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(2) may, both individually and collectively, agree 
to such information-sharing arrangements as may be 
deemed to be necessary or appropriate in the public 
interest or for the protection of investors and swap 
counterparties. 
SEC. 753. ANTIMARKET MANIPULATION AUTHORITY. 
(a) PROHIBITION REGARDING MANIPULATION
AND 
FALSE INFORMATION.—Subsection (c) of section 6 of the 
Commodity Exchange Act (7 U.S.C. 9, 15) is amended to 
read as follows: 
‘‘(c) PROHIBITION REGARDING MANIPULATION
AND 
FALSE INFORMATION.— 
‘‘(1) PROHIBITION AGAINST MANIPULATION.—It 
shall be unlawful for any person, directly or indi-
rectly, to use or employ, or attempt to use or employ, 
in connection with any swap, or a contract of sale of 
any commodity in interstate commerce, or for future 
delivery on or subject to the rules of any registered en-
tity, any manipulative or deceptive device or contriv-
ance, in contravention of such rules and regulations 
as the Commission shall promulgate by not later than 
1 year after the date of enactment of the Restoring 
American Financial Stability Act of 2010. 
‘‘(A) SPECIAL
PROVISION
FOR
MANIPULA-
TION BY FALSE REPORTING.—Unlawful manipu-
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lation for purposes of this paragraph shall in-
clude, but not be limited to, delivering, or caus-
ing to be delivered for transmission through the 
mails or interstate commerce, by any means of 
communication whatsoever, a false or misleading 
or inaccurate report concerning crop or market 
information or conditions that affect or tend to 
affect the price of any commodity in interstate 
commerce, knowing, or acting in reckless dis-
regard of the fact, that such report is false, mis-
leading or inaccurate. 
‘‘(B) EFFECT ON OTHER LAW.—Nothing in 
this paragraph shall affect, or be construed to af-
fect, the applicability of section 9(a)(2). 
‘‘(2) PROHIBITION REGARDING FALSE INFORMA-
TION.—It shall be unlawful for any person to make 
any false or misleading statement of a material fact 
to the Commission, including in any registration ap-
plication or any report filed with the Commission 
under this Act, or any other information relating to 
a swap, or a contract of sale of a commodity, in 
interstate commerce, or for future delivery on or sub-
ject to the rules of any registered entity, or to omit 
to state in any such statement any material fact that 
is necessary to make any statement of a material fact
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† HR 4173 EAS 
made not misleading in any material respect, if the 
person knew, or reasonably should have known, the 
statement to be false or misleading. 
‘‘(3) OTHER MANIPULATION.—In addition to the 
prohibition in paragraph (1), it shall be unlawful for 
any person, directly or indirectly, to manipulate or 
attempt to manipulate the price of any swap, or of 
any commodity in interstate commerce, or for future 
delivery on or subject to the rules of any registered en-
tity. 
‘‘(4) ENFORCEMENT.— 
‘‘(A) AUTHORITY OF COMMISSION.—If the 
Commission has reason to believe that any per-
son (other than a registered entity) is violating 
or has violated this subsection, or any other pro-
vision of this Act (including any rule, regula-
tion, or order of the Commission promulgated in 
accordance with this subsection or any other pro-
vision of this Act), the Commission may serve 
upon the person a complaint. 
‘‘(B) CONTENTS
OF
COMPLAINT.—A com-
plaint under subparagraph (A) shall— 
‘‘(i) contain a description of the 
charges against the person that is the sub-
ject of the complaint; and
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‘‘(ii) have attached or contain a notice 
of hearing that specifies the date and loca-
tion of the hearing regarding the complaint. 
‘‘(C) HEARING.—A hearing described in 
subparagraph (B)(ii)— 
‘‘(i) shall be held not later than 3 days 
after service of the complaint described in 
subparagraph (A); 
‘‘(ii) shall require the person to show 
cause regarding why— 
‘‘(I) an order should not be 
made— 
‘‘(aa) to prohibit the person 
from trading on, or subject to the 
rules of, any registered entity; and 
‘‘(bb) to direct all registered 
entities to refuse all privileges to 
the person until further notice of 
the Commission; and 
‘‘(II) the registration of the per-
son, if registered with the Commission 
in any capacity, should not be sus-
pended or revoked; and 
‘‘(iii) may be held before— 
‘‘(I) the Commission; or
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† HR 4173 EAS 
‘‘(II) an administrative law judge 
designated by the Commission, under 
which the administrative law judge 
shall ensure that all evidence is re-
corded in written form and submitted 
to the Commission. 
‘‘(5) SUBPOENA.—For the purpose of securing ef-
fective enforcement of the provisions of this Act, for 
the purpose of any investigation or proceeding under 
this Act, and for the purpose of any action taken 
under section 12(f) of this Act, any member of the 
Commission or any Administrative Law Judge or 
other officer designated by the Commission (except as 
provided in paragraph (7)) may administer oaths 
and affirmations, subpoena witnesses, compel their 
attendance, take evidence, and require the production 
of any books, papers, correspondence, memoranda, or 
other records that the Commission deems relevant or 
material to the inquiry. 
‘‘(6) WITNESSES.—The attendance of witnesses 
and the production of any such records may be re-
quired from any place in the United States, any 
State, or any foreign country or jurisdiction at any 
designated place of hearing.
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‘‘(7) SERVICE.—A subpoena issued under this 
section may be served upon any person who is not to 
be found within the territorial jurisdiction of any 
court of the United States in such manner as the Fed-
eral Rules of Civil Procedure prescribe for service of 
process in a foreign country, except that a subpoena 
to be served on a person who is not to be found within 
the territorial jurisdiction of any court of the United 
States may be issued only on the prior approval of 
the Commission. 
‘‘(8) REFUSAL TO OBEY.—In case of contumacy 
by, or refusal to obey a subpoena issued to, any per-
son, the Commission may invoke the aid of any court 
of the United States within the jurisdiction in which 
the investigation or proceeding is conducted, or where 
such person resides or transacts business, in requiring 
the attendance and testimony of witnesses and the 
production of books, papers, correspondence, memo-
randa, and other records. Such court may issue an 
order requiring such person to appear before the Com-
mission or member or Administrative Law Judge or 
other officer designated by the Commission, there to 
produce records, if so ordered, or to give testimony 
touching the matter under investigation or in ques-
tion.
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‘‘(9) FAILURE TO OBEY.—Any failure to obey 
such order of the court may be punished by the court 
as a contempt thereof. All process in any such case 
may be served in the judicial district wherein such 
person is an inhabitant or transacts business or wher-
ever such person may be found. 
‘‘(10) EVIDENCE.—On the receipt of evidence 
under paragraph (4)(C)(iii), the Commission may— 
‘‘(A) prohibit the person that is the subject 
of the hearing from trading on, or subject to the 
rules of, any registered entity and require all 
registered entities to refuse the person all privi-
leges on the registered entities for such period as 
the Commission may require in the order; 
‘‘(B) if the person is registered with the 
Commission in any capacity, suspend, for a pe-
riod not to exceed 180 days, or revoke, the reg-
istration of the person; 
‘‘(C) assess such person— 
‘‘(i) a civil penalty of not more than 
an amount equal to the greater of— 
‘‘(I) $140,000; or 
‘‘(II) triple the monetary gain to 
such person for each such violation; or
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‘‘(ii) in any case of manipulation or 
attempted manipulation in violation of this 
subsection or section 9(a)(2), a civil penalty 
of not more than an amount equal to the 
greater of— 
‘‘(I) $1,000,000; or 
‘‘(II) triple the monetary gain to 
the person for each such violation; and 
‘‘(D) require restitution to customers of 
damages proximately caused by violations of the 
person. 
‘‘(11) ORDERS.— 
‘‘(A) NOTICE.—The Commission shall pro-
vide to a person described in paragraph (10) 
and the appropriate governing board of the reg-
istered entity notice of the order described in 
paragraph (10) by— 
‘‘(i) registered mail; 
‘‘(ii) certified mail; or 
‘‘(iii) personal delivery. 
‘‘(B) REVIEW.— 
‘‘(i) IN GENERAL.—A person described 
in paragraph (10) may obtain a review of 
the order or such other equitable relief as
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determined to be appropriate by a court de-
scribed in clause (ii). 
‘‘(ii) PETITION.—To obtain a review 
or other relief under clause (i), a person 
may, not later than 15 days after notice is 
given to the person under clause (i), file a 
written petition to set aside the order with 
the United States Court of Appeals— 
‘‘(I) for the circuit in which the 
petitioner carries out the business of 
the petitioner; or 
‘‘(II) in the case of an order deny-
ing registration, the circuit in which 
the principal place of business of the 
petitioner is located, as listed on the 
application for registration of the peti-
tioner. 
‘‘(C) PROCEDURE.— 
‘‘(i) DUTY OF CLERK OF APPROPRIATE 
COURT.—The clerk of the appropriate court 
under subparagraph (B)(ii) shall transmit 
to the Commission a copy of a petition filed 
under subparagraph (B)(ii). 
‘‘(ii) DUTY
OF
COMMISSION.—In ac-
cordance with section 2112 of title 28,
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† HR 4173 EAS 
United States Code, the Commission shall 
file in the appropriate court described in 
subparagraph (B)(ii) the record theretofore 
made. 
