IB 

Union Calendar No. 223 

111TH CONGRESS 

1ST SESSION H. R. 977 

[Report No. 111–385, Part I] 

To amend the Commodity Exchange Act to bring greater transparency and 

accountability to commodity markets, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 11, 2009 

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

Services, 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 

DECEMBER 19, 2009 

Additional sponsors: Mr. HOLDEN, Mr. BOSWELL, Mr. CARDOZA, Ms. 

HERSETH SANDLIN, Mr. WALZ, Mr. KAGEN, Mr. SCHRADER, Mr. MASSA, 

Ms. MARKEY of Colorado, Mr. SCHAUER, Mr. KISSELL, Mr. POMEROY, 

Mr. WELCH, Mr. HIGGINS, Mr. ANDREWS, Mr. MICHAUD, Mr. SHULER, 

Mr. RAHALL, Mr. WEXLER, Mr. PASCRELL, Mr. HALL of New York, Mr. 

BRIGHT, Mr. BISHOP of New York, Mr. COHEN, and Mr. HODES

DECEMBER 19, 2009 

Reported from the Committee on Agriculture with an amendment and referred 

to the Committee on the Judiciary for a period ending not later than December 19, 2009, for consideration of such provisions of the bill and 

amendment as fall within the jurisdiction of that committee pursuant to 

clause 1(k), rule X 

[Strike out all after the enacting clause and insert the part printed in italic] 

DECEMBER 19, 2009 

Committees on Financial Services and the Judiciary discharged; committed to 

the Committee of the Whole House on the State of the Union and ordered to be printed 


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[For text of introduced bill, see copy of bill as introduced on February 11, 2009] 

A BILL 

To amend the Commodity Exchange Act to bring greater 

transparency and accountability to commodity markets, 

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 Markets 

5 Transparency and Accountability Act of 2009’’. 

6 SEC. 2. TABLE OF CONTENTS. 

7 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

Sec. 3. Speculative limits and transparency of off-shore trading. 

Sec. 4. Detailed reporting and disaggregation of market data. 

Sec. 5. Transparency and recordkeeping authorities. 

Sec. 6. Trading limits to prevent excessive speculation. 

Sec. 7. CFTC Administration. 

Sec. 8. Review of prior actions. 

Sec. 9. Review of over-the-counter markets. 

Sec. 10. Study relating to international regulation of energy commodity markets. 

Sec. 11. Over-the-counter authority. 

Sec. 12. Expedited process. 

Sec. 13. Certain exclusions and exemptions available only for certain transactions 

settled and cleared through registered derivatives clearing organizations. 

Sec. 14. Treatment of emission allowances and offset credits. 

Sec. 15. Inspector General of the Commodity Futures Trading Commission. 

Sec. 16. Authority of Commodity Futures Trading Commission to suspend trading in credit default swaps. 

Sec. 17. Authority of Commodity Futures Trading Commission to prosecute 

criminal violations of the Commodity Exchange Act. 

Sec. 18. Diversity of directors of boards of trade. 


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1 SEC. 3. SPECULATIVE LIMITS AND TRANSPARENCY OF OFF2 SHORE TRADING. 

3 (a) IN GENERAL.—Section 4 of the Commodity Ex4 change Act (7 U.S.C. 6) is amended by adding at the end 

5 the following: 

6 ‘‘(e) FOREIGN BOARDS OF TRADE.— 

7 ‘‘(1) IN GENERAL.—The Commission may not 

8 permit a foreign board of trade to provide to the 

9 members of the foreign board of trade or other partici10 pants located in the United States direct access to the 

11 electronic trading and order matching system of the 

12 foreign board of trade with respect to an agreement, 

13 contract, or transaction that settles against any price 

14 (including the daily or final settlement price) of 1 or 

15 more contracts listed for trading on a registered enti16 ty, unless— 

17 ‘‘(A) the foreign board of trade makes public 

18 daily trading information regarding the agree19 ment, contract, or transaction that is comparable 

20 to the daily trading information published by 

21 the registered entity for the 1 or more contracts 

22 against which the agreement, contract, or trans23 action traded on the foreign board of trade set24 tles; and 


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1 ‘‘(B) the foreign board of trade (or the for2 eign futures authority that oversees the foreign 

3 board of trade)— 

4 ‘‘(i) adopts position limits (including 

5 related hedge exemption provisions) for the 

6 agreement, contract, or transaction that are 

7 comparable, taking into consideration the 

8 relative sizes of the respective markets, to 

9 the position limits (including related hedge 

10 exemption provisions) adopted by the reg11 istered entity for the 1 or more contracts 

12 against which the agreement, contract, or 

13 transaction traded on the foreign board of 

14 trade settles; 

15 ‘‘(ii) has the authority to require or di16 rect market participants to limit, reduce, or 

17 liquidate any position the foreign board of 

18 trade (or the foreign futures authority that 

19 oversees the foreign board of trade) deter20 mines to be necessary to prevent or reduce 

21 the threat of price manipulation, excessive 

22 speculation as described in section 4a, price 

23 distortion, or disruption of delivery or the 

24 cash settlement process; 


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1 ‘‘(iii) agrees to promptly notify the 

2 Commission, with regard to the agreement, 

3 contract, or transaction, of any change re4 garding— 

5 ‘‘(I) the information that the for6 eign board of trade will make publicly 

7 available; 

8 ‘‘(II) the position limits that the 

9 foreign board of trade or foreign fu10 tures authority will adopt and enforce; 

11 ‘‘(III) the position reductions re12 quired to prevent manipulation, exces13 sive speculation as described in section 

14 4a, price distortion, or disruption of 

15 delivery or the cash settlement process; 

16 and 

17 ‘‘(IV) any other area of interest 

18 expressed by the Commission to the for19 eign board of trade or foreign futures 

20 authority; 

21 ‘‘(iv) provides information to the Com22 mission regarding large trader positions in 

23 the agreement, contract, or transaction that 

24 is comparable to the large trader position 

25 information collected by the Commission for 


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1 the 1 or more contracts against which the 

2 agreement, contract, or transaction traded 

3 on the foreign board of trade settles; and 

4 ‘‘(v) provides the Commission with in5 formation necessary to publish reports on 

6 aggregate trader positions for the agree7 ment, contract, or transaction traded on the 

8 foreign board of trade that are comparable 

9 to such reports on aggregate trading posi10 tions for 1 or more contracts against which 

11 the agreement, contract, or transaction 

12 traded on the foreign board of trade settles. 

13 ‘‘(2) EXISTING FOREIGN BOARDS OF TRADE.— 

14 Paragraph (1) shall not be effective with respect to 

15 any agreement, contract, or transaction executed on a 

16 foreign board of trade to which the Commission had 

17 granted direct access permission before the date of the 

18 enactment of this subsection until the date that is 180 

19 days after such date of enactment.’’. 

