II 

110TH CONGRESS 

2D SESSION S. 3131 

To amend the Commodity Exchange Act to ensure the application of 

speculation limits to speculators in energy markets, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 12, 2008 

Mrs. FEINSTEIN (for herself and Mr. STEVENS) introduced the following bill; 

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

A BILL 

To amend the Commodity Exchange Act to ensure the application of speculation limits to speculators in energy 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 ‘‘Oil Speculation Control 

5 Act of 2008’’. 

6 SEC. 2. DEFINITION OF INSTITUTIONAL INVESTOR. 

7 (a) DEFINITION.—Section 1a of the Commodity Ex8 change Act (7 U.S.C. 1a) is amended— 


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1 (1) by redesignating paragraphs (22) through 

2 (34) as paragraphs (23) through (35), respectively; 

3 and 

4 (2) by inserting after paragraph (21) the fol5 lowing: 

6 ‘‘(22) INSTITUTIONAL INVESTOR.—The term 

7 ‘institutional investor’ means a long-term investor in 

8 financial markets (including pension funds, endow9 ments, and foundations) that— 

10 ‘‘(A) invests in energy commodities as an 

11 asset class in a portfolio of financial invest12 ments; and 

13 ‘‘(B) does not take or make physical deliv14 ery of energy commodities on a frequent basis, 

15 as determined by the Commission.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) Section 13106(b)(1) of the Food, Conserva18 tion, and Energy Act of 2008 is amended by striking 

19 ‘‘section 1a(32)’’ and inserting ‘‘section 1a’’. 

20 (2) Section 402(d)(1)(B) of the Legal Certainty 

21 for Bank Products Act of 2000 (7 U.S.C. 

22 27(d)(1)(B)) is amended by striking ‘‘section 

23 1a(33)’’ and inserting ‘‘section 1a’’. 


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1 SEC. 3. INSPECTOR GENERAL. 

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

3 U.S.C. 2(a)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(13) INSPECTOR GENERAL.— 

6 ‘‘(A) OFFICE.—There shall be in the Com7 mission, as an independent office, an Office of 

8 the Inspector General. 

9 ‘‘(B) APPOINTMENT.—The Office shall be 

10 headed by an Inspector General, appointed in 

11 accordance with the Inspector General Act of 

12 1978 (5 U.S.C. App.). 

13 ‘‘(C) COMPENSATION.—The Inspector 

14 General shall be compensated at the rate pro15 vided for level IV of the Executive Schedule 

16 under section 5315 of title 5, United States 

17 Code. 

18 ‘‘(D) ADMINISTRATION.—The Inspector 

19 General shall exert independent control of the 

20 budget allocations, expenditures, and staffing 

21 levels, personnel decisions and processes, pro22 curement, and other administrative and man23 agement functions of the Office.’’. 


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1 SEC. 4. TRADING PRACTICES REVIEW WITH RESPECT TO 

2 INDEX TRADERS, SWAP DEALERS, AND INSTI3 TUTIONAL INVESTORS. 

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

5 6) is amended by adding at the end the following: 

6 ‘‘(e) TRADING PRACTICES REVIEW WITH RESPECT

7 TO INDEX TRADERS, SWAP DEALERS, AND INSTITU8 TIONAL INVESTORS.— 

9 ‘‘(1) REVIEW.— 

10 ‘‘(A) IN GENERAL.—Not later than 30 

11 days after the date of enactment of this sub12 section, the Commission shall carry out a review 

13 of the trading practices of index traders, swap 

14 dealers, and institutional investors in markets 

15 under the jurisdiction of the Commission— 

16 ‘‘(i) to ensure that index trading is 

17 not adversely impacting the price discovery 

18 process; 

19 ‘‘(ii) to determine whether different 

20 practices or regulations should be imple21 mented; and 

22 ‘‘(iii) to gather data for use in pro23 posing regulations to limit the size and in24 fluence of institutional investor positions in 

25 commodity markets. 


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1 ‘‘(B) EMERGENCY AUTHORITY.—For the 

2 60-day period described in subparagraph (A), in 

3 accordance with each applicable rule adopted 

4 under section 5(d)(6), the Commission shall ex5 ercise the emergency authority of the Commis6 sion to prevent institutional investors from in7 creasing the positions of the institutional inves8 tors in— 

9 ‘‘(i) energy commodity futures; and 

10 ‘‘(ii) commodity future index funds. 

