I 

114TH CONGRESS 

2D SESSION H. R. 5592 

To amend the Commodity Exchange Act to clarify which fees the Commodity 

Futures Trading Commission may assess and collect, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 28, 2016 

Mr. CUMMINGS introduced the following bill; which was referred to the Committee on Agriculture, and in addition to the Committees on Financial 

Services, and the Judiciary, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL 

To amend the Commodity Exchange Act to clarify which 

fees the Commodity Futures Trading Commission may 

assess and collect, 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. 

4 This Act may be cited as the ‘‘Derivatives Oversight 

5 and Taxpayer Protection Act’’. 


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1 TITLE I—STRENGTHENING 

2 OVERSIGHT AND ENFORCEMENT 

3 SEC. 101. FEES TO RECOVER COSTS. 

4 (a) IN GENERAL.—The Commodity Exchange Act is 

5 amended by inserting after section 10 (7 U.S.C. 17) the 

6 following: 

7 ‘‘SEC. 11. FEES TO RECOVER COSTS. 

8 ‘‘(a) RECOVERY OF CERTAIN COSTS OF ANNUAL AP9 PROPRIATION.— 

10 ‘‘(1) IN GENERAL.—Effective beginning Octo11 ber 1, 2016, so as to recover the costs to the Fed12 eral Government of the annual appropriation to the 

13 Commission by Congress, the Commission shall as14 sess and collect fees under this subsection. 

15 ‘‘(2) REQUIREMENTS.—Subject to paragraph 

16 (3), the Commission may— 

17 ‘‘(A) assess fees to recover the costs of the 

18 regulatory services provided by the Commission; 

19 and 

20 ‘‘(B) assess fees from registered entities 

21 and persons registered under this Act. 

22 ‘‘(3) SERVICE FEES.—The Commission may as23 sess fees to recover the costs of the following regu24 latory services provided by the Commission: 


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1 ‘‘(A) Designated contract market compli2 ance examinations. 

3 ‘‘(B) Foreign board of trade registration 

4 reviews. 

5 ‘‘(C) Swap execution facility designation 

6 reviews. 

7 ‘‘(D) Swap data repository registration re8 views. 

9 ‘‘(E) Designated contract market designa10 tion reviews. 

11 ‘‘(F) Swap execution facility compliance 

12 examinations. 

13 ‘‘(G) Swap data repository compliance re14 views. 

15 ‘‘(H) Designated contract market contract 

16 review and approvals. 

17 ‘‘(I) Swap execution facility contract re18 view and approvals. 

19 ‘‘(J) Designated contract market contract 

20 certification and rule reviews. 

21 ‘‘(K) Swap execution facility contract cer22 tification and rule reviews. 

23 ‘‘(L) Swap data repository rule reviews. 

24 ‘‘(M) Reviews of mergers, transfers, and 

25 other action requests from designated contract 


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1 markets, swap execution facilities, and swap 

2 data repositories. 

3 ‘‘(N) Designated self-regulatory organiza4 tion financial surveillance reviews. 

5 ‘‘(O) Registered futures association compli6 ance program reviews. 

7 ‘‘(P) Derivatives clearing organization re8 views. 

9 ‘‘(Q) Futures commission merchant exami10 nations. 

11 ‘‘(R) Registered foreign exchange dealer 

12 examinations. 

13 ‘‘(S) Swap dealer registration reviews. 

14 ‘‘(T) Swap dealer examinations. 

15 ‘‘(U) Other entity registration, reviews, or 

16 examinations, or other regulatory services pro17 vided by the Commission. 

18 ‘‘(4) FEE RATES.—Fees assessed shall— 

19 ‘‘(A) be reasonably related to the cost to 

20 the Commission of providing the services of the 

21 Commission; 

22 ‘‘(B) take into consideration the full-time 

23 equivalent number of employees performing the 

24 services, overhead costs, and other factors that 


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1 the Commission determines are necessary in the 

2 public interest; 

3 ‘‘(C) support market access for smaller 

4 market participants hedging or mitigating com5 mercial or agricultural risk, including farmers 

6 and ranchers; and 

7 ‘‘(D) minimize negative impacts on market 

8 liquidity and maintain the efficiency, competi9 tiveness, and financial integrity of futures and 

10 swaps markets in the United States. 

