes; and

15 ‘‘(ii) have the authority and ability to

16 discipline, limit, suspend, or terminate a

17 member’s or participant’s activities for vio18 lations of rules of the applicant.

19 ‘‘(I) SYSTEM SAFEGUARDS.—The applicant

20 shall demonstrate that the applicant—

21 ‘‘(i) has established and will maintain

22 a program of oversight and risk analysis to

23 ensure that the automated systems of the

24 applicant function properly and have ade25 quate capacity and security; and
70

•S 2697 IS

1 ‘‘(ii) has established and will maintain

2 emergency procedures and a plan for dis3 aster recovery, and will periodically test

4 backup facilities sufficient to ensure daily

5 processing, clearing, and settlement of

6 transactions.

7 ‘‘(J) REPORTING.—The applicant shall

8 provide to the Commission all information nec9 essary for the Commission to conduct the over10 sight function of the applicant with respect to

11 the activities of the derivatives clearing organi12 zation.

13 ‘‘(K) RECORDKEEPING.—The applicant

14 shall—

15 ‘‘(i) maintain full records of all activi16 ties related to the business of the applicant

17 as a derivatives clearing organization in a

18 form and manner acceptable to the Com19 mission for a period of at least 5 years;

20 ‘‘(ii) make the records readily avail21 able during at least the first 2 years of the

22 5-year period and provide the records to

23 the Commission at the expense of the per24 son required to maintain the records; and
71

•S 2697 IS

1 ‘‘(iii) keep the records open to inspec2 tion by any representative of the Commis3 sion or the Department of Justice.

4 ‘‘(L) PUBLIC INFORMATION.—The appli5 cant shall make information concerning the

6 rules and operating procedures governing the

7 clearing and settlement systems (including de8 fault procedures) available to market partici9 pants.

10 ‘‘(M) INFORMATION SHARING.—The appli11 cant shall—

12 ‘‘(i) enter into and abide by the terms

13 of all appropriate and applicable domestic

14 and international information-sharing

15 agreements; and

16 ‘‘(ii) use relevant information obtained

17 from the agreements in carrying out the

18 clearing organization’s risk management

19 program.

20 ‘‘(N) ANTITRUST CONSIDERATIONS.—Un21 less appropriate to achieve the purposes of this

22 Act, the derivatives clearing organization shall

23 avoid—
72

•S 2697 IS

1 ‘‘(i) adopting any rule or taking any

2 action that results in any unreasonable re3 straint of trade; or

4 ‘‘(ii) imposing any material anti5 competitive burden on trading on the con6 tract market.

7 ‘‘(3) ORDERS CONCERNING COMPETITION.—A

8 derivatives clearing organization may request the

9 Commission to issue an order concerning whether a

10 rule or practice of the applicant is the least anti11 competitive means of achieving the objectives, pur12 poses, and policies of this Act.

13 ‘‘(e) EXISTING DERIVATIVES CLEARING ORGANIZA14 TIONS.—A derivatives clearing organization shall be

15 deemed to be registered under this section to the extent

16 that—

17 ‘‘(1) the derivatives clearing organization clears

18 agreements, contracts, or transactions for a board of

19 trade that has been designated by the Commission

20 as a contract market for such agreements, contracts,

21 or transactions before the date of enactment of this

22 section; and

23 ‘‘(2) the Commission has reviewed and ap24 proved the rules of the derivatives clearing organiza25 tion before that date.
73

•S 2697 IS

1 ‘‘(f) APPOINTMENT OF TRUSTEE.—

2 ‘‘(1) IN GENERAL.—If a proceeding under sec3 tion 5e results in the suspension or revocation of the

4 registration of a derivatives clearing organization, or

5 if a derivatives clearing organization withdraws from

6 registration, the Commission, on notice to the de7 rivatives clearing organization, may apply to the ap8 propriate United States district court where the de9 rivatives clearing organization is located for the ap10 pointment of a trustee.

11 ‘‘(2) ASSUMPTION OF JURISDICTION.—If the

12 Commission applies for appointment of a trustee

13 under paragraph (1)—

14 ‘‘(A) the court may take exclusive jurisdic15 tion over the derivatives clearing organization

16 and the records and assets of the derivatives

17 clearing organization, wherever located; and

18 ‘‘(B) if the court takes jurisdiction under

19 subparagraph (A), the court shall appoint the

20 Commission, or a person designated by the

21 Commission, as trustee with power to take pos22 session and continue to operate or terminate

23 the operations of the derivatives clearing orga24 nization in an orderly manner for the protection
74

•S 2697 IS

1 of participants, subject to such terms and con2 ditions as the court may prescribe.

3 ‘‘(g) LINKING OF REGULATED CLEARING FACILI4 TIES.—

5 ‘‘(1) IN GENERAL.—The Commission shall fa6 cilitate the linking or coordination of derivatives

7 clearing organizations registered under this Act with

8 other regulated clearance facilities for the coordi9 nated settlement of cleared transactions.

10 ‘‘(2) COORDINATION.—In carrying out para11 graph (1), the Commission shall coordinate with the

12 Federal banking agencies and the Securities and Ex13 change Commission.’’.

14 SEC. 14. COMMON PROVISIONS APPLICABLE TO REG15 ISTERED ENTITIES.

16 The Commodity Exchange Act (7 U.S.C. 1 et seq.)

17 is amended by inserting after section 5b (as added by sec18 tion 13) the following:

19 ‘‘SEC. 5c. COMMON PROVISIONS APPLICABLE TO REG20 ISTERED ENTITIES.

21 ‘‘(a) ACCEPTABLE BUSINESS PRACTICES UNDER

22 CORE PRINCIPLES.—

23 ‘‘(1) IN GENERAL.—Consistent with the pur24 poses of this Act, the Commission may issue inter25 pretations, or approve interpretations submitted to
75

•S 2697 IS

1 the Commission, of the core principles for registered

2 entities specified in sections 5(d), 5a(d), and

3 5b(d)(2) to describe what would constitute an ac4 ceptable business practice under the core principles.

5 ‘‘(2) TIMING.—If any person submits to the

6 Commission a request for an interpretation or for

7 approval of an interpretation under paragraph (1),

8 the Commission shall issue the interpretation or

9 shall approve or disapprove the interpretation not

10 later than 45 days after receiving the request.