20 (b) LIABILITY OF REGISTERED PERSONS TRADING ON

21 A FOREIGN BOARD OF TRADE.— 

22 (1) Section 4(a) of such Act (7 U.S.C. 6(a)) is 

23 amended by inserting ‘‘or by subsection (f)’’ after 

24 ‘‘Unless exempted by the Commission pursuant to 

25 subsection (c)’’. 


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1 (2) Section 4 of such Act (7 U.S.C. 6) is further 

2 amended by adding at the end the following: 

3 ‘‘(f)(1) A person registered with the Commission, or 

4 exempt from registration by the Commission, under this Act 

5 may not be found to have violated subsection (a) with re6 spect to a transaction in, or in connection with, a contract 

7 of sale of a commodity for future delivery if the person— 

8 ‘‘(A) has reason to believe the transaction and 

9 the contract is made on or subject to the rules of a 

10 board of trade that is— 

11 ‘‘(i) legally organized under the laws of a 

12 foreign country; 

13 ‘‘(ii) authorized to act as a board of trade 

14 by a foreign futures authority; and 

15 ‘‘(iii) subject to regulation by the foreign fu16 tures authority; and 

17 ‘‘(B) has not been determined by the Commission 

18 to be operating in violation of subsection (a). 

19 ‘‘(2) Nothing in this subsection shall be construed as 

20 implying or creating any presumption that a board of 

21 trade, exchange, or market is located outside the United 

22 States, or its territories or possessions, for purposes of sub23 section (a).’’. 


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1 (c) CONTRACT ENFORCEMENT FOR FOREIGN FUTURES

2 CONTRACTS.—Section 22(a) of such Act (7 U.S.C. 25(a)) 

3 is amended by adding at the end the following: 

4 ‘‘(5) A contract of sale of a commodity for future 

5 delivery traded or executed on or through the facilities 

6 of a board of trade, exchange, or market located out7 side the United States for purposes of section 4(a) 

8 shall not be void, voidable, or unenforceable, and a 

9 party to such a contract shall not be entitled to re10 scind or recover any payment made with respect to 

11 the contract, based on the failure of the foreign board 

12 of trade to comply with any provision of this Act.’’. 

13 SEC. 4. DETAILED REPORTING AND DISAGGREGATION OF 

14 MARKET DATA. 

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

16 6), as amended by section 3 of this Act, is amended by add17 ing at the end the following: 

18 ‘‘(g) DETAILED REPORTING AND DISAGGREGATION OF

19 MARKET DATA.— 

20 ‘‘(1) INDEX TRADERS AND SWAP DEALERS RE21 PORTING.—The Commission shall issue a proposed 

22 rule defining and classifying index traders and swap 

23 dealers (as those terms are defined by the Commis24 sion) for purposes of data reporting requirements and 

25 setting routine detailed reporting requirements for 


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1 any positions of such entities in contracts traded on 

2 designated contract markets, derivatives transaction 

3 execution facilities, foreign boards of trade subject to 

4 section 4(e), and electronic trading facilities with re5 spect to significant price discovery contracts not later 

6 than 90 days after the date of the enactment of this 

7 subsection, and issue a final rule within 180 days 

8 after such date of enactment. 

9 ‘‘(2) DISAGGREGATION OF INDEX FUNDS AND

10 OTHER DATA IN MARKETS.—Subject to section 8 and 

11 beginning within 60 days of the issuance of the final 

12 rule required by paragraph (1), the Commission shall 

13 disaggregate and make public monthly— 

14 ‘‘(A) the number of positions and total no15 tional value of index funds and other passive, 

16 long-only and short-only positions (as defined by 

17 the Commission) in all markets to the extent 

18 such information is available; and 

19 ‘‘(B) data on speculative positions relative 

20 to bona fide hedgers in those markets to the ex21 tent such information is available.’’. 

22 SEC. 5. TRANSPARENCY AND RECORDKEEPING AUTHORI23 TIES. 

24 (a) IN GENERAL.—Section 4g(a) of the Commodity 

25 Exchange Act (7 U.S.C. 6g(a)) is amended— 


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1 (1) by inserting ‘‘a’’ before ‘‘futures commission 

2 merchant’’; and 

3 (2) by inserting ‘‘and transactions and positions 

4 traded pursuant to subsection (d), (g), (h)(1), or 

5 (h)(3) of section 2, or any exemption issued by the 

6 Commission by rule, regulation or order,’’ after 

7 ‘‘United States or elsewhere,’’. 

8 (b) REPORTS OF DEALS EQUAL TO OR IN EXCESS OF

9 TRADING LIMITS.— 

10 (1) IN GENERAL.—Section 4i of such Act (7 

11 U.S.C. 6i) is amended— 

12 (A) in the first sentence— 

13 (i) by inserting ‘‘(a)’’ before ‘‘It shall’’; 

14 and 

15 (ii) by inserting ‘‘in the United States 

16 or elsewhere, and of transactions and posi17 tions in any such commodity entered into 

18 pursuant to subsection (d), (g), (h)(1), or 

19 (h)(3) of section 2, or any exemption issued 

20 by the Commission by rule, regulation or 

21 order’’ before ‘‘, and of cash or spot’’; and 

22 (B) by striking all that follows the 1st sen23 tence and inserting the following: 

24 ‘‘(b) Upon special call by the Commission, any person 

25 shall provide to the Commission, in a form and manner 


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1 and within the period specified in the special call, books 

2 and records of all transactions and positions traded on or 

3 subject to the rules of any board of trade or electronic trad4 ing facility in the United States or elsewhere, or pursuant 

5 to subsection (d), (g), (h)(1), or (h)(3) of section 2, or any 

6 exemption issued by the Commission by rule, regulation, 

7 or order, as the Commission may determine appropriate to 

8 deter and prevent price manipulation or any other disrup9 tion to market integrity or to diminish, eliminate, or pre10 vent excessive speculation as described in section 4a(a). 

11 ‘‘(c) Such books and records described in subsections 

12 (a) and (b) shall show complete details concerning all such 

13 transactions, positions, inventories, and commitments, in14 cluding the names and addresses of all persons having any 

15 interest therein, shall be kept for a period of 5 years, and 

16 shall be open at all times to inspection by any representa17 tive of the Commission or the Department of Justice. For 

18 the purposes of this section, the futures and cash or spot 

19 transactions and positions of any person shall include such 

20 transactions and positions of any persons directly or indi21 rectly controlled by the person.’’. 

22 (2) NOTICE AND COMMENT.—Within 60 days 

23 after the date of the enactment of this subsection, the 

24 Commodity Futures Trading Commission shall con25 duct rulemaking, including an opportunity for notice 


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1 and comment, on implementing the amendments 

2 made by paragraph (1). 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Section 2(d)(1) of such Act (7 U.S.C. 