11 ‘‘(5) COLLECTION OF FEES.—The Commission 

12 shall collect fees paid in accordance with paragraph 

13 (2) in a manner and within such time as determined 

14 by the Commission. 

15 ‘‘(b) PUBLICATION.—Not later than 60 days after the 

16 date on which a law providing a regular appropriation to 

17 the Commission for a fiscal year is enacted, the Commis18 sion shall publish in the Federal Register— 

19 ‘‘(1) notices of the fee rates for the fiscal year, 

20 including any estimates or projections on which the 

21 fees are based; and 

22 ‘‘(2) a schedule of fees for the fiscal year, in23 cluding an explanation of the method used for calcu24 lating applicable fee rates. 

25 ‘‘(c) DEPOSIT OF FEES.— 


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1 ‘‘(1) OFFSETTING COLLECTIONS.—Fees col2 lected under subsection (a) for any fiscal year— 

3 ‘‘(A) shall be deposited and credited as off4 setting collections to the account providing ap5 propriations to the Commission; and 

6 ‘‘(B) except as provided in subsection (e), 

7 shall not be collected or available for obligation 

8 for any fiscal year except to the extent provided 

9 in advance in appropriation Acts. 

10 ‘‘(2) GENERAL REVENUES PROHIBITED.—No 

11 fees collected under subsection (a) shall be deposited 

12 and credited as general revenue of the Treasury. 

13 ‘‘(d) FEE ORDERS.— 

14 ‘‘(1) ANNUAL ADJUSTMENT.—For each fiscal 

15 year, the Commission shall by order set the fees ap16 plicable under subsection (a) for the fiscal year at 

17 rates that are reasonably likely to produce aggregate 

18 fee collections under this section that are equal to 

19 the costs to the Federal Government of the annual 

20 appropriation to the Commission by Congress. 

21 ‘‘(2) MID-YEAR ADJUSTMENT.— 

22 ‘‘(A) IN GENERAL.—For each fiscal year, 

23 the Commission shall determine, not later than 

24 March 1 of the fiscal year, whether, based on 

25 the actual fees collected during the first 5 


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1 months of the fiscal year, the collections gen2 erated under the fee rates determined under 

3 paragraph (1) for the fiscal year are reasonably 

4 likely to be 10 percent (or more) greater or less 

5 than the annual appropriation to the Commis6 sion for the fiscal year. 

7 ‘‘(B) ADJUSTMENT.— 

8 ‘‘(i) IN GENERAL.—If the Commission 

9 makes an affirmative determination, the 

10 Commission shall by order, not later than 

11 March 1, adjust the fees for the fiscal year 

12 to rates that are reasonably likely to 

13 produce aggregate fee collections under 

14 this section that are equal to the cost to 

15 the Federal Government of the annual ap16 propriation to the Commission by Con17 gress. 

18 ‘‘(ii) FACTORS.—The fee rates shall 

19 be assessed based on the same factors de20 scribed in subsection (a). 

21 ‘‘(e) LAPSE OF APPROPRIATION.—If on the first day 

22 of a fiscal year a regular appropriation to the Commission 

23 has not been enacted, the Commission shall continue to 

24 collect (as offsetting collections) the fees and assessments 

25 under subsection (a) at the rates in effect on September 


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1 30 of the preceding fiscal year, until 90 days after the 

2 date a regular appropriation is enacted.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Section 2(d) of the Commodity Exchange 

5 Act (7 U.S.C. 2(d)) is amended by striking ‘‘and 9’’ 

6 and inserting ‘‘9, and 11’’. 

7 (2) Section 4(c)(1)(A)(i)(I) of the Commodity 

8 Exchange Act (7 U.S.C. 6(c)(1)(A)(i)(I)) is amended 

9 by inserting ‘‘11,’’ after ‘‘8e,’’. 

10 (3) Section 15(a)(3) of the Commodity Ex11 change Act (7 U.S.C. 19(a)(3)) is amended by add12 ing at the end the following: 

13 ‘‘(D) An action under section 11.’’. 

