I 

113TH CONGRESS 

1ST SESSION H. R. 677 

To exempt inter-affiliate swaps from certain regulatory requirements put 

in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2013 

Mr. STIVERS (for himself, Ms. FUDGE, Ms. MOORE, Mr. GIBSON, and Mr. 

SCHWEIKERT) introduced the following bill; which was referred to the 

Committee on Financial Services, and in addition to the Committee on 

Agriculture, 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 exempt inter-affiliate swaps from certain regulatory requirements put in place by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act. 

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 ‘‘Inter-Affiliate Swap 

5 Clarification Act’’. 

6 SEC. 2. TREATMENT OF AFFILIATE TRANSACTIONS. 

7 (a) COMMODITY EXCHANGE ACT AMENDMENTS.— 


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1 (1) TREATMENT OF AFFILIATE TRANS2 ACTIONS.—Section 1a(47) of the Commodity Ex3 change Act (7 U.S.C. 1a(47)), as added by section 

4 721(a)(21) of the Dodd-Frank Wall Street Reform 

5 and Consumer Protection Act, is amended by adding 

6 at the end the following: 

7 ‘‘(G) TREATMENT OF AFFILIATE TRANS8 ACTIONS.— 

9 ‘‘(i) IN GENERAL.—For the purposes 

10 of any clearing and execution requirements 

11 under section 2(h) and any applicable mar12 gin and capital requirements of section 

13 4s(e) and for purposes of defining ‘swap 

14 dealer’ or ‘major swap participant’, and re15 porting requirements other than those set 

16 forth in clause (ii), the term ‘swap’ does 

17 not include any agreement, contract, or 

18 transaction that— 

19 ‘‘(I) would otherwise be included 

20 as a ‘swap’ under subparagraph (A); 

21 and 

22 ‘‘(II) is entered into by parties, 

23 neither of which is a ‘swap dealer’ 

24 that is an insured depository institu25 tion or a ‘major swap participant’ 


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1 that is an insured depository institu2 tion, that report information or pre3 pare financial statements on a consoli4 dated basis, or for which a company 

5 affiliated with both parties reports in6 formation or prepares financial state7 ments on a consolidated basis. 

8 ‘‘(ii) REPORTING.—All agreements, 

9 contracts, or transactions described in 

10 clause (i) shall be reported to either a 

11 swap data repository, or, if there is no 

12 swap data repository that would accept 

13 such agreements, contracts, or trans14 actions, to the Commission pursuant to 

15 section 4r, or to a swap data repository or 

16 to the Commission pursuant to section 

17 2(h)(5), within such time period as the 

18 Commission may by rule or regulation pre19 scribe. Nothing in this subparagraph shall 

20 prohibit the Commission from establishing 

21 public reporting requirements for covered 

22 transactions between affiliates as described 

23 in sections 23A and 23B of the Federal 

24 Reserve Act in a manner consistent with 

25 rules governing the treatment of such covVerDate Mar 15 2010 22:33 Feb 21, 2013 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H677.IH H677

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1 ered transactions pursuant to section 

2 2(a)(13) of this Act. 

3 ‘‘(iii) PROTECTION OF INSURANCE

4 FUNDS.—Nothing in this subparagraph 

5 shall be construed to prevent the regulator 

6 of a Federal or State insurance fund or 

7 guaranty fund from exercising its other ex8 isting authority to protect the integrity of 

9 such a fund, except that such regulator 

10 shall not subject agreements, contracts, or 

11 transactions described in clause (i) to 

12 clearing and execution requirements under 

13 section 2 of this Act, to any applicable 

14 margin and capital requirements of section 

15 4s(e) of this Act, or to reporting require16 ments of title VII of Public Law 111–203 

17 other than those set forth in clause (ii) of 

18 this subparagraph. 

19 ‘‘(iv) PRESERVATION OF FEDERAL RE20 SERVE ACT AUTHORITY.—Nothing in this 

21 subparagraph shall exempt a transaction 

22 described in this subparagraph from sec23 tions 23A or 23B of the Federal Reserve 

24 Act or implementing regulations there25 under. 


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1 ‘‘(v) PRESERVATION OF FEDERAL

2 AND STATE REGULATORY AUTHORITIES.— 

3 Nothing in this subparagraph shall affect 

4 the Federal banking agencies’ safety-and5 soundness authorities over banks estab6 lished in law other than title VII of Public 

7 Law 111–203 or the authorities of State 

8 insurance regulators over insurers, includ9 ing the authority to impose capital require10 ments with regard to swaps. For purposes 

11 of this clause, the term ‘bank’ shall be de12 fined pursuant to section 3(a)(6) of the Se13 curities Exchange Act of 1934, ‘insurer’ 

14 shall be defined pursuant to title V of Pub15 lic Law 111–203, and ‘swap’ shall be de16 fined pursuant to title VII of Public Law 

17 111–203. 

18 ‘‘(vi) PREVENTION OF EVASION.—The 

19 Commission may prescribe rules under this 

20 subparagraph (and issue interpretations of 

21 such rules) as determined by the Commis22 sion to be necessary to include in the defi23 nition of swaps under this paragraph any 

24 agreement, contract, or transaction that 


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1 has been structured to evade the require2 ments of this Act applicable to swaps.’’. 