‘‘(iii) JURISDICTION OF APPROPRIATE 
COURT.—Upon the filing of a petition 
under subparagraph (B)(ii), the appro-
priate court described in subparagraph 
(B)(ii) shall have jurisdiction to affirm, set 
aside, or modify the order of the Commis-
sion, and the findings of the Commission as 
to the facts, if supported by the weight of 
evidence, shall in like manner be conclu-
sive.’’. 
(b) CEASE AND DESIST ORDERS, FINES.—Section 6(d) 
of the Commodity Exchange Act (7 U.S.C. 13b) is amended 
to read as follows: 
‘‘(d) If any person (other than a registered entity), is 
violating or has violated subsection (c) or any other provi-
sions of this Act or of the rules, regulations, or orders of 
the Commission thereunder, the Commission may, upon no-
tice and hearing, and subject to appeal as in other cases 
provided for in subsection (c), make and enter an order di-
recting that such person shall cease and desist therefrom 
and, if such person thereafter and after the lapse of the pe-
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† HR 4173 EAS 
riod allowed for appeal of such order or after the affirmance 
of such order, shall fail or refuse to obey or comply with 
such order, such person shall be guilty of a misdemeanor 
and, upon conviction thereof, shall be fined not more than 
the higher of $140,000 or triple the monetary gain to such 
person, or imprisoned for not less than six months nor more 
than one year, or both, except that if such failure or refusal 
to obey or comply with such order involves any offense with-
in subsection (a) or (b) of section 9 of this Act, such person 
shall be guilty of a felony and, upon conviction thereof, shall 
be subject to the penalties of said subsection (a) or (b): Pro-
vided, That any such cease and desist order under this sub-
section against any respondent in any case of manipulation 
shall be issued only in conjunction with an order issued 
against such respondent under subsection (c). Each day 
during which such failure or refusal to obey or comply with 
such order continues shall be deemed a separate offense.’’. 
(c) MANIPULATIONS; PRIVATE RIGHTS OF ACTION.— 
Section 22(a)(1) of the Commodity Exchange Act (7 U.S.C. 
25(a)(1)) is amended by striking subparagraph (D) and in-
serting the following: 
‘‘(D) who purchased or sold a contract re-
ferred to in subparagraph (B) hereof or swap if 
the violation constitutes—
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‘‘(i) the use or employment of, or an 
attempt to use or employ, in connection 
with a swap, or a contract of sale of a com-
modity, in interstate commerce, or for fu-
ture delivery on or subject to the rules of 
any registered entity, any manipulative de-
vice or contrivance in contravention of such 
rules and regulations as the Commission 
shall promulgate by not later than 1 year 
after the date of enactment of the Restoring 
American Financial Stability Act of 2010; 
or 
‘‘(ii) a manipulation of the price of 
any such contract or swap or the price of 
the commodity underlying such contract or 
swap.’’. 
(d) EFFECTIVE DATE.— 
(1) The amendments made by this section shall 
take effect on the date on which the final rule promul-
gated by the Commodity Futures Trading Commis-
sion pursuant to this Act takes effect. 
(2) Paragraph (1) shall not preclude the Com-
mission from undertaking prior to the effective date 
any rulemaking necessary to implement the amend-
ments contained in this section.
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† HR 4173 EAS 
SEC. 754. EFFECTIVE DATE. 
Unless otherwise provided in this title, this subtitle 
shall take effect on the date that is 180 days after the date 
of enactment of this Act. 
Subtitle B—Regulation of Security- 
Based Swap Markets 
SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE 
ACT OF 1934. 
(a) DEFINITIONS.—Section 3(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)) is amended— 
(1) in subparagraphs (A) and (B) of paragraph 
(5), by inserting ‘‘(not including security-based 
swaps, other than security-based swaps with or for 
persons that are not eligible contract participants)’’ 
after ‘‘securities’’ each place that term appears; 
(2) in paragraph (10), by inserting ‘‘security- 
based swap,’’ after ‘‘security future,’’; 
(3) in paragraph (13), by adding at the end the 
following: ‘‘For security-based swaps, such terms in-
clude the execution, termination (prior to its sched-
uled maturity date), assignment, exchange, or similar 
transfer or conveyance of, or extinguishing of rights 
or obligations under, a security-based swap, as the 
context may require.’’; 
(4) in paragraph (14), by adding at the end the 
following: ‘‘For security-based swaps, such terms in-
764 
† HR 4173 EAS 
clude the execution, termination (prior to its sched-
uled maturity date), assignment, exchange, or similar 
transfer or conveyance of, or extinguishing of rights 
or obligations under, a security-based swap, as the 
context may require.’’; 
(5) in paragraph (39)— 
(A) in subparagraph (B)(i)— 
(i) in subclause (I), by striking ‘‘or 
government securities dealer’’ and inserting 
‘‘government securities dealer, security- 
based swap dealer, or major security-based 
swap participant’’; and 
(ii) in subclause (II), by inserting ‘‘se-
curity-based swap dealer, major security- 
based swap participant,’’ after ‘‘government 
securities dealer,’’; 
(B) in subparagraph (C), by striking ‘‘or 
government securities dealer’’ and inserting 
‘‘government securities dealer, security-based 
swap dealer, or major security-based swap par-
ticipant’’; and 
(C) in subparagraph (D), by inserting ‘‘se-
curity-based swap dealer, major security-based 
swap participant,’’ after ‘‘government securities 
dealer,’’; and
765 
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(6) by adding at the end the following: 
‘‘(65) ELIGIBLE
CONTRACT
PARTICIPANT.—The 
term ‘eligible contract participant’ has the same 
meaning as in section 1a of the Commodity Exchange 
Act (7 U.S.C. 1a). 
‘‘(66) MAJOR
SWAP
PARTICIPANT.—The term 
‘major swap participant’ has the same meaning as in 
section 1a of the Commodity Exchange Act (7 U.S.C. 
1a). 
‘‘(67) MAJOR
SECURITY-BASED
SWAP
PARTICI-
PANT.— 
‘‘(A) IN GENERAL.—The term ‘major secu-
rity-based swap participant’ means any per-
son— 
‘‘(i) who is not a security-based swap 
dealer; and 
‘‘(ii)(I) who maintains a substantial 
position in security-based swaps for any of 
the major security-based swap categories, as 
such categories are determined by the Com-
mission, excluding— 
‘‘(aa) positions held for hedging 
or mitigating commercial risk; and 
‘‘(bb) positions maintained by 
any employee benefit plan (or any con-
766 
† HR 4173 EAS 
tract held by such a plan), as that 
term is defined in paragraphs (3) and 
(32) of section 3 of the Employee Re-
tirement Income Security Act of 1974 
(29 U.S.C. 1002), for the primary pur-
pose of hedging or mitigating any risk 
directly associated with the operation 
of the plan; 
‘‘(II) whose outstanding security-based 
swaps create substantial counterparty expo-
sure that could have serious adverse effects 
on the financial stability of the United 
States banking system or financial markets; 
or 
‘‘(III) that is a financial entity that— 
‘‘(aa) is highly leveraged relative 
to the amount of capital such entity 
holds; and 
‘‘(bb) maintains a substantial po-
sition in outstanding security-based 
swaps in any major security-based 
swap category, as such categories are 
determined by the Commission. 
‘‘(B) DEFINITION
OF
SUBSTANTIAL
POSI-
TION.—For purposes of subparagraph (A), the
767 
† HR 4173 EAS 
Commission shall define, by rule or regulation, 
the term ‘substantial position’ at the threshold 
that the Commission determines to be prudent 
for the effective monitoring, management, and 
oversight of entities that are systemically impor-
tant or can significantly impact the financial 
system of the United States. 
‘‘(C) SCOPE
OF
DESIGNATION.—For pur-
poses of subparagraph (A), a person may be des-
ignated as a major security-based swap partici-
pant for 1 or more categories of security-based 
swaps without being classified as a major secu-
rity-based swap participant for all classes of se-
curity-based swaps. 
‘‘(D) CAPITAL.—In setting capital require-
ments for a person that is designated as a major 
security-based swap participant for a single type 
or single class or category of security-based swap 
or activities, the prudential regulator and the 
Commission shall take into account the risks as-
sociated with other types of security-based swaps 
or classes of security-based swaps or categories of 
security-based swaps engaged in and the other 
activities conducted by that person that are not 
otherwise subject to regulation applicable to that
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† HR 4173 EAS 
person by virtue of the status of the person as a 
major security-based swap participant. 
‘‘(68) SECURITY-BASED SWAP.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘security-based swap’ 
means any agreement, contract, or transaction 
that— 
‘‘(i) is a swap, as that term is defined 
under section 1a of the Commodity Ex-
change Act; and 
‘‘(ii) is based on— 
‘‘(I) an index that is a narrow- 
based security index, including any in-
terest therein or on the value thereof; 
‘‘(II) a single security or loan, in-
cluding any interest therein or on the 
value thereof; or 
‘‘(III) the occurrence, nonoccur-
rence, or extent of the occurrence of an 
event relating to a single issuer of a se-
curity or the issuers of securities in a 
narrow-based security index, provided 
that such event directly affects the fi-
nancial statements, financial condi-
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† HR 4173 EAS 
tion, or financial obligations of the 
issuer. 