14 SEC. 102. CIVIL PENALTIES AND FINES UNDER THE COM15 MODITY EXCHANGE ACT AND RELATED EN16 FORCEMENT ACTIONS. 

17 (a) CIVIL PENALTIES GENERALLY.—Section 

18 6(c)(10) of the Commodity Exchange Act (7 U.S.C. 9(10)) 

19 is amended by striking subparagraph (C) and inserting 

20 the following: 

21 ‘‘(C) assess such person— 

22 ‘‘(i) a civil penalty of not more than 

23 an amount equal to the greater of— 


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1 ‘‘(I) $1,000,000, in the case of a 

2 person who is an individual, for each 

3 violation; 

4 ‘‘(II) $10,000,000, in the case of 

5 any person other than an individual, 

6 for each violation; 

7 ‘‘(III) triple the monetary gain to 

8 the person and all other persons act9 ing in concert with the person, for 

10 each such violation; or 

11 ‘‘(IV) triple the total amount of 

12 losses to persons proximately caused 

13 by each such violation; or 

14 ‘‘(ii) a civil penalty of triple the max15 imum amount otherwise available under 

16 clause (i) if the person, within 5 years pre17 ceding the violation, has been— 

18 ‘‘(I) found in a proceeding 

19 brought by the Commission, or by 

20 agreement of settlement to which the 

21 Commission is a party, to have reck22 lessly, knowingly, or willfully violated 

23 any provision of this Act or of the 

24 rules, regulations, or orders of the 

25 Commission thereunder; 


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1 ‘‘(II) found in a proceeding 

2 brought by the Securities and Ex3 change Commission, or by agreement 

4 of settlement to which the Securities 

5 and Exchange Commission is a party, 

6 to have recklessly, knowingly, or will7 fully violated any provision of the Se8 curities Act of 1933, the Securities 

9 Exchange Act of 1934, the Invest10 ment Company Act of 1940, or the 

11 Investment Advisers Act of 1940, or 

12 of the rules, regulations, or orders of 

13 the Securities and Exchange Commis14 sion thereunder; 

15 ‘‘(III) found in a proceeding 

16 brought by the Federal Energy Regu17 latory Commission, or by agreement 

18 of settlement to which the Federal 

19 Energy Regulatory Commission is a 

20 party, to have recklessly, knowingly, 

21 or willfully violated any provision of 

22 the Federal Power Act (16 U.S.C. 

23 792 et seq.), the Natural Gas Act (15 

24 U.S.C. 717 et seq.), the Public Utility 

25 Regulatory Policies Act of 1978 (16 


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1 U.S.C. 2601 et seq.), the Natural Gas 

2 Policy Act of 1978 (15 U.S.C. 3301 

3 et seq.), or the rules, regulations, or 

4 orders of the Federal Energy Regu5 latory Commission issued thereunder; 

6 ‘‘(IV) convicted of any criminal 

7 violation of this Act or of the rules, 

8 regulations, or orders of the Commis9 sion thereunder; 

10 ‘‘(V) convicted of any criminal 

11 violation of the Securities Act of 

12 1933, the Securities Exchange Act of 

13 1934, the Investment Company Act of 

14 1940, or the Investment Advisers Act 

15 of 1940, or of the rules, regulations, 

16 or orders of the Securities and Ex17 change Commission thereunder; or 

18 ‘‘(VI) convicted of any other 

19 criminal offense that involves any con20 duct, transaction, advice or activity 

21 related to any commodity interest, as 

22 that term is defined by the Commis23 sion, or security-based swap; and’’. 

24 (b) FINES AND CIVIL PENALTIES RELATED TO VIO25 LATION OF CEASE AND DESIST ORDER.—Section 6(d) of 


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1 the Commodity Exchange Act (7 U.S.C. 13b) is amend2 ed— 

3 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; 

4 (2) by striking ‘‘$140,000 or triple the mone5 tary gain to such person,’’ and inserting ‘‘(A) 

6 $1,000,000, in the case of a person who is an indi7 vidual, for each violation, (B) $10,000,000, in the 

8 case of any person other than an individual, for each 

9 violation, (C) triple the monetary gain to the person 

10 and all other persons acting in concert with the per11 son, for each such violation, or (D) triple the total 

12 amount of losses to persons proximately caused by 

13 each such violation,’’; and 

14 (3) by adding at the end the following: 

