IB 

Union Calendar No. 348 

113TH CONGRESS 

2D SESSION H. R. 4413 

[Report No. 113–469] 

To reauthorize the Commodity Futures Trading Commission, to better protect 

futures customers, to provide end users with market certainty, to make 

basic reforms to ensure transparency and accountability at the Commission, to help farmers, ranchers, and end users manage risks to help 

keep consumer costs low, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 7, 2014 

Mr. LUCAS (for himself, Mr. PETERSON, Mr. CONAWAY, and Mr. DAVID

SCOTT of Georgia) introduced the following bill; which was referred to the 

Committee on Agriculture 

JUNE 5, 2014 

Committed to the Committee of the Whole House on the State of the Union 

and ordered to be printed 

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A BILL 

To reauthorize the Commodity Futures Trading Commission, 

to better protect futures customers, to provide end users 

with market certainty, to make basic reforms to ensure 

transparency and accountability at the Commission, to 

help farmers, ranchers, and end users manage risks to 

help keep consumer costs low, and for other purposes. 

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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 ‘‘Customer Protection 

5 and End User Relief Act’’. 

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. 

TITLE I—CUSTOMER PROTECTIONS 

Sec. 101. Short title. 

Sec. 102. Enhanced protections for futures customers. 

Sec. 103. Electronic confirmation of customer funds. 

Sec. 104. Notice and certifications providing additional customer protections. 

Sec. 105. Futures commission merchant compliance. 

Sec. 106. Certainty for futures customers and market participants. 

Sec. 107. Study on high-frequency trading. 

TITLE II—COMMODITY FUTURES TRADING COMMISSION 

REFORMS 

Sec. 201. Short title. 

Sec. 202. Extension of operations. 

Sec. 203. Consideration by the Commodity Futures Trading Commission of the 

costs and benefits of its regulations and orders. 

Sec. 204. Division directors. 

Sec. 205. Office of the Chief Economist. 

Sec. 206. Procedures governing actions taken without a commission vote. 

Sec. 207. Strategic technology plan. 

Sec. 208. Internal risk controls. 

Sec. 209. Subpoena duration and renewal. 

Sec. 210. Implementation plan for Commission rulemakings. 

Sec. 211. Applicability of notice and comment requirements of the Administrative Procedure Act to guidance voted on by the Commission. 

Sec. 212. Judicial review of Commission rules. 

Sec. 213. GAO study on adequacy of CFTC resources. 

TITLE III—END-USER RELIEF 

Sec. 301. Short title. 

Subtitle A—End-User Exemption From Margin Requirements 

Sec. 311. End-user margin requirements. 

Sec. 312. Implementation. 

Subtitle B—Inter-Affiliate Swaps 

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Sec. 321. Treatment of affiliate transactions. 

Subtitle C—Indemnification Requirements Related to Swap Data Repositories 

Sec. 331. Indemnification requirements. 

Subtitle D—Relief for Municipal Utilities 

Sec. 341. Transactions with utility special entities. 

Sec. 342. Utility special entity defined. 

Sec. 343. Utility operations-related swap. 

Subtitle E—End-User Regulatory Relief 

Sec. 351. End users not treated as financial entities. 

Sec. 352. Reporting of illiquid swaps so as to not disadvantage certain non-financial end users. 

Sec. 353. Relief for grain elevator operators, farmers, agricultural counterparties, and commercial market participants. 

Sec. 354. Relief for end users who use physical contracts with volumetric 

optionality. 

Sec. 355. Commission vote required before automatic change of swap dealer de 

minimis level. 

Sec. 356. Capital requirements for non-bank swap dealers. 

Sec. 357. Harmonization with the Jumpstart Our Business Startups Act. 

Sec. 358. Bona fide hedge defined to protect end user risk management needs. 

Sec. 359. Cross-border regulation of derivatives transactions. 

Subtitle F—Effective Date 

Sec. 371. Effective date. 

1 TITLE I—CUSTOMER 

2 PROTECTIONS 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘Futures Customer 

5 Protection Act’’. 

6 SEC. 102. ENHANCED PROTECTIONS FOR FUTURES CUS7 TOMERS. 

8 Section 17 of the Commodity Exchange Act (7 U.S.C. 

9 21) is amended by adding at the end the following: 

10 ‘‘(s) A registered futures association shall— 

11 ‘‘(1) require each member of the association 

12 that is a futures commission merchant to maintain 

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1 written policies and procedures regarding the main2 tenance of— 

3 ‘‘(A) the residual interest of the member, 

4 as described in section 1.23 of title 17, Code of 

5 Federal Regulations, in any customer seg6 regated funds account of the member, as identi7 fied in section 1.20 of such title, and in any for8 eign futures and foreign options customer se9 cured amount funds account of the member, as 

10 identified in section 30.7 of such title; and 

11 ‘‘(B) the residual interest of the member, 

12 as described in section 22.2(e)(4) of such title, 

13 in any cleared swaps customer collateral ac14 count of the member, as identified in section 

15 22.2 of such title; and 

16 ‘‘(2) establish rules to govern the withdrawal, 

17 transfer or disbursement by any member of the asso18 ciation, that is a futures commission merchant, of 

19 the member’s residual interest in customer seg20 regated funds as provided in such section 1.20, in 

21 foreign futures and foreign options customer secured 

22 amount funds, identified as provided in such section 

23 30.7, and from a cleared swaps customer collateral, 

24 identified as provided in such section 22.2.’’. 

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1 SEC. 103. ELECTRONIC CONFIRMATION OF CUSTOMER 

2 FUNDS. 

3 Section 17 of the Commodity Exchange Act (7 U.S.C. 

4 21), as amended by section 102 of this Act, is amended 

5 by adding at the end the following: 

6 ‘‘(t) A registered futures association shall require any 

7 member of the association that is a futures commission 

8 merchant to— 

9 ‘‘(1) use an electronic system or systems to re10 port financial and operational information to the as11 sociation, including information related to customer 

12 segregated funds, foreign futures and foreign options 

13 customer secured amount funds accounts, and 

14 cleared swaps customer collateral, in accordance 

15 with such terms, conditions, documentation stand16 ards, and regular time intervals as are established 

17 by the association; 

18 ‘‘(2) instruct each depository, including any 

19 bank, trust company, derivatives clearing organiza20 tion, or futures commission merchant, holding cus21 tomer segregated funds under section 1.20 of title 

22 17, Code of Federal Regulations, foreign futures and 

23 foreign options customer secured amount funds 

24 under section 30.7 of such title, or cleared swap cus25 tomer funds under section 22.2 of such title, to re26 port balances in the futures commission merchant’s 

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1 section 1.20 customer segregated funds, section 30.7 

2 foreign futures and foreign options customer secured 

3 amount funds, and section 22.2 cleared swap cus4 tomer funds, to the registered futures association or 

5 another party designated by the registered futures 

6 association, in the form, manner, and interval pre7 scribed by the registered futures association; and 

8 ‘‘(3) hold section 1.20 customer segregated 

9 funds, section 30.7 foreign futures and foreign op10 tions customer secured amount funds and section 

11 22.2 cleared swaps customer funds in a depository 

12 that reports the balances in these accounts of the fu13 tures commission merchant held at the depository to 

14 the registered futures association or another party 

15 designated by the registered futures association in 

16 the form, manner, and interval prescribed by the 

17 registered futures association.’’. 