‘‘(B) RULE OF CONSTRUCTION REGARDING 
MASTER AGREEMENTS.—The term ‘security-based 
swap’ shall be construed to include a master 
agreement that provides for an agreement, con-
tract, or transaction that is a security-based 
swap pursuant to subparagraph (A), together 
with all supplements to any such master agree-
ment, without regard to whether the master 
agreement contains an agreement, contract, or 
transaction that is not a security-based swap 
pursuant to subparagraph (A), except that the 
master agreement shall be considered to be a se-
curity-based swap only with respect to each 
agreement, contract, or transaction under the 
master agreement that is a security-based swap 
pursuant to subparagraph (A). 
‘‘(C) EXCLUSIONS.—The term ‘security- 
based swap’ does not include any agreement, 
contract, or transaction that meets the definition 
of a security-based swap only because such agree-
ment, contract, or transaction references, is based 
upon, or settles through the transfer, delivery, or 
receipt of an exempted security under paragraph
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† HR 4173 EAS 
(12), as in effect on the date of enactment of the 
Futures Trading Act of 1982 (other than any 
municipal security as defined in paragraph (29) 
as in effect on the date of enactment of the Fu-
tures Trading Act of 1982), unless such agree-
ment, contract, or transaction is of the character 
of, or is commonly known in the trade as, a put, 
call, or other option. 
‘‘(D) MIXED
SWAP.—The term ‘security- 
based swap’ includes any agreement, contract, or 
transaction that is as described in subparagraph 
(A) and also is based on the value of 1 or more 
interest or other rates, currencies, commodities, 
instruments of indebtedness, indices, quantitative 
measures, other financial or economic interest or 
property of any kind (other than a single secu-
rity or a narrow-based security index), or the oc-
currence, non-occurrence, or the extent of the oc-
currence of an event or contingency associated 
with a potential financial, economic, or commer-
cial consequence (other than an event described 
in subparagraph (A)(ii)(III)). 
‘‘(69) SWAP.—The term ‘swap’ has the same 
meaning as in section 1a of the Commodity Exchange 
Act (7 U.S.C. 1a).
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† HR 4173 EAS 
‘‘(70) PERSON ASSOCIATED WITH A SECURITY- 
BASED
SWAP
DEALER
OR
MAJOR
SECURITY-BASED 
SWAP PARTICIPANT.— 
‘‘(A) IN GENERAL.—The term ‘person asso-
ciated with a security-based swap dealer or 
major security-based swap participant’ or ‘asso-
ciated person of a security-based swap dealer or 
major security-based swap participant’ means— 
‘‘(i) any partner, officer, director, or 
branch manager of such security-based swap 
dealer or major security-based swap partici-
pant (or any person occupying a similar 
status or performing similar functions); 
‘‘(ii) any person directly or indirectly 
controlling, controlled by, or under common 
control with such security-based swap dealer 
or major security-based swap participant; 
or 
‘‘(iii) any employee of such security- 
based swap dealer or major security-based 
swap participant. 
‘‘(B) EXCLUSION.—Other than for purposes 
of section 15F(l)(2), the term ‘person associated 
with a security-based swap dealer or major secu-
rity-based swap participant’ or ‘associated per-
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† HR 4173 EAS 
son of a security-based swap dealer or major se-
curity-based swap participant’ does not include 
any person associated with a security-based 
swap dealer or major security-based swap partic-
ipant whose functions are solely clerical or min-
isterial. 
‘‘(71) SECURITY-BASED SWAP DEALER.— 
‘‘(A) IN
GENERAL.—The term ‘security- 
based swap dealer’ means any person who— 
‘‘(i) holds themself out as a dealer in 
security-based swaps; 
‘‘(ii) makes a market in security-based 
swaps; 
‘‘(iii) regularly engages in the pur-
chase and sale of security-based swaps in 
the ordinary course of a business; or 
‘‘(iv) engages in any activity causing 
it to be commonly known in the trade as a 
dealer or market maker in security-based 
swaps. 
‘‘(B) DESIGNATION BY TYPE OR CLASS.—A 
person may be designated as a security-based 
swap dealer for a single type or single class or 
category of security-based swap or activities and 
considered not to be a security-based swap dealer
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† HR 4173 EAS 
for other types, classes, or categories of security- 
based swaps or activities. 
‘‘(C) CAPITAL.—In setting capital require-
ments for a person that is designated as a secu-
rity-based swap dealer for a single type or single 
class or category of security-based swap or ac-
tivities, the prudential regulator and the Com-
mission shall take into account the risks associ-
ated with other types of security-based swaps or 
classes of security-based swaps or categories of se-
curity-based swaps engaged in and the other ac-
tivities conducted by that person that are not 
otherwise subject to regulation applicable to that 
person by virtue of the status of the person as a 
security-based swap dealer. 
‘‘(72) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘appropriate Federal banking agency’ 
has the same meaning as in section 3(q) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(q)). 
‘‘(73) BOARD.—The term ‘Board’ means the 
Board of Governors of the Federal Reserve System. 
‘‘(74) 
PRUDENTIAL
REGULATOR.—The 
term 
‘prudential regulator’ has the same meaning as in 
section 1a of the Commodity Exchange Act (7 U.S.C. 
1a).
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† HR 4173 EAS 
‘‘(75) SECURITY-BASED
SWAP
DATA
REPOSI-
TORY.—The term ‘security-based swap data reposi-
tory’ means any person that collects, calculates, pre-
pares, or maintains information or records with re-
spect to transactions or positions in, or the terms and 
conditions of, security-based swaps entered into by 
third parties. 
‘‘(76) SWAP DEALER.—The term ‘swap dealer’ 
has the same meaning as in section 1a of the Com-
modity Exchange Act (7 U.S.C. 1a). 
‘‘(77) SWAP
EXECUTION
FACILITY.—The term 
‘swap execution facility’ means a facility in which 
multiple participants have the ability to execute or 
trade security-based swaps by accepting bids and of-
fers made by other participants that are open to mul-
tiple participants in the facility or system, or con-
firmation facility, that— 
‘‘(A) facilitates the execution of security- 
based swaps between persons; and 
‘‘(B) is not a designated contract market. 
‘‘(78) SECURITY-BASED SWAP AGREEMENT.— 
‘‘(A) IN GENERAL.—For purposes of sections 
9, 10, 16, 20, and 21A of this Act, and section 
17 of the Securities Act of 1933 (15 U.S.C. 77q), 
the term ‘security-based swap agreement’ means
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† HR 4173 EAS 
a swap agreement as defined in section 206A of 
the Gramm-Leach-Bliley Act (15 U.S.C. 78c 
note) of which a material term is based on the 
price, yield, value, or volatility of any security 
or any group or index of securities, or any inter-
est therein. 
‘‘(B) EXCLUSIONS.—The term ‘security- 
based swap agreement’ does not include any se-
curity-based swap.’’. 
(b) AUTHORITY TO FURTHER DEFINE TERMS.—The 
Securities and Exchange Commission may, by rule, further 
define the terms ‘‘security-based swap’’, ‘‘security-based 
swap dealer’’, ‘‘major security-based swap participant’’, 
and ‘‘eligible contract participant’’ with regard to security- 
based swaps (as such terms are defined in the amendments 
made by subsection (a)) for the purpose of including trans-
actions and entities that have been structured to evade this 
subtitle or the amendments made by this subtitle. 
(c) OTHER INCORPORATED DEFINITIONS.—Except as 
the context otherwise requires, in this subtitle, the terms 
‘‘prudential regulator’’, ‘‘swap’’, ‘‘swap dealer’’, ‘‘major 
swap participant’’, ‘‘swap data repository’’, ‘‘associated 
person of a swap dealer or major swap participant’’, ‘‘eligi-
ble contract participant’’, ‘‘swap execution facility’’, ‘‘secu-
rity-based swap’’, ‘‘security-based swap dealer’’, ‘‘major se-
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† HR 4173 EAS 
curity-based swap participant’’, ‘‘security-based swap data 
repository’’, and ‘‘associated person of a security-based 
swap dealer or major security-based swap participant’’ 
have the same meanings as in section 1a of the Commodity 
Exchange Act (7 U.S.C. 1a), as amended by this Act. 
SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SE-
CURITY-BASED SWAP AGREEMENTS. 
(a) REPEAL.—Sections 206B and 206C of the Gramm- 
Leach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) 
are repealed. 
(b) CONFORMING AMENDMENTS TO THE SECURITIES 
ACT OF 1933.— 
(1) Section 2A of the Securities Act of 1933 (15 
U.S.C. 77b–1) is amended— 
(A) by striking subsection (a) and reserving 
that subsection; and 
(B) by striking ‘‘(as defined in section 206B 
of the Gramm-Leach-Bliley Act)’’ each place that 
such term appears and inserting ‘‘(as defined in 
section 3(a)(78) of the Securities Exchange Act 
of 1934)’’. 
(2) Section 17 of the Securities Act of 1933 (15 
U.S.C. 77q) is amended— 
(A) in subsection (a)—
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† HR 4173 EAS 
(i) by inserting ‘‘(including security- 
based swaps)’’ after ‘‘securities’’; and 
(ii) by striking ‘‘(as defined in section 
206B of the Gramm-Leach-Bliley Act)’’ and 
inserting ‘‘(as defined in section 3(a)(78) of 
the Securities Exchange Act)’’; and 
(B) in subsection (d), by striking ‘‘206B of 
the Gramm-Leach-Bliley Act’’ and inserting 
‘‘3(a)(78) of the Securities Exchange Act of 
1934’’. 