15 ‘‘(2) A person may be held liable for a civil penalty 

16 in triple the amount otherwise available for a violation 

17 under this subsection if the person, within 5 years pre18 ceding such violation, has been— 

19 ‘‘(A) found in a proceeding brought by the 

20 Commission, or by agreement of settlement to which 

21 the Commission is a party, to have recklessly, know22 ingly, or willfully violated any provision of this Act 

23 or the rules, regulations, or orders of the Commis24 sion thereunder; 


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1 ‘‘(B) found in a proceeding brought by the Se2 curities and Exchange Commission, or by agreement 

3 of settlement to which the Securities and Exchange 

4 Commission is a party, to have recklessly, know5 ingly, or willfully violated any provision of the Secu6 rities Act of 1933, the Securities Exchange Act of 

7 1934, the Investment Company Act of 1940, or the 

8 Investment Advisers Act of 1940, or of the rules, 

9 regulations, or orders of the Securities and Ex10 change Commission thereunder; 

11 ‘‘(C) found in a proceeding brought by the Fed12 eral Energy Regulatory Commission, or by agree13 ment of settlement to which the Federal Energy 

14 Regulatory Commission is a party, to have reck15 lessly, knowingly, or willfully violated any provision 

16 of the Federal Power Act (16 U.S.C. 792 et seq.), 

17 the Natural Gas Act (15 U.S.C. 717 et seq.), the 

18 Public Utility Regulatory Policies Act of 1978 (16 

19 U.S.C. 2601 et seq.), the Natural Gas Policy Act of 

20 1978 (15 U.S.C. 3301 et seq.), or the rules, regula21 tions, or orders of the Federal Energy Regulatory 

22 Commission issued thereunder; 

23 ‘‘(D) convicted of any criminal violation of this 

24 Act or the rules, regulations, or orders of the Com25 mission thereunder; 


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1 ‘‘(E) convicted of any criminal violation of the 

2 Securities Act of 1933, the Securities Exchange Act 

3 of 1934, the Investment Company Act of 1940, or 

4 the Investment Advisers Act of 1940, or of the rules, 

5 regulations, or orders of the Securities and Ex6 change Commission thereunder; or 

7 ‘‘(F) convicted of any other criminal offense 

8 that involves any conduct, transaction, advice or ac9 tivity related to any commodity interest, as that 

10 term is defined by the Commission, or security-based 

11 swap.’’. 

12 (c) NONENFORCEMENT OF RULES OF GOVERNMENT

13 OR OTHER VIOLATIONS.—Section 6b of the Commodity 

14 Exchange Act (7 U.S.C. 13a) is amended— 

15 (1) in the first sentence, by striking ‘‘$500,000 

16 for each such violation, or, in any case of manipula17 tion or attempted manipulation in violation of sec18 tion 6(c), 6(d), or 9(a)(2), a civil penalty of not 

19 more than $1,000,000 for each such violation’’ and 

20 inserting ‘‘(A) $1,000,000, in the case of a person 

21 who is an individual, for each violation, (B) 

22 $10,000,000, in the case of any person other than 

23 an individual, for each violation, (C) triple the mone24 tary gain to the person and all other persons acting 

25 in concert with the person, for each such violation, 


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1 or (D) triple the total amount of losses to persons 

2 proximately caused by each such violation, and such 

3 civil penalty shall be assessed for each violation on 

4 which a failure to enforce or other violation occurs 

5 or has occurred; provided that such registered entity, 

6 director, officer, agent, or employee may be assessed 

7 a civil penalty of triple the amount otherwise avail8 able if the person, within 5 years of such violation, 

9 has been (i) found in a proceeding brought by the 

10 Commission, or by agreement of settlement to which 

11 the Commission is a party, to have recklessly, know12 ingly, or willfully violated any provision of this Act 

13 or the rules, regulations, or orders of the Commis14 sion thereunder, (ii) found in a proceeding brought 

15 by the Securities and Exchange Commission, or by 

16 agreement of settlement to which the Securities and 

17 Exchange Commission is a party, to have recklessly, 

18 knowingly, or willfully violated any provision of the 

19 Securities Act of 1933, the Securities Exchange Act 

20 of 1934, the Investment Company Act of 1940, or 

21 the Investment Advisers Act of 1940, or of the rules, 

22 regulations, or orders of the Securities and Ex23 change Commission thereunder, (iii) found in a pro24 ceeding brought by the Federal Energy Regulatory 