5 2(d)(1)) is amended by striking ‘‘5b or 12(e)(2)(B)’’ 

6 and inserting ‘‘4g(a), 4i, 5b, or 12(e)(2)(B), and the 

7 regulations of the Commission pursuant to section 

8 4i(b) requiring reporting in connection with com9 modity option transactions)’’. 

10 (2) Section 2(d)(2) of such Act (7 U.S.C. 

11 2(d)(2)) is amended— 

12 (A) by inserting ‘‘4g(a), 4i,’’ before ‘‘5a 

13 (to’’; and 

14 (B) by inserting ‘‘, and the regulations of 

15 the Commission pursuant to section 4i(b) requir16 ing reporting in connection with commodity op17 tion transactions’’ after ‘‘12(e)(2)(B)’’. 

18 (3) Section 2(g) of such Act (7 U.S.C. 2(g)) is 

19 amended— 

20 (A) by inserting ‘‘4g(a), 4i,’’ before ‘‘5a 

21 (to’’; and 

22 (B) by inserting ‘‘, and the regulations of 

23 the Commission pursuant to section 4i(b) requir24 ing reporting in connection with commodity op25 tion transactions’’ after ‘‘12(e)(2)’’. 


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1 (4) Section 2(h)(2)(A) of such Act (7 U.S.C. 

2 2(h)(2)(A)) is amended to read as follows: 

3 ‘‘(A) sections 4g(a), 4i, 5b and 12(e)(2)(B), 

4 and the regulations of the Commission pursuant 

5 to section 4i(b) requiring reporting in connection 

6 with commodity option transactions;’’. 

7 (5) Section 2(h)(4)(A) of such Act (7 U.S.C. 

8 2(h)(4)(A)) is amended to read as follows: 

9 ‘‘(A) sections 4g(a), 4i, 5a (to the extent 

10 provided in section 5a(g)), 5b, 5d, and 

11 12(e)(2)(B), and the regulations of the Commis12 sion pursuant to section 4i(b) requiring report13 ing in connection with commodity option trans14 actions;’’. 

15 SEC. 6. TRADING LIMITS TO PREVENT EXCESSIVE SPECULA16 TION. 

17 (a) POSITION LIMITS.—Section 4a of the Commodity 

18 Exchange Act (7 U.S.C. 6a) is amended— 

19 (1) in subsection (a)— 

20 (A) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 

21 (B) by adding after and below the end the 

22 following: 

23 ‘‘(2)(A) In accordance with the standards set forth in 

24 paragraph (1) of this subsection and consistent with the 

25 good faith exception cited in subsection (b)(2), with respect 


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1 to physical commodities other than excluded commodities 

2 as defined by the Commission, the Commission shall by 

3 rule, regulation, or order establish limits on the amount of 

4 positions, as appropriate, other than bona fide hedge posi5 tions, that may be held by any person with respect to con6 tracts of sale for future delivery or with respect to options 

7 on such contracts or commodities traded on or subject to 

8 the rules of a contract market or derivatives transaction 

9 execution facility, or on an electronic trading facility as 

10 a significant price discovery contract. 

11 ‘‘(B)(i) For exempt commodities, the limits shall be es12 tablished within 180 days after the date of the enactment 

13 of this paragraph. 

14 ‘‘(ii) For agricultural commodities, the limits shall be 

15 established within 270 days after the date of the enactment 

16 of this paragraph. 

17 ‘‘(3) In establishing the limits required in paragraph 

18 (2), the Commission, as appropriate, shall set limits— 

19 ‘‘(A) on the number of positions that may be 

20 held by any person for the spot month, each other 

21 month, and the aggregate number of positions that 

22 may be held by any person for all months; 

23 ‘‘(B) to the maximum extent practicable, in its 

24 discretion— 


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1 ‘‘(i) to diminish, eliminate, or prevent ex2 cessive speculation as described under this sec3 tion; 

4 ‘‘(ii) to deter and prevent market manipu5 lation, squeezes, and corners; 

6 ‘‘(iii) to ensure sufficient market liquidity 

7 for bona fide hedgers; and 

8 ‘‘(iv) to ensure that the price discovery 

9 function of the underlying market is not dis10 rupted; and 

11 ‘‘(C) to the maximum extent practicable, in its 

12 discretion, take into account the total number of posi13 tions in fungible agreements, contracts, or trans14 actions that a person can hold in other markets. 

15 ‘‘(4)(A) Not later than 150 days after the establishment 

16 of position limits pursuant to paragraph (2), and bian17 nually thereafter, the Commission shall hold 2 public hear18 ings, 1 for agriculture commodities and 1 for energy com19 modities as such terms are defined by the Commission, in 

20 order to receive recommendations regarding the position 

21 limits to be established in paragraph (2). 

22 ‘‘(B) Each public hearing held pursuant to subpara23 graph (A) shall, at a minimum providing there is sufficient 

24 interest, receive recommendations from— 


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1 ‘‘(i) 7 predominantly commercial short hedgers 

2 of the actual physical commodity for future delivery; 

3 ‘‘(ii) 7 predominantly commercial long hedgers 

4 of the actual physical commodity for future delivery; 

5 ‘‘(iii) 4 non-commercial participants in markets 

6 for commodities for future delivery; and 

7 ‘‘(iv) each designated contract market or deriva8 tives transaction execution facility upon which a con9 tract in the commodity for future delivery is traded, 

10 and each electronic trading facility that has a signifi11 cant price discovery contract in the commodity. 

12 ‘‘(C) Within 60 days after each public hearing held 

13 pursuant to subparagraph (A), the Commission shall pub14 lish in the Federal Register its response to the recommenda15 tions regarding position limits heard at the hearing.’’; and 

16 (2) in subsection (c)— 

17 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 

18 (B) by adding after and below the end the 

19 following: 

20 ‘‘(2) For the purposes of implementation of subsection 

21 (a)(2) for contracts of sale for future delivery and options 

22 on such contracts or commodities, the Commission shall de23 fine what constitutes a bona fide hedging transaction or po24 sition as a transaction or position that— 


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1 ‘‘(A)(i) represents a substitute for transactions 

2 made or to be made or positions taken or to be taken 

3 at a later time in a physical marketing channel; 

4 ‘‘(ii) is economically appropriate to the reduc5 tion of risks in the conduct and management of a 

6 commercial enterprise; and 

7 ‘‘(iii) arises from the potential change in the 

8 value of— 

9 ‘‘(I) assets that a person owns, produces, 

10 manufactures, processes, or merchandises or an11 ticipates owning, producing, manufacturing, 

12 processing, or merchandising; 

13 ‘‘(II) liabilities that a person owns or an14 ticipates incurring; or 

15 ‘‘(III) services that a person provides, pur16 chases, or anticipates providing or purchasing; 

17 or 

18 ‘‘(B) reduces risks attendant to a position result19 ing from a transaction that— 

20 ‘‘(i) was executed pursuant to subsection 

21 (g), (h)(1), or (h)(3) of section 2, or an exemp22 tion issued by the Commission by rule, regula23 tion or order; and 

24 ‘‘(ii)(I) was executed opposite a 

25 counterparty for which the transaction would 


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1 qualify as a bona fide hedging transaction pur2 suant to subparagraph (A); or 

3 ‘‘(II) meets the requirements of subpara4 graph (A).’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) Section 5(d)(5) of such Act (7 U.S.C. 