11 ‘‘(3) EFFECT OF INTERPRETATION.—An inter12 pretation issued under paragraph (1) shall not pro13 vide the exclusive means for complying with the core

14 principles.

15 ‘‘(b) DELEGATION OF FUNCTIONS UNDER CORE

16 PRINCIPLES.—

17 ‘‘(1) IN GENERAL.—A registered entity may

18 comply with any applicable core principle through

19 delegation of any relevant function to a registered

20 futures association or another registered entity.

21 ‘‘(2) RESPONSIBILITY.—A registered entity that

22 delegates a function under paragraph (1) shall re23 main responsible for carrying out the function.

24 ‘‘(c) NEW CONTRACTS, NEW RULES, AND RULE

25 AMENDMENTS.—
76

•S 2697 IS

1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

2 registered entity may elect to list for trading any

3 new contract or other instrument, or may elect to

4 approve and implement any new rule or rule amend5 ment, by providing to the Commission a written cer6 tification that the new contract, new rule, or rule

7 amendment complies with this Act (including regula8 tions under this Act).

9 ‘‘(2) PRIOR APPROVAL.—

10 ‘‘(A) IN GENERAL.—A registered entity

11 may request that the Commission grant prior

12 approval to any new contract or other instru13 ment, new rule, or rule amendment.

14 ‘‘(B) DEADLINE.—If prior approval is re15 quested under subparagraph (A), the Commis16 sion shall take final action on the request not

17 later than 90 days after submission of the re18 quest, unless the person submitting the request

19 agrees to an extension of the time limitation es20 tablished under this subparagraph.

21 ‘‘(C) AGRICULTURAL CONTRACTS.—Not22 withstanding any other provision of this section,

23 a designated contract market shall submit for

24 prior approval by the Commission each rule

25 amendment that materially changes a term or
77

•S 2697 IS

1 condition in any contract of sale of a com2 modity for future delivery or related option

3 traded through the facilities of the designated

4 contract market, if—

5 ‘‘(i) the commodity is specifically list6 ed in section 1a(3); and

7 ‘‘(ii) the rule amendment applies to

8 contracts and delivery months that have

9 previously been listed for trading and have

10 open interest.

11 ‘‘(3) APPROVAL.—The Commission shall ap12 prove any such new contract or instrument, new

13 rule, or rule amendment unless the Commission

14 finds that the new contract or instrument, new rule,

15 or rule amendment would violate this Act.

16 ‘‘(d) VIOLATION OF CORE PRINCIPLES.—

17 ‘‘(1) IN GENERAL.—If the Commission deter18 mines, on the basis of substantial evidence, that a

19 registered entity is violating any of the applicable

20 core principles specified in sections 5(d), 5a(d), and

21 5b(d)(2), the Commission shall—

22 ‘‘(A) notify the registered entity of the de23 termination; and

24 ‘‘(B) afford the registered entity an oppor25 tunity to make appropriate changes to bring the
78

•S 2697 IS

1 registered entity into compliance with the core

2 principles.

3 ‘‘(2) FAILURE TO MAKE CHANGES.—If, not

4 later than 30 days after receiving a notification

5 under paragraph (1), a registered entity fails to

6 make changes that, in the opinion of the Commis7 sion, are necessary to accomplish the objectives of

8 the core principles, the Commission may take fur9 ther action in accordance with this Act.

10 ‘‘(e) RESERVATION OF EMERGENCY AUTHORITY.—

11 Notwithstanding any other provision of this section, the

12 Commission shall retain the full scope of its emergency

13 powers under section 8a(9) to direct any contract market

14 to take emergency action in compliance with the provisions

15 and standards of section 8a(9).’’.

16 SEC. 15. EXEMPT BOARDS OF TRADE.

17 The Commodity Exchange Act (7 U.S.C. 1 et seq.)

18 is amended by inserting after section 5c (as added by sec19 tion 14) the following:

20 ‘‘SEC. 5d. EXEMPT BOARDS OF TRADE.

21 ‘‘(a) IN GENERAL.—Except as otherwise provided in

22 this section, a contract of sale (or option on such a con23 tract) of a commodity for future delivery traded on or

24 through the facilities of an exempt board of trade shall
79

•S 2697 IS

1 be exempt from all provisions of this Act, other than sec2 tion 2(g).

3 ‘‘(b) CRITERIA FOR EXEMPTION.—To qualify for an

4 exemption under subsection (a), a board of trade shall

5 limit trading on or through the facilities of the board of

6 trade to contracts of sale of a commodity for future deliv7 ery (or options on such contracts)—

8 ‘‘(1) that have—

9 ‘‘(A) a nearly inexhaustible deliverable sup10 ply;

11 ‘‘(B) a deliverable supply that is suffi12 ciently large, and a cash market sufficiently liq13 uid, to render any contract traded on the com14 modity highly unlikely to be susceptible to ma15 nipulation; or

16 ‘‘(C) no cash market; and

17 ‘‘(2) that are entered into only between persons

18 that—

19 ‘‘(A) are eligible contract participants at

20 the time at which the persons enter into the

21 contract; or

22 ‘‘(B) enter into the contract or option for

23 the benefit only of eligible contract participants.

24 ‘‘(c) ANTIMANIPULATION REQUIREMENTS.—A party

25 to a futures contract or related option that is traded on
80

•S 2697 IS

1 an exempt board of trade shall be subject to sections 4b,

2 4o, 6(c), and 9(a)(2), and the Commission shall enforce

3 those provisions with respect to any such trading.

4 ‘‘(d) PRICE DISCOVERY.—If the Commission finds

5 that an exempt board of trade is a significant source of

6 price discovery for any underlying commodity in any

7 transaction traded on or through the facilities of the board

8 of trade, the board of trade shall disseminate publicly on

9 a daily basis trading volume, opening and closing price

10 ranges, open interest, and other trading data as appro11 priate to the market.

12 ‘‘(e) JURISDICTION.—The Commission shall have ex13 clusive jurisdiction over any account, agreement, or trans14 action involving a contract of sale of a commodity for fu15 ture delivery, or related option, to the extent that such

16 an account, agreement, or transaction is traded on an ex17 empt board of trade.