25 Commission, or by agreement of settlement to which 


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1 the Federal Energy Regulatory Commission is a 

2 party, to have recklessly, knowingly, or willfully vio3 lated any provision of the Federal Power Act (16 

4 U.S.C. 792 et seq.), the Natural Gas Act (15 U.S.C. 

5 717 et seq.), the Public Utility Regulatory Policies 

6 Act of 1978 (16 U.S.C. 2601 et seq.), the Natural 

7 Gas Policy Act of 1978 (15 U.S.C. 3301 et seq.), or 

8 the rules, regulations, or orders of the Federal En9 ergy Regulatory Commission issued thereunder; (iv) 

10 convicted of any criminal violation of this Act or the 

11 rules, regulations, or orders of the Commission 

12 thereunder; (v) convicted of any criminal violation of 

13 the Securities Act of 1933, the Securities Exchange 

14 Act of 1934, the Investment Company Act of 1940, 

15 or the Investment Advisers Act of 1940, or of the 

16 rules, regulations, or orders of the Securities and 

17 Exchange Commission thereunder; or (vi) convicted 

18 of any other criminal offense that involves any con19 duct, transaction, advice or activity related to any 

20 commodity interest, as that term is defined by the 

21 Commission, or security-based swap’’; and 

22 (2) in the second sentence, by striking 

23 ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 


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1 (d) ACTION TO ENJOIN OR RESTRAIN VIOLA2 TIONS.—Section 6c(d) of the Commodity Exchange Act (7 

3 U.S.C. 13a–1(d)) is amended— 

4 (1) in paragraph (1), by inserting ‘‘a civil pen5 alty in the amount of’’ after ‘‘violation’’; and 

6 (2) by striking subparagraphs (A) and (B) of 

7 paragraph (1) and inserting the following: 

8 ‘‘(A) not more than the greater of— 

9 ‘‘(i) $1,000,000, in the case of a per10 son who is an individual, for each violation; 

11 ‘‘(ii) $10,000,000, in the case of any 

12 person other than an individual, for each 

13 violation; 

14 ‘‘(iii) triple the monetary gain to the 

15 person and all other persons acting in con16 cert with the person, for each such viola17 tion; or 

18 ‘‘(iv) triple the total amount of losses 

19 by persons proximately caused by each 

20 such violation; or 

21 ‘‘(B) triple the maximum amount other22 wise available under subparagraph (A) if the 

23 person, within 5 years preceding the violation, 

24 has been— 


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1 ‘‘(i) found in a proceeding brought by 

2 the Commission, or by agreement of settle3 ment to which the Commission is a party, 

4 to have recklessly, knowingly, or willfully 

5 violated any provision of this Act or of the 

6 rules, regulations, or orders of the Com7 mission thereunder; 

8 ‘‘(ii) found in a proceeding brought by 

9 the Securities and Exchange Commission, 

10 or by agreement of settlement to which the 

11 Securities and Exchange Commission is a 

12 party, to have recklessly, knowingly, or 

13 willfully violated any provision of the Secu14 rities Act of 1933, the Securities Exchange 

15 Act of 1934, the Investment Company Act 

16 of 1940, or the Investment Advisers Act of 

17 1940, or of the rules, regulations, or or18 ders of the Commission thereunder; 

19 ‘‘(iii) found in a proceeding brought 

20 by the Federal Energy Regulatory Com21 mission, or by agreement of settlement to 

22 which the Federal Energy Regulatory 

23 Commission is a party, to have recklessly, 

24 knowingly, or willfully violated any provi25 sion of the Federal Power Act (16 U.S.C. 