(c) CONFORMING AMENDMENTS TO THE SECURITIES 
EXCHANGE ACT OF 1934.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended— 
(1) in section 3A (15 U.S.C. 78c–1)— 
(A) by striking subsection (a) and reserving 
that subsection; and 
(B) by striking ‘‘(as defined in section 206B 
of the Gramm-Leach-Bliley Act)’’ each place that 
the term appears; 
(2) in section 9 (15 U.S.C. 78i)— 
(A) in subsection (a), by striking para-
graphs (2) through (5) and inserting the fol-
lowing: 
‘‘(2) To effect, alone or with 1 or more other persons, 
a series of transactions in any security registered on a na-
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† HR 4173 EAS 
tional securities exchange, any security not so registered, 
or in connection with any security-based swap or security- 
based swap agreement with respect to such security creating 
actual or apparent active trading in such security, or rais-
ing or depressing the price of such security, for the purpose 
of inducing the purchase or sale of such security by others. 
‘‘(3) If a dealer, broker, security-based swap dealer, 
major security-based swap participant, or other person sell-
ing or offering for sale or purchasing or offering to purchase 
the security, a security-based swap, or a security-based 
swap agreement with respect to such security, to induce the 
purchase or sale of any security registered on a national 
securities exchange, any security not so registered, any secu-
rity-based swap, or any security-based swap agreement 
with respect to such security by the circulation or dissemi-
nation in the ordinary course of business of information 
to the effect that the price of any such security will or is 
likely to rise or fall because of market operations of any 
1 or more persons conducted for the purpose of raising or 
depressing the price of such security. 
‘‘(4) If a dealer, broker, security-based swap dealer, 
major security-based swap participant, or other person sell-
ing or offering for sale or purchasing or offering to purchase 
the security, a security-based swap, or security-based swap 
agreement with respect to such security, to make, regarding
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† HR 4173 EAS 
any security registered on a national securities exchange, 
any security not so registered, any security-based swap, or 
any security-based swap agreement with respect to such se-
curity, for the purpose of inducing the purchase or sale of 
such security, such security-based swap, or such security- 
based swap agreement any statement which was at the time 
and in the light of the circumstances under which it was 
made, false or misleading with respect to any material fact, 
and which that person knew or had reasonable ground to 
believe was so false or misleading. 
‘‘(5) For a consideration, received directly or indi-
rectly from a broker, dealer, security-based swap dealer, 
major security-based swap participant, or other person sell-
ing or offering for sale or purchasing or offering to purchase 
the security, a security-based swap, or security-based swap 
agreement with respect to such security, to induce the pur-
chase of any security registered on a national securities ex-
change, any security not so registered, any security-based 
swap, or any security-based swap agreement with respect 
to such security by the circulation or dissemination of in-
formation to the effect that the price of any such security 
will or is likely to rise or fall because of the market oper-
ations of any 1 or more persons conducted for the purpose 
of raising or depressing the price of such security.’’; and
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† HR 4173 EAS 
(B) in subsection (i), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’; 
(3) in section 10 (15 U.S.C. 78j)— 
(A) in subsection (b), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act),’’ each place that term appears; and 
(B) in the matter following subsection (b), 
by striking ‘‘(as defined in section 206B of the 
Gramm-Leach-Bliley Act)’’; 
(4) in section 15 (15 U.S.C. 78o)— 
(A) in subsection (c)(1)(A), by striking ‘‘(as 
defined in section 206B of the Gramm-Leach- 
Bliley Act),’’; 
(B) in subparagraphs (B) and (C) of sub-
section (c)(1), by striking ‘‘(as defined in section 
206B of the Gramm-Leach-Bliley Act)’’ each 
place that term appears; 
(C) by redesignating subsection (i), as 
added by section 303(f) of the Commodity Fu-
tures Modernization Act of 2000 (Public Law 
106–554; 114 Stat. 2763A–455)), as subsection 
(j); and
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† HR 4173 EAS 
(D) in subsection (j), as redesignated by 
subparagraph (C), by striking ‘‘(as defined in 
section 206B of the Gramm-Leach-Bliley Act)’’; 
(5) in section 16 (15 U.S.C. 78p)— 
(A) in subsection (a)(2)(C), by striking ‘‘(as 
defined in section 206(b) of the Gramm-Leach- 
Bliley Act (15 U.S.C. 78c note))’’; 
(B) in subsection (a)(3)(B), by inserting 
‘‘or security-based swaps’’ after ‘‘security-based 
swap agreement’’; 
(C) in the first sentence of subsection (b), by 
striking ‘‘(as defined in section 206B of the 
Gramm-Leach-Bliley Act)’’; 
(D) in the third sentence of subsection (b), 
by striking ‘‘(as defined in section 206B of the 
Gramm-Leach Bliley Act)’’ and inserting ‘‘or a 
security-based swap’’; and 
(E) in subsection (g), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’; 
(6) in section 20 (15 U.S.C. 78t), 
(A) in subsection (d), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’; and
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† HR 4173 EAS 
(B) in subsection (f), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’; 
(7) in section 21A (15 U.S.C. 78u–1)— 
(A) in subsection (a)(1), by striking ‘‘(as 
defined in section 206B of the Gramm-Leach- 
Bliley Act)’’; and 
(B) in subsection (g), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’. 
SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE 
ACT OF 1934. 
(a) CLEARING FOR SECURITY-BASED SWAPS.—The Se-
curities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after section 3B (as added by section 
717 of this Act): 
‘‘SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS. 
‘‘(a) CLEARING REQUIREMENT.— 
‘‘(1) SUBMISSION.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraphs (9) and (10), any person who is a 
party to a security-based swap shall submit such 
security-based swap for clearing to a clearing 
agency registered under section 17A of this title.
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† HR 4173 EAS 
‘‘(B) OPEN ACCESS.—The rules of a reg-
istered clearing agency shall— 
‘‘(i) prescribe that all security-based 
swaps with the same terms and conditions 
are economically equivalent and may be off-
set with each other within the clearing 
agency; and 
‘‘(ii) provide for nondiscriminatory 
clearing of a security-based swap executed 
bilaterally or on or through the rules of an 
unaffiliated national securities exchange or 
swap execution facility, subject to the re-
quirements of section 5(b). 
‘‘(2) COMMISSION APPROVAL.— 
‘‘(A) IN GENERAL.—A clearing agency shall 
submit to the Commission for prior approval 
any group, category, type, or class of security- 
based swaps that the clearing agency seeks to ac-
cept for clearing, which submission the Commis-
sion shall make available to the public. 
‘‘(B) DEADLINE.—The Commission shall 
take final action on a request submitted pursu-
ant to subparagraph (A) not later than 90 days 
after submission of the request, unless the clear-
ing agency submitting the request agrees to an
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† HR 4173 EAS 
extension of the time limitation established under 
this subparagraph. 
‘‘(C) APPROVAL.—The Commission shall 
approve, unconditionally or subject to such terms 
and conditions as the Commission determines to 
be appropriate, any request submitted pursuant 
to subparagraph (A) if the Commission finds 
that the request is consistent with the require-
ments of section 17A. The Commission shall not 
approve any such request if the Commission does 
not make such finding. 
‘‘(D) RULES.—The Commission shall adopt 
rules for a clearing agency’s submission for ap-
proval, pursuant to this paragraph, of any 
group, category, type, or class of security-based 
swaps that the clearing agency seeks to accept for 
clearing. 
‘‘(3) STAY OF CLEARING REQUIREMENT.—At any 
time after issuance of an approval pursuant to para-
graph (2): 
‘‘(A) REVIEW PROCESS.—The Commission, 
on application of a counterparty to a security- 
based swap or on its own initiative, may stay 
the clearing requirement of paragraph (1) until 
the Commission completes a review of the terms
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† HR 4173 EAS 
of the security-based swap, or the group, cat-
egory, type, or class of security-based swaps, and 
the clearing arrangement. 
‘‘(B) DEADLINE.—The Commission shall 
complete a review undertaken pursuant to sub-
paragraph (A) not later than 90 days after 
issuance of the stay, unless the clearing agency 
that clears the security-based swap, or the group, 
category, type, or class of security-based swaps, 
agrees to an extension of the time limitation es-
tablished under this subparagraph. 
‘‘(C) DETERMINATION.—Upon completion of 
the review undertaken pursuant to subparagraph 
(A)— 
‘‘(i) the Commission may determine, 
unconditionally or subject to such terms 
and conditions as the Commission deter-
mines to be appropriate, that the security- 
based swap, or the group, category, type, or 
class of security-based swaps, must be 
cleared pursuant to this subsection if the 
Commission finds that such clearing— 
‘‘(I) is consistent with the require-
ments of section 17A; and
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† HR 4173 EAS 
‘‘(II) is otherwise in the public in-
terest, for the protection of investors, 
and consistent with the purposes of 
this title; 
‘‘(ii) the Commission may determine 
that the clearing requirement of paragraph 
(1) shall not apply to the security-based 
swap, or the group, category, type, or class 
of security-based swaps; or 
‘‘(iii) if a determination is made that 
the clearing requirement of paragraph (1) 
shall no longer apply, then the Commission 
may still permit such security-based swap, 
or the group, category, type, or class of secu-
rity-based swaps to be cleared. 