18 ‘‘(f) SUBSIDIARIES.—A board of trade that is des19 ignated as a contract market or registered as a derivatives

20 transaction execution facility may operate an exempt

21 board of trade by establishing a separate subsidiary or

22 other legal entity and otherwise satisfying the require23 ments of this section.’’.
81

•S 2697 IS

1 SEC. 16. SUSPENSION OR REVOCATION OF DESIGNATION

2 AS CONTRACT MARKET.

3 Section 5e of the Commodity Exchange Act (7 U.S.C.

4 7b) (as redesignated by section 11(1)) is amended to read

5 as follows:

6 ‘‘SEC. 5e. SUSPENSION OR REVOCATION OF DESIGNATION

7 AS REGISTERED ENTITY.

8 ‘‘The failure of a registered entity to comply with any

9 provision of this Act, or any regulation or order of the

10 Commission under this Act, shall be cause for the suspen11 sion of the registered entity for a period not to exceed 180

12 days, or revocation of designation as a registered entity

13 in accordance with the procedures and subject to the judi14 cial review provided in section 6(b).’’.

15 SEC. 17. AUTHORIZATION OF APPROPRIATIONS.

16 Section 12(d) of the Commodity Exchange Act (7

17 U.S.C. 16(d)) is amended by striking ‘‘2000’’ and insert18 ing ‘‘2005’’.

19 SEC. 18. PREEMPTION.

20 Section 12(e) of the Commodity Exchange Act (7

21 U.S.C. 16(e)) is amended by striking paragraph (2) and

22 inserting the following:

23 ‘‘(2) the application of any Federal or State law

24 (including any regulation) to an agreement, contract,

25 or transaction in or involving any commodity, prod-
82

•S 2697 IS

1 uct, right, service, or interest, except that this Act

2 shall supersede and preempt—

3 ‘‘(A) any Federal or State law (including

4 any regulation), in the case of any such agree5 ment, contract, or transaction—

6 ‘‘(i) that is conducted on or subject to

7 the rules of a registered entity or exempt

8 board of trade;

9 ‘‘(ii) that is conducted on or subject

10 to the rules of any board of trade, ex11 change, or market located outside the

12 United States, or any territory or posses13 sion of the United States (in accordance

14 with any terms or conditions specified by

15 the Commission by regulation); and

16 ‘‘(iii) that is subject to regulation by

17 the Commission under section 4c or 19;

18 and

19 ‘‘(B) any State or local law that prohibits

20 or regulates gaming or the operation of bucket

21 shops (other than antifraud provisions of gen22 eral applicability) in the case of—

23 ‘‘(i) an excluded trading facility under

24 section 2(e); or
83

•S 2697 IS

1 ‘‘(ii) an agreement, contract, or trans2 action that—

3 ‘‘(I) is excluded under subsection

4 (c), (d), or (f) of section 2; or

5 ‘‘(II) is covered by the terms of

6 an exemption granted by the Commis7 sion under section 4(c) (regardless of

8 whether any such agreement, con9 tract, or transaction is otherwise sub10 ject to this Act); or’’.

11 SEC. 19. PREDISPUTE RESOLUTION AGREEMENTS FOR IN12 STITUTIONAL CUSTOMERS.

13 Section 14 of the Commodity Exchange Act (7 U.S.C.

14 18) is amended by striking subsection (g) and inserting

15 the following:

16 ‘‘(g) PREDISPUTE RESOLUTION AGREEMENTS FOR

17 INSTITUTIONAL CUSTOMERS.—Nothing in this section

18 prohibits a registered futures commission merchant from

19 requiring a customer that is an eligible contract partici20 pant, as a condition to the commission merchant’s con21 ducting a transaction for the customer, to enter into an

22 agreement waiving the right to file a claim under this sec23 tion.’’.
84

•S 2697 IS

1 SEC. 20. CONSIDERATION OF COSTS AND BENEFITS AND

2 ANTITRUST LAWS.

3 Section 15 of the Commodity Exchange Act (7 U.S.C.

4 19) is amended by striking ‘‘SEC. 15. The Commission’’

5 and inserting the following:

6 ‘‘SEC. 15. CONSIDERATION OF COSTS AND BENEFITS AND

7 ANTITRUST LAWS.

8 ‘‘(a) COSTS AND BENEFITS.—

9 ‘‘(1) IN GENERAL.—Before promulgating a reg10 ulation under this Act or issuing an order (except as

11 provided in paragraph (3)), the Commission shall

12 consider the costs and benefits of the action of the

13 Commission.

14 ‘‘(2) CONSIDERATIONS.—The costs and benefits

15 of the proposed Commission action shall be evalu16 ated in light of—

17 ‘‘(A) considerations of protection of market

18 participants and the public;

19 ‘‘(B) considerations of the efficiency, com20 petitiveness, and financial integrity of futures

21 markets;

22 ‘‘(C) considerations of price discovery;

23 ‘‘(D) considerations of sound risk manage24 ment practices; and

25 ‘‘(E) other public interest considerations.
85

•S 2697 IS

1 ‘‘(3) APPLICABILITY.—This subsection does not

2 apply to the following actions of the Commission:

3 ‘‘(A) An order that initiates, is part of, or

4 is the result of an adjudicatory or investigative

5 process of the Commission.

6 ‘‘(B) An emergency action.

7 ‘‘(C) A finding of fact regarding compli8 ance with a requirement of the Commission.

9 ‘‘(b) ANTITRUST LAWS.—The Commission’’.

10 SEC. 21. CONTRACT ENFORCEMENT BETWEEN ELIGIBLE

11 COUNTERPARTIES.

12 Section 22(a) of the Commodity Exchange Act (7

13 U.S.C. 25(a)) is amended by adding at the end the fol14 lowing:

15 ‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELI16 GIBLE COUNTERPARTIES.—No agreement, contract,

17 or transaction between eligible contract participants

18 shall be void, voidable, or unenforceable, and no

19 such eligible contract participant shall be entitled to

20 rescind, or recover any payment made with respect

21 to, such an agreement, contract, or transaction,

22 under this section based solely on the failure of the

23 agreement, contract, or transaction to comply with

24 the terms or conditions of an exemption or exclusion
86

•S 2697 IS

1 from any provision of this Act or regulations of the

2 Commission.’’.

3 SEC. 22. LEGAL CERTAINTY FOR SWAP AGREEMENTS.

4 (a) DEFINITION OF SWAP AGREEMENT.—In this sec5 tion, the term ‘‘swap agreement’’ has the meaning given

6 the term in section 5220 of the Revised Statutes.