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1 792 et seq.), the Natural Gas Act (15 

2 U.S.C. 717 et seq.), the Public Utility Reg3 ulatory Policies Act of 1978 (16 U.S.C. 

4 2601 et seq.), the Natural Gas Policy Act 

5 of 1978 (15 U.S.C. 3301 et seq.), or the 

6 rules, regulations, or orders of the Federal 

7 Energy Regulatory Commission issued 

8 thereunder; 

9 ‘‘(iv) convicted of any criminal viola10 tion of this Act or of the rules, regulations, 

11 or orders of the Commission thereunder; 

12 ‘‘(v) convicted of any criminal viola13 tion of the Securities Act of 1933, the Se14 curities Exchange Act of 1934, the Invest15 ment Company Act of 1940, or the Invest16 ment Advisers Act of 1940, or of the rules, 

17 regulations, or orders of the Securities and 

18 Exchange Commission thereunder; or 

19 ‘‘(vi) convicted of any other criminal 

20 offense that involves any conduct, trans21 action, advice or activity related to any 

22 commodity interest, as that term is defined 

23 by the Commission, or security-based 

24 swap.’’. 


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1 (e) CRIMINAL PENALTIES.—Section 9(a) of the Com2 modity Exchange Act (7 U.S.C. 13(a)) is amended in the 

3 matter preceding paragraph (1) by inserting after 

4 ‘‘$1,000,000’’ the following: ‘‘in the case of an individual 

5 for each violation or $10,000,000 in the case of any person 

6 other than an individual for each violation,’’. 

7 (f) STATUTE OF LIMITATIONS.—Section 9 of the 

8 Commodity Exchange Act (7 U.S.C. 13) is amended by 

9 adding at the end the following: 

10 ‘‘(f) STATUTE OF LIMITATIONS.— 

11 ‘‘(1) IN GENERAL.—An action, suit or pro12 ceeding for the enforcement of any civil fine, pen13 alty, or forfeiture, pecuniary or otherwise, shall not 

14 be entertained unless commenced within 10 years 

15 after the date when the cause of action first accrued 

16 if, within the same period, the offender or the prop17 erty is found within the United States in order that 

18 proper service may be made thereon. 

19 ‘‘(2) ACCRUAL.—A cause of action accrues as 

20 of the date the Commission learns of facts sufficient 

21 to give the Commission notice that a violation has 

22 occurred.’’. 

23 (g) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect on the date that is 90 days 

25 after the date of the enactment of this Act. 


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1 SEC. 103. CLOSING THE CROSS-BORDER LOOPHOLE. 

2 Section 2(i) of the Commodity Exchange Act (7 

3 U.S.C. 2(i)) is amended— 

4 (1) by redesignating paragraphs (1) and (2) as 

5 subparagraphs (A) and (B), respectively; 

6 (2) in the matter preceding subparagraph (A), 

7 as so redesignated, by striking ‘‘The provisions’’ and 

8 inserting the following: 

9 ‘‘(1) IN GENERAL.—The provisions’’; 

10 (3) in paragraph (1), as so designated— 

11 (A) in subparagraph (A), as so redesig12 nated, by striking ‘‘or’’ at the end; 

13 (B) in subparagraph (B), as so redesig14 nated, by striking the period at the end and in15 serting ‘‘; or’’; and 

16 (C) by adding at the end the following: 

17 ‘‘(C) except as provided in paragraph (2), 

18 involve a swaps transaction in which a financial 

19 entity that is domiciled or organized in the 

20 United States, or a subsidiary entity that is 

21 majority owned or controlled by a financial enti22 ty that is domiciled or organized in the United 

23 States, bears swaps-related risks.’’; and 

24 (4) by adding at the end the following: 

25 ‘‘(2) SUBSTITUTED COMPLIANCE.—Notwith26 standing paragraph (1)(C), the Commission may 


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1 allow a swaps transaction that involves a subsidiary 

2 entity that is majority owned or controlled by a fi3 nancial entity that is domiciled or organized in the 

4 United States to be conducted in whole or in part 

5 under the rules and oversight of a foreign jurisdic6 tion if the Commission determines, by rule, that— 

7 ‘‘(A) the applicable elements of the foreign 

8 rules are substantively equivalent to, or offer 

9 greater protection than, the applicable rules in 

10 the United States; and 

11 ‘‘(B) enforcement of and oversight with re12 spect to the rules described in subparagraph 

13 (A) is not less stringent than enforcement of 

14 and oversight with respect to the applicable 

15 rules in the United States.’’. 