‘‘(D) RULES.—The Commission shall adopt 
rules for reviewing, pursuant to this paragraph, 
a clearing agency’s clearing of a security-based 
swap, or a group, category, type, or class of secu-
rity-based swaps that the Commission has ac-
cepted for clearing. 
‘‘(4) SECURITY-BASED SWAPS REQUIRED TO BE 
ACCEPTED FOR CLEARING.— 
‘‘(A) RULEMAKING.—The Commission shall 
adopt rules to further identify any group, cat-
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† HR 4173 EAS 
egory, type, or class of security-based swaps not 
submitted for approval under paragraph (2) that 
the Commission deems should be accepted for 
clearing. In adopting such rules, the Commission 
shall take into account the following factors: 
‘‘(i) The extent to which any of the 
terms of the group, category, type, or class 
of security-based swaps, including price, are 
disseminated to third parties or are ref-
erenced in other agreements, contracts, or 
transactions. 
‘‘(ii) The volume of transactions in the 
group, category, type, or class of security- 
based swaps. 
‘‘(iii) The extent to which the terms of 
the group, category, type, or class of secu-
rity-based swaps are similar to the terms of 
other agreements, contracts, or transactions 
that are cleared. 
‘‘(iv) Whether any differences in the 
terms of the group, category, type, or class 
of security-based swaps, compared to other 
agreements, contracts, or transactions that 
are cleared, are of economic significance.
788 
† HR 4173 EAS 
‘‘(v) Whether a clearing agency is pre-
pared to clear the group, category, type, or 
class of security-based swaps and such 
clearing agency has in place effective risk 
management systems. 
‘‘(vi) Any other factor the Commission 
determines to be appropriate. 
‘‘(B) OTHER DESIGNATIONS.—At any time 
after the adoption of the rules required under 
subparagraph (A), the Commission may sepa-
rately designate a particular security-based swap 
or class of security-based swaps as subject to the 
clearing requirement of paragraph (1), taking 
into account the factors established in clauses (i) 
through (vi) of subparagraph (A) and the rules 
adopted in such subparagraph. 
‘‘(C) IN
GENERAL.—In accordance with 
subparagraph (A), the Commission shall, con-
sistent with the public interest, adopt rules 
under the expedited process described in subpara-
graph (D) to establish criteria for determining 
that a swap, or any group, category, type, or 
class of swap is required to be cleared. 
‘‘(D) EXPEDITED
RULEMAKING
AUTHOR-
ITY.—
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† HR 4173 EAS 
‘‘(i) PROCEDURE.—The promulgation 
of regulations under subparagraph (A) may 
be made without regard to— 
‘‘(I) the notice and comment pro-
visions of section 553 of title 5, United 
States Code; and 
‘‘(II) chapter 35 of title 44, 
United States Code (commonly known 
as the ‘Paperwork Reduction Act’). 
‘‘(ii) AGENCY
RULEMAKING.—In car-
rying out subparagraph (A), the Commis-
sion shall use the authority provided under 
section 808 of title 5, United States Code. 
‘‘(5) PREVENTION OF EVASION.— 
‘‘(A) IN GENERAL.—The Commission shall 
have authority to prescribe rules under this sec-
tion, or issue interpretations of such rules, as 
necessary to prevent evasions of this section. 
‘‘(B) DUTY OF COMMISSION TO INVESTIGATE 
AND TAKE CERTAIN ACTIONS.—To the extent the 
Commission finds that a particular security- 
based swap or any group, category, type, or class 
of security-based swaps that would otherwise be 
subject to mandatory clearing but no clearing 
agency has listed the security-based swap or the
792 
† HR 4173 EAS 
tion shall provide for the reporting of data, as 
follows: 
‘‘(i) Security-based swaps entered into 
before the date of the enactment of this sec-
tion shall be reported to a registered secu-
rity-based swap repository or the Commis-
sion not later than 180 days after the effec-
tive date of this section. 
‘‘(ii) Security-based swaps entered into 
on or after such date of enactment shall be 
reported to a registered security-based swap 
repository or the Commission not later than 
the later of— 
‘‘(I) 90 days after such effective 
date; or 
‘‘(II) such other time after enter-
ing into the security-based swap as the 
Commission may prescribe by rule or 
regulation. 
‘‘(B) CLEARING TRANSITION RULES.— 
‘‘(i) Security-based swaps entered into 
before the date of the enactment of this sec-
tion are exempt from the clearing require-
ments of this subsection if reported pursu-
ant to subparagraph (A)(i).
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† HR 4173 EAS 
‘‘(ii) Security-based swaps entered into 
before application of the clearing require-
ment pursuant to this section are exempt 
from the clearing requirements of this sec-
tion if reported pursuant to subparagraph 
(A)(ii). 
‘‘(8) TRADE EXECUTION.— 
‘‘(A) IN GENERAL.—With respect to trans-
actions involving security-based swaps subject to 
the clearing requirement of paragraph (1), 
counterparties shall— 
‘‘(i) execute the transaction on an ex-
change; or 
‘‘(ii) execute the transaction on a swap 
execution facility registered under section 
3D or a swap execution facility that is ex-
empt from registration under section 3D(e). 
‘‘(B) EXCEPTION.—The requirements of 
clauses (i) and (ii) of subparagraph (A) shall not 
apply— 
‘‘(i) if no national securities exchange 
or security-based swap execution facility 
makes the security-based swap available to 
trade; or
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† HR 4173 EAS 
‘‘(ii) to swap transactions where a 
commercial end user opts to use the clearing 
exemption under paragraph (10). 
‘‘(9) REQUIRED EXEMPTION.—Subject to para-
graph (4), the Commission shall exempt a security- 
based swap from the requirements of paragraphs (1) 
and (8) and any rules issued under this subsection, 
if no clearing agency registered under this Act will 
accept the security-based swap from clearing. 
‘‘(10) END USER CLEARING EXEMPTION.— 
‘‘(A) DEFINITION
OF
COMMERCIAL
END 
USER.— 
‘‘(i) IN GENERAL.—In this paragraph, 
the term ‘commercial end user’ means any 
person other than a financial entity de-
scribed in clause (ii) who, as its primary 
business activity, owns, uses, produces, 
processes, manufactures, distributes, mer-
chandises, or markets services or commod-
ities (which shall include coal, natural gas, 
electricity, ethanol, crude oil, distillates, 
and other hydrocarbons) either individually 
or in a fiduciary capacity. 
‘‘(ii) FINANCIAL
ENTITY.—The term 
‘financial entity’ means—
795 
† HR 4173 EAS 
‘‘(I) a swap dealer, major swap 
participant, security-based swap deal-
er, or major security-based swap par-
ticipant; 
‘‘(II) a person predominantly en-
gaged in activities that are in the busi-
ness of banking or financial in nature, 
as defined in Section 4(k) of the Bank 
Holding Company Act of 1956; 
‘‘(III) a person predominantly en-
gaged in activities that are financial 
in nature; 
‘‘(IV) a private fund as defined in 
section 202(a) of the Investment Advis-
ers Act of 1940 (15 U.S.C. 80b–2(a)) 
or a commodity pool as defined in sec-
tion 1a of the Commodity Exchange 
Act (7 U.S.C. 1a); or 
‘‘(V) a person that is registered or 
required to be registered with the Com-
mission, but does not include a public 
company which registers its securities 
with the Commission. 
‘‘(B) END USER CLEARING EXEMPTION.—
796 
† HR 4173 EAS 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), in the event that a security-based swap 
is subject to the mandatory clearing require-
ment under paragraph (1), and 1 of the 
counterparties to the security-based swap is 
a commercial end user that counterparty— 
‘‘(I)(aa) may elect not to clear the 
security-based swap, as required under 
paragraph (1); or 
‘‘(bb) may elect to require clearing 
of the security-based swap; and 
‘‘(II) if the end user makes an 
election under subclause (I)(bb), shall 
have the sole right to select the clearing 
agency at which the security-based 
swap will be cleared. 
‘‘(ii) LIMITATION.—A commercial end 
user may only make an election under 
clause (i) if the end user is using the secu-
rity-based swap to hedge its own commer-
cial risk. 
‘‘(C) TREATMENT OF AFFILIATES.— 
‘‘(i) IN GENERAL.—An affiliate of a 
commercial end user (including affiliate en-
tities predominantly engaged in providing
797 
† HR 4173 EAS 
financing for the purchase of the merchan-
dise or manufactured goods of the commer-
cial end user) may make an election under 
subparagraph (B)(i) only if the affiliate, 
acting on behalf of the commercial end user 
and as an agent, uses the security-based 
swap to hedge or mitigate the commercial 
risk of the commercial end user parent or 
other affiliates of the commercial end user 
that is not a financial entity. 
‘‘(ii) PROHIBITION RELATING TO CER-
TAIN AFFILIATES.—An affiliate of a com-
mercial end user shall not use the exemption 
under subparagraph (B) if the affiliate is— 
‘‘(I) a security-based swap dealer; 
‘‘(II) a security-based security- 
based swap dealer; 
‘‘(III) 
a 
major 
security-based 
swap participant; 
‘‘(IV) a major security-based secu-
rity-based swap participant; 
‘‘(V) an issuer that would be an 
investment company, as defined in sec-
tion 3 of the Investment Company Act 
of 1940 (15 U.S.C. 80a–3), but for
798 
† HR 4173 EAS 
paragraph (1) or (7) of subsection (c) 
of that section 3 (15 U.S.C. 80a–3(c)); 
‘‘(VI) a commodity pool; 
‘‘(VII) a bank holding company 
with over $50,000,000,000 in consoli-
dated assets; or 
‘‘(VIII) an affiliate of any entity 
described in subclauses (I) through 
(VII). 