7 (b) LEGAL CERTAINTY.—

8 (1) IN GENERAL.—Nothing in this Act or any

9 amendment made by this Act authorizes the Securi10 ties and Exchange Commission to regulate, super11 vise, or otherwise subject to oversight any activity,

12 agreement, instrument, transaction, or product over

13 which the Securities and Exchange Commission is

14 not granted specific jurisdiction under this Act, any

15 amendment made by this Act, or any other law.

16 (2) SWAP AGREEMENTS.—Nothing in this Act

17 or any amendment made by this Act grants the

18 Commodity Futures Trading Commission or the Se19 curities and Exchange Commission any jurisdiction

20 over any swap agreement, except that a registered

21 entity may voluntarily submit to the jurisdiction of

22 the Commodities Futures Trading Commission

23 under section 12 or 13 of the Commodities Ex24 change Act (7 U.S.C. 16, 13c).

25 (c) MORATORIUM ON RETAIL SWAP AGREEMENTS.—
87

•S 2697 IS

1 (1) IN GENERAL.—During the 1-year period be2 ginning on the date of enactment of this Act, no fi3 nancial institution engaged in activities authorized

4 or permitted under section 4(k) of the Bank Holding

5 Company Act (12 U.S.C. 1843(k)) may initiate

6 through a widespread offering the opportunity for

7 individuals other than accredited investors to enter

8 into swap agreements. In the preceding sentence, the

9 term ‘‘accredited investor’’ means an individual with

10 net worth of at least $5,000,000.

11 (2) REPORT.—Not later than the date that is

12 1 year after the date of enactment of this Act, the

13 Federal banking agencies (as defined in section 3 of

14 the Federal Deposit Insurance Act (12 U.S.C.

15 1813)), the Department of the Treasury, the Com16 modity Futures Trading Commission, and the Secu17 rities and Exchange Commission shall submit to the

18 Committee on Agriculture, Nutrition, and Forestry

19 and the Committee on Banking, Housing, and

20 Urban Affairs of the Senate, and the Committee on

21 Agriculture and the Committee on Banking and Fi22 nancial Services of the House of Representatives a

23 report on—
88

•S 2697 IS

1 (A) the regulatory framework under which

2 swap agreements identified in paragraph (1)

3 should be supervised;

4 (B) the jurisdictional issues relating to

5 swap agreements identified in paragraph (1);

6 and

7 (C) investor protection concerns in connec8 tion with swap agreements identified in para9 graph (1).

10 SEC. 23. TECHNICAL AND CONFORMING AMENDMENTS.

11 (a) COMMODITY EXCHANGE ACT.—

12 (1) Section 1a of the Commodity Exchange Act

13 (7 U.S.C. 1a) (as amended by section 3(1)) is

14 amended—

15 (A) in paragraphs (4), (5), (17), (18),

16 (21), and (24), by inserting ‘‘or derivatives

17 transaction execution facility’’ after ‘‘contract

18 market’’ each place it appears; and

19 (B) in paragraph (25)—

20 (i) in the paragraph heading, by strik21 ing ‘‘CONTRACT MARKET’’ and inserting

22 ‘‘REGISTERED ENTITY’’; and

23 (ii) by striking ‘‘contract market’’

24 each place it appears and inserting ‘‘reg25 istered entity’’.
89

•S 2697 IS

1 (2) Section 2 of the Commodity Exchange Act

2 (7 U.S.C. 2, 2a, 4, 4a, 3) is amended—

3 (A) by striking ‘‘SEC. 2. (a)(1)(A)(i) The’’

4 and inserting the following:

5 ‘‘SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF

6 PRINCIPAL FOR ACT OF AGENT; COMMODITY

7 FUTURES TRADING COMMISSION; TRANS8 ACTION IN INTERSTATE COMMERCE.

9 ‘‘(a) JURISDICTION OF COMMISSION; COMMODITY

10 FUTURES TRADING COMMISSION.—

11 ‘‘(1) JURISDICTION OF COMMISSION.—

12 ‘‘(A) IN GENERAL.—The’’; and

13 (B) in subsection (a)—

14 (i) in paragraph (1) (as amended by

15 subparagraph (A))—

16 (I) by striking subparagraph (B);

17 (II) by striking ‘‘subparagraph

18 (B) of this subparagraph’’ and insert19 ing ‘‘subsection (g)’’;

20 (III) by striking ‘‘contract mar21 ket designated pursuant to section 5

22 of this Act’’ and inserting ‘‘contract

23 market designated or derivatives

24 transaction execution facility reg25 istered pursuant to section 5 or 5a’’;
90

•S 2697 IS

1 (IV) by striking clause (ii); and

2 (V) in clause (iii), by striking

3 ‘‘(iii) The’’ and inserting the fol4 lowing:

5 ‘‘(B) LIABILITY OF PRINCIPAL FOR ACT OF

6 AGENT.—The’’;

7 (ii) in paragraph (7), by striking

8 ‘‘contract market’’ and inserting ‘‘reg9 istered entity’’; and

10 (iii) in paragraph (8)(B)(ii)—

11 (I) in the first sentence, by strik12 ing ‘‘designation as a contract mar13 ket’’ and inserting ‘‘designation or

14 registration as a contract market or

15 derivatives transaction execution facil16 ity’’;

17 (II) in the second sentence, by

18 striking ‘‘designate a board of trade

19 as a contract market’’ and inserting

20 ‘‘designate or register a board of

21 trade as a contract market or deriva22 tives transaction execution facility’’;

23 and

24 (III) in the fourth sentence, by

25 striking ‘‘designating, or refusing,
91

•S 2697 IS

1 suspending, or revoking the designa2 tion of, a board of trade as a contract

3 market’’ and inserting ‘‘designating,

4 registering, or refusing, suspending,

5 or revoking the designation or reg6 istration of, a board of trade as a con7 tract market or derivatives trans8 action execution facility’’.