18 SEC. 104. NOTICE AND CERTIFICATIONS PROVIDING ADDI19 TIONAL CUSTOMER PROTECTIONS. 

20 Section 17 of the Commodity Exchange Act (7 U.S.C. 

21 21), as amended by sections 102 and 103 of this Act, is 

22 amended by adding at the end the following: 

23 ‘‘(u) A futures commission merchant that has ad24 justed net capital in an amount less than the amount re25 quired by regulations established by the Commission or 

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1 a self-regulatory organization of which the futures com2 mission merchant is a member shall immediately notify 

3 the Commission and the self-regulatory organization of 

4 this occurrence. 

5 ‘‘(v) A futures commission merchant that does not 

6 hold a sufficient amount of funds in segregated accounts 

7 for futures customers under section 1.20 of title 17, Code 

8 of Federal Regulations, in foreign futures and foreign op9 tions secured amount accounts for foreign futures and for10 eign options secured amount customers under section 30.7 

11 of such title, or in segregated accounts for cleared swap 

12 customers under section 22.2 of such title, as required by 

13 regulations established by the Commission or a self-regu14 latory organization of which the futures commission mer15 chant is a member, shall immediately notify the Commis16 sion and the self-regulatory organization of this occur17 rence. 

18 ‘‘(w) Within such time period established by the Com19 mission after the end of each fiscal year, a futures com20 mission merchant shall file with the Commission a report 

21 from the chief compliance officer of the futures commis22 sion merchant containing an assessment of the internal 

23 compliance programs of the futures commission mer24 chant.’’. 

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1 SEC. 105. FUTURES COMMISSION MERCHANT COMPLIANCE. 

2 (a) IN GENERAL.—Section 4d(a) of the Commodity 

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

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

5 subparagraphs (A) and (B) and by moving the mar6 gins of such subparagraphs two ems to the right; 

7 (2) by inserting ‘‘(1)’’ before ‘‘It shall be unlaw8 ful’’; and 

9 (3) by adding at the end the following new 

10 paragraph: 

11 ‘‘(2) Any rules or regulations requiring a fu12 tures commission merchant to maintain a residual 

13 interest in accounts held for the benefit of customers 

14 in amounts at least sufficient to exceed the sum of 

15 all uncollected margin deficits of such customers 

16 shall provide that a futures commission merchant 

17 shall meet its residual interest requirement as of the 

18 end of each business day calculated as of the close 

19 of business on the previous business day.’’. 

20 (b) CONFORMING AMENDMENT.—Section 4d(h) of 

21 the Commodity Exchange Act (7 U.S.C. 6d(h)) is amend22 ed by striking ‘‘Notwithstanding subsection (a)(2)’’ and 

23 inserting ‘‘Notwithstanding subsection (a)(1)(B)’’. 

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1 SEC. 106. CERTAINTY FOR FUTURES CUSTOMERS AND MAR2 KET PARTICIPANTS. 

3 Section 20(a) of the Commodity Exchange Act (7 

4 U.S.C. 24(a)) is amended— 

5 (1) by striking ‘‘and’’ at the end of paragraph 

6 (4); 

7 (2) by striking the period at the end of para8 graph (5) and inserting ‘‘; and’’; and 

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

10 ‘‘(6) that cash, securities, or other property of 

11 the estate of a commodity broker, including the 

12 trading or operating accounts of the commodities 

13 broker and commodities held in inventory by the 

14 commodity broker, shall be included in customer 

15 property, but only to the extent that the property 

16 that is otherwise customer property is insufficient to 

17 satisfy the net equity claims of public customers (as 

18 such term may be defined by the Commission by 

19 rule or regulation) of the commodity broker.’’. 

20 SEC. 107. STUDY ON HIGH-FREQUENCY TRADING. 

21 (a) IN GENERAL.—Not later than one year after the 

22 date of the enactment of this Act, the Commodity Futures 

23 Trading Commission shall submit to the Committee on 

24 Agriculture of the House of Representatives and the Com25 mittee on Agriculture, Nutrition, and Forestry of the Sen26 ate a report examining the effect of the practice commonly 

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1 referred to as high-frequency trading on markets under 

2 its jurisdiction. 

3 (b) SPECIFIC AREAS EXAMINED IN REPORT.—In 

4 preparing the report submitted under subsection (a), the 

5 Commission shall particularly examine each of the fol6 lowing areas: 

7 (1) The technology, personnel, or other re8 sources the Commission may require for purposes of 

9 monitoring the effect of high-frequency trading. 

10 (2) The role such trading plays in providing 

11 market liquidity. 

12 (3) Whether the technology creates discrep13 ancies in the marketplace between market partici14 pants. 

15 (4) Whether the existing authority of the Com16 mission with respect to such trading is sufficient to 

17 meet the Commission’s mission to— 

18 (A) protect market participants and the 

19 public from fraud, manipulation, abusive prac20 tices, and systemic risk related to derivatives; 

21 and 

22 (B) foster transparent, open, competitive, 

23 and financially sound markets. 

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1 TITLE II—COMMODITY FUTURES 

2 TRADING COMMISSION RE3 FORMS 

4 SEC. 201. SHORT TITLE. 

5 This title may be cited as the ‘‘Commodity Futures 

6 Trading Commission Reform Act’’. 

7 SEC. 202. EXTENSION OF OPERATIONS. 

8 Section 12(d) of the Commodity Exchange Act (7 

9 U.S.C. 16(d)) is amended by striking ‘‘2013’’ and insert10 ing ‘‘2018’’. 

11 SEC. 203. CONSIDERATION BY THE COMMODITY FUTURES 

12 TRADING COMMISSION OF THE COSTS AND 

13 BENEFITS OF ITS REGULATIONS AND OR14 DERS. 

15 Section 15(a) of the Commodity Exchange Act (7 

16 U.S.C. 19(a)) is amended by striking paragraphs (1) and 

17 (2) and inserting the following: 

18 ‘‘(1) IN GENERAL.—Before promulgating a reg19 ulation under this Act or issuing an order (except as 

20 provided in paragraph (3)), the Commission, 

21 through the Office of the Chief Economist, shall as22 sess and publish in the regulation or order the costs 

23 and benefits, both qualitative and quantitative, of 

24 the proposed regulation or order, and the proposed 

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1 regulation or order shall state its statutory justifica2 tion. 

3 ‘‘(2) CONSIDERATIONS.—In making a reasoned 

4 determination of the costs and the benefits, the 

5 Commission shall evaluate— 

6 ‘‘(A) considerations of protection of market 

7 participants and the public; 

8 ‘‘(B) considerations of the efficiency, com9 petitiveness, and financial integrity of futures 

10 and swaps markets; 

11 ‘‘(C) considerations of the impact on mar12 ket liquidity in the futures and swaps markets; 

13 ‘‘(D) considerations of price discovery; 

14 ‘‘(E) considerations of sound risk manage15 ment practices; 

16 ‘‘(F) available alternatives to direct regula17 tion; 

18 ‘‘(G) the degree and nature of the risks 

19 posed by various activities within the scope of 

20 its jurisdiction; 

21 ‘‘(H) the costs of complying with the pro22 posed regulation or order by all regulated enti23 ties, including a methodology for quantifying 

24 the costs (recognizing that some costs are dif25 ficult to quantify); 

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1 ‘‘(I) whether the proposed regulation or 

2 order is inconsistent, incompatible, or duplica3 tive of other Federal regulations or orders; 

4 ‘‘(J) whether, in choosing among alter5 native regulatory approaches, those approaches 

6 maximize net benefits (including potential eco7 nomic and other benefits, distributive impacts, 

8 and equity); and 

9 ‘‘(K) other public interest considerations.’’. 

