I 

112TH CONGRESS 

1ST SESSION H. R. 3045 

To amend the Employee Retirement Income Security Act of 1974, the Commodity Exchange Act, and the Securities Exchange Act of 1934 to 

ensure that pension plans can use swaps to hedge risks, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 23, 2011 

Mr. CANSECO (for himself and Mr. GARRETT) introduced the following bill; 

which was referred to the Committee on Agriculture, and in addition to 

the Committees on Education and the Workforce and 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 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974, the Commodity Exchange Act, and the Securities Exchange Act of 1934 to ensure that pension plans 

can use swaps to hedge risks, 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 ‘‘Retirement Income 

5 Protection Act of 2011’’. 


tjames on DSK6SPTVN1PROD with BILLS
2 

•HR 3045 IH

1 SEC. 2. CLARIFICATION OF THE DEFINITION OF FIDU2 CIARY. 

3 Section 3(21) of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1002(21)) is amended— 

5 (1) in subparagraph (A), by striking ‘‘subpara6 graph (B)’’ and inserting ‘‘subparagraphs (B) and 

7 (C)’’; 

8 (2) by adding at the end the following subpara9 graph: 

10 ‘‘(C) No person shall be a fiduciary with respect 

11 to a plan by reason of any service, act, or duty that 

12 such person is required to perform with respect to 

13 such plan by reason of section 4s(h) of the Com14 modity Exchange Act, section 15F(h) of the Securi15 ties Exchange Act of 1934, any rule, regulation, or 

16 standard prescribed pursuant to such sections, or 

17 any other Federal law, rule, or regulation.’’. 

18 SEC. 3. CLARIFICATION OF THE DEFINITION OF SPECIAL 

19 ENTITY AND REMOVAL OF ERISA PLANS. 

20 (a) AMENDMENT TO THE CEA.—Section 4s(h)(2)(C) 

21 of the Commodity Exchange Act (7 U.S.C. 6s(h)(2)(C)) 

22 is amended— 

23 (1) by striking ‘‘For purposes’’ and inserting 

24 ‘‘(i) For purposes’’; 


tjames on DSK6SPTVN1PROD with BILLS
3 

•HR 3045 IH

1 (2) by striking clause (iii) and redesignating 

2 clauses (i), (ii), (iv), and (v) as subclauses (I), (II), 

3 (III) and (IV), respectively; and 

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

5 ‘‘(ii) Such term shall not include any col6 lective investment vehicle in which one or more 

7 special entities invest.’’. 

8 (b) AMENDMENT TO THE 1934 ACT.—Section 

9 15F(h)(2)(C) of the Securities Exchange Act of 1934 (15 

10 U.S.C. 78o–10(h)(2)(C)) is amended— 

11 (1) by striking ‘‘For purposes’’ and inserting 

12 ‘‘(i) For purposes’’; 

13 (2) by striking clause (iii) and redesignating 

14 clauses (i), (ii), (iv), and (v) as subclauses (I), (II), 

15 (III) and (IV), respectively; and 

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

17 ‘‘(ii) Such term shall not include any col18 lective investment vehicle in which one or more 

19 special entities invest.’’. 

20 SEC. 4. CONFORMING AMENDMENTS TO COUNTERPARTY 

21 REQUIREMENTS. 

22 (a) AMENDMENT TO THE CEA.—Section 

23 4s(h)(5)(A)(i) of the Commodity Exchange Act (7 U.S.C. 

24 6s(h)(5)(A)(i)) is amended— 


tjames on DSK6SPTVN1PROD with BILLS
4 

•HR 3045 IH

1 (1) by inserting ‘‘and’’ after the semicolon in 

2 subclause (V); and 

3 (2) by striking subclause (VII). 

