Swap Trading Improvement Act

To improve swap execution facility administration, swap entity compliance, and for other purposes. 1. Short title This Act may be cited as the Swap Trading Improvement Act 2. Simplification of swap data aggregation requirements (a) Obligations for designated contract markets Section 5(d)(5) of the Commodity Exchange Act ( 7 U.S.C. 7(d)(5) (1) in subparagraph (A), by inserting that is not a swap contract for each contract of the board of trade (2) in subparagraph (B), by inserting that is not a swap contract contract (b) Obligations for swap execution facilities Section 5h(f)(4)(B) of such Act ( 7 U.S.C. 7b–3(f)(4)(B) in swaps activity in swaps occurring on the swap execution facility (c) Cross-Facility data aggregation relief Section 5h(f) of such Act ( 7 U.S.C. 7b–3(f) 3. Swap entity administrative improvements (a) Authority of registered entities To use third-Party service providers Section 5c(b) of the Commodity Exchange Act ( 7 U.S.C. 7a–2(b) (b) Delegation of functions under core principles (1) In general A registered entity may comply with any applicable core principle through delegation of any relevant function to a third-party service provider. (2) Responsibility A registered entity that delegates a function under paragraph (1) shall remain responsible for carrying out the function. (3) Noncompliance If a registered entity that delegates a function under paragraph (1) becomes aware that the function is not being performed as required under this Act, the registered entity shall promptly take steps to address the noncompliance. . (b) Registration of swap execution facilities Section 5h(a)(1) of such Act ( 7 U.S.C. 7b–3(a)(1) or processing (c) Core principles for swap execution facilities (1) Modification of emergency authority requirements Section 5h(f)(8) of such Act ( 7 U.S.C. 7b–3(f)(8) cooperation with the Commission or other registered entities, as is necessary and appropriate, to facilitate the liquidation or transfer of open positions in any swap, or to suspend or curtail trading in a swap. (2) Reduction of operating capital requirement Section 5h(f)(13)(B) of such Act ( 7 U.S.C. 7b–3(f)(13)(B) 1-year period, as calculated on a rolling basis, 90-day period, as calculated on a rolling basis, or conduct an orderly wind-down of its operations, whichever is greater. 4. Simplification of swap execution facility chief compliance officer obligations Section 5h(f)(15) of the Commodity Exchange Act ( 7 U.S.C. 7b–3(f)(15) (1) in subparagraph (A), by adding at the end the following: The individual may also perform other responsibilities for the swap execution facility. (2) in subparagraph (B)— (A) in clause (i), by inserting , to a committee of the board, directly to the board (B) by striking clauses (iii) through (v) and inserting the following: (iii) establish and administer policies and procedures that are reasonably designed to resolve any conflicts of interest that may arise; (iv) establish and administer policies and procedures that reasonably ensure compliance with this Act and the rules and regulations issued under this Act, including rules prescribed by the Commission pursuant to this section; and ; and (C) by redesignating clause (vi) as clause (v); (3) in subparagraph (C), by striking (B)(vi) (B)(v) (4) in subparagraph (D)— (A) in clause (i)— (i) by striking In accordance with rules prescribed by the Commission, the The (ii) by striking and sign (B) in clause (ii)— (i) in the matter preceding subclause (I), by inserting or senior officer officer (ii) by amending subclause (I) to read as follows: (I) submit each report described in clause (i) to the Commission; and ; and (iii) in subclause (II), by inserting materially accurate 5. Clarification of CFTC authority over swaps entities (a) Section 6b of the Commodity Exchange Act ( 7 U.S.C. 13a or section 5h sections 5 through 5c (b) Section 8a of such Act ( 7 U.S.C. 12a (1) in paragraph (7)(A), by inserting or swap contracts contracts of sale (2) in paragraph (9), by striking futures contract contract of sale for future delivery or swap contract (c) Section 15(b) of such Act ( 7 U.S.C. 19(b) contract market registered entity 6. Technical correction Section 5h(h) of the Commodity Exchange Act ( 7 U.S.C. 7b–3 alternative

Summary: Swap Trading Improvement Act This bill revises provisions regarding swap execution facilities (i.e., trading platforms for speculators exchanging the benefit or liability of two financial instruments). The bill eliminates the requirement that swap execution facilities must adopt position limitations or position accountability for speculators. The bill allows a swap execution facility to delegate certain core functions to a third party. Currently, these functions may only be delegated to other registered entities. Additionally, the bill revises the required adequate financial resources of a swap execution facility. Currently, a facility must be able to cover the operating costs of a one year period. The bill requires the facility to cover the greater amount of the operating costs of a 90 day period, or to enable an orderly wind down of its operations.