10 SEC. 204. DIVISION DIRECTORS. 

11 Section 2(a)(6)(C) of the Commodity Exchange Act 

12 (7 U.S.C. 2(a)(6)(C)) is amended by inserting ‘‘, and the 

13 heads of the units shall serve at the pleasure of the Com14 mission, report directly to the Commission, and perform 

15 such functions and duties as the Commission may pre16 scribe’’ before the period. 

17 SEC. 205. OFFICE OF THE CHIEF ECONOMIST. 

18 (a) IN GENERAL.—Section 2(a) of the Commodity 

19 Exchange Act (7 U.S.C. 2(a)) is amended by adding at 

20 the end the following: 

21 ‘‘(17) OFFICE OF THE CHIEF ECONOMIST.— 

22 ‘‘(A) ESTABLISHMENT.—There is estab23 lished in the Commission the Office of the Chief 

24 Economist. 

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1 ‘‘(B) HEAD.—The Office of the Chief 

2 Economist shall be headed by the Chief Econo3 mist, who shall be appointed by the Commission 

4 and serve at the pleasure of the Commission. 

5 ‘‘(C) FUNCTIONS.—The Chief Economist 

6 shall report directly to the Commission and per7 form such functions and duties as the Commis8 sion may prescribe. 

9 ‘‘(D) PROFESSIONAL STAFF.—The Com10 mission shall appoint such other economists as 

11 may be necessary to assist the Chief Economist 

12 in performing such economic analysis, regu13 latory cost-benefit analysis, or research the 

14 Commission may direct.’’. 

15 (b) CONFORMING AMENDMENT.—Section 2(a)(6)(A) 

16 of such Act (7 U.S.C. 2(a)(6)(A)) is amended by striking 

17 ‘‘(4) and (5)’’ and inserting ‘‘(4), (5), and (17)’’. 

18 SEC. 206. PROCEDURES GOVERNING ACTIONS TAKEN WITH19 OUT A COMMISSION VOTE. 

20 Section 2(a)(12) of the Commodity Exchange Act (7 

21 U.S.C. 2(a)(12)) is amended— 

22 (1) by striking ‘‘(12) The’’ and inserting the 

23 following: 

24 ‘‘(12) RULES AND REGULATIONS.— 

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1 ‘‘(A) IN GENERAL.—Subject to the other 

2 provisions of this paragraph, the’’; and 

3 (2) by adding after and below the end the fol4 lowing new subparagraph: 

5 ‘‘(B) NOTICE TO COMMISSION.— 

6 ‘‘(i) GENERAL RULE.—A division or 

7 office of the Commission may not issue an 

8 interpretive rule of general applicability, a 

9 statement of general policy, a response to 

10 a formal, written request or petition from 

11 any member of the public for guidance, or 

12 an exemptive, a no-action, or an interpre13 tive letter, unless, at least 7 calendar days 

14 before the issuance, the division or office 

15 has provided the Commission with a copy 

16 of the matter to be issued. 

17 ‘‘(ii) OPPORTUNITY FOR MEETING RE18 QUIRED.—After receiving a copy of the 

19 matter provided in accordance with clause 

20 (i), any member of the Commission may 

21 request that the Commission hold a meet22 ing to review the matter, and the Chair23 man shall immediately put any such re24 quest for a meeting before the Commis25 sion, and if the Commission decides to hold 

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1 the meeting by a majority vote, the matter 

2 may not be issued until the Commission 

3 has concluded the meeting. 

4 ‘‘(iii) LIMITATIONS ON APPLICA5 BILITY.—By a majority vote, the Commis6 sion may waive the 7-day prior notice re7 quirement of clause (i) when the Commis8 sion finds that requiring such a notice 

9 would be impracticable, unnecessary, or 

10 contrary to the public interest.’’. 

11 SEC. 207. STRATEGIC TECHNOLOGY PLAN. 

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

13 U.S.C. 2(a)), as amended by section 204(a) of this Act, 

14 is amended by adding at the end the following: 

15 ‘‘(18) STRATEGIC TECHNOLOGY PLAN.— 

16 ‘‘(A) IN GENERAL.—Every 5 years, the 

17 Commission shall develop and submit to the 

18 Committee on Agriculture of the House of Rep19 resentatives and the Committee on Agriculture, 

20 Nutrition, and Forestry of the Senate a detailed 

21 plan focused on the acquisition and use of tech22 nology by the Commission. 

23 ‘‘(B) CONTENTS.—The plan shall— 

24 ‘‘(i) include for each related division 

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1 cused exclusively on market surveillance 

2 and risk detection, market data collection, 

3 aggregation, interpretation, standardiza4 tion, harmonization, streamlining, and in5 ternal management and protection of data 

6 collected by the Commission, including a 

7 detailed accounting of how the funds pro8 vided for technology will be used and the 

9 priorities that will apply in the use of the 

10 funds; and 

11 ‘‘(ii) set forth annual goals to be ac12 complished and annual budgets needed to 

13 accomplish the goals.’’. 

14 SEC. 208. INTERNAL RISK CONTROLS. 

15 (a) IN GENERAL.—Section 2(a)(12) of the Com16 modity Exchange Act (7 U.S.C. 2(a)(12)), as amended by 

17 section 206 of this Act, is amended by adding at the end 

18 the following: 

19 ‘‘(C) INTERNAL RISK CONTROLS.—The 

20 Commission staff and the Chief Economist shall 

21 develop comprehensive internal risk control 

22 mechanisms to safeguard and govern the stor23 age of all market data by the Commission, all 

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1 mission, and all academic research performed at 

2 the Commission using market data.’’. 

3 (b) REPORTS TO THE CONGRESS.— 

4 (1) CONTENT.—The Commission shall submit 

5 to the Committee on Agriculture of the House of 

6 Representatives and the Committee on Agriculture, 

7 Nutrition, and Forestry of the Senate 2 reports on 

8 the progress made in implementing the internal risk 

9 controls provided for in section 2(a)(12)(C) of the 

10 Commodity Exchange Act. 

11 (2) TIMING.—The Commission shall submit the 

12 1st report required by paragraph (1) within 60 days 

13 after the date of the enactment of this Act, and the 

14 2nd such report within 120 days after such date of 

15 enactment. 

