II 

113TH CONGRESS 

2D SESSION S. 2330 

To amend the Commodity Exchange Act to improve futures and swaps 

trading, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 13, 2014 

Mr. CHAMBLISS 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 improve futures 

and swaps trading, 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 ‘‘End-User Protection 

5 Act of 2014’’. 

6 SEC. 2. DEFINITIONS. 

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

9 (1) by redesignating paragraphs (8) through 

10 (51) as paragraphs (9) through (52), respectively; 


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1 (2) by inserting after paragraph (7) the fol2 lowing: 

3 ‘‘(8) COMMERCIAL MARKET PARTICIPANT.—The 

4 term ‘commercial market participant’ means any 

5 producer, processor, merchant, or commercial user 

6 of an exempt or agricultural commodity, or the prod7 ucts or by-products of an exempt or agricultural 

8 commodity.’’; 

9 (3) in subparagraph (B) of paragraph (48) (as 

10 so redesignated), by striking clause (ii) and inserting 

11 the following: 

12 ‘‘(ii) any purchase or sale of a non13 financial commodity or security for de14 ferred shipment or delivery, so long as the 

15 transaction is intended to be physically set16 tled, including any stand-alone or embed17 ded option for which exercise would result 

18 in a physical delivery obligation;’’; and 

19 (4) in paragraph (50) (as redesignated by para20 graph (1)), by striking subparagraph (D) and insert21 ing the following: 

22 ‘‘(D) DE MINIMIS EXCEPTION.— 

23 ‘‘(i) IN GENERAL.—The Commission 

24 shall exempt from designation as a swap 

25 dealer an entity that engages in a de miniVerDate Mar 15 2010 21:04 May 18, 2014 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2330.IS S2330

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1 mis quantity of swap dealing (which shall 

2 not be less than $8,000,000,000) in con3 nection with transactions with or on behalf 

4 of its customers. 

5 ‘‘(ii) REGULATIONS.—The Commis6 sion shall promulgate regulations to estab7 lish the factors to be used in a determina8 tion under clause (i) to exempt, including 

9 any monetary or other levels established by 

10 the Commission, and those levels shall only 

11 be amended or changed through an affirm12 ative action of the Commission undertaken 

13 by rule or regulation.’’. 

14 (b) FINANCIAL ENTITY.—Section 2(h)(7)(C) of the 

15 Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)) is amend16 ed— 

17 (1) in clause (iii)— 

18 (A) by striking ‘‘an entity whose’’ and in19 serting the following: ‘‘an entity— 

20 ‘‘(I) whose’’; 

21 (B) by striking the period at the end and 

22 inserting a semicolon; and 

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

24 ‘‘(II) that is— 


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1 ‘‘(aa) a commercial market 

2 participant; 

3 ‘‘(bb) included in clause 

4 (i)(VIII); and 

5 ‘‘(cc) not supervised by a 

6 prudential regulator; or 

7 ‘‘(III) that is included in clause 

8 (i)(VIII) because— 

9 ‘‘(aa) the entity regularly 

10 enters into foreign exchange or 

11 derivatives transactions on behalf 

12 of, or to hedge or mitigate, 

13 whether directly or indirectly, the 

14 commercial risk of 1 or more en15 tities within the same commercial 

16 enterprise as the entity; or 

17 ‘‘(bb) of the making of loans 

18 to 1 or more entities within the 

19 same commercial enterprise as 

20 the entity.’’; and 

21 (2) by adding at the end the following: 

22 ‘‘(iv) SAME COMMERCIAL ENTER23 PRISE.—For purposes of clause (iii)(III), 

24 an entity shall be considered to be within 


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1 the same commercial enterprise as another 

2 entity if— 

3 ‘‘(I) 1 of the entities owns, di4 rectly or indirectly, at least a majority 

5 ownership interest in the other entity 

6 and reports its financial statements 

7 on a consolidated basis and the con8 solidated financial statements include 

9 the financial results of both entities; 

10 or 

11 ‘‘(II) a third party owns at least 

12 a majority ownership interest in both 

13 entities and reports its financial state14 ments on a consolidated basis and the 

15 financial statements of the third party 

16 include the financial results of both 

17 entities. 

18 ‘‘(v) PREDOMINANTLY ENGAGED.— 

19 ‘‘(I) IN GENERAL.—Not later 

20 than 90 days after the date of enact21 ment of this clause, the Commission 

22 shall promulgate regulations defining 

23 the term ‘predominantly engaged’ for 

24 purposes of clause (i)(VIII). 


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1 ‘‘(II) MINIMUM REVENUES.—The 

2 regulations shall provide that an enti3 ty shall not be considered to be pre4 dominantly engaged in activities that 

5 are in the business of banking or fi6 nancial in nature if the consolidated 

7 revenues of the entity derived from 

8 the activities constitute less than a 

9 percentage (as specified by the Com10 mission in the regulations) of the total 

11 consolidated revenues of the entity. 