‘‘(iii) ABUSE
OF
EXEMPTION.—The 
Commission may prescribe such rules, or 
issue interpretations of the rules, as the 
Commission determines to be necessary to 
prevent abuse of the exemption described in 
subparagraph (B). 
‘‘(D) OPTION TO CLEAR.— 
‘‘(i) 
SECURITY-BASED
SWAPS
RE-
QUIRED
TO
BE
CLEARED
ENTERED
INTO 
WITH A FINANCIAL ENTITY.—With respect to 
any securities-based swap that is required 
to be cleared by a clearing agency and en-
tered into by a securities-based swap dealer 
or a major securities-based swap partici-
pant with a financial entity, the financial 
entity shall have the sole right to select the
799 
† HR 4173 EAS 
clearing agency at which the securities- 
based swap will be cleared. 
‘‘(ii) SECURITY-BASED SWAPS NOT RE-
QUIRED
TO
BE
CLEARED
ENTERED
INTO 
WITH A FINANCIAL ENTITY OR COMMERCIAL 
END USER.—With respect to any securities- 
based swap that is not required to be 
cleared by a clearing agency and entered 
into by a securities-based swap dealer or a 
major securities-based swap participant 
with a financial entity or commercial end 
user, the financial entity or commercial end 
user— 
‘‘(I) may elect to require clearing 
of the securities-based swap; and 
‘‘(II) shall have the sole right to 
select the clearing agency at which the 
securities-based swap will be cleared. 
‘‘(b) AUDIT
COMMITTEE
APPROVAL.—Exemptions 
from the requirements of this section to clear or trade a 
security-based swap through a national securities exchange 
or security-based swap execution facility shall be available 
to a counterparty that is an issuer of securities that are 
registered under section 12 or that is required to file reports 
pursuant to section 15(d), only if the issuer’s audit com-
800 
† HR 4173 EAS 
mittee has reviewed and approved the issuer’s decision to 
enter into security-based swaps that are subject to such ex-
emptions. 
‘‘(c) PUBLIC AVAILABILITY OF SECURITY-BASED SWAP 
TRANSACTION DATA.— 
‘‘(1) IN GENERAL.— 
‘‘(A) DEFINITION OF REAL-TIME PUBLIC RE-
PORTING.—In this paragraph, the term ‘real- 
time public reporting’ means to report data re-
lating to a security-based swap transaction as 
soon as technologically practicable after the time 
at which the security-based swap transaction has 
been executed. 
‘‘(B) PURPOSE.—The purpose of this section 
is to authorize the Commission to make security- 
based swap transaction and pricing data avail-
able to the public in such form and at such times 
as the Commission determines appropriate to en-
hance price discovery. 
‘‘(C) GENERAL RULE.—The Commission is 
authorized to provide by rule for the public 
availability of security-based swap transaction 
and pricing data as follows: 
‘‘(i) With respect to those security- 
based swaps that are subject to the manda-
801 
† HR 4173 EAS 
tory clearing requirement described in sub-
section (a)(1) (including those security- 
based swaps that are exempted from those 
requirements), the Commission shall require 
real-time public reporting for such trans-
actions. 
‘‘(ii) With respect to those security- 
based swaps that are not subject to the man-
datory clearing requirement described in 
subsection (a)(1), but are cleared at a reg-
istered clearing agency, the Commission 
shall require real-time public reporting for 
such transactions. 
‘‘(iii) With respect to security-based 
swaps that are not cleared at a registered 
clearing agency and which are reported to 
a security-based swap data repository or the 
Commission under subsection (a), the Com-
mission shall make available to the public, 
in a manner that does not disclose the busi-
ness transactions and market positions of 
any person, aggregate data on such secu-
rity-based swap trading volumes and posi-
tions.
802 
† HR 4173 EAS 
‘‘(iv) With respect to security-based 
swaps that are exempt from the require-
ments of subsection (a)(1), but are subject to 
the requirements of subsection (a)(8), the 
Commission shall require real-time public 
reporting for such transactions. 
‘‘(D) REGISTERED
ENTITIES
AND
PUBLIC 
REPORTING.—The Commission may require reg-
istered entities to publicly disseminate the secu-
rity-based swap transaction and pricing data re-
quired to be reported under this paragraph. 
‘‘(E) RULEMAKING
REQUIRED.—With re-
spect to the rule providing for the public avail-
ability of transaction and pricing data for secu-
rity-based swaps described in clauses (i) and (ii) 
of subparagraph (C), the rule promulgated by the 
Commission shall contain provisions— 
‘‘(i) to ensure such information does 
not identify the participants; 
‘‘(ii) to specify the criteria for deter-
mining what constitutes a large notional se-
curity-based swap transaction (block trade) 
for particular markets and contracts; 
‘‘(iii) to specify the appropriate time 
delay for reporting large notional security-
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† HR 4173 EAS 
based swap transactions (block trades) to 
the public; and 
‘‘(iv) that take into account whether 
the public disclosure will materially reduce 
market liquidity. 
‘‘(F) TIMELINESS OF REPORTING.—Parties 
to a security-based swap (including agents of the 
parties to a security-based swap) shall be respon-
sible for reporting security-based swap trans-
action information to the appropriate registered 
entity in a timely manner as may be prescribed 
by the Commission. 
‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORT-
ING OF AGGREGATE SECURITY-BASED SWAP DATA.— 
‘‘(A) IN
GENERAL.—In accordance with 
subparagraph (B), the Commission shall issue a 
written report on a semiannual and annual 
basis to make available to the public information 
relating to— 
‘‘(i) the trading and clearing in the 
major security-based swap categories; and 
‘‘(ii) the market participants and de-
velopments in new products.
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† HR 4173 EAS 
‘‘(B) USE; CONSULTATION.—In preparing a 
report under subparagraph (A), the Commission 
shall— 
‘‘(i) use information from security- 
based swap data repositories and clearing 
agencies; and 
‘‘(ii) consult with the Office of the 
Comptroller of the Currency, the Bank for 
International Settlements, and such other 
regulatory bodies as may be necessary. 
‘‘(C) 
TRANSITION
RULE
FOR 
PREENACTMENT SECURITY-BASED SWAPS.— 
‘‘(i) SECURITY-BASED SWAPS ENTERED 
INTO BEFORE THE DATE OF ENACTMENT OF 
THE WALL STREET TRANSPARENCY AND AC-
COUNTABILITY ACT OF 2010.—Each security- 
based swap entered into before the date of 
enactment of the Wall Street Transparency 
and Accountability Act of 2010, the terms of 
which have not expired as of the date of en-
actment of that Act, shall be reported to a 
registered security-based swap data reposi-
tory or the Commission by a date that is 
not later than—
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† HR 4173 EAS 
‘‘(I) 30 days after the date of 
issuance of the interim final rule; or 
‘‘(II) such other period as the 
Commission determines to be appro-
priate. 
‘‘(ii) COMMISSION RULEMAKING.—The 
Commission shall promulgate an interim 
final rule within 90 days of the date of en-
actment of this section providing for the re-
porting of each security-based swap entered 
into before the date of enactment as ref-
erenced in clause (i). 
‘‘(D) EFFECTIVE DATE.—The reporting pro-
visions described in this paragraph shall be effec-
tive upon the date of enactment of this section. 
‘‘(d) DESIGNATION
OF CHIEF COMPLIANCE OFFI-
CER.— 
‘‘(1) IN
GENERAL.—Each registered clearing 
agency shall designate an individual to serve as a 
chief compliance officer. 
‘‘(2) DUTIES.—The chief compliance officer 
shall— 
‘‘(A) report directly to the board or to the 
senior officer of the clearing agency;
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† HR 4173 EAS 
‘‘(B) in consultation with its board, a body 
performing a function similar thereto, or the sen-
ior officer of the registered clearing agency, re-
solve any conflicts of interest that may arise; 
‘‘(C) be responsible for administering each 
policy and procedure that is required to be estab-
lished pursuant to this section; 
‘‘(D) ensure compliance with this title (in-
cluding regulations issued under this title) relat-
ing to agreements, contracts, or transactions, in-
cluding each rule prescribed by the Commission 
under this section; 
‘‘(E) establish procedures for the remedi-
ation of noncompliance issues identified by the 
compliance officer through any— 
‘‘(i) compliance office review; 
‘‘(ii) look-back; 
‘‘(iii) internal or external audit find-
ing; 
‘‘(iv) self-reported error; or 
‘‘(v) validated complaint; and 
‘‘(F) establish and follow appropriate proce-
dures for the handling, management response, re-
mediation, retesting, and closing of noncompli-
ance issues.