9 (3) Section 4 of the Commodity Exchange Act

10 (7 U.S.C. 6) is amended—

11 (A) in subsection (a)—

12 (i) by inserting ‘‘exempted by oper13 ation of section 5d or unless’’ after ‘‘Un14 less’’;

15 (ii) in paragraph (1), by striking

16 ‘‘designated by the Commission as a ‘con17 tract market’ for’’ and inserting ‘‘des18 ignated or registered by the Commission as

19 a contract market or derivatives trans20 action execution facility for’’;

21 (iii) in paragraph (2), by striking

22 ‘‘member of such’’; and

23 (iv) in paragraph (3), by inserting ‘‘or

24 derivatives transaction execution facility’’

25 after ‘‘contract market’’; and
92

•S 2697 IS

1 (B) in subsection (c)—

2 (i) in paragraph (1)—

3 (I) by striking ‘‘designated as a

4 contract market’’ and inserting ‘‘des5 ignated or registered as a contract

6 market or derivatives transaction exe7 cution facility’’; and

8 (II) by striking ‘‘section

9 2(a)(1)(B)’’ and inserting ‘‘section

10 2(g)’’; and

11 (ii) in paragraph (2)(B)(ii), by insert12 ing ‘‘or derivatives transaction execution

13 facility’’ after ‘‘contract market’’.

14 (4) Section 4a of the Commodity Exchange Act

15 (7 U.S.C. 6a) is amended—

16 (A) in subsection (a)—

17 (i) in the first sentence, by inserting

18 ‘‘or derivatives transaction execution facili19 ties’’ after ‘‘contract markets’’; and

20 (ii) in the second sentence, by insert21 ing ‘‘or derivatives transaction execution

22 facility’’ after ‘‘contract market’’;

23 (B) in subsection (b), by inserting ‘‘or de24 rivatives transaction execution facility’’ after

25 ‘‘contract market’’ each place it appears; and
93

•S 2697 IS

1 (C) in subsection (e)—

2 (i) by striking ‘‘contract market or’’

3 each place it appears and inserting ‘‘con4 tract market, derivatives transaction execu5 tion facility, or’’;

6 (ii) by striking ‘‘licensed or des7 ignated’’ each place it appears and insert8 ing ‘‘licensed, designated, or registered’’;

9 and

10 (iii) by striking ‘‘contract market, or’’

11 and inserting ‘‘contract market or deriva12 tives transaction execution facility, or’’.

13 (5) Section 4b(a) of the Commodity Exchange

14 Act (7 U.S.C. 6b(a)) is amended by striking ‘‘con15 tract market’’ each place it appears and inserting

16 ‘‘registered entity’’.

17 (6) Sections 4c(g), 4d, 4e, and 4f of the Com18 modity Exchange Act (7 U.S.C. 6c(g), 6d, 6e, 6f)

19 are amended by inserting ‘‘or derivatives transaction

20 execution facility’’ after ‘‘contract market’’ each

21 place it appears.

22 (7) Section 4g of the Commodity Exchange Act

23 (7 U.S.C. 6g) is amended—
94

•S 2697 IS

1 (A) in subsection (b), by striking ‘‘clear2 inghouse and contract market’’ and inserting

3 ‘‘registered entity’’; and

4 (B) in subsection (f), by striking ‘‘clearing5 houses, contract markets, and exchanges’’ and

6 inserting ‘‘registered entities’’.

7 (8) Section 4h of the Commodity Exchange Act

8 (7 U.S.C. 6h) is amended by striking ‘‘contract mar9 ket’’ each place it appears and inserting ‘‘registered

10 entity’’.

11 (9) Section 4i of the Commodity Exchange Act

12 (7 U.S.C. 6i) is amended in the first sentence by in13 serting ‘‘or derivatives transaction execution facility’’

14 after ‘‘contract market’’.

15 (10) Section 4j of the Commodity Exchange

16 Act (7 U.S.C. 6j) is repealed.

17 (11) Section 4l of the Commodity Exchange Act

18 (7 U.S.C. 6l) is amended by inserting ‘‘or derivatives

19 transaction execution facilities’’ after ‘‘contract mar20 kets’’ each place it appears.

21 (12) Section 4p of the Commodity Exchange

22 Act (7 U.S.C. 6p) is amended—

23 (A) in the third sentence of subsection (a),

24 by striking ‘‘Act or contract markets’’ and in-
95

•S 2697 IS

1 serting ‘‘Act, contract markets, or derivatives

2 transaction execution facilities’’; and

3 (B) in subsection (b), by inserting ‘‘deriva4 tives transaction execution facility,’’ after ‘‘con5 tract market,’’.

6 (13) The Commodity Exchange Act (as amend7 ed by paragraphs (10), (11), and (12)) is amended

8 by redesignating section 4k through 4p (7 U.S.C. 6k

9 through 6p) as sections 4j through 4o, respectively.

10 (14) Section 6 of the Commodity Exchange Act

11 (7 U.S.C. 8, 9, 9a, 9b, 13b, 15) is amended—

12 (A) in subsection (a)—

13 (i) in the first sentence—

14 (I) by striking ‘‘board of trade

15 desiring to be designated a ‘contract

16 market’ shall make application to the

17 Commission for such designation’’ and

18 inserting ‘‘person desiring to be des19 ignated or registered as a registered

20 entity shall make application to the

21 Commission for such designation or

22 registration’’;

23 (II) by striking ‘‘above condi24 tions’’ and inserting ‘‘conditions set

25 forth in this Act’’; and
96

•S 2697 IS

1 (III) by striking ‘‘above require2 ments’’ and inserting ‘‘the require3 ments of this Act’’;

4 (ii) in the second sentence, by striking

5 ‘‘designation as a contract market within

6 one year’’ and inserting ‘‘designation or

7 registration as a registered entity within

8 180 days’’;

9 (iii) in the third sentence—

10 (I) by striking ‘‘board of trade’’

11 and inserting ‘‘person’’; and

12 (II) by striking ‘‘one-year period’’

13 and inserting ‘‘180-day period’’; and

14 (iv) in the last sentence, by striking

15 ‘‘designate as a ‘contract market’ any

16 board of trade that has made application

17 therefor, such board of trade’’ and insert18 ing ‘‘designate or register as a registered

19 entity any person that has made applica20 tion therefor, such person’’;

21 (B) in subsection (b)—

22 (i) in the first sentence—

23 (I) by striking ‘‘designation of

24 any board of trade as a ‘contract mar25 ket’ upon’’ and inserting ‘‘designation
97

•S 2697 IS

1 or registration of any registered entity

2 on’’;

3 (II) by striking ‘‘board of trade’’

4 each place it appears and inserting

5 ‘‘registered entity’’; and

6 (III) by striking ‘‘designation as

7 set forth in section 5 of this Act’’ and

8 inserting ‘‘designation or registration

9 as set forth in sections 5 through 5c’’;

10 (ii) in the second sentence—

11 (I) by striking ‘‘board of trade’’