12 ‘‘(III) REVENUES FROM BANKING

13 OR FINANCIAL ACTIVITIES.—In deter14 mining the percentage of the revenues 

15 of an entity that are derived from ac16 tivities that are in the business of 

17 banking or financial in nature, the 

18 regulations shall exclude all revenues 

19 that are or result from foreign ex20 change or derivatives transactions 

21 used to hedge or mitigate commercial 

22 risk (as defined by the Commission in 

23 the regulations).’’. 


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1 SEC. 3. REPORTING OF ILLIQUID SWAPS SO AS TO NOT DIS2 ADVANTAGE CERTAIN NON-FINANCIAL END 

3 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’’; 

9 (2) by redesignating subparagraphs (D) 

10 through (G) as subparagraphs (E) through (H), re11 spectively; and 

12 (3) by inserting after subparagraph (C) the fol13 lowing: 

14 ‘‘(D) REQUIREMENTS FOR SWAP TRANS15 ACTIONS IN ILLIQUID MARKETS.— 

16 ‘‘(i) DEFINITION OF ILLIQUID MAR17 KETS.—In this subparagraph, the term ‘il18 liquid markets’ means any market in which 

19 the volume and frequency of trading in 

20 swaps is at such a level as to allow identi21 fication of individual market participants. 

22 ‘‘(ii) REQUIREMENTS.—Notwith23 standing subparagraph (C), the Commis24 sion shall— 

25 ‘‘(I) provide by rule for the pub26 lic reporting of swap transactions, inVerDate Mar 15 2010 21:04 May 18, 2014 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2330.IS S2330

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1 cluding price and volume data, in il2 liquid markets that are not cleared 

3 and entered into by a nonfinancial en4 tity that is hedging or mitigating com5 mercial risk in accordance with sub6 section (h)(7)(A); and 

7 ‘‘(II) ensure that the swap trans8 action information described in sub9 clause (I) is available to the public not 

10 sooner than 30 days after the swap 

11 transaction has been executed or at 

12 such later date as the Commission de13 termines appropriate to protect the 

14 identity of participants and positions 

15 in illiquid markets and to prevent the 

16 elimination or reduction of market li17 quidity.’’. 

18 SEC. 4. TREATMENT OF AFFILIATES. 

19 Section 2(h)(7)(D)(i) of the Commodity Exchange 

20 Act (7 U.S.C. 2(h)(7)(D)(i)) is amended— 

21 (1) by striking ‘‘An affiliate’’ and inserting ‘‘A 

22 person that is a financial entity and is an affiliate’’; 

23 (2) by striking ‘‘(including affiliate entities pre24 dominantly engaged in providing financing for the 


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1 purchase of the merchandise or manufactured goods 

2 of the person)’’; and 

3 (3) by striking ‘‘and as an agent’’. 

4 SEC. 5. APPLICABILITY TO BONA FIDE HEDGE TRANS5 ACTIONS OR POSITIONS. 

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

7 U.S.C. 6a(c)) is amended— 

8 (1) in the second sentence of paragraph (1), by 

9 striking ‘‘into the future for which’’ and inserting 

10 ‘‘in the future, to be determined by the Commission, 

11 for which either an appropriate swap is available 

12 or’’; and 

13 (2) in paragraph (2)— 

14 (A) in the matter preceding subparagraph 

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

16 follows through ‘‘position that—’’ and inserting 

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

18 swaps, contracts of sale for future delivery, or 

19 options on the contracts or commodities, a bona 

20 fide hedging transaction or position is a trans21 action or position that—’’; and 

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

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

24 current or anticipated risks’’; and 

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


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1 ‘‘(3) COMMISSION DEFINITION.—The Commis2 sion may further define, by rule or regulation, what 

3 constitutes a bona fide hedging transaction or posi4 tion so long as the rule or regulation is consistent 

5 with the requirements of subparagraphs (A) and (B) 

6 of paragraph (2).’’. 

7 SEC. 6. REPORTING AND RECORDKEEPING. 

8 Section 4g(f) of the Commodity Exchange Act (7 

9 U.S.C. 6g(f)) is amended— 

10 (1) by striking ‘‘(f) Nothing contained in this 

11 section’’ and inserting the following: 

12 ‘‘(f) AUTHORITY OF COMMISSION TO MAKE SEPA13 RATE DETERMINATIONS UNIMPAIRED.— 

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graph (2), nothing in this section’’; and 

16 (2) by adding at the end the following: 

17 ‘‘(2) EXCEPTION.—If the Commission imposes 

18 any requirement under this section on any person 

19 that is not registered, or required to be registered, 

20 with the Commission in any capacity, that person 

21 shall satisfy the requirements of any rule, order, or 

22 regulation under this section by maintaining a writ23 ten record of each cash or forward transaction re24 lated to a reportable or hedging commodity interest 


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1 transaction, futures contract, option on a futures 

2 contract, or swap. 