7 7(d)(5)) is amended to read as follows: 

8 ‘‘(5) To reduce the potential threat of market 

9 manipulation or congestion, especially during trading 

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

11 for each of its contracts, where necessary and appro12 priate, position limitations or position accountability 

13 standards for speculators. For any contract that is 

14 subject to a position limitation established by the 

15 Commission pursuant to section 4a(a), the board of 

16 trade shall set its position limitation at a level no 

17 higher than the Commission-established limitation.’’. 

18 (2) Section 5a(d)(4) of such Act (7 U.S.C. 

19 7a(d)(4)) is amended to read as follows: 

20 ‘‘(4) To reduce the potential threat of market 

21 manipulation or congestion, especially during trading 

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

23 for each of its contracts, where necessary and appro24 priate, position limitations or position accountability 

25 standards for speculators. For any contract that is 


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1 subject to a position limitation established by the 

2 Commission pursuant to section 4a(a), the board of 

3 trade shall set its position limitation at a level no 

4 higher than the Commission-established limitation.’’. 

5 (3) Section 2(h)(7)(C)(ii)(IV) of such Act (7 

6 U.S.C. 2(h)(7)(C)(ii)(IV)) is amended to read as fol7 lows: 

8 ‘‘(IV) The electronic trading facil9 ity shall adopt, where necessary and 

10 appropriate, position limitations or 

11 position accountability standards for 

12 speculators in significant price dis13 covery contracts, taking into account 

14 positions in other agreements, con15 tracts, and transactions that are treat16 ed by a derivatives clearing organiza17 tion, whether registered or not reg18 istered, as fungible with such signifi19 cant price discovery contracts to reduce 

20 the potential threat of market manipu21 lation or congestion, especially during 

22 trading in the delivery month. For any 

23 contract that is subject to a position 

24 limitation established by the Commis25 sion pursuant to section 4a(a), the 


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1 electronic trading facility shall set its 

2 position limitation at a level no higher 

3 than the Commission-established limi4 tation.’’. 

5 SEC. 7. CFTC ADMINISTRATION. 

6 Section 2(a)(7) of the Commodity Exchange Act (7 

7 U.S.C. 2(a)(7)) is amended by adding at the end the fol8 lowing: 

9 ‘‘(D) ADDITIONAL EMPLOYEES.—As soon as 

10 practicable after the date of the enactment of this 

11 subparagraph, subject to appropriations, the 

12 Commission shall appoint a sufficient number of 

13 full-time employees (in addition to the employees 

14 employed by the Commission as of the date of the 

15 enactment of this subparagraph)— 

16 ‘‘(i) to increase the public trans17 parency of operations in markets; 

18 ‘‘(ii) to improve the enforcement of this 

19 Act in those markets; 

20 ‘‘(iii) to enhance oversight of the trad21 ing and clearing of contracts, agreements, 

22 and transactions; and 

23 ‘‘(iv) to carry out the provisions of the 

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1 countability Act of 2009 and such other du2 ties as are prescribed by the Commission.’’. 

3 SEC. 8. REVIEW OF PRIOR ACTIONS. 

4 Notwithstanding any other provision of the Com5 modity Exchange Act, the Commodity Futures Trading 

6 Commission shall review, as appropriate, all regulations, 

7 rules, exemptions, exclusions, guidance, no action letters, or8 ders, other actions taken by or on behalf of the Commission, 

9 and any action taken pursuant to the Commodity Exchange 

10 Act by an exchange, self-regulatory organization, or any 

11 other registered entity, that are currently in effect, to ensure 

12 that such prior actions are in compliance with the provi13 sions of this Act. 

14 SEC. 9. REVIEW OF OVER-THE-COUNTER MARKETS. 

15 (a) STUDY.—The Commodity Futures Trading Com16 mission shall conduct a study— 

17 (1) to determine the efficacy, practicality, and 

18 consequences of establishing limits on the size of a po19 sition, other than bona fide hedge positions, that may 

20 be held by any person with respect to agreements, 

21 contracts, or transactions involving an agricultural 

22 or energy commodity, conducted in reliance on section 

23 2(g) or 2(h) of the Commodity Exchange Act and of 

24 any exemption issued by the Commission by rule, reg25 ulation or order, that are fungible (as defined by the 


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1 Commission) with agreements, contracts, or trans2 actions traded on or subject to the rules of any board 

3 of trade or of any electronic trading facility with re4 spect to a significant price discovery contract, as a 

5 means to deter and prevent price manipulation or 

6 any other disruption to market integrity or to dimin7 ish, eliminate, or prevent excessive speculation as de8 scribed in section 4a of such Act for physical-based 

9 agricultural or energy commodities; and 

10 (2) to determine the efficacy, practicality, and 

11 consequences of establishing aggregate position limits 

12 for similar agreements, contracts, or transactions for 

13 physical-based agricultural or energy commodities 

14 traded— 

15 (A) on designated contract markets; 

16 (B) on derivatives transaction execution fa17 cilities; and 

18 (C) in reliance on such section 2(g) or 2(h) 

19 and of any exemption issued by the Commission 

20 by rule, regulation or order. 

21 (b) PUBLIC HEARINGS.—The Commission shall pro22 vide for not less than 2 public hearings to take testimony, 

23 on the record, as part of the fact- gathering process in prep24 aration of the report. 


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1 (c) REPORT AND RECOMMENDATIONS.—Not less than 

2 12 months after the date of the enactment of this section, 

3 the Commission shall provide to the Committee on Agri4 culture of the House of Representatives and the Committee 

5 on Agriculture, Nutrition, and Forestry of the Senate a re6 port that— 

7 (1) describes the results of the study; and 

8 (2) provides recommendations on any actions 

9 necessary to deter and prevent price manipulation or 

10 any other disruption to market integrity or to dimin11 ish, eliminate, or prevent excessive speculation as de12 scribed in section 4a of the Commodity Exchange Act 

13 for physical-based commodities, including— 

14 (A) any additional statutory authority that 

15 the Commission determines to be necessary to 

16 implement the recommendations; and 

17 (B) a description of the resources that the 

18 Commission considers to be necessary to imple19 ment the recommendations. 

20 SEC. 10. STUDY RELATING TO INTERNATIONAL REGULA21 TION OF ENERGY COMMODITY MARKETS. 

22 (a) IN GENERAL.—The Comptroller General of the 

23 United States shall conduct a study of the international re24 gime for regulating the trading of energy commodity futures 

25 and derivatives. 