12 the first place it appears and inserting

13 ‘‘registered entity’’; and

14 (II) by striking ‘‘board of trade’’

15 the second and third places it appears

16 and inserting ‘‘person’’; and

17 (iii) in the last sentence, by striking

18 ‘‘board of trade’’ each place it appears and

19 inserting ‘‘person’’;

20 (C) in subsection (c)—

21 (i) by striking ‘‘contract market’’ each

22 place it appears and inserting ‘‘registered

23 entity’’;
98

•S 2697 IS

1 (ii) by striking ‘‘contract markets’’

2 each place it appears and inserting ‘‘reg3 istered entities’’; and

4 (iii) by striking ‘‘trading privileges’’

5 each place it appears and inserting ‘‘privi6 leges’’;

7 (D) in subsection (d), by striking ‘‘contract

8 market’’ each place it appears and inserting

9 ‘‘registered entity’’; and

10 (E) in subsection (e), by striking ‘‘trading

11 on all contract markets’’ each place it appears

12 and inserting ‘‘the privileges of all registered

13 entities’’.

14 (15) Section 6a of the Commodity Exchange

15 Act (7 U.S.C. 10a) is amended—

16 (A) in the first sentence of subsection (a),

17 by striking ‘‘designated as a ‘contract market’

18 shall’’ and inserting ‘‘designated or registered

19 as a contract market or a derivatives trans20 action execution facility’’; and

21 (B) in subsection (b), by striking ‘‘des22 ignated as a contract market’’ and inserting

23 ‘‘designated or registered as a contract market

24 or a derivatives transaction execution facility’’.
99

•S 2697 IS

1 (16) Section 6b of the Commodity Exchange

2 Act (7 U.S.C. 13a) is amended—

3 (A) by striking ‘‘contract market’’ each

4 place it appears and inserting ‘‘registered enti5 ty’’;

6 (B) in the first sentence, by striking ‘‘des7 ignation as set forth in section 5 of this Act’’

8 and inserting ‘‘designation or registration as set

9 forth in sections 5 through 5c’’; and

10 (C) in the last sentence, by striking ‘‘the

11 contract market’s ability’’ and inserting ‘‘the

12 ability of the registered entity’’.

13 (17) Section 6c(a) of the Commodity Exchange

14 Act (7 U.S.C. 13a–1(a)) by striking ‘‘contract mar15 ket’’ and inserting ‘‘registered entity’’.

16 (18) Section 6d(1) of the Commodity Exchange

17 Act (7 U.S.C. 13a–2(1)) is amended by inserting

18 ‘‘derivatives transaction execution facility,’’ after

19 ‘‘contract market,’’.

20 (19) Section 7 of the Commodity Exchange Act

21 (7 U.S.C. 11) is amended—

22 (A) in the first sentence—

23 (i) by striking ‘‘board of trade’’ and

24 inserting ‘‘person’’;
100

•S 2697 IS

1 (ii) by inserting ‘‘or registered’’ after

2 ‘‘designated’’;

3 (iii) by inserting ‘‘or registration’’

4 after ‘‘designation’’ each place it appears;

5 and

6 (iv) by striking ‘‘contract market’’

7 each place it appears and inserting ‘‘reg8 istered entity’’;

9 (B) in the second sentence—

10 (i) by striking ‘‘designation of such

11 board of trade as a contract market’’ and

12 inserting ‘‘designation or registration of

13 the registered entity’’; and

14 (ii) by striking ‘‘contract markets’’

15 and inserting ‘‘registered entities’’; and

16 (C) in the last sentence—

17 (i) by striking ‘‘board of trade’’ and

18 inserting ‘‘person’’; and

19 (ii) by striking ‘‘designated again a

20 contract market’’ and inserting ‘‘des21 ignated or registered again a registered en22 tity’’.

23 (20) Section 8(c) of the Commodity Exchange

24 Act (7 U.S.C. 12(c)) is amended in the first sen-
101

•S 2697 IS

1 tence by striking ‘‘board of trade’’ and inserting

2 ‘‘registered entity’’.

3 (21) Section 8a of the Commodity Exchange

4 Act (7 U.S.C. 12a) is amended—

5 (A) by striking ‘‘contract market’’ each

6 place it appears and inserting ‘‘registered enti7 ty’’; and

8 (B) in paragraph (2)(F), by striking ‘‘trad9 ing privileges’’ and inserting ‘‘privileges’’.

10 (22) Sections 8b and 8c(e) of the Commodity

11 Exchange Act (7 U.S.C. 12b, 12c(e)) are amended

12 by striking ‘‘contract market’’ each place it appears

13 and inserting ‘‘registered entity’’.

14 (23) Section 8e of the Commodity Exchange

15 Act (7 U.S.C. 12e) is amended—

16 (A) by striking ‘‘contract market’’ each

17 place it appears and inserting ‘‘registered enti18 ty’’;

19 (B) in subsection (a), by striking ‘‘section

20 5a(b)’’ and inserting ‘‘sections 5 through 5c’’;

21 (C) in subsection (b)—

22 (i) in paragraph (1), by striking ‘‘a

23 contract market’s trade monitoring system

24 implemented pursuant to section 5a(b)’’

25 and inserting ‘‘the trade monitoring system
102

•S 2697 IS

1 of a registered entity implemented pursu2 ant to sections 5 through 5c’’;

3 (ii) by striking paragraph (3) and in4 serting the following:

5 ‘‘(3) REMEDIES.—On becoming final, the Com6 mission deficiency order may require the registered

7 entity to—

8 ‘‘(A) institute appropriate improvements in

9 its trade monitoring system necessary to correct

10 the deficiencies in the order;

11 ‘‘(B) satisfy stated objective performance

12 criteria to correct the deficiencies; or

13 ‘‘(C) upgrade or reconfigure existing sys14 tems for collecting or processing relevant data

15 on trading and trader or broker activity, includ16 ing, where appropriate, the commitment of ad17 ditional resources.’’; and

18 (iii) in paragraph (5)—

19 (I) in the paragraph heading, by

20 striking ‘‘DESIGNATION AS CONTRACT

21 MARKET’’ and inserting ‘‘DESIGNA22 TION OR REGISTRATION AS REG23 ISTERED ENTITY’’;

24 (II) by inserting ‘‘or registra25 tion’’ after ‘‘designation’’; and
103

•S 2697 IS

1 (III) by striking ‘‘board of trade’’

2 and inserting ‘‘person’’;

3 (D) in subsection (d)(2), by striking ‘‘sec4 tion 5b’’ and inserting ‘‘section 5e’’; and

5 (E) in the paragraph heading of subsection

6 (e)(2), by striking ‘‘CONTRACT MARKETS’’ and

7 inserting ‘‘REGISTERED ENTITIES’’.