4 (b) AMENDMENT TO THE 1934 ACT.—Section 

5 15F(h)(5)(A)(i) of the Securities Exchange Act of 1934 

6 (15 U.S.C. 78o–10(h)(5)(A)(i)) is amended— 

7 (1) by inserting ‘‘and’’ after the semicolon in 

8 subclause (V); and 

9 (2) by striking subclause (VII). 

10 SEC. 5. CLARIFICATION OF THE DEFINITION OF ADVISOR. 

11 (a) AMENDMENT TO THE CEA.—Section 4s(h)(4) of 

12 the Commodity Exchange Act (7 U.S.C. 6s(h)(4)) is 

13 amended— 

14 (1) in subparagraph (B), by adding at the end 

15 the following: ‘‘The duty of a swap dealer to act in 

16 the best interests of a Special Entity shall not be 

17 construed to be a fiduciary standard under Federal 

18 or State Law.’’; and 

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

20 ‘‘(D) RULE OF CONSTRUCTION.—A swap 

21 dealer will not be treated as an advisor to a 

22 Special Entity if— 

23 ‘‘(i) the Special Entity represents in 

24 writing that— 


tjames on DSK6SPTVN1PROD with BILLS
5 

•HR 3045 IH

1 ‘‘(I) the Special Entity will not 

2 rely on recommendations provided by 

3 the swap dealer; and 

4 ‘‘(II) the Special Entity will rely 

5 on advice from an independent rep6 resentative as described in paragraph 

7 (5); and 

8 ‘‘(ii) the swap dealer discloses to the 

9 Special Entity that it is not undertaking to 

10 act in the best interests of the Special En11 tity, as otherwise required by this para12 graph. 

13 No swap dealer shall be considered to act as an 

14 advisor to a Special Entity solely by reason of 

15 providing information to an independent rep16 resentative described in paragraph (5)(D) of a 

17 Special Entity.’’. 

18 (b) AMENDMENT TO THE 1934 ACT.—Section 

19 15F(h)(4)(B) of the Securities Exchange Act of 1934 (15 

20 U.S.C. 78o–10(h)(4)(B)) is amended— 

21 (1) in subparagraph (B), by adding at the end 

22 the following: ‘‘The duty of a security-based swap 

23 dealer to act in the best interests of a Special Entity 

24 shall not be construed to be a fiduciary standard 

25 under Federal or State Law.’’; and 


tjames on DSK6SPTVN1PROD with BILLS
6 

•HR 3045 IH

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

2 ‘‘(D) RULE OF CONSTRUCTION.—A secu3 rity-based swap dealer will not be treated as an 

4 advisor to a Special Entity if— 

5 ‘‘(i) the Special Entity represents in 

6 writing that— 

7 ‘‘(I) the Special Entity will not 

8 rely on recommendations provided by 

9 the security-based swap dealer; and 

10 ‘‘(II) the Special Entity will rely 

11 on advice from an independent rep12 resentative as described in paragraph 

13 (5); and 

14 ‘‘(ii) the security-based swap dealer 

15 discloses to the Special Entity that it is 

16 not undertaking to act in the best interests 

17 of the Special Entity, as otherwise required 

18 by this paragraph. 

19 No security-based swap dealer shall be consid20 ered to act as an advisor to a Special Entity 

21 solely by reason of providing information to an 

22 independent representative described in para23 graph (5)(D) of a Special Entity.’’. 


tjames on DSK6SPTVN1PROD with BILLS
7 

•HR 3045 IH

1 SEC. 6. CLARIFICATION OF THE DEFINITION OF INDE2 PENDENT REPRESENTATIVES. 

3 (a) AMENDMENT TO THE CEA.—Section 4s(h)(5) of 

4 the Commodity Exchange Act (7 U.S.C. 6s(h)(5)) is 

5 amended— 

6 (1) in subparagraph (A)(ii) by striking ‘‘; and’’ 

7 and inserting a period; 

8 (2) in subparagraph (B), by striking ‘‘the Com9 mission’’ and inserting ‘‘The Commission’’; 

10 (3) by adding at the end the following subpara11 graphs: 

12 ‘‘(C) A representative of a Special Entity 

13 will be considered to be independent of a swap 

14 dealer if— 

15 ‘‘(i) the representative is not an asso16 ciated person of the swap dealer within the 

17 meaning of section 1a(4); and 

18 ‘‘(ii) no more than 10 percent of the 

19 gross revenues of the representative are de20 rived from the swap dealer. 