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1 (b) ANALYSIS.—The study shall include an analysis 

2 of, at a minimum— 

3 (1) key common features and differences among 

4 countries in the regulation of energy commodity trad5 ing, including with respect to market oversight and 

6 enforcement standards and activities; 

7 (2) variations among countries with respect to 

8 the use of position limits, position accountability lev9 els, or other thresholds to detect and prevent price ma10 nipulation, excessive speculation as described in sec11 tion 4a of the Commodity Exchange Act, or other un12 fair trading practices; 

13 (3) variations in practices regarding the dif14 ferentiation of commercial and noncommercial trad15 ing; 

16 (4) agreements and practices for sharing market 

17 and trading data among futures authorities and be18 tween futures authorities and the entities that the fu19 tures authorities oversee; and 

20 (5) agreements and practices for facilitating 

21 international cooperation on market oversight, com22 pliance, and enforcement. 

23 (c) REPORT.—Not later than 1 year after the date of 

24 the enactment of this Act, the Comptroller General shall 

25 submit to the Committee on Agriculture of the House of 


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1 Representatives and the Committee on Agriculture, Nutri2 tion, and Forestry of the Senate a report that— 

3 (1) describes the results of the study; 

4 (2) addresses whether there is excessive specula5 tion, and if so, the effects of any such speculation and 

6 energy price volatility on energy futures; and 

7 (3) provides recommendations to improve open8 ness, transparency, and other necessary elements of a 

9 properly functioning market in a manner that pro10 tects consumers in the United States. 

11 SEC. 11. OVER-THE-COUNTER AUTHORITY. 

12 (a) IN GENERAL.—Section 2 of the Commodity Ex13 change Act (7 U.S.C. 2) is amended by adding at the end 

14 the following: 

15 ‘‘(j) OVER-THE-COUNTER AUTHORITY.— 

16 ‘‘(1) Notwithstanding subsections (d), (g), (h)(1), 

17 and (h)(3) of section 2, and any exemption issued by 

18 the Commission by rule, regulation, or order, the 

19 Commission shall assess and issue a finding on 

20 whether agreements, contracts, or transactions entered 

21 into in reliance on subsection (d), (g), (h)(1), or 

22 (h)(3) of section 2 or any other exemption issued by 

23 the Commission by rule, regulation, or order, that are 

24 fungible (as defined by the Commission) with agree25 ments, contracts, or transactions traded on or subject 


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1 to the rules of any board of trade or electronic trading 

2 facility with respect to a significant price discovery 

3 contract, alone or in conjunction with other similar 

4 agreements, contracts, or transactions, have the poten5 tial to— 

6 ‘‘(A) disrupt the liquidity or price discovery 

7 function on a registered entity; 

8 ‘‘(B) cause a severe market disturbance in 

9 the underlying cash or futures market; or 

10 ‘‘(C) prevent or otherwise impair the price 

11 of a contract listed for trading on a registered 

12 entity from reflecting the forces of supply and 

13 demand in any market. 

14 ‘‘(2) If the Commission makes a finding pursu15 ant to paragraph (1) of this subsection, the Commis16 sion may, in its discretion, utilize its authority under 

17 section 8a(9) to impose position limits (including, as 

18 appropriate and in its discretion, related hedge ex19 emption provisions for bona fide hedging comparable 

20 to bona fide hedge provisions of section 4a(c)(2)) on 

21 agreements, contracts, or transactions involved, and 

22 take corrective actions to enforce the limits.’’. 

23 (b) CONFORMING AMENDMENTS.— 


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1 (1) Section 2(d)(1) of such Act (7 U.S.C. 

2 2(d)(1)) is amended by inserting ‘‘subsection (j) of 

3 this section, and’’ after ‘‘(other than’’. 

4 (2) Section 2(d)(2) of such Act (7 U.S.C. 

5 2(d)(2)) is amended by inserting ‘‘subsection (j) of 

6 this section, and’’ after ‘‘(other than’’. 

7 (3) Section 2(g) of such Act (7 U.S.C. 2(g)) is 

8 amended by inserting ‘‘subsection (j) of this section, 

9 and’’ after ‘‘(other than’’. 

10 (4) Section 2(h)(2)(A) of such Act (7 U.S.C. 

11 2(h)(2)(A)), as amended by section 5(c)(4) of this Act, 

12 is amended by inserting ‘‘subsection (j) of this section 

13 and’’ before ‘‘sections’’. 

14 (5) Section 2(h)(4)(A) of such Act (7 U.S.C. 

15 2(h)(4)(A)), as amended by section 5(c)(5) of this Act, 

16 is amended by inserting ‘‘subsection (j) of this section 

17 and’’ before ‘‘sections’’. 

18 (6) Section 8a(9) of such Act (7 U.S.C. 

19 12a(a)(9)) is amended— 

20 (A) by striking ‘‘(9)’’ and inserting 

21 ‘‘(9)(A)’’; and 

22 (B) by striking ‘‘action.’’ and inserting ‘‘ac23 tion; and (B) to direct any person to abide by 

24 any position limits to agreements, contracts, or 


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1 transactions subject to section 2(j)(1) that are 

2 imposed pursuant to section 2(j)(2).’’. 

3 SEC. 12. EXPEDITED PROCESS. 

4 The Commodity Futures Trading Commission may 

5 use emergency and expedited procedures (including any ad6 ministrative or other procedure as appropriate) to carry 

7 out this Act if, in its discretion, it deems it necessary to 

8 do so. 

9 SEC. 13. CERTAIN EXCLUSIONS AND EXEMPTIONS AVAIL10 ABLE ONLY FOR CERTAIN TRANSACTIONS 

11 SETTLED AND CLEARED THROUGH REG12 ISTERED DERIVATIVES CLEARING ORGANIZA13 TIONS. 

14 (a) IN GENERAL.— 

15 (1) EXCLUSION OF CERTAIN DERIVATIVE TRANS16 ACTIONS.— 

17 (A) Section 2(d)(1) of the Commodity Ex18 change Act (7 U.S.C. 2(d)(1)) is amended— 

19 (i) by striking ‘‘and’’ at the end of sub20 paragraph (A); 

21 (ii) by striking the period at the end of 

22 subparagraph (B) and inserting ‘‘; and’’; 

23 and 

24 (iii) by adding at the end the fol25 lowing: 


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1 ‘‘(C) except as provided in section 4(h), the 

2 agreement, contract, or transaction is settled and 

3 cleared through a derivatives clearing organiza4 tion registered with the Commission.’’. 