11 ‘‘(2) REPORT.—Not later than 30 days after 

12 the date described in paragraph (1)(A), the Commis13 sion shall submit to the appropriate committees of 

14 Congress a report that contains recommendations 

15 for such legislation as the Commission determines to 

16 be necessary to limit the size and influence of insti17 tutional investor positions in commodity markets.’’. 

18 SEC. 5. BONA FIDE HEDGING TRANSACTIONS OR POSI19 TIONS. 

20 Section 4a(c) of the Commodity Exchange Act (7 

21 U.S.C. 6a(c)) is amended by striking ‘‘(c) No rule’’ and 

22 inserting the following: 

23 ‘‘(c) BONA FIDE HEDGING TRANSACTIONS OR POSI24 TIONS.— 


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1 ‘‘(1) DEFINITION OF BONA FIDE HEDGING

2 TRANSACTION OR POSITION.—The term ‘bona fide 

3 hedging transaction or position’ means a transaction 

4 or position that represents a hedge against price risk 

5 exposure relating to physical transactions involving 

6 an energy commodity. 

7 ‘‘(2) APPLICATION WITH RESPECT TO BONA

8 FIDE HEDGING TRANSACTIONS OR POSITIONS.—No 

9 rule’’. 

10 SEC. 6. SPECULATION LIMITS RELATING TO SPECULATORS 

11 IN ENERGY MARKETS. 

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

13 6a) is amended by adding at the end the following: 

14 ‘‘(f) SPECULATION LIMITS RELATING TO SPECU15 LATORS IN ENERGY MARKETS.— 

16 ‘‘(1) DEFINITION OF SPECULATOR.—In this 

17 subsection, the term ‘speculator’ includes any insti18 tutional investor or investor of an investment fund 

19 that holds a position through an intermediary broker 

20 or dealer. 

21 ‘‘(2) ENFORCEMENT OF SPECULATION LIM22 ITS.—The Commission shall enforce speculation lim23 its with respect to speculators in energy markets.’’. 


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1 SEC. 7. LARGE TRADER REPORTING WITH RESPECT TO 

2 INDEX TRADERS, SWAP DEALERS, AND INSTI3 TUTIONAL INVESTORS. 

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

5 6g) is amended by adding at the end the following: 

6 ‘‘(g) LARGE TRADER REPORTING WITH RESPECT TO

7 INDEX TRADERS, SWAP DEALERS, AND INSTITUTIONAL

8 INVESTORS.— 

9 ‘‘(1) IN GENERAL.—Each recordkeeping and re10 porting requirement under this section relating to 

11 large trader transactions and positions shall apply to 

12 index traders, swaps dealers, and institutional inves13 tors in markets under the jurisdiction of the Com14 mission. 

15 ‘‘(2) PROMULGATION OF REGULATIONS.—As 

16 soon as practicable after the date of enactment of 

17 this subsection, the Commission shall promulgate 

18 regulations to establish separate classifications for 

19 index traders, swaps dealers, and institutional inves20 tors— 

21 ‘‘(A) to enforce the recordkeeping and re22 porting requirements described in paragraph 

23 (1); and 

24 ‘‘(B) to enforce position limits and position 

25 accountability levels with respect to energy com26 modities under section 4a(f).’’. 


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1 SEC. 8. INSTITUTIONAL INVESTOR SPECULATION LIMITS. 

2 (a) CORE PRINCIPLES APPLICABLE TO SIGNIFICANT

3 PRICE DISCOVERY CONTRACTS.—Section 

4 2(h)(7)(C)(ii)(IV) of the Commodity Exchange Act (7 

5 U.S.C. 2(h)(7)(C)(ii)(IV)) is amended by inserting after 

6 ‘‘speculators’’ the following: ‘‘(including institutional in7 vestors that do not take delivery of energy commodities 

8 and that hold positions in energy commodities through 

9 swaps dealers or other third parties)’’. 

10 (b) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

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

12 7(d)(5)) is amended by inserting after ‘‘speculators’’ the 

13 following: ‘‘(including institutional investors that do not 

14 take delivery of energy commodities and that hold posi15 tions in energy commodities through swaps dealers or 

16 other third parties)’’. 

Æ 


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