16 SEC. 209. SUBPOENA DURATION AND RENEWAL. 

17 Section 6(c)(5) of the Commodity Exchange Act (7 

18 U.S.C. 9(5)) is amended— 

19 (1) by striking ‘‘(5) SUBPOENA.—For’’ and in20 serting the following: 

21 ‘‘(5) SUBPOENA.— 

22 ‘‘(A) IN GENERAL.—For’’; and 

23 (2) by adding after and below the end the fol24 lowing: 

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1 ‘‘(B) CONTENT OF SUBPOENA ORDER.—An 

2 order of the Commission authorizing the 

3 issuance of a subpoena— 

4 ‘‘(i) shall state in good faith the pur5 pose of the investigation; 

6 ‘‘(ii) shall require only the provision of 

7 information reasonably relevant to that 

8 purpose; and 

9 ‘‘(iii) shall not be for an indefinite du10 ration. 

11 ‘‘(C) RENEWAL.—An order issued under 

12 this paragraph may be renewed only by Com13 mission action.’’. 

14 SEC. 210. IMPLEMENTATION PLAN FOR COMMISSION 

15 RULEMAKINGS. 

16 Section 2(a)(12) of the Commodity Exchange Act (7 

17 U.S.C. 2(a)(12)), as amended by sections 206 and 208(a) 

18 of this Act, is amended by adding at the end the following: 

19 ‘‘(E) REQUIREMENT TO PUBLISH IMPLE20 MENTATION PLAN FOR COMMISSION RULES.— 

21 The Commission shall direct its staff to develop 

22 and publish in any proposed rule a plan for— 

23 ‘‘(i) when and for how long the pro24 posed rule will be subject to public com25 ment; and 

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1 ‘‘(ii) by when compliance with the 

2 final rule will be required.’’. 

3 SEC. 211. APPLICABILITY OF NOTICE AND COMMENT RE4 QUIREMENTS OF THE ADMINISTRATIVE PRO5 CEDURE ACT TO GUIDANCE VOTED ON BY 

6 THE COMMISSION. 

7 Section 2(a)(12) of the Commodity Exchange Act (7 

8 U.S.C. 2(a)(12)), as amended by sections 206, 208(a), 

9 and 210 of this Act, is amended by adding at the end 

10 the following: 

11 ‘‘(F) APPLICABILITY OF NOTICE AND COM12 MENT RULES TO GUIDANCE VOTED ON BY THE

13 COMMISSION.—The notice and comment re14 quirements of chapter 5 of title 5, United 

15 States Code, shall also apply with respect to 

16 any guidance issued by the Commission after 

17 being voted on by the Commission.’’. 

18 SEC. 212. JUDICIAL REVIEW OF COMMISSION RULES. 

19 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

20 is amended by adding at the end the following: 

21 ‘‘SEC. 24. JUDICIAL REVIEW OF COMMISSION RULES. 

22 ‘‘(a) A person aggrieved by a final rule of the Com23 mission under this Act may obtain review of the rule in 

24 the United States Court of Appeals for the District of Co25 lumbia Circuit or the United States Court of Appeals for 

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1 the circuit where the party resides, by filing in the court, 

2 within 60 days after publication in the Federal Register 

3 of the entry of the rule, a written petition requesting that 

4 the rule be modified or set aside in whole or in part. 

5 ‘‘(b) A copy of the petition shall be transmitted forth6 with by the clerk of the court to an officer designated by 

7 the Commission for that purpose. Thereupon the Commis8 sion shall file in the court the record on which the rule 

9 complained of is entered, as provided in section 2112 of 

10 title 28, United States Code, and the Federal Rules of 

11 Appellate Procedure. 

12 ‘‘(c) On the filing of the petition, the court has juris13 diction, which becomes exclusive on the filing of the 

14 record, to affirm or modify and enforce or to set aside 

15 the rule in whole or in part. 

16 ‘‘(d) The findings of the Commission as to the facts 

17 identified by the Commission as the basis, in whole or in 

18 part, of the rule, if supported by substantial evidence, are 

19 conclusive. The court shall affirm and enforce the rule un20 less the Commission’s action in promulgating the rule is 

21 found to be arbitrary, capricious, an abuse of discretion, 

22 or otherwise not in accordance with law; contrary to con23 stitutional right, power, privilege, or immunity; in excess 

24 of statutory jurisdiction, authority, or limitations, or short 

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1 of statutory right; or without observance of procedure re2 quired by law. 

3 ‘‘(e) If either party applies to the court for leave to 

4 adduce additional evidence and shows to the satisfaction 

5 of the court that the additional evidence is material and 

6 that there was reasonable ground for failure to adduce it 

7 before the Commission, the court may remand the case 

8 to the Commission for further proceedings, in whatever 

9 manner and on whatever conditions the court considers 

10 appropriate. If the case is remanded to the Commission, 

11 it shall file in the court a supplemental record containing 

12 any new evidence, any further or modified findings, and 

13 any new order.’’. 

14 SEC. 213. GAO STUDY ON ADEQUACY OF CFTC RESOURCES. 

15 (a) STUDY.—The Comptroller General of the United 

16 States shall conduct a study of the resources of the Com17 modity Futures Trading Commission that— 

18 (1) assesses whether the resources of the Com19 mission are sufficient to enable the Commission to 

20 effectively carry out the duties of the Commission; 

21 and 

22 (2) examines the prior expenditures of the Com23 mission on hardware, software, and analytical proc24 esses designed to protect customers in the areas 

25 of— 

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1 (A) market surveillance and risk detection; 

2 and 

3 (B) market data collection, aggregation, 

4 interpretation, standardization, harmonization, 

5 and streamlining. 

6 (b) REPORT.—Not later than 180 days after the date 

7 of the enactment of this Act, the Comptroller General of 

8 the United States shall submit to the Committee on Agri9 culture of the House of Representatives and the Com10 mittee on Agriculture, Nutrition, and Forestry of the Sen11 ate a report that contains the results of the study. 

12 TITLE III—END-USER RELIEF 

13 SEC. 301. SHORT TITLE. 

14 This title may be cited as the ‘‘End-User Relief and 

15 Market Certainty Act’’. 

16 Subtitle A—End-User Exemption 

17 From Margin Requirements 

18 SEC. 311. END-USER MARGIN REQUIREMENTS. 

19 Section 4s(e) of the Commodity Exchange Act (7 

20 U.S.C. 6s(e)) is amended by adding at the end the fol21 lowing new paragraph: 

22 ‘‘(4) APPLICABILITY WITH RESPECT TO

23 COUNTERPARTIES.—The requirements of paragraphs 

24 (2)(A)(ii) and (2)(B)(ii), including the initial and 

25 variation margin requirements imposed by rules 

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1 adopted pursuant to paragraphs (2)(A)(ii) and 

2 (2)(B)(ii), shall not apply to a swap in which a 

3 counterparty qualifies for an exception under section 

4 2(h)(7)(A), or an exemption issued under section 

5 4(c)(1) from the requirements of section 2(h)(1)(A) 

6 for cooperative entities as defined in such exemption, 

7 or satisfies the criteria in section 2(h)(7)(D).’’. 

8 SEC. 312. IMPLEMENTATION. 

9 The amendment made by this subtitle shall be imple10 mented— 

11 (1) without regard to— 

12 (A) chapter 35 of title 44, United States 

13 Code; and 

14 (B) the notice and comment provisions of 

15 section 553 of title 5, United States Code; 

16 (2) through the promulgation of an interim 

17 final rule, pursuant to which public comment will be 

18 sought before a final rule is issued; and 

19 (3) such that paragraph (1) shall apply solely 

20 to changes to rules and regulations, or proposed 

21 rules and regulations, that are limited to and di22 rectly a consequence of the amendment. 