5 (B) Section 2(d)(2) of such Act (7 U.S.C. 

6 2(d)(2)) is amended— 

7 (i) by striking ‘‘and’’ at the end of sub8 paragraph (B); 

9 (ii) by striking the period at the end of 

10 subparagraph (C) and inserting ‘‘; and’’; 

11 and 

12 (iii) by adding at the end the fol13 lowing: 

14 ‘‘(D) except as provided in section 4(h), the 

15 agreement, contract, or transaction is settled and 

16 cleared through a derivatives clearing organiza17 tion registered with the Commission.’’. 

18 (2) EXCLUSION FOR CERTAIN SWAP TRANS19 ACTIONS.—Section 2(g) of such Act (7 U.S.C. 2(g)) is 

20 amended— 

21 (A) by striking ‘‘and’’ at the end of para22 graph (2); 

23 (B) by striking the period at the end of 

24 paragraph (3) and inserting ‘‘; and’’; and 

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


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1 ‘‘(4) except as provided in section 4(h), settled 

2 and cleared through a derivatives clearing organiza3 tion registered with the Commission.’’. 

4 (3) EXEMPTION FOR CERTAIN TRANSACTIONS IN

5 EXEMPT COMMODITIES.— 

6 (A) Section 2(h)(1) of such Act ( 7 U.S.C. 

7 2(h)(1)) is amended— 

8 (i) by striking ‘‘and’’ at the end of sub9 paragraph (A); 

10 (ii) by striking the period at the end of 

11 subparagraph (B) and inserting ‘‘; and’’; 

12 and 

13 (iii) by adding at the end the fol14 lowing: 

15 ‘‘(C) except as provided in section 4(h), is 

16 settled and cleared through a derivatives clearing 

17 organization registered with the Commission.’’. 

18 (B) Section 2(h)(3) of such Act (7 U.S.C. 

19 2(h)(3)) is amended— 

20 (i) by striking ‘‘and’’ at the end of sub21 paragraph (A); 

22 (ii) by striking the period at the end of 

23 subparagraph (B) and inserting ‘‘; and’’; 

24 and 


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1 (iii) by adding at the end the fol2 lowing: 

3 ‘‘(C) except as provided in section 4(h), set4 tled and cleared through a derivatives clearing 

5 organization registered with the Commission.’’. 

6 (4) GENERAL EXEMPTIVE AUTHORITY.—Section 

7 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is amended by 

8 inserting ‘‘the agreement, contract, or transaction, ex9 cept as provided in section 4(h), will be settled and 

10 cleared through a derivatives clearing organization 

11 registered with the Commission and’’ before ‘‘the 

12 Commission determines’’. 

13 (b) ALTERNATIVES TO CLEARING THROUGH DERIVA14 TIVES CLEARING ORGANIZATIONS.—Section 4 of such Act 

15 (7 U.S.C. 6), as amended by sections 3 and 4 of this Act, 

16 is amended by adding at the end the following: 

17 ‘‘(h) ALTERNATIVES TO CLEARING THROUGH DERIVA18 TIVES CLEARING ORGANIZATIONS.— 

19 ‘‘(1) SETTLEMENT AND CLEARING THROUGH

20 CERTAIN OTHER REGULATED ENTITIES.— 

21 ‘‘(A) An agreement, contract, or trans22 action, or class thereof, relating to an excluded 

23 commodity, that would otherwise be required to 

24 be settled and cleared by section 2(d)(1)(C), 

25 2(d)(2)(D), or 2(g)(4) of this Act, or subsection 


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1 (c)(1) of this section may be settled and cleared 

2 through an entity listed in section 409(b)(1) of 

3 the Federal Deposit Insurance Corporation Im4 provement Act of 1991. 

5 ‘‘(B) An agreement, contract, or trans6 action, or class thereof, that would otherwise be 

7 required to be settled and cleared by section 

8 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 

9 2(h)(3)(C) of this Act, or subsection (c)(1) of this 

10 section may be settled and cleared through an 

11 entity listed in section 409(b)(3) of the Federal 

12 Deposit Insurance Corporation Improvement Act 

13 of 1991. 

14 ‘‘(2) WAIVER OF CLEARING REQUIREMENT.— 

15 ‘‘(A) The Commission, in its discretion, 

16 may exempt an agreement, contract, or trans17 action, or class thereof, that would otherwise be 

18 required by section 2(d)(1)(C), 2(d)(2)(D), 

19 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or 

20 subsection (c)(1) of this section to be settled and 

21 cleared through a derivatives clearing organiza22 tion registered with the Commission from such 

23 requirement. 

24 ‘‘(B) In granting exemptions pursuant to 

25 subparagraph (A), the Commission shall consult 


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1 with the Securities and Exchange Commission 

2 and the Board of Governors of the Federal Re3 serve System regarding exemptions that relate to 

4 excluded commodities or entities for which the 

5 Securities Exchange Commission or the Board of 

6 Governors of the Federal Reserve System serve as 

7 the primary regulator. 

8 ‘‘(C) Before granting an exemption pursu9 ant to subparagraph (A), the Commission shall 

10 find that the agreement, contract, or transaction, 

11 or class thereof— 

12 ‘‘(i) is highly customized as to its ma13 terial terms and conditions; 

14 ‘‘(ii) is transacted infrequently; 

15 ‘‘(iii) does not serve a significant 

16 price-discovery function in the marketplace; 

17 and 

18 ‘‘(iv) is being entered into by parties 

19 who can demonstrate the financial integrity 

20 of the agreement, contract, or transaction 

21 and their own financial integrity, as such 

22 terms and standards are determined by the 

23 Commission. The standards shall include a 

24 net capital requirement associated with any 

25 agreement, contract, or transaction subject 


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1 to an exemption from the clearing require2 ment that recognizes the risks associated 

3 with the absence of clearing. 

4 ‘‘(D) Any agreement, contract, or trans5 action, or class thereof, which is exempted pursu6 ant to subparagraph (A) shall be reported in a 

7 manner designated by the Commission to the 

8 Commission, the Securities and Exchange Com9 mission, the Board of Governors of the Federal 

10 Reserve System, or such other entity the Com11 mission deems appropriate. 

12 ‘‘(i) SPOT AND FORWARD EXCLUSION.—The settlement 

13 and clearing requirements of section 2(d)(1)(C), 2(d)(2)(D), 

14 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) shall not apply 

15 to an agreement, contract, or transaction of any cash com16 modity for immediate or deferred shipment or delivery, as 

17 defined by the Commission.’’. 