21 ‘‘(D) Each of the requirements of this 

22 paragraph shall be considered to be met if the 

23 Special Entity represents to the swap dealer 

24 that it is represented by— 


tjames on DSK6SPTVN1PROD with BILLS
8 

•HR 3045 IH

1 ‘‘(i) an entity registered as an invest2 ment adviser under the Investment Advis3 ers Act of 1940; 

4 ‘‘(ii) a commodity trading adviser as 

5 defined in section 1a(12); 

6 ‘‘(iii) a municipal advisor as defined 

7 in section 15B(e)(4) of the Securities Ex8 change Act of 1934; or 

9 ‘‘(iv) an advisor certified by the Na10 tional Futures Association.’’. 

11 (b) AMENDMENT TO THE 1934 ACT.—Section 

12 15F(h)(5) of the Securities Exchange Act of 1934 (15 

13 U.S.C. 78o–10(h)(5)) is amended by adding at the end 

14 the following subparagraphs: 

15 ‘‘(C) INDEPENDENCE.—A representative of 

16 a Special Entity will be considered to be inde17 pendent of a security-based swap dealer if— 

18 ‘‘(i) the representative is not an asso19 ciated person of the security-based swap 

20 dealer within the meaning of section 1a(4) 

21 of the Commodity Exchange Act; and 

22 ‘‘(ii) no more than 10 percent of the 

23 gross revenues of the representative are de24 rived from the security-based swap dealer. 


tjames on DSK6SPTVN1PROD with BILLS
9 

•HR 3045 IH

1 ‘‘(D) RULE OF CONSTRUCTION.—Each of 

2 the requirements of this paragraph shall be con3 sidered to be met if the Special Entity rep4 resents to the security-based swap dealer that it 

5 is represented by— 

6 ‘‘(i) an entity registered as an invest7 ment adviser under the Investment Advis8 ers Act of 1940; 

9 ‘‘(ii) a commodity trading adviser as 

10 defined in section 1a(12) of the Com11 modity Exchange Act; 

12 ‘‘(iii) a municipal advisor as defined 

13 in section 15B(e)(4); or 

14 ‘‘(iv) an advisor certified by the Fi15 nancial Industry Regulatory Authority.’’. 

16 SEC. 7. AMENDMENT TO THE DEFINITION OF COMMODITY 

17 TRADING ADVISOR. 

18 Section 1a(12)(B)(iii) of the Commodity Exchange 

19 Act (7 U.S.C. 1a(12)(B)(iii)) is amended by striking ‘‘or 

20 futures commission merchant’’ and inserting ‘‘, futures 

21 commission merchant, or swap dealer’’. 

22 SEC. 8. EFFECTIVE DATE. 

23 (a) IN GENERAL.—The amendments made by sec24 tions 3 through 7 to the respective provisions of the Com25 modity Exchange Act and the Securities Exchange Act of 


tjames on DSK6SPTVN1PROD with BILLS
10 

•HR 3045 IH

1 1934 shall take effect as if included in the sections of the 

2 Dodd-Frank Wall Street Reform and Consumer Protec3 tion Act that added such respective provisions to such 

4 Acts. 

5 (b) ERISA AMENDMENTS.—The amendment made 

6 by section 2 of this Act shall take effect as if enacted on 

7 the date of enactment of the Dodd-Frank Wall Street Re8 form and Consumer Protection Act. 

Æ 


tjames on DSK6SPTVN1PROD with BILLS