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† HR 4173 EAS 
‘‘(3) ANNUAL REPORTS.— 
‘‘(A) IN
GENERAL.—In accordance with 
rules prescribed by the Commission, the chief 
compliance officer shall annually prepare and 
sign a report that contains a description of— 
‘‘(i) the compliance of the registered 
clearing agency or security-based swap exe-
cution facility of the compliance officer with 
respect to this title (including regulations 
under this title); and 
‘‘(ii) each policy and procedure of the 
registered clearing agency of the compliance 
officer (including the code of ethics and con-
flict of interest policies of the registered 
clearing agency). 
‘‘(B) REQUIREMENTS.—A compliance re-
port under subparagraph (A) shall— 
‘‘(i) accompany each appropriate fi-
nancial report of the registered clearing 
agency that is required to be furnished to 
the Commission pursuant to this section; 
and 
‘‘(ii) include a certification that, under 
penalty of law, the compliance report is ac-
curate and complete.’’.
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† HR 4173 EAS 
(b) CLEARING AGENCY REQUIREMENTS.—Section 17A 
of the Securities Exchange Act of 1934 (15 U.S.C. 78q–1) 
is amended by adding at the end the following: 
‘‘(g) REGISTRATION REQUIREMENT.—It shall be un-
lawful for a clearing agency, unless registered with the 
Commission, directly or indirectly to make use of the mails 
or any means or instrumentality of interstate commerce to 
perform the functions of a clearing agency with respect to 
a security-based swap. 
‘‘(h) VOLUNTARY
REGISTRATION.—A person that 
clears agreements, contracts, or transactions that are not 
required to be cleared under this title may register with 
the Commission as a clearing agency. 
‘‘(i) STANDARDS FOR CLEARING AGENCIES CLEARING 
SECURITY-BASED SWAP TRANSACTIONS.—To be registered 
and to maintain registration as a clearing agency that 
clears security-based swap transactions, a clearing agency 
shall comply with such standards as the Commission may 
establish by rule. In establishing any such standards, and 
in the exercise of its oversight of such a clearing agency 
pursuant to this title, the Commission may conform such 
standards or oversight to reflect evolving United States and 
international standards. Except where the Commission de-
termines otherwise by rule or regulation, a clearing agency
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† HR 4173 EAS 
shall have reasonable discretion in establishing the manner 
in which it complies with any such standards. 
‘‘(j) RULES.—The Commission shall adopt rules gov-
erning persons that are registered as clearing agencies for 
security-based swaps under this title. 
‘‘(k) EXEMPTIONS.— 
‘‘(1) IN
GENERAL.—The Commission may ex-
empt, conditionally or unconditionally, a clearing 
agency from registration under this section for the 
clearing of security-based swaps if the Commission 
determines that the clearing agency is subject to com-
parable, comprehensive supervision and regulation by 
the Commodity Futures Trading Commission or the 
appropriate government authorities in the home coun-
try of the agency. Such conditions may include, but 
are not limited to, requiring that the clearing agency 
be available for inspection by the Commission and 
make available all information requested by the Com-
mission. 
‘‘(2) DERIVATIVES CLEARING ORGANIZATIONS.— 
A person that is required to be registered as a deriva-
tives clearing organization under the Commodity Ex-
change Act, whose principal business is clearing com-
modity futures and options on commodity futures 
transactions and swaps and which is a derivatives
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† HR 4173 EAS 
clearing organization registered with the Commodity 
Futures Trading Commission under the Commodity 
Exchange Act (7 U.S.C. 1 et seq.), shall be uncondi-
tionally exempt from registration under this section 
solely for the purpose of clearing security-based 
swaps, unless the Commission finds that such deriva-
tives clearing organization is not subject to com-
parable, comprehensive supervision and regulation by 
the Commodity Futures Trading Commission. 
‘‘(l) MODIFICATION OF CORE PRINCIPLES.—The Com-
mission may conform the core principles established in this 
section to reflect evolving United States and international 
standards.’’. 
(c) SECURITY-BASED SWAP EXECUTION FACILITIES.— 
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
is amended by inserting after section 3C (as added by sub-
section (a) of this section) the following: 
‘‘SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES. 
‘‘(a) REGISTRATION.— 
‘‘(1) IN GENERAL.—No person may operate a fa-
cility for the trading or processing of security-based 
swaps, unless the facility is registered as a security- 
based swap execution facility or as a national securi-
ties exchange under this section.
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† HR 4173 EAS 
‘‘(2) DUAL REGISTRATION.—Any person that is 
registered as a security-based swap execution facility 
under this section shall register with the Commission 
regardless of whether the person also is registered with 
the Commodity Futures Trading Commission as a 
swap execution facility. 
‘‘(b) TRADING AND TRADE PROCESSING.—A security- 
based swap execution facility that is registered under sub-
section (a) may— 
‘‘(1) make available for trading any security- 
based swap; and 
‘‘(2) facilitate trade processing of any security- 
based swap. 
‘‘(c) IDENTIFICATION OF FACILITY USED TO TRADE 
SECURITY-BASED SWAPS BY NATIONAL SECURITIES EX-
CHANGES.—A national securities exchange shall, to the ex-
tent that the exchange also operates a security-based swap 
execution facility and uses the same electronic trade execu-
tion system for listing and executing trades of security- 
based swaps on or through the exchange and the facility, 
identify whether electronic trading of such security-based 
swaps is taking place on or through the national securities 
exchange or the security-based swap execution facility. 
‘‘(d) CORE PRINCIPLES FOR SECURITY-BASED SWAP 
EXECUTION FACILITIES.—
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† HR 4173 EAS 
‘‘(1) COMPLIANCE WITH CORE PRINCIPLES.— 
‘‘(A) IN GENERAL.—To be registered, and 
maintain registration, as a security-based swap 
execution facility, the security-based swap execu-
tion facility shall comply with— 
‘‘(i) the core principles described in 
this subsection; and 
‘‘(ii) any requirement that the Com-
mission may impose by rule or regulation. 
‘‘(B) REASONABLE
DISCRETION
OF
SECU-
RITY-BASED SWAP EXECUTION FACILITY.—Unless 
otherwise determined by the Commission, by rule 
or regulation, a security-based swap execution 
facility described in subparagraph (A) shall have 
reasonable discretion in establishing the manner 
in which it complies with the core principles de-
scribed in this subsection. 
‘‘(2) COMPLIANCE
WITH
RULES.—A security- 
based swap execution facility shall— 
‘‘(A) monitor and enforce compliance with 
any rule established by such security-based swap 
execution facility, including— 
‘‘(i) the terms and conditions of the se-
curity-based swaps traded or processed on 
or through the facility; and
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† HR 4173 EAS 
‘‘(ii) any limitation on access to the 
facility; 
‘‘(B) establish and enforce trading, trade 
processing, and participation rules that will 
deter abuses and have the capacity to detect, in-
vestigate, and enforce those rules, including 
means— 
‘‘(i) to provide market participants 
with impartial access to the market; and 
‘‘(ii) to capture information that may 
be used in establishing whether rule viola-
tions have occurred; and 
‘‘(C) establish rules governing the operation 
of the facility, including rules specifying trading 
procedures to be used in entering and executing 
orders traded or posted on the facility, including 
block trades. 
‘‘(3) SECURITY-BASED SWAPS NOT READILY SUS-
CEPTIBLE
TO
MANIPULATION.—The security-based 
swap execution facility shall permit trading only in 
security-based swaps that are not readily susceptible 
to manipulation. 
‘‘(4) MONITORING OF TRADING AND TRADE PROC-
ESSING.—The security-based swap execution facility 
shall—
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† HR 4173 EAS 
‘‘(A) establish and enforce rules or terms 
and conditions defining, or specifications detail-
ing— 
‘‘(i) trading procedures to be used in 
entering and executing orders traded on or 
through the facilities of the security-based 
swap execution facility; and 
‘‘(ii) procedures for trade processing of 
security-based swaps on or through the fa-
cilities of the security-based swap execution 
facility; and 
‘‘(B) monitor trading in security-based 
swaps to prevent manipulation, price distortion, 
and disruptions of the delivery or cash settlement 
process through surveillance, compliance, and 
disciplinary practices and procedures, including 
methods for conducting real-time monitoring of 
trading and comprehensive and accurate trade 
reconstructions. 
‘‘(5) ABILITY TO OBTAIN INFORMATION.—The se-
curity-based swap execution facility shall— 
‘‘(A) establish and enforce rules that will 
allow the facility to obtain any necessary infor-
mation to perform any of the functions described 
in this subsection;
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† HR 4173 EAS 
‘‘(B) provide the information to the Com-
mission on request; and 
‘‘(C) have the capacity to carry out such 
international information-sharing agreements as 
the Commission may require. 
‘‘(6) POSITION LIMITS OR ACCOUNTABILITY.— 
‘‘(A) IN GENERAL.—To reduce the potential 
threat of market manipulation or congestion, es-
pecially during trading in the delivery month, a 
security-based swap execution facility that is a 
trading facility shall adopt for each of the con-
tracts of the facility, as is necessary and appro-
priate, position limitations or position account-
ability for speculators. 
‘‘(B) POSITION LIMITS.—For any contract 
or agreement that is subject to a position limita-
tion established by the Commission pursuant to 
section 10B, the security-based swap execution 
facility shall set its position limitation at a level 
no higher than the limitation established by the 
Commission. 