18 (c) ADDITIONAL REQUIREMENTS APPLICABLE TO AP19 PLICANTS FOR REGISTRATION AS A DERIVATIVES CLEARING

20 ORGANIZATION.—Section 5b(c)(2) of such Act (7 U.S.C. 

21 7a–1(c)(2)) is amended by adding at the end the following: 

22 ‘‘(O) DISCLOSURE OF GENERAL INFORMA23 TION.—The applicant shall disclose publicly and 

24 to the Commission information concerning— 


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1 ‘‘(i) the terms and conditions of con2 tracts, agreements, and transactions cleared 

3 and settled by the applicant; 

4 ‘‘(ii) the conventions, mechanisms, and 

5 practices applicable to the contracts, agree6 ments, and transactions; 

7 ‘‘(iii) the margin-setting methodology 

8 and the size and composition of the finan9 cial resource package of the applicant; and 

10 ‘‘(iv) other information relevant to 

11 participation in the settlement and clearing 

12 activities of the applicant. 

13 ‘‘(P) DAILY PUBLICATION OF TRADING IN14 FORMATION.—The applicant shall make public 

15 daily information on settlement prices, volume, 

16 and open interest for contracts settled or cleared 

17 pursuant to the requirements of section 

18 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 

19 2(h)(3)(C) or 4(c)(1) of this Act by the applicant 

20 if the Commission determines that the contracts 

21 perform a significant price discovery function 

22 for transactions in the cash market for the com23 modity underlying the contracts. 

24 ‘‘(Q) FITNESS STANDARDS.—The applicant 

25 shall establish and enforce appropriate fitness 


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1 standards for directors, members of any discipli2 nary committee, and members of the applicant, 

3 and any other persons with direct access to the 

4 settlement or clearing activities of the applicant, 

5 including any parties affiliated with any of the 

6 persons described in this subparagraph.’’. 

7 (d) AMENDMENTS.— 

8 (1) Section 409 of the Federal Deposit Insurance 

9 Corporation Improvement Act of 1991 (12 U.S.C. 

10 4422) is amended— 

11 (A) in subsection (a), by inserting after 

12 ‘‘Federal Reserve Act’’ the following: ‘‘, and the 

13 person is registered as a clearing agency under 

14 the Securities Exchange Act of 1934 or as a de15 rivatives clearing organization under the Com16 modity Exchange Act’’; and 

17 (B) in subsection (b)(3), by striking ‘‘the 

18 Comptroller of the Currency, the Board of Gov19 ernors of the Federal Reserve System, the Federal 

20 Deposit Insurance Corporation,’’. 

21 (2) Section 407 of the Legal Certainty for Bank 

22 Products Act of 2000 (7 U.S.C. 27e) is amended by 

23 inserting ‘‘and the settlement and clearing require24 ments of sections 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 


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1 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of such Act’’ after 

2 ‘‘the clearing of covered swap agreements’’. 

3 (3) Section 10 of the Federal Reserve Act is 

4 amended by adding at the end the following new pro5 vision: 

6 ‘‘The Board shall have no power to issue any rule, reg7 ulation, or order, or otherwise to establish the standards of 

8 regulation of any entity in its capacity as a multilateral 

9 clearing organization as defined in section 408 of the Fed10 eral Deposit Insurance Corporation Improvement Act of 

11 1991.’’. 

12 (4) Section 5b(b) of the Commodity Exchange 

13 Act (7 U.S.C. 7a–1(b)) is amended— 

14 (A) by striking ‘‘(b) VOLUNTARY REGISTRA15 TION.—A derivatives clearing organization’’ and 

16 inserting the following: 

17 ‘‘(b) VOLUNTARY REGISTRATION.— 

18 ‘‘(1) A derivatives clearing organization’’; and 

19 (B) by adding at the end the following: 

20 ‘‘(2)(A) A national bank, a State member bank, 

21 an insured State nonmember bank, an affiliate of a 

22 national bank, a State member bank, an insured 

23 State nonmember bank, or a corporation chartered 

24 under section 25A of the Federal Reserve Act may 


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1 register with the Commission as a derivatives clearing 

2 organization. 

3 ‘‘(B) The Commission shall expedite the applica4 tion of any institution referred to in subparagraph 

5 (A) to the extent that, as of the date of enactment of 

6 this paragraph, the institution had received the ap7 proval of the Board of Governors of the Federal Re8 serve System to act as a multilateral clearing organi9 zation.’’. 

10 (e) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—The amendments made by 

12 this section shall take effect 150 days after the date 

13 of the enactment of this Act. 

14 (2) PUBLICATION OF GUIDELINES.—Before the 

15 amendments made by this section take effect, the 

16 Commission shall through rulemaking, after notice 

17 and comment, establish and publish guidelines out18 lining the terms and conditions that must apply for 

19 an agreement, contract, transaction, or class thereof, 

20 to qualify for the exemption cited in section 4(h)(2) 

21 of the Commodity Exchange Act. 

22 (f) TRANSITION RULE.—Any agreement, contract, or 

23 transaction entered into before the date of the enactment 

24 of this Act or within 150 days after such date of enactment, 

25 in reliance on subsection (d), (g), (h)(1), or (h)(3) of section 


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1 2 of the Commodity Exchange Act or any other exemption 

2 issued by the Commodity Futures Trading Commission by 

3 rule, regulation, or order shall, within 150 days after such 

4 date of enactment, unless settled and cleared through an en5 tity registered with the Commission as a derivatives clear6 ing organization or another clearing entity pursuant to sec7 tion 4(h) of such Act, be reported to the Commission in a 

8 manner designated by the Commission, or to such other en9 tity as the Commission deems appropriate. 

10 SEC. 14. TREATMENT OF EMISSION ALLOWANCES AND OFF11 SET CREDITS. 

12 (a) Section 1a(14) of the Commodity Exchange Act (7 

13 U.S.C. 1a(14)) is amended by striking ‘‘or an agricultural 

14 commodity’’ and inserting ‘‘, an agricultural commodity, 

15 any allowance authorized under law to emit a greenhouse 

16 gas, and any credit authorized under law toward the reduc17 tion in greenhouse gas emissions or an increase in carbon 

18 sequestration’’. 

19 (b) Within 180 days after the date of the enactment 

20 of this section, the Commodity Futures Trading Commis21 sion shall enter into a memorandum of understanding with 

22 the Secretary of Agriculture which shall include provisions, 

23 consistent with section 1245 of the Food Security Act of 

24 1985, ensuring that the development of any procedures and 

25 protocols for a market-based greenhouse gas contract on a 


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1 board of trade designated as a contract market under sec2 tion 5 of the Commodity Exchange Act are properly con3 structed and coordinated to maximize credits for carbon se4 questration. 