16 SEC. 104. PROVIDING OVERSIGHT OF FOREIGN EXCHANGE 

17 SWAPS. 

18 Section 1a(47) of the Commodity Exchange Act (7 

19 U.S.C. 1a(47)) is amended by striking subparagraph (E) 

20 and inserting the following: 

21 ‘‘(E) TREATMENT OF FOREIGN EXCHANGE

22 SWAPS AND FORWARDS.—Foreign exchange 

23 swaps and foreign exchange forwards shall be 

24 considered swaps under this paragraph.’’. 


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1 SEC. 105. IMPROVING DATA SHARING BETWEEN REGU2 LATORS. 

3 Section 21 of the Commodity Exchange Act (7 U.S.C. 

4 24a) is amended by adding at the end the following: 

5 ‘‘(i) DATA SHARING.—The Commission shall make 

6 data with respect to any person that is required to be reg7 istered as a swap data repository under this section avail8 able to any other financial regulatory agency— 

9 ‘‘(1) upon request; and 

10 ‘‘(2) as soon as is practicable after receiving a 

11 request.’’. 

12 SEC. 106. IMPROVING DATA QUALITY AND ACCESSIBILITY. 

13 Section 4s of the Commodity Exchange Act (7 U.S.C. 

14 6s) is amended by adding at the end the following: 

15 ‘‘(m) DATA QUALITY AND ACCESSIBILITY.— 

16 ‘‘(1) IN GENERAL.—Not later than 2 years 

17 after the date of enactment of this subsection, the 

18 Commission and the Securities and Exchange Com19 mission shall determine whether the data that swap 

20 dealers registered under this section provide to swap 

21 data repositories— 

22 ‘‘(A) are accurate; and 

23 ‘‘(B) use consistent and standardized for24 mats that allow that data to be aggregated and 

25 analyzed by regulators. 


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1 ‘‘(2) PENALTY.—The Commission shall revoke 

2 the license of any swap dealer that the Commission 

3 and the Securities and Exchange Commission has 

4 found violated paragraph (1).’’. 

5 TITLE II—SHIFTING DERIVA6 TIVES RISKS FROM TAX7 PAYERS TO FINANCIAL INSTI8 TUTIONS 

9 SEC. 201. ENDING FAVORABLE TREATMENT OF DERIVA10 TIVES IN BANKRUPTCY. 

11 Section 560 of title 11, United States Code, is re12 pealed. 

13 SEC. 202. REVERSING THE CFTC’S INTERAFFILIATE MAR14 GIN EXCEPTION. 

15 Not later than 180 days after the date of enactment 

16 of this Act, the Commodity Futures Trading Commission 

17 shall modify the rule on margin requirements entitled 

18 ‘‘Margin Requirements for Uncleared Swaps for Swap 

19 Dealers and Major Swap Participants’’ (81 Fed. Reg. 636 

20 (January 6, 2016)) to require entities to collect margin 

21 in all interaffiliate swaps. 


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1 SEC. 203. BANNING CLOSEOUT NETTING FOR CAPITAL PUR2 POSES; ENSURING MINIMUM CAPITAL. 

3 Section 165(b)(1) of the Financial Stability Act of 

4 2010 (12 U.S.C. 5365(b)(1)) is amended by adding at the 

5 end the following: 

6 ‘‘(C) CONSOLIDATED ASSETS.— 

7 ‘‘(i) DEFINITION.—In this subpara8 graph, the term ‘covered financial institu9 tion’ means— 

10 ‘‘(I) a swap dealer registered 

11 under section 4s of the Commodity 

12 Exchange Act (7 U.S.C. 6s); 

13 ‘‘(II) a security-based swap deal14 er, as defined in section 3(a) of the 

15 Securities Exchange Act of 1934 (15 

16 U.S.C. 78c(a)); 

17 ‘‘(III) an insured depository in18 stitution, as defined in section 3 of 

19 the Federal Deposit Insurance Act 

20 (12 U.S.C. 1813); 

21 ‘‘(IV) a nonbank financial com22 pany supervised by the Board of Gov23 ernors; 

24 ‘‘(V) a major swap participant, 

25 as defined in section 1a of the Com26 modity Exchange Act (7 U.S.C. 1a); 


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1 ‘‘(VI) a bank holding company 

2 described in subsection (a); and 

3 ‘‘(VII) any subsidiary of a bank 

4 holding company described in sub5 section (a). 

