II 

112TH CONGRESS 

1ST SESSION S. 947 

To provide end user exemptions from certain provisions of the Commodity 

Exchange Act and the Securities Exchange Act of 1934, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 11, 2011 

Mr. JOHANNS (for himself, Mr. TOOMEY, Mr. CRAPO, Mr. HOEVEN, Mr. 

WICKER, Mr. MORAN, and Mr. COCHRAN) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To provide end user exemptions from certain provisions of 

the Commodity Exchange Act and the Securities Exchange Act of 1934, 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. MARGIN RULES. 

4 (a) CAPITAL AND MARGIN REQUIREMENTS.—Section 

5 4s(e) of the Commodity Exchange Act (7 U.S.C. 6s(e)) 

6 is amended by adding at the end the following: 

7 ‘‘(4) APPLICABILITY WITH RESPECT TO

8 COUNTERPARTIES.—The margin requirements of 


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1 this subsection shall not apply to swaps in which 1 

2 of the counterparties is not— 

3 ‘‘(A) a swap dealer or major swap partici4 pant; 

5 ‘‘(B) an investment fund that— 

6 ‘‘(i) has issued securities (other than 

7 debt securities) to more than 5 unaffiliated 

8 persons; 

9 ‘‘(ii) would be an investment company 

10 (as defined in section 3 of the Investment 

11 Company Act of 1940 (15 U.S.C. 80a–3)) 

12 but for paragraph (1) or (7) of subsection 

13 (c) of that section; and 

14 ‘‘(iii) is not primarily invested in 

15 physical assets (including commercial real 

16 estate) directly or through an interest in 

17 an affiliate that owns the physical assets; 

18 ‘‘(C) a regulated entity, as defined in sec19 tion 1303 of the Federal Housing Enterprises 

20 Financial Safety and Soundness Act of 1992 

21 (12 U.S.C. 4502); or 

22 ‘‘(D) a commodity pool. 

23 ‘‘(5) MARGIN TRANSITION RULES.—Swaps en24 tered into before the date on which final rules are 

25 required to be promulgated under section 712(e) of 


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1 the Dodd-Frank Wall Street Reform and Consumer 

2 Protection Act (15 U.S.C. 8302(e)) shall be exempt 

3 from the margin requirements under this sub4 section.’’. 

5 (b) MAJOR SWAP PARTICIPANT.—Section 1a(33)(A) 

6 of the Commodity Exchange Act (7 U.S.C. 1a(33)(A)) is 

7 amended by striking clause (ii) and inserting the following: 

8 ‘‘(ii) whose outstanding swaps create 

9 substantial net counterparty exposure that 

10 could have serious adverse effects on the 

11 financial stability of the United States 

12 banking system or financial markets; or’’. 

13 SEC. 2. SECURITIES LAWS AMENDMENTS. 

14 (a) MARGIN REQUIREMENTS.—Section 15F(e) of the 

15 Securities Exchange Act of 1934 (15 U.S.C. 780–10(e)), 

16 as added by section 764 of the Dodd-Frank Wall Street 

17 Reform and Consumer Protection Act, is amended by add18 ing at the end the following: 

19 ‘‘(4) APPLICABILITY WITH RESPECT TO

20 COUNTERPARTIES.—The margin requirements of 

21 this subsection shall not apply to security-based 

22 swaps in which 1 of the counterparties is not— 

23 ‘‘(A) a security-based swap dealer or major 

24 security-based swap participant; 


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1 ‘‘(B) an investment fund that would be an 

2 investment company (as defined in section 3 of 

3 the Investment Company Act of 1940 (15 

4 U.S.C. 80a–3)), but for paragraph (1) or (7) of 

5 section 3(c) of that Act (15 U.S.C. 80a–3(c)), 

6 that is not primarily invested in physical assets 

7 (including commercial real estate) directly or 

8 through interest in its affiliates that own such 

9 assets; 

10 ‘‘(C) a regulated entity, as defined in sec11 tion 1303 of the Federal Housing Enterprises 

12 Financial Safety and Soundness Act of 1992 

13 (12 U.S.C. 4502); or 

14 ‘‘(D) a commodity pool. 

15 ‘‘(5) MARGIN TRANSITION RULES.—Security16 based swaps entered into before the date on which 

17 final rules are required to be published under section 

18 712(a)(5) of the Wall Street Transparency and Ac19 countability Act of 2010 (15 U.S.C. 8302(a)(5)) are 

20 exempt from the margin requirements of this sub21 section.’’. 

22 (b) DEFINITIONS.—Section 3(a)(67)(A)(ii)(II) of the 

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

24 78c(a)(67)(A)(ii)(II)), as amended to read as follows: 


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1 ‘‘(II) whose outstanding security2 based swaps create substantial net 

3 counterparty exposure that could have 

4 serious adverse effects on the financial 

5 stability of the United States banking 

6 system or financial markets;’’. 

7 SEC. 3. EFFECTIVE DATE. 

8 The amendments made by this Act shall have the 

9 same effective date as provided in section 774 of the Wall 

10 Street Transparency and Accountability Act of 2010 (15 

11 U.S.C. 77b note). 

Æ 


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