5 SEC. 15. INSPECTOR GENERAL OF THE COMMODITY FU6 TURES TRADING COMMISSION. 

7 (a) ELEVATION OF OFFICE.— 

8 (1) INCLUSION OF CFTC IN DEFINITION OF ES9 TABLISHMENT.— 

10 (A) Section 12(1) of the Inspector General 

11 Act of 1978 (5 U.S.C. App.) is amended by strik12 ing ‘‘or the Federal Cochairpersons of the Com13 missions established under section 15301 of title 

14 40, United States Code;’’ and inserting ‘‘the Fed15 eral Cochairpersons of the Commissions estab16 lished under section 15301 of title 40, United 

17 States Code; or the Chairman of the Commodity 

18 Futures Trading Commission;’’. 

19 (B) Section 12(2) of the Inspector General 

20 Act of 1978 (5 U.S.C. App.) is amended by strik21 ing ‘‘or the Commissions established under sec22 tion 15301 of title 40, United States Code,’’ and 

23 inserting ‘‘the Commissions established under 

24 section 15301 of title 40, United States Code, or 

25 the Commodity Futures Trading Commission,’’. 


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1 (2) EXCLUSION OF CFTC FROM DEFINITION OF

2 DESIGNATED FEDERAL ENTITY.—Section 8G(a)(2) of 

3 the Inspector General Act of 1978 (5 U.S.C. App.) is 

4 amended by striking ‘‘the Commodity Futures Trad5 ing Commission,’’. 

6 (b) EFFECTIVE DATE; TRANSITION RULE.— 

7 (1) EFFECTIVE DATE.—The amendments made 

8 by this section shall take effect 30 days after the date 

9 of the enactment of this Act. 

10 (2) TRANSITION RULE.—An individual serving 

11 as Inspector General of the Commodity Futures Trad12 ing Commission on the effective date of this section 

13 pursuant to an appointment made under section 8G 

14 of the Inspector General Act of 1978 (5 U.S.C. 

15 App.)— 

16 (A) may continue so serving until the Presi17 dent makes an appointment under section 3(a) 

18 of such Act consistent with the amendments 

19 made by this section; and 

20 (B) shall, while serving under subparagraph 

21 (A), remain subject to the provisions of section 

22 8G of such Act which apply with respect to the 

23 Commodity Futures Trading Commission. 


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1 SEC. 16. AUTHORITY OF COMMODITY FUTURES TRADING 

2 COMMISSION TO SUSPEND TRADING IN CRED3 IT DEFAULT SWAPS. 

4 (a) IN GENERAL.—Section 4c of the Commodity Ex5 change Act (7 U.S.C. 6c) is amended by adding at the end 

6 the following: 

7 ‘‘(h) AUTHORITY OF COMMISSION TO SUSPEND TRAD8 ING OF CREDIT DEFAULT SWAPS.— 

9 ‘‘(1) IN GENERAL.—If, in the opinion of the 

10 Commission, the public interest and the protection of 

11 investors so require, the Commission may, by order— 

12 ‘‘(A) summarily suspend trading in any 

13 credit default swap; and 

14 ‘‘(B) summarily suspend all trading on any 

15 contract market, derivatives transaction execu16 tion facility, or otherwise, in credit default 

17 swaps. 

18 ‘‘(2) LIMITATION.—An action described in para19 graph (1) shall— 

20 ‘‘(A) not take effect unless the Commission 

21 notifies the President of its decision, and the 

22 President notifies the Commission that the Presi23 dent does not disapprove of the decision; 

24 ‘‘(B) only apply to credit default swaps that 

25 are related to securities subject to a short selling 

26 suspension order by the Securities and Exchange 


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1 Commission, and such action must terminate 

2 when such suspension order terminates; and 

3 ‘‘(C) only apply to credit default swaps 

4 purchased by persons who are not purchasing the 

5 credit default swap to reduce an existing credit 

6 risk directly related to the reference entity or its 

7 obligations.’’. 

8 (b) DEFINITION OF CREDIT DEFAULT SWAP.—Section 

9 1a of such Act (7 U.S.C. 1a) is amended by adding at the 

10 end the following: 

11 ‘‘(34) CREDIT DEFAULT SWAP.—The term ‘credit 

12 default swap’ means a contract which hedges a party 

13 to the contract against the risk that an entity may 

14 experience a loss of value as a result of an event spec15 ified in the contract, such as a default or credit down16 grade. A credit default swap that is proposed to be 

17 traded or is traded on or proposed to be or is cleared 

18 by a registered entity pursuant to this Act shall be ex19 cluded from the definition of a security as defined in 

20 this Act and in section 2(a)(1) of the Securities Act 

21 of 1933 or section 3(a)(10) of the Securities Exchange 

22 Act of 1934, except as necessary solely for purposes of 

23 enforcing prohibitions against insider trading in sec24 tions 10 and 16 of the Securities Exchange Act of 

25 1934.’’. 


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1 (c) EFFECTIVE DATE.—The amendment made by sub2 section (b) shall be effective for credit default swaps entered 

3 into after 90 days after the date of the enactment of this 

4 section. 

5 SEC. 17. AUTHORITY OF COMMODITY FUTURES TRADING 

6 COMMISSION TO PROSECUTE CRIMINAL VIO7 LATIONS OF THE COMMODITY EXCHANGE 

8 ACT. 

9 Section 9 of the Commodity Exchange Act (7 U.S.C. 

10 13) is amended by adding at the end the following: 

11 ‘‘(f) Notwithstanding section 516 of title 28, United 

12 States Code, the Commission may initiate and conduct 

13 criminal litigation relating to a violation of this Act, and 

14 secure evidence therefor, if the Attorney General has de15 clined to do so.’’. 

16 SEC. 18. DIVERSITY OF DIRECTORS OF BOARDS OF TRADE. 

17 Section 5(d) of the Commodity Exchange Act (7 U.S.C. 

18 7(d)) is amended by adding at the end the following: 

19 ‘‘(19) DIVERSITY OF BOARDS OF DIRECTORS.— 

20 The board of trade of a publicly traded company shall 

21 endeavor to recruit individuals to serve on the board 

22 of directors and the other decision-making bodies (as 

23 determined by the Commission) of the board of trade 

24 from among, and to have the composition of such bodVerDate Nov 24 2008 21:08 Dec 23, 2009 Jkt 089200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6203 E:\BILLS\H977.RH H977

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1 ies reflect, a broad and culturally diverse pool of 

2 qualified candidates.’’. 


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Union Calendar No. 223 

111TH CONGRESS 

1ST SESSION H. R. 977 

[Report No. 111–385, Part I] 

A BILL 

To amend the Commodity Exchange Act to bring 

modity markets, and for other purposes. greater transparency and accountability to comDECEMBER 19, 2009 

Reported from the Committee on Agriculture with an 

that committee pursuant to clause 1(k), rule X bill and amendment as fall within the jurisdiction of 19, 2009, for consideration of such provisions of the diciary for a period ending not later than December amendment and referred to the Committee on the JuDECEMBER 19, 2009 

Committees on Financial Services and the Judiciary disprinted House on the State of the Union and ordered to be charged; committed to the Committee of the Whole 


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