6 ‘‘(ii) IN GENERAL.—For purposes of 

7 determining the amount of capital required 

8 under the risk-based capital requirements 

9 and leverage limits required under sub10 paragraph (A)(i), consolidated assets shall 

11 include the fair value and potential future 

12 exposure of derivatives exposures, without 

13 recognizing the benefits of any netting ar14 rangement, unless the netting arrange15 ment— 

16 ‘‘(I)(aa) is documented under a 

17 formal master netting agreement or 

18 other formal arrangement with a de19 rivatives clearing organization reg20 istered with a primary Federal finan21 cial regulatory agency; and 

22 ‘‘(bb) meets financial standards 

23 approved by the Board of Governors 

24 and the Corporation; or 


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1 ‘‘(II)(aa) is documented under a 

2 formal master netting agreement with 

3 a counterparty; and 

4 ‘‘(bb) requires the covered finan5 cial institution, as a matter of ongoing 

6 business practice, to— 

7 ‘‘(AA) exchange collateral 

8 daily for the fulfillment of vari9 ation margin requirements on a 

10 net basis; and 

11 ‘‘(BB) fulfill all contractual 

12 payment requirements, including 

13 payments for contract determina14 tion, on a net basis, with such 

15 net exchange of collateral and 

16 payments encompassing all de17 rivatives exposures covered by the 

18 formal arrangement. 

19 ‘‘(D) TOTAL DERIVATIVES RISK EXPO20 SURES.—For purposes of determining the 

21 amount of capital required under leverage limits 

22 required under subparagraph (A)(i)— 

23 ‘‘(i) total derivatives risk exposures 

24 shall not be assessed at a level less than 2 

25 percent of total gross notional derivatives 


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1 contracts to which the covered financial in2 stitution, as defined in subparagraph 

3 (C)(i), is a party; and 

4 ‘‘(ii) such leverage limits shall not 

5 vary for derivatives exposures as compared 

6 to other assets.’’. 

7 SEC. 204. REPORT ON CLEARINGHOUSES. 

8 (a) IN GENERAL.—Not later than 1 year after the 

9 date of enactment of this Act, the Commodity Futures 

10 Trading Commission, the Office of the Comptroller of the 

11 Currency, the Federal Deposit Insurance Corporation, and 

12 the Board of Governors of the Federal Reserve System 

13 shall jointly publish a report that answers the following 

14 questions: 

15 (1) Are prefunded default funds at major clear16 inghouses, along with prefunded liquidity resources, 

17 adequate to absorb losses and continue operations in 

18 the event of the failure of multiple large clearing 

19 members during a systemic stress event affecting the 

20 financial system as a whole? 

21 (2) Are capital and liquidity resources associ22 ated with cleared derivatives at clearinghouse mem23 bers adequate to meet clearinghouse capital and 

24 margin calls that might occur during a systemic 

25 stress event associated with the failure of multiple 


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1 large clearing members during a systemic stress 

2 event? 

3 (3) Based on planned resource levels at clear4 inghouses and major clearing members, in what 

5 ways might a lack of prefunded resources at a clear6 ing house, or the level of member capital and liquid7 ity resources associated with cleared derivatives, con8 tribute to increased financial system stress during a 

9 systemic event? 

10 (4) How would the answers to the questions in 

11 paragraphs (1) through (3) be affected if portfolio 

12 correlation levels in clearinghouse margin and de13 fault fund models were significantly lower than those 

14 assumed in current risk models? 

15 (5) Are such lower correlation levels possible in 

16 a stress event? 

17 (6) Are capital levels held by clearinghouses 

18 currently adequate to align risk management incen19 tives between clearinghouses themselves, their mem20 bers, and end user clients of their members? 

21 (7) Do the fiduciary duties of clearinghouse 

22 management to their stockholders in any way con23 flict with the public interest? 

24 (b) POLICY RECOMMENDATIONS.—The report re25 quired under subsection (a) shall contain policy recVerDate Sep 11 2014 21:02 Jun 29, 2016 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H5592.IH H5592

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1 ommendations associated with the answers to the ques2 tions posed under paragraphs (1) through (7) of that sub3 section. 

Æ 


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