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1 Subtitle B—Inter-Affiliate Swaps 

2 SEC. 321. TREATMENT OF AFFILIATE TRANSACTIONS. 

3 (a) IN GENERAL.—Section 2(h)(7)(D)(i) of the Com4 modity Exchange Act (7 U.S.C. 2(h)(7)(D)(i)) is amended 

5 to read as follows: 

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

7 person that qualifies for an exception 

8 under subparagraph (A) (including affiliate 

9 entities predominantly engaged in pro10 viding financing for the purchase of the 

11 merchandise or manufactured goods of the 

12 person) may qualify for the exception only 

13 if the affiliate enters into the swap to 

14 hedge or mitigate the commercial risk of 

15 the person or other affiliate of the person 

16 that is not a financial entity, provided that 

17 if the transfer of commercial risk is ad18 dressed by entering into a swap with a 

19 swap dealer or major swap participant, a 

20 credit support measure or other mecha21 nism is utilized.’’. 

22 (b) APPLICABILITY OF CREDIT SUPPORT MEASURE

23 REQUIREMENT.—Notwithstanding section 371 of this Act, 

24 the requirement in section 2(h)(7)(D)(i) of the Commodity 

25 Exchange Act, as amended by subsection (a), requiring 

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1 that a credit support measure or other mechanism be uti2 lized if the transfer of commercial risk referred to in such 

3 section is addressed by entering into a swap with a swap 

4 dealer or major swap participant, shall not apply with re5 spect to swaps entered into before the date of the enact6 ment of this Act. 

7 Subtitle C—Indemnification Re8 quirements Related to Swap 

9 Data Repositories 

10 SEC. 331. INDEMNIFICATION REQUIREMENTS. 

11 (a) DERIVATIVES CLEARING ORGANIZATIONS.—Sec12 tion 5b(k)(5) of the Commodity Exchange Act (7 U.S.C. 

13 7a–1(k)(5)) is amended to read as follows: 

14 ‘‘(5) CONFIDENTIALITY AGREEMENT.—Before 

15 the Commission may share information with any en16 tity described in paragraph (4), the Commission 

17 shall receive a written agreement from each entity 

18 stating that the entity shall abide by the confiden19 tiality requirements described in section 8 relating to 

20 the information on swap transactions that is pro21 vided.’’. 

22 (b) SWAP DATA REPOSITORIES.—Section 21(d) of 

23 such Act (7 U.S.C. 24a(d)) is amended to read as follows: 

24 ‘‘(d) CONFIDENTIALITY AGREEMENT.—Before the 

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1 ty described in subsection (c)(7), the swap data repository 

2 shall receive a written agreement from each entity stating 

3 that the entity shall abide by the confidentiality require4 ments described in section 8 relating to the information 

5 on swap transactions that is provided.’’. 

6 Subtitle D—Relief for Municipal 

7 Utilities 

8 SEC. 341. TRANSACTIONS WITH UTILITY SPECIAL ENTITIES. 

9 Section 1a(49) of the Commodity Exchange Act (7 

10 U.S.C. 1a(49)) is amended by adding at the end the fol11 lowing: 

12 ‘‘(E) CERTAIN TRANSACTIONS WITH A

13 UTILITY SPECIAL ENTITY.— 

14 ‘‘(i) Transactions in utility operations15 related swaps shall be reported pursuant to 

16 section 4r. 

17 ‘‘(ii) In making a determination to ex18 empt pursuant to subparagraph (D), the 

19 Commission shall treat a utility operations20 related swap entered into with a utility 

21 special entity, as defined in section 

22 4s(h)(2)(D), as if it were entered into with 

23 an entity that is not a special entity, as de24 fined in section 4s(h)(2)(C).’’. 

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1 SEC. 342. UTILITY SPECIAL ENTITY DEFINED. 

2 Section 4s(h)(2) of the Commodity Exchange Act (7 

3 U.S.C. 6s(h)(2)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(D) UTILITY SPECIAL ENTITY.—For pur6 poses of this Act, the term ‘utility special enti7 ty’ means a special entity, or any instrumen8 tality, department, or corporation of or estab9 lished by a State or political subdivision of a 

10 State, that— 

11 ‘‘(i) owns or operates an electric or 

12 natural gas facility or an electric or nat13 ural gas operation; 

14 ‘‘(ii) supplies natural gas and or elec15 tric energy to another utility special entity; 

16 ‘‘(iii) has public service obligations 

17 under Federal, State, or local law or regu18 lation to deliver electric energy or natural 

19 gas service to customers; or 

20 ‘‘(iv) is a Federal power marketing 

21 agency, as defined in section 3 of the Fed22 eral Power Act.’’. 

23 SEC. 343. UTILITY OPERATIONS-RELATED SWAP. 

24 (a) SWAP FURTHER DEFINED.—Section 

25 1a(47)(A)(iii) of the Commodity Exchange Act (7 U.S.C. 

26 1a(47)(A)(iii)) is amended— 

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1 (1) by striking ‘‘and’’ at the end of subclause 

2 (XXI); 

3 (2) by adding ‘‘and’’ at the end of subclause 

4 (XXII); and 

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

6 ‘‘(XXIII) a utility operations-re7 lated swap;’’. 

8 (b) UTILITY OPERATIONS-RELATED SWAP DE9 FINED.—Section 1a of such Act (7 U.S.C. 1a) is amended 

10 by adding at the end the following: 

11 ‘‘(52) UTILITY OPERATIONS-RELATED SWAP.— 

12 The term ‘utility operations-related swap’ means a 

13 swap that— 

14 ‘‘(A) is entered into to hedge or mitigate a 

15 commercial risk; 

16 ‘‘(B) is not a contract, agreement, or 

17 transaction based on, derived on, or ref18 erencing— 

19 ‘‘(i) an interest rate, credit, equity, or 

20 currency asset class; or 

21 ‘‘(ii) a metal, agricultural commodity, 

22 or crude oil or gasoline commodity of any 

23 grade, except as used as fuel for electric 

24 energy generation; and 

25 ‘‘(C) is associated with— 

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1 ‘‘(i) the generation, production, pur2 chase, or sale of natural gas or electric en3 ergy, the supply of natural gas or electric 

4 energy to a utility, or the delivery of nat5 ural gas or electric energy service to utility 

6 customers; 

7 ‘‘(ii) all fuel supply for the facilities or 

8 operations of a utility; 

9 ‘‘(iii) compliance with an electric sys10 tem reliability obligation; 

11 ‘‘(iv) compliance with an energy, en12 ergy efficiency, conservation, or renewable 

13 energy or environmental statute, regula14 tion, or government order applicable to a 

15 utility; or 

16 ‘‘(v) any other electric energy or nat17 ural gas swap to which a utility is a 

18 party.’’. 