3 ‘‘(3) SUFFICIENCY.—A written record described 

4 in paragraph (2) shall be sufficient if the written 

5 record— 

6 ‘‘(A) memorializes the final agreement be7 tween the parties, including the material eco8 nomic terms of the transaction; and 

9 ‘‘(B) is identifiable and searchable by 

10 transaction.’’. 

11 SEC. 7. MARGIN REQUIREMENTS. 

12 (a) COMMODITY EXCHANGE ACT AMENDMENT.— 

13 Section 4s(e) of the Commodity Exchange Act (7 U.S.C. 

14 6s(e)) is amended by adding at the end the following: 

15 ‘‘(4) APPLICABILITY WITH RESPECT TO

16 COUNTERPARTIES.—The requirements of paragraphs 

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

18 variation margin requirements imposed by rules 

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

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

21 counterparty qualifies for an exception under section 

22 2(h)(7)(A) or 2(h)(7)(D), or an exemption issued 

23 under section 4(c)(1) from the requirements of sec24 tion 2(h)(1)(A) for cooperative entities as defined in 

25 that exemption.’’. 


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1 (b) SECURITIES EXCHANGE ACT AMENDMENT.— 

2 Section 15F(e) of the Securities Exchange Act of 1934 

3 (15 U.S.C. 78o–10(e)) is amended by adding at the end 

4 the following: 

5 ‘‘(4) APPLICABILITY WITH RESPECT TO

6 COUNTERPARTIES.—The requirements of paragraphs 

7 (2)(A)(ii) and (2)(B)(ii) shall not apply to a secu8 rity-based swap in which a counterparty qualifies for 

9 an exception under section 3C(g)(1) or satisfies the 

10 criteria in section 3C(g)(4).’’. 

11 (c) IMPLEMENTATION.—The amendments made by 

12 this section to the Commodity Exchange Act (7 U.S.C. 

13 1 et seq.) shall be implemented— 

14 (1) without regard to— 

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

16 Code; and 

17 (B) the notice and comment provisions of 

18 section 553 of title 5, United States Code; 

19 (2) through the promulgation of an interim 

20 final rule, pursuant to which public comment is 

21 sought before a final rule is issued; and 

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

23 to changes to rules and regulations, or proposed 

24 rules and regulations, that are limited to and di25 rectly a consequence of the amendments. 


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1 SEC. 8. ANALYSIS BY THE COMMODITY FUTURES TRADING 

2 COMMISSION OF THE COSTS AND BENEFITS 

3 OF REGULATIONS AND ORDERS. 

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

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

6 (2) and inserting the following: 

7 ‘‘(1) IN GENERAL.—Before promulgating a reg8 ulation under this Act or issuing an order (except as 

9 provided in paragraph (3)), the Commission, acting 

10 through the Office of the Chief Economist, shall— 

11 ‘‘(A) state a justification for the regulation 

12 or order; 

13 ‘‘(B) state the baseline for the cost-benefit 

14 analysis and explain how the regulation or 

15 order measures costs against the baseline; 

16 ‘‘(C) assess the costs and benefits, both 

17 qualitative and quantitative, of the intended 

18 regulation or order; 

19 ‘‘(D) measure, and seek to improve, the ac20 tual results of regulatory requirements; and 

21 ‘‘(E) propose or adopt a regulation or 

22 order only on a reasoned determination that the 

23 benefits of the intended regulation or order jus24 tify the costs of the intended regulation or 

25 order (recognizing that some benefits and costs 

26 are difficult to quantify). 


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

2 determination of costs and benefits under paragraph 

3 (1), the Commission shall consider— 

4 ‘‘(A) the protection of market participants 

5 and the public; 

6 ‘‘(B) the efficiency, competitiveness, and fi7 nancial integrity of futures and swaps markets; 

8 ‘‘(C) the impact on market liquidity in the 

9 futures and swaps markets; 

10 ‘‘(D) price discovery; 

11 ‘‘(E) sound risk management practices; 

12 ‘‘(F) the cost of available alternatives to 

13 direct regulation; 

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

15 posed by various activities within the scope of 

16 the jurisdiction of the Commission; 

17 ‘‘(H) whether, consistent with obtaining 

18 regulatory objectives, the regulation or order is 

19 tailored to impose the least burden on society, 

20 including market participants, individuals, busi21 nesses of differing sizes, and other entities (in22 cluding small communities and governmental 

23 entities), taking into account, to the extent 

24 practicable, the cumulative costs of regulations 

25 and orders; 


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1 ‘‘(I) whether the regulation or order is in2 consistent, incompatible, or duplicative of other 

3 Federal regulations and orders; and 

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

6 maximize net benefits (including potential eco7 nomic, environmental, and other benefits, dis8 tributive impacts, and equity).’’. 

Æ 


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