8 (24) Section 9 of the Commodity Exchange Act

9 (7 U.S.C. 13) is amended—

10 (A) by striking ‘‘contract market’’ each

11 place it appears and inserting ‘‘registered enti12 ty’’; and

13 (B) in subsection (a)(2), by striking ‘‘sec14 tion 4o(1),’’ and inserting ‘‘section 4n(1),’’.

15 (25) Section 14 of the Commodity Exchange

16 Act (7 U.S.C. 18) is amended—

17 (A) in subsection (a)(1)(B), by striking

18 ‘‘contract market’’ and inserting ‘‘registered en19 tity’’; and

20 (B) in subsection (f), by striking ‘‘contract

21 markets’’ and inserting ‘‘registered entities’’.

22 (26) Sections 15 and 17 of the Commodity Ex23 change Act (7 U.S.C. 19, 21) are amended by strik24 ing ‘‘contract market’’ each place it appears and in25 serting ‘‘registered entity’’.
104

•S 2697 IS

1 (27) Section 22 of the Commodity Exchange

2 Act (7 U.S.C. 25) is amended—

3 (A) in subsection (a)—

4 (i) in paragraph (1)—

5 (I) by striking ‘‘contract market,

6 clearing organization of a contract

7 market, licensed board of trade,’’ and

8 inserting ‘‘registered entity’’; and

9 (II) in subparagraph (C)(i), by

10 striking ‘‘contract market’’ and insert11 ing ‘‘registered entity’’;

12 (ii) in paragraph (2), by striking ‘‘sec13 tions 5a(11),’’ and inserting ‘‘sections

14 5(d)(13), 5b(d)(2)(H)(i),’’; and

15 (iii) in paragraph (3), by striking

16 ‘‘contract market’’ and inserting ‘‘reg17 istered entity’’; and

18 (B) in subsection (b)—

19 (i) in paragraph (1)—

20 (I) by striking ‘‘contract market

21 or clearing organization of a contract

22 market’’ and inserting ‘‘registered en23 tity’’;
105

•S 2697 IS

1 (II) by striking ‘‘section 5a(8)

2 and section 5a(9) of this Act’’ and in3 serting ‘‘sections 5 through 5c’’;

4 (III) by striking ‘‘contract mar5 ket, clearing organization of a con6 tract market, or licensed board of

7 trade’’ and inserting ‘‘registered enti8 ty’’; and

9 (IV) by striking ‘‘contract market

10 or licensed board of trade’’ and insert11 ing ‘‘registered entity’’;

12 (ii) in paragraph (3)—

13 (I) by striking ‘‘a contract mar14 ket, clearing organization, licensed

15 board of trade,’’ and inserting ‘‘reg16 istered entity’’; and

17 (II) by striking ‘‘contract market,

18 licensed board of trade’’ and inserting

19 ‘‘registered entity’’;

20 (iii) in paragraph (4), by striking

21 ‘‘contract market, licensed board of trade,

22 clearing organization,’’ and inserting ‘‘reg23 istered entity’’; and

24 (iv) in paragraph (5), by striking

25 ‘‘contract market, licensed board of trade,
106

•S 2697 IS

1 clearing organization,’’ and inserting ‘‘reg2 istered entity’’.

3 (b) FEDERAL DEPOSIT INSURANCE CORPORATION

4 IMPROVEMENT ACT OF 1991.—Section 402(2) of the Fed5 eral Deposit Insurance Corporation Improvement Act of

6 1991 (12 U.S.C. 4402(2)) is amended by striking sub7 paragraph (B) and inserting the following:

8 ‘‘(B) that is registered as a derivatives

9 clearing organization under section 5b of the

10 Commodity Exchange Act.’’.

11 (c) REVISED STATUTES.—Chapter three of title LXII

12 of the Revised Statutes is amended by adding at the end

13 the following:

14 ‘‘SEC. 5220. SWAP AGREEMENTS.

15 ‘‘(a) IN GENERAL.—The term ‘swap agreement’

16 means—

17 ‘‘(1) an individually negotiated contract, agree18 ment, warrant, note, option, or transaction that is

19 based, in whole or in part, on the occurrence of any

20 event, or on the value of, any interest in, or any

21 quantitative measure relating to, 1 or more commod22 ities, securities, currencies, interest rates, indices,

23 other rates, or other assets;

24 ‘‘(2) any other agreement or combination of

25 agreements that is similar to a contract, agreement,
107

•S 2697 IS

1 warrant, note, option, or transaction described in

2 paragraph (1); and

3 ‘‘(3) an option to enter into a contract, agree4 ment, warrant, note, or option described in para5 graph (1) or an agreement described in paragraph

6 (2).

7 ‘‘(b) INCLUSIONS.—The term ‘swap agreement’ in8 cludes a master swap agreement, and all supplements to

9 a master swap agreement, without regard to whether the

10 master swap agreement contains a contract, agreement,

11 warrant, note, option, or transaction that is not a swap

12 agreement described in subsection (a), but only to the ex13 tent that the master swap agreement contains such a con14 tract, agreement, warrant, note, option, or transaction.’’.

15 (d) GRAMM-LEACH-BLILEY ACT.—Section 206 of the

16 Gramm-Leach-Bliley Act (15 U.S.C. 78c note; Public Law

17 106–102) is amended—

18 (1) in subsection (a), by striking paragraph (6)

19 and inserting the following:

20 ‘‘(6) a swap agreement (as defined in section

21 5220 of the Revised Statutes).’’;

22 (2) by striking subsection (b); and

23 (3) by redesignating subsections (c) and (d) as

24 subsections (b) and (c), respectively.
108

•S 2697 IS

1 (e) SECURITIES ACT OF 1933.—The Securities Act

2 of 1933 (15 U.S.C. 77a et seq.) is amended by inserting

3 after section 3 the following:

4 ‘‘SEC. 3A. SWAP AGREEMENTS.