19 Subtitle E—End-User Regulatory 

20 Relief 

21 SEC. 351. END USERS NOT TREATED AS FINANCIAL ENTI22 TIES. 

23 (a) IN GENERAL.—Section 2(h)(7)(C)(iii) of the 

24 Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)(iii)) is 

25 amended to read as follows: 

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1 ‘‘(iii) LIMITATION.—Such definition 

2 shall not include an entity— 

3 ‘‘(I) whose primary business is 

4 providing financing, and who uses de5 rivatives for the purpose of hedging 

6 underlying commercial risks related to 

7 interest rate and foreign currency ex8 posures, 90 percent or more of which 

9 arise from financing that facilitates 

10 the purchase or lease of products, 90 

11 percent or more of which are manu12 factured by the parent company or 

13 another subsidiary of the parent com14 pany; or 

15 ‘‘(II) who is not supervised by a 

16 prudential regulator, and is not de17 scribed in any of subclauses (I) 

18 through (VII) of clause (i), and— 

19 ‘‘(aa) is a commercial mar20 ket participant and is considered 

21 a financial entity under clause 

22 (i)(VIII) because the entity pre23 dominantly engages in physical 

24 delivery contracts; or 

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1 ‘‘(bb) enters into swaps, 

2 contracts for future delivery, and 

3 other derivatives on behalf of, or 

4 to hedge or mitigate the commer5 cial risk of, whether directly or in 

6 the aggregate, affiliates that are 

7 not so supervised or described.’’. 

8 (b) COMMERCIAL MARKET PARTICIPANT DE9 FINED.— 

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

11 U.S.C. 1a) is amended by redesignating paragraphs 

12 (8) through (51) as paragraphs (9) through (52), re13 spectively, and by inserting after paragraph (6) the 

14 following: 

15 ‘‘(7) COMMERCIAL MARKET PARTICIPANT.—The 

16 term ‘commercial market participant’ means any 

17 producer, processor, merchant, or commercial user 

18 of an exempt or agricultural commodity, or the prod19 ucts or byproducts of such a commodity.’’. 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) Section 1a of such Act (7 U.S.C. 1a) 

22 is amended— 

23 (i) in subparagraph (A) of paragraph 

24 (18) (as so redesignated by paragraph (1) 

25 of this subsection), in the matter preceding 

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1 clause (i), by striking ‘‘(18)(A)’’ and in2 serting ‘‘(19)(A)’’; and 

3 (ii) in subparagraph (A)(vii) of para4 graph (19) (as so redesignated by para5 graph (1) of this subsection), in the matter 

6 following subclause (III), by striking 

7 ‘‘(17)(A)’’ and inserting ‘‘(18)(A)’’. 

8 (B) Section 4(c)(1)(A)(i)(I) of such Act (7 

9 U.S.C. 6(c)(1)(A)(i)(I)) is amended by striking 

10 ‘‘(7), paragraph (18)(A)(vii)(III), paragraphs 

11 (23), (24), (31), (32), (38), (39), (41), (42), 

12 (46), (47), (48), and (49)’’ and inserting ‘‘(8), 

13 paragraph (19)(A)(vii)(III), paragraphs (24), 

14 (25), (32), (33), (39), (40), (42), (43), (47), 

15 (48), (49), and (50)’’. 

16 (C) Section 4q(a)(1) of such Act (7 U.S.C. 

17 6o–1(a)(1)) is amended by striking ‘‘1a(9)’’ and 

18 inserting ‘‘1a(10)’’. 

19 (D) Section 4s(f)(1)(D) of such Act (7 

20 U.S.C. 6s(f)(1)(D)) is amended by striking 

21 ‘‘1a(47)(A)(v)’’ and inserting ‘‘1a(48)(A)(v)’’. 

22 (E) Section 4s(h)(5)(A)(i) of such Act (7 

23 U.S.C. 6s(h)(5)(A)(i)) is amended by striking 

24 ‘‘1a(18)’’ and inserting ‘‘1a(19)’’. 

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1 (F) Section 4t(b)(1)(C) of such Act (7 

2 U.S.C. 6t(b)(1)(C)) is amended by striking 

3 ‘‘1a(47)(A)(v)’’ and inserting ‘‘1a(48)(A)(v)’’. 

4 (G) Section 5(d)(23) of such Act (7 U.S.C. 

5 7(d)(23)) is amended by striking 

6 ‘‘1a(47)(A)(v)’’ and inserting ‘‘1a(48)(A)(v)’’. 

7 (H) Section 5(e)(1) of such Act (7 U.S.C. 

8 7(e)(1)) is amended by striking ‘‘1a(9)’’ and in9 serting ‘‘1a(10)’’. 

10 (I) Section 5b(k)(3)(A) of such Act (7 

11 U.S.C. 7a–1(k)(3)(A)) is amended by striking 

12 ‘‘1a(47)(A)(v)’’ and inserting ‘‘1a(48)(A)(v)’’. 

13 (J) Section 5c(c)(4)(B) of such Act (7 

14 U.S.C. 7a–2(c)(4)(B)) is amended by striking 

15 ‘‘1a(10)’’ and inserting ‘‘1a(11)’’. 

16 (K) Section 5h(f)(10)(A)(iii) of such Act 

17 (7 U.S.C. 7b–3(f)(10)(A)(iii)) is amended by 

18 striking ‘‘1a(47)(A)(v)’’ and inserting 

19 ‘‘1a(48)(A)(v)’’. 

20 (L) Section 21(f)(4)(C) of such Act (7 

21 U.S.C. 24a(f)(4)(C)) is amended by striking 

22 ‘‘1a(48)’’ and inserting ‘‘1a(49)’’. 

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1 SEC. 352. REPORTING OF ILLIQUID SWAPS SO AS TO NOT 

2 DISADVANTAGE CERTAIN NON-FINANCIAL 

3 END USERS. 

4 Section 2(a)(13) of the Commodity Exchange Act (7 

5 U.S.C. 2(a)(13)) is amended— 

6 (1) in subparagraph (C), by striking ‘‘The 

7 Commission’’ and inserting ‘‘Except as provided in 

8 subparagraph (D), the Commission’’; and 

9 (2) by redesignating subparagraphs (D) 

10 through (G) as subparagraphs (E) through (H), re11 spectively, and inserting after subparagraph (C) the 

12 following: 

13 ‘‘(D) REQUIREMENTS FOR SWAP TRANS14 ACTIONS IN ILLIQUID MARKETS.—Notwith15 standing subparagraph (C): 

16 ‘‘(i) The Commission shall provide by 

17 rule for the public reporting of swap trans18 actions, including price and volume data, 

19 in illiquid markets that are not cleared and 

20 entered into by a non-financial entity that 

21 is hedging or mitigating commercial risk in 

22 accordance with subsection (h)(7)(A). 

23 ‘‘(ii) The Commission shall ensure 

24 that the swap transaction information re25 ferred to in clause (i) of this subparagraph 

26 is available to the public no sooner than 30 

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1 days after the swap transaction has been 

2 executed or at such later date as the Com3 mission determines appropriate to protect 

4 the identity of participants and positions in 

5 illiquid markets and to prevent the elimi6 nation or reduction of market liquidity. 

7 ‘‘(iii) In this subparagraph, the term 

8 ‘illiquid markets’ means any market in 

9 which the volume and frequency of trading 

10 in swaps is at such a level as to allow iden11 tification of individual market partici12 pants.’’. 