3 (2) TREATMENT OF AFFILIATES.—Section 

4 2(h)(7)(D)(i) of the Commodity Exchange Act (7 

5 U.S.C. 2(h)(7)(D)(i)), as added by section 723(a) of 

6 the Dodd-Frank Wall Street Reform and Consumer 

7 Protection Act, is amended to read as follows: 

8 ‘‘(i) IN GENERAL.—An affiliate of a 

9 person that qualifies for an exception 

10 under subparagraph (A) (including affiliate 

11 entities predominantly engaged in pro12 viding financing for the purchase of the 

13 merchandise or manufactured goods of the 

14 person) may qualify for the exception only 

15 if the affiliate enters into the swap to 

16 hedge or mitigate the commercial risk of 

17 the person or other affiliate of the person 

18 that is not a financial entity.’’. 

19 (b) SECURITIES EXCHANGE ACT OF 1934 AMEND20 MENTS.— 

21 (1) TREATMENT OF AFFILIATE TRANS22 ACTIONS.—Section 3(a)(68) of the Securities Ex23 change Act of 1934 (15 U.S.C. 78c(a)(68)), as 

24 added by section 761(a)(6) of the Dodd-Frank Wall 


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1 Street Reform and Consumer Protection Act, is 

2 amended by adding at the end the following: 

3 ‘‘(F) TREATMENT OF AFFILIATE TRANS4 ACTIONS.— 

5 ‘‘(i) IN GENERAL.—For the purposes 

6 of any clearing and execution requirements 

7 under section 3C and any applicable mar8 gin and capital requirements of section 

9 15F(e), and for purposes of defining ‘secu10 rity-based swap dealer’ or a ‘major secu11 rity-based swap participant’, and reporting 

12 requirements other than those set forth in 

13 clause (ii), the term ‘security-based swap’ 

14 does not include any agreement, contract, 

15 or transaction that— 

16 ‘‘(I) would otherwise be included 

17 as a ‘security-based swap’ under sub18 paragraph (A); and 

19 ‘‘(II) is entered into by parties, 

20 neither of which is a ‘security-based 

21 swap dealer’ that is an insured deposi22 tory institution or a ‘major security23 based swap participant’ that is an in24 sured depository institution, that re25 port information or prepare financial 


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1 statements on a consolidated basis, or 

2 for which a company affiliated with 

3 both parties reports information or 

4 prepares financial statements on a 

5 consolidated basis. 

6 ‘‘(ii) REPORTING.—All agreements, 

7 contracts, or transactions described in 

8 clause (i) shall be reported to either a se9 curity-based swap data repository, or, if 

10 there is no security-based swap data repos11 itory that would accept such agreements, 

12 contracts, or transactions, to the Commis13 sion pursuant to section 13A, within such 

14 time period as the Commission may by rule 

15 or regulation prescribe. 

16 ‘‘(iii) PRESERVATION OF FEDERAL

17 RESERVE ACT AUTHORITY.—Nothing in 

18 this subparagraph shall exempt a trans19 action described in this subparagraph from 

20 sections 23A or 23B of the Federal Re21 serve Act or implementing regulations 

22 thereunder. 

23 ‘‘(iv) PROTECTION OF INSURANCE

24 FUNDS.—Nothing in this subparagraph 

25 shall be construed to prevent the regulator 


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1 of a Federal or State insurance fund or 

2 guaranty fund from exercising its other ex3 isting authority to protect the integrity of 

4 such a fund, except that such regulator 

5 shall not subject security-based swap 

6 transactions between affiliated companies 

7 to clearing and execution requirements 

8 under section 3C, to any applicable margin 

9 and capital requirements of section 15F(e), 

10 or to reporting requirements of title VII of 

11 Public Law 111–203 other than those set 

12 forth in clause (ii). 

13 ‘‘(v) PRESERVATION OF FEDERAL

14 AND STATE REGULATORY AUTHORITIES.— 

15 Nothing in this subparagraph shall affect 

16 the Federal banking agencies’ safety-and17 soundness authorities over banks estab18 lished in law other than title VII of Public 

19 Law 111–203 or the authorities of State 

20 insurance regulators over insurers, includ21 ing the authority to impose capital require22 ments with regard to security-based swaps. 

23 For purposes of this clause, the term 

24 ‘bank’ shall be defined pursuant to section 

25 3(a)(6) of the Securities Exchange Act of 


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1 1934, ‘insurer’ shall be defined pursuant 

2 to title V of Public Law 111–203, and ‘se3 curity-based swap’ shall be defined pursu4 ant to title VII of Public Law 111–203. 

5 ‘‘(vi) PREVENTION OF EVASION.—The 

6 Commission may prescribe rules under this 

7 subparagraph (and issue interpretations of 

8 such rules) as determined by the Commis9 sion to be necessary to include in the defi10 nition of security-based swap under this 

11 paragraph any agreement, contract, or 

12 transaction that has been structured to 

13 evade the requirements of this Act applica14 ble to security-based swaps.’’. 

15 (2) TREATMENT OF AFFILIATES.—Section 

16 3C(g)(4)(A) of the Securities Exchange Act of 1934 

17 (15 U.S.C. 78c-3(g)(4)(A)), as added by section 

18 763(a) of the Dodd-Frank Wall Street Reform and 

19 Consumer Protection Act, is amended to read as fol20 lows: 

21 ‘‘(i) IN GENERAL.—An affiliate of a 

22 person that qualifies for an exception 

23 under this subsection (including affiliate 

24 entities predominantly engaged in pro25 viding financing for the purchase of the 


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1 merchandise or manufactured goods of the 

2 person) may qualify for the exception only 

3 if the affiliate enters into the security4 based swap to hedge or mitigate the com5 mercial risk of the person or other affiliate 

6 of the person that is not a financial enti7 ty.’’. 

Æ 


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