5 ‘‘Nothing in this Act (including regulations under

6 this Act) authorizes the Commission to regulate, super7 vise, or otherwise subject to oversight—

8 ‘‘(1) an activity, agreement, instrument, trans9 action, or product over which the Commission is not

10 explicitly granted jurisdiction or enforcement author11 ity under this Act; or

12 ‘‘(2) a swap agreement (as defined in section

13 5220 of the Revised Statutes), without regard to

14 whether the swap agreement is entered into or en15 gaged in by a depository institution (as defined in

16 section 3 of the Federal Deposit Insurance Act (12

17 U.S.C. 1813)).’’.

18 (f) SECURITIES EXCHANGE ACT OF 1934.—The Se19 curities Exchange Act of 1934 (15 U.S.C. 78a et seq.)

20 is amended by inserting after section 3 the following:

21 ‘‘SEC. 3A. SWAP AGREEMENTS.

22 ‘‘Nothing in this Act (including regulations under

23 this Act) authorizes the Commission to regulate, super24 vise, or otherwise subject to oversight—
109

•S 2697 IS

1 ‘‘(1) an activity, agreement, instrument, trans2 action, or product over which the Commission is not

3 explicitly granted jurisdiction or enforcement author4 ity under this Act; or

5 ‘‘(2) a swap agreement (as defined in section

6 5220 of the Revised Statutes), without regard to

7 whether the swap agreement is entered into or en8 gaged in by a depository institution (as defined in

9 section 3 of the Federal Deposit Insurance Act (12

10 U.S.C. 1813)).’’.

11 (g) TRUST INDENTURE ACT OF 1939.—The Trust

12 Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is

13 amended by inserting after section 304 the following:

14 ‘‘SEC. 304A. SWAP AGREEMENTS.

15 ‘‘Nothing in this Act (including regulations under

16 this Act) authorizes the Commission to regulate, super17 vise, or otherwise subject to oversight—

18 ‘‘(1) an activity, agreement, instrument, trans19 action, or product over which the Commission is not

20 explicitly granted jurisdiction or enforcement author21 ity under this Act; or

22 ‘‘(2) a swap agreement (as defined in section

23 5220 of the Revised Statutes), without regard to

24 whether the swap agreement is entered into or en25 gaged in by a depository institution (as defined in
110

•S 2697 IS

1 section 3 of the Federal Deposit Insurance Act (12

2 U.S.C. 1813)).’’.

3 (h) INVESTMENT COMPANY ACT OF 1940.—The In4 vestment Company Act of 1940 (15 U.S.C. 80a–1 et seq.)

5 is amended by inserting after section 6 the following:

6 ‘‘SEC. 6A. SWAP AGREEMENTS.

7 ‘‘Nothing in this Act (including regulations under

8 this Act) authorizes the Commission to regulate, super9 vise, or otherwise subject to oversight—

10 ‘‘(1) an activity, agreement, instrument, trans11 action, or product over which the Commission is not

12 explicitly granted jurisdiction or enforcement author13 ity under this Act; or

14 ‘‘(2) a swap agreement (as defined in section

15 5220 of the Revised Statutes), without regard to

16 whether the swap agreement is entered into or en17 gaged in by a depository institution (as defined in

18 section 3 of the Federal Deposit Insurance Act (12

19 U.S.C. 1813)).’’.

20 (i) INVESTMENT ADVISERS ACT OF 1940.—The In21 vestment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.)

22 is amended by inserting after section 206A the following:
111

•S 2697 IS

1 ‘‘SEC. 206B. SWAP AGREEMENTS.

2 ‘‘Nothing in this Act (including regulations under

3 this Act) authorizes the Commission to regulate, super4 vise, or otherwise subject to oversight—

5 ‘‘(1) an activity, agreement, instrument, trans6 action, or product over which the Commission is not

7 explicitly granted jurisdiction or enforcement author8 ity under this Act; or

9 ‘‘(2) a swap agreement (as defined in section

10 5220 of the Revised Statutes), without regard to

11 whether the swap agreement is entered into or en12 gaged in by a depository institution (as defined in

13 section 3 of the Federal Deposit Insurance Act (12

14 U.S.C. 1813)).’’.

15 (j) PUBLIC UTILITY HOLDING COMPANY ACT OF

16 1935.—The Public Utility Holding Company Act of 1935

17 (15 U.S.C. 79 et seq.) is amended by inserting after sec18 tion 34 the following:

19 ‘‘SEC. 34A. SWAP AGREEMENTS.

20 ‘‘Nothing in this Act (including regulations under

21 this Act) authorizes the Commission to regulate, super22 vise, or otherwise subject to oversight—

23 ‘‘(1) an activity, agreement, instrument, trans24 action, or product over which the Commission is not

25 explicitly granted jurisdiction or enforcement author26 ity under this Act; or
112

•S 2697 IS

1 ‘‘(2) a swap agreement (as defined in section

2 5220 of the Revised Statutes), without regard to

3 whether the swap agreement is entered into or en4 gaged in by a depository institution (as defined in

5 section 3 of the Federal Deposit Insurance Act (12

6 U.S.C. 1813)).’’.

7 (k) SECURITIES INVESTOR PROTECTION ACT OF

8 1970.—The Securities Investor Protection Act of 1970

9 (15 U.S.C. 78aaa et seq.) is amended by adding at the

10 end the following:

11 ‘‘SEC. 17. SWAP AGREEMENTS.

12 ‘‘Nothing in this Act (including regulations under

13 this Act) authorizes the Commission to regulate, super14 vise, or otherwise subject to oversight—

15 ‘‘(1) an activity, agreement, instrument, trans16 action, or product over which the Commission is not

17 explicitly granted jurisdiction or enforcement author18 ity under this Act; or

19 ‘‘(2) a swap agreement (as defined in section

20 5220 of the Revised Statutes), without regard to

21 whether the swap agreement is entered into or en22 gaged in by a depository institution (as defined in

23 section 3 of the Federal Deposit Insurance Act (12

24 U.S.C. 1813)).’’.
113

•S 2697 IS

1 SEC. 24. EFFECTIVE DATE.

2 (a) IN GENERAL.—Except as provided in subsection

3 (b), this Act takes effect on the date of enactment of this

4 Act.

5 (b) JURISDICTION OF COMMODITIES FUTURES

6 TRADING COMMISSION.—Section 8, and the amendments

7 made by that section, take effect 1 year after the date

8 of enactment of this Act.

Æ