13 SEC. 353. RELIEF FOR GRAIN ELEVATOR OPERATORS, 

14 FARMERS, AGRICULTURAL COUNTERPAR15 TIES, AND COMMERCIAL MARKET PARTICI16 PANTS. 

17 The Commodity Exchange Act (7 U.S.C. 1 et seq.) 

18 is amended by inserting after section 4t the following: 

19 ‘‘SEC. 4u. RECORDKEEPING REQUIREMENTS APPLICABLE 

20 TO NON-REGISTERED MEMBERS OF CERTAIN 

21 REGISTERED ENTITIES. 

22 ‘‘Except as provided in section 4(a)(3), a member of 

23 a designated contract market or a swap execution facility 

24 that is not registered with the Commission and not re25 quired to be registered with the Commission in any capacmstockstill on DSK4VPTVN1PROD with BILLS

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1 ity shall satisfy the recordkeeping requirements of this Act 

2 and any recordkeeping rule, order, or regulation under 

3 this Act by maintaining a written record of each trans4 action in a contract for future delivery, option on a future, 

5 swap, swaption, trade option, or related cash or forward 

6 transaction. The written record shall be sufficient if it in7 cludes the final agreement between the parties and the 

8 material economic terms of the transaction and is identifi9 able and searchable by transaction.’’. 

10 SEC. 354. RELIEF FOR END USERS WHO USE PHYSICAL 

11 CONTRACTS WITH VOLUMETRIC OPTIONALI12 TY. 

13 Section 1a(47)(B)(ii) of the Commodity Exchange 

14 Act (7 U.S.C. 1a(47)(B)(ii)) is amended to read as fol15 lows: 

16 ‘‘(ii) any purchase or sale of a non17 financial commodity or security for de18 ferred shipment or delivery, so long as the 

19 transaction is intended to be physically set20 tled, including any stand-alone or embed21 ded option for which— 

22 ‘‘(I) exercise results in a physical 

23 delivery obligation; 

24 ‘‘(II) cannot be severed or mar25 keted separately from the overall 

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1 transaction for the purpose of finan2 cial settlement; and 

3 ‘‘(III) both parties are commer4 cial market participants.’’. 

5 SEC. 355. COMMISSION VOTE REQUIRED BEFORE AUTO6 MATIC CHANGE OF SWAP DEALER DE MINI7 MIS LEVEL. 

8 Section 1a(49)(D) of the Commodity Exchange Act 

9 (7 U.S.C. 1a(49)(D)) is amended— 

10 (1) by striking all that precedes ‘‘shall exempt’’ 

11 and inserting the following: 

12 ‘‘(D) DE MINIMIS EXCEPTION.— 

13 ‘‘(i) IN GENERAL.—The Commission’’; 

14 and 

15 (2) by adding after and below the end the fol16 lowing new clause: 

17 ‘‘(ii) The de minimis quantity of swap 

18 dealing as described in clause (i) that is 

19 currently set at a quantity of 

20 $8,000,000,000 shall only be amended or 

21 reduced through a new affirmative action 

22 of the Commission undertaken by rule or 

23 regulation.’’. 

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1 SEC. 356. CAPITAL REQUIREMENTS FOR NON-BANK SWAP 

2 DEALERS. 

3 Section 4s(e) of the Commodity Exchange Act (7 

4 U.S.C. 6s(e)) is amended— 

5 (1) in paragraph (2)(B), by inserting ‘‘, in con6 sultation with the prudential regulators and the Se7 curities and Exchange Commission,’’ before ‘‘shall’’; 

8 and 

9 (2) in paragraph (3)(D)— 

10 (A) in clause (ii), by striking ‘‘shall, to the 

11 maximum extent practicable,’’ and inserting 

12 ‘‘shall’’; and 

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

14 ‘‘(iii) FINANCIAL MODELS.—To the 

15 extent that swap dealers and major swap 

16 participants that are banks are permitted 

17 to use financial models approved by the 

18 prudential regulators or the Securities and 

19 Exchange Commission to calculate min20 imum capital requirements and minimum 

21 initial and variation margin requirements, 

22 including the use of non-cash collateral, 

23 the Commission shall, in consultation with 

24 the prudential regulators and the Securi25 ties and Exchange Commission, permit the 

26 use of comparable financial models by 

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1 swap dealers and major swap participants 

2 that are not banks.’’. 

3 SEC. 357. HARMONIZATION WITH THE JUMPSTART OUR 

4 BUSINESS STARTUPS ACT. 

5 Within 90 days after the date of the enactment of 

6 this Act, the Commodity Futures Trading Commission 

7 shall— 

8 (1) revise section 4.7(b) of title 17, Code of 

9 Federal Regulations, in the matter preceding para10 graph (1), to read as follows: 

11 ‘‘(b) Relief available to commodity pool operators. 

12 Upon filing the notice required by paragraph (d) of this 

13 section, and subject to compliance with the conditions 

14 specified in paragraph (d) of this section, any registered 

15 commodity pool operator who sells participations in a pool 

16 solely to qualified eligible persons in an offering which 

17 qualifies for exemption from the registration requirements 

18 of the Securities Act pursuant to section 4(2) of that Act 

19 or pursuant to Regulation S, 17 CFR 230.901 et seq., and 

20 any bank registered as a commodity pool operator in con21 nection with a pool that is a collective trust fund whose 

22 securities are exempt from registration under the Securi23 ties Act pursuant to section 3(a)(2) of that Act and are 

24 sold solely to qualified eligible persons, may claim any or 

25 all of the following relief with respect to such pool:’’; and 

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1 (2) revise section 4.13(a)(3)(i) of such title to 

2 read as follows: 

3 ‘‘(i) Interests in the pool are exempt from registration 

4 under the Securities Act of 1933, and such interests are 

5 offered and sold pursuant to section 4 of the Securities 

6 Act of 1933 and the regulations thereunder;’’. 

7 SEC. 358. BONA FIDE HEDGE DEFINED TO PROTECT END 

8 USER RISK MANAGEMENT NEEDS. 

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

10 U.S.C. 6a(c)) is amended— 

11 (1) in paragraph (1)— 

12 (A) by striking ‘‘may’’ and inserting 

13 ‘‘shall’’; and 

14 (B) by striking ‘‘future for which’’ and in15 serting ‘‘future, to be determined by the Com16 mission, for which either an appropriate swap is 

17 available or’’; 

18 (2) in paragraph (2)— 

19 (A) in the matter preceding subparagraph 

20 (A), by striking ‘‘subsection (a)(2)’’ and all that 

21 follows through ‘‘position as’’ and inserting 

22 ‘‘paragraphs (2) and (5) of subsection (a) for 

23 swaps, contracts of sale for future delivery, or 

24 options on the contracts or commodities, a bona 

25 fide hedging transaction or position is’’; and 

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1 (B) in subparagraph (A)(ii), by striking 

2 ‘‘of risks’’ and inserting ‘‘or management of 

3 current or anticipated risks’’; and 

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

5 ‘‘(3) The Commission may further define, by 

6 rule or regulation, what constitutes a bona fide 

7 hedging transaction, provided that the rule or regu8 lation is consistent with the requirements of sub9 paragraphs (A) and (B) of paragraph (2).’’. 

10 SEC. 359. CROSS-BORDER REGULATION OF DERIVATIVES 

11 TRANSACTIONS. 

12 (a) RULES REQUIRED.—Within 180 days after the 

13 date of the enactment of this Act, the Commodity Futures 

14 Trading Commission shall issue rules that address— 

15 (1) the nature of the connections to the United 

16 States that require a non-U.S. person to register as 

17 a swap dealer or major swap participant under the 

18 Commodity Exchange Act and the regulations issued 

19 under such Act; 

20 (2) which of the United States swaps require21 ments shall apply to the swap activities of non-U.S. 

22 persons, U.S. persons, and their branches, agencies, 

23 subsidiaries, and affiliates outside of the United 

24 States and the extent to which such requirements 

25 shall apply; and 

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1 (3) the circumstances under which a non-U.S. 

2 person in compliance with the regulatory require3 ments of a foreign jurisdiction shall be exempt from 

4 United States swaps requirements. 

5 (b) RULE IN ACCORDANCE WITH APA REQUIRED.— 

6 No guidance, memorandum of understanding, or any such 

7 other agreement may satisfy the requirement to issue a 

8 rule from the Commission in accordance with section 553 

9 of title 5, United States Code. 

10 (c) GENERAL APPLICATION TO COUNTRIES OR AD11 MINISTRATIVE REGIONS HAVING 9 LARGEST MARKETS.— 

12 (1) GENERAL APPLICATION.—In issuing rules 

13 under this section, the Commission shall provide 

14 that a non-U.S. person in compliance with the swaps 

15 regulatory requirements of a country or administra16 tive region that has 1 of the 9 largest swap markets 

17 by notional amount in the calendar year preceding 

18 issuance of such rules, or other foreign jurisdiction 

19 as determined by the Commission, shall be exempt 

20 from United States swaps requirements in accord21 ance with the schedule set forth in paragraph (2), 

22 unless the Commission determines that the regu23 latory requirements of the country or administrative 

24 region or other foreign jurisdiction are not broadly 

25 equivalent to United States swaps requirements. 

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1 (2) EFFECTIVE DATE SCHEDULE.—The exemp2 tion described in paragraph (1) and set forth under 

3 the rules required by this section shall apply to per4 sons or transactions relating to or involving— 

5 (A) countries or administrative regions de6 scribed in such paragraph, or any other foreign 

7 jurisdiction as determined by the Commission, 

8 accounting for the 5 largest swap markets by 

9 notional amount in the calendar year preceding 

10 issuance of such rules, on the date on which 

11 final rules are issued under this section; and 

12 (B) the remaining countries or administra13 tive regions described in such paragraph, and 

14 any other foreign jurisdiction as determined by 

15 the Commission, 1 year after the date on which 

16 such rules are issued. 

17 (3) CRITERIA.—In such rules, the Commission 

18 shall establish criteria for determining that 1 or 

19 more categories of regulatory requirements of a 

20 country or administrative region described in para21 graph (1) or other foreign jurisdiction is not broadly 

22 equivalent to United States swaps requirements and 

23 shall determine the appropriate application of cer24 tain United States swap requirements to persons or 

25 transactions relating to or involving the country or 

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1 administrative region or other foreign jurisdiction. 

2 The criteria shall include the scope and objectives of 

3 the regulatory requirements of a country or adminis4 trative region described in paragraph (1) or other 

5 foreign jurisdiction as well as the effectiveness of the 

6 supervisory compliance program administered, and 

7 the enforcement authority exercised, by the country 

8 or administrative region or other foreign jurisdiction, 

9 and such other factors as the Commission, by rule, 

10 determines to be necessary or appropriate in the 

11 public interest. 

12 (4) REQUIRED ASSESSMENT.—Beginning on the 

13 date on which final rules are issued under this sec14 tion, the Commission shall begin to assess the regu15 latory requirements of countries or administrative 

16 regions described in paragraph (1), as the Commis17 sion determines appropriate, in accordance with the 

18 criteria established pursuant to this subsection, to 

19 determine if 1 or more categories of regulatory re20 quirements of such a country or administrative re21 gion or other foreign jurisdiction is not broadly 

22 equivalent to United States swaps requirements. 

23 (d) REPORT TO CONGRESS.—If the Commission 

24 makes the determination described in subsection (c)(1) 

25 that the regulatory requirements of a country or adminismstockstill on DSK4VPTVN1PROD with BILLS

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1 trative region described in such subsection or other foreign 

2 jurisdiction are not broadly equivalent to United States 

3 swaps requirements, the Commission shall articulate the 

4 basis for the determination in a written report transmitted 

5 to the Committee on Agriculture of the House of Rep6 resentatives and the Committee on Agriculture, Nutrition, 

7 and Forestry of the Senate within 30 days of the deter8 mination. The determination shall not be effective until 

9 the transmission of the report. 

10 (e) DEFINITIONS.—As used in this section and for 

11 purposes of the rules issued pursuant to this section, the 

12 following definitions apply: 

13 (1) The term ‘‘U.S. person’’— 

14 (A) means— 

15 (i) any natural person resident in the 

16 United States; 

17 (ii) any partnership, corporation, 

18 trust, or other legal person organized or 

19 incorporated under the laws of the United 

20 States or having its principal place of busi21 ness in the United States; 

22 (iii) any account (whether discre23 tionary or non-discretionary) of a U.S. per24 son; and 

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48 

•HR 4413 RH

1 (iv) any other person as the Commis2 sion may further define to more effectively 

3 carry out the purposes of this section; and 

4 (B) does not include the International 

5 Monetary Fund, the International Bank for Re6 construction and Development, the Inter-Amer7 ican Development Bank, the Asian Development 

8 Bank, the African Development Bank, the 

9 United Nations, their agencies and pension 

10 plans, and any other similar international orga11 nizations and their agencies and pension plans. 

12 (2) The term ‘‘United States swaps require13 ments’’ means the provisions relating to swaps con14 tained in the Commodity Exchange Act (7 U.S.C. 1a 

15 et seq.) that were added by title VII of the Dodd16 Frank Wall Street Reform and Consumer Protection 

17 Act, and any rules or regulations prescribed by the 

18 Commodity Futures Trading Commission pursuant 

19 to such provisions. 

20 (f) CONFORMING AMENDMENT.—Section 4(c)(1)(A) 

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

22 amended by inserting ‘‘or except as necessary to effectuate 

23 section 361 of the Customer Protection and End User Re24 lief Act,’’ after ‘‘to grant exemptions,’’. 

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49 

•HR 4413 RH

1 Subtitle F—Effective Date 

2 SEC. 371. EFFECTIVE DATE. 

3 The amendments made by this title shall take effect 

4 as if enacted on July 21, 2010. 

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Union Calendar No. 348 

113TH CONGRESS 

2D SESSION H. R. 4413 

[Report No. 113–469] 

A BILL 

To reauthorize the Commodity Futures Trading 

poses. help keep consumer costs low, and for other purers, ranchers, and end users manage risks to accountability at the Commission, to help farmmake basic reforms to ensure transparency and to provide end users with market certainty, to Commission, to better protect futures customers, 

JUNE 5, 2014 

Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

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