‘‘(C) POSITION
ENFORCEMENT.—For any 
contract or agreement that is subject to a posi-
tion limitation established by the Commission 
pursuant to section 10B, a security-based swap
816 
† HR 4173 EAS 
execution facility shall reject any proposed secu-
rity-based swap transaction if, based on infor-
mation readily available to a security-based 
swap execution facility, any proposed security- 
based swap transaction would cause a security- 
based swap execution facility customer that 
would be a party to such swap transaction to ex-
ceed such position limitation. 
‘‘(7) FINANCIAL INTEGRITY OF TRANSACTIONS.— 
The security-based swap execution facility shall estab-
lish and enforce rules and procedures for ensuring the 
financial integrity of security-based swaps entered on 
or through the facilities of the security-based swap 
execution facility, including the clearance and settle-
ment of security-based swaps pursuant to section 
3C(a)(1). 
‘‘(8) EMERGENCY
AUTHORITY.—The security- 
based swap execution facility shall adopt rules to pro-
vide for the exercise of emergency authority, in con-
sultation or cooperation with the Commission, as is 
necessary and appropriate, including the authority to 
liquidate or transfer open positions in any security- 
based swap or to suspend or curtail trading in a se-
curity-based swap.
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† HR 4173 EAS 
‘‘(9) TIMELY PUBLICATION OF TRADING INFOR-
MATION.— 
‘‘(A) 
IN
GENERAL.—The 
security-based 
swap execution facility shall make public timely 
information on price, trading volume, and other 
trading data on security-based swaps to the ex-
tent prescribed by the Commission. 
‘‘(B) CAPACITY OF SECURITY-BASED SWAP 
EXECUTION FACILITY.—The security-based swap 
execution facility shall be required to have the 
capacity to electronically capture trade informa-
tion with respect to transactions executed on the 
facility. 
‘‘(10) RECORDKEEPING AND REPORTING.— 
‘‘(A) IN GENERAL.—A security-based swap 
execution facility shall— 
‘‘(i) maintain records of all activities 
relating to the business of the facility, in-
cluding a complete audit trail, in a form 
and manner acceptable to the Commission 
for a period of 5 years; and 
‘‘(ii) report to the Commission, in a 
form and manner acceptable to the Commis-
sion, such information as the Commission 
determines to be necessary or appropriate
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† HR 4173 EAS 
‘‘(A) 
IN
GENERAL.—The 
security-based 
swap execution facility shall have adequate fi-
nancial, operational, and managerial resources 
to discharge each responsibility of the security- 
based swap execution facility, as determined by 
the Commission. 
‘‘(B) DETERMINATION OF RESOURCE ADE-
QUACY.—The financial resources of a security- 
based swap execution facility shall be considered 
to be adequate if the value of the financial re-
sources— 
‘‘(i) enables the organization to meet 
its financial obligations to its members and 
participants notwithstanding a default by 
the member or participant creating the 
largest financial exposure for that organiza-
tion in extreme but plausible market condi-
tions; and 
‘‘(ii) exceeds the total amount that 
would enable the security-based swap execu-
tion facility to cover the operating costs of 
the security-based swap execution facility 
for a 1-year period, as calculated on a roll-
ing basis.
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† HR 4173 EAS 
‘‘(14) SYSTEM SAFEGUARDS.—The security-based 
swap execution facility shall— 
‘‘(A) establish and maintain a program of 
risk analysis and oversight to identify and mini-
mize sources of operational risk, through the de-
velopment of appropriate controls and proce-
dures, and automated systems, that— 
‘‘(i) are reliable and secure; and 
‘‘(ii) have adequate scalable capacity; 
‘‘(B) establish and maintain emergency pro-
cedures, backup facilities, and a plan for disaster 
recovery that are designed to allow for— 
‘‘(i) the timely recovery and resump-
tion of operations; and 
‘‘(ii) the fulfillment of the responsibil-
ities and obligation of the security-based 
swap execution facility; and 
‘‘(C) periodically conduct tests to verify that 
the backup resources of the security-based swap 
execution facility are sufficient to ensure contin-
ued— 
‘‘(i) order processing and trade match-
ing; 
‘‘(ii) price reporting; 
‘‘(iii) market surveillance; and
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† HR 4173 EAS 
‘‘(iv) maintenance of a comprehensive 
and accurate audit trail. 
‘‘(15) DESIGNATION OF CHIEF COMPLIANCE OFFI-
CER.— 
‘‘(A) IN
GENERAL.—Each security-based 
swap execution facility shall designate an indi-
vidual to serve as a chief compliance officer. 
‘‘(B) DUTIES.—The chief compliance officer 
shall— 
‘‘(i) report directly to the board or to 
the senior officer of the facility; 
‘‘(ii) review compliance with the core 
principles in this subsection; 
‘‘(iii) in consultation with the board of 
the facility, a body performing a function 
similar to that of a board, or the senior offi-
cer of the facility, resolve any conflicts of 
interest that may arise; 
‘‘(iv) be responsible for establishing 
and administering the policies and proce-
dures required to be established pursuant to 
this section; 
‘‘(v) ensure compliance with this title 
and the rules and regulations issued under
822 
† HR 4173 EAS 
this title, including rules prescribed by the 
Commission pursuant to this section; 
‘‘(vi) establish procedures for the reme-
diation of noncompliance issues found dur-
ing— 
‘‘(I) compliance office reviews; 
‘‘(II) look backs; 
‘‘(III) internal or external audit 
findings; 
‘‘(IV) self-reported errors; or 
‘‘(V) 
through 
validated 
com-
plaints; and 
‘‘(vii) establish and follow appropriate 
procedures for the handling, management 
response, remediation, retesting, and closing 
of noncompliance issues. 
‘‘(C) ANNUAL REPORTS.— 
‘‘(i) IN GENERAL.—In accordance with 
rules prescribed by the Commission, the 
chief compliance officer shall annually pre-
pare and sign a report that contains a de-
scription of— 
‘‘(I) the compliance of the secu-
rity-based swap execution facility with 
this title; and
823 
† HR 4173 EAS 
‘‘(II) the policies and procedures, 
including the code of ethics and con-
flict of interest policies, of the security- 
based security-based swap execution fa-
cility. 
‘‘(ii) REQUIREMENTS.—The chief com-
pliance officer shall— 
‘‘(I) submit each report described 
in clause (i) with the appropriate fi-
nancial report of the security-based 
swap execution facility that is required 
to be submitted to the Commission pur-
suant to this section; and 
‘‘(II) include in the report a cer-
tification that, under penalty of law, 
the report is accurate and complete. 
‘‘(e) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a security-based swap 
execution facility from registration under this section if the 
Commission finds that the facility is subject to comparable, 
comprehensive supervision and regulation on a consolidated 
basis by the Commodity Futures Trading Commission. 
‘‘(f) RULES.—The Commission shall prescribe rules 
governing the regulation of security-based swap execution 
facilities under this section.’’.
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† HR 4173 EAS 
(d) SEGREGATION OF ASSETS HELD AS COLLATERAL 
IN SECURITY-BASED SWAP TRANSACTIONS.—The Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended 
by inserting after section 3D (as added by subsection (b)) 
the following: 
‘‘SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL 
IN SECURITY-BASED SWAP TRANSACTIONS. 
‘‘(a) REGISTRATION REQUIREMENT.—It shall be un-
lawful for any person to accept any money, securities, or 
property (or to extend any credit in lieu of money, securi-
ties, or property) from, for, or on behalf of a security-based 
swaps customer or to margin, guarantee, or secure a secu-
rity-based swap cleared by or through a clearing agency 
(including money, securities, or property accruing to the 
customer as the result of such a security-based swap), unless 
the person shall have registered under this title with the 
Commission as a broker, dealer, or security-based swap 
dealer, and the registration shall not have expired nor been 
suspended nor revoked. 
‘‘(b) CLEARED SECURITY-BASED SWAPS.— 
‘‘(1) SEGREGATION REQUIRED.—A broker, deal-
er, or security-based swap dealer shall treat and deal 
with all money, securities, and property of any secu-
rity-based swaps customer received to margin, guar-
antee, or secure a security-based swap cleared by or
825 
† HR 4173 EAS 
though a clearing agency (including money, securi-
ties, or property accruing to the security-based swaps 
customer as the result of such a security-based swap) 
as belonging to the security-based swaps customer. 
‘‘(2) COMMINGLING PROHIBITED.—Money, secu-
rities, and property of a security-based swaps cus-
tomer described in paragraph (1) shall be separately 
accounted for and shall not be commingled with the 
funds of the broker, dealer, or security-based swap 
dealer or be used to margin, secure, or guarantee any 
trades or contracts of any security-based swaps cus-
tomer or person other than the person for whom the 
same are held. 
‘‘(c) EXCEPTIONS.— 
‘‘(1) USE OF FUNDS.— 
‘‘(A) IN
GENERAL.—Notwithstanding sub-
section (b), money, securities, and property of a 
security-based swaps customer of a broker, deal-
er, or security-based swap dealer described in 
subsection (b) may, for convenience, be commin-
gled and deposited in the same 1 or more ac-
counts with any bank or trust company or with 
a clearing agency. 
‘‘(B) WITHDRAWAL.—Notwithstanding sub-
section (b), such share of the money, securities,
826 
† HR 4173 EAS 
and property described in subparagraph (A) as 
in the normal course of business shall be nec-
essary to margin, guarantee, secure, transfer, ad-
just, or settle a cleared security-based swap with 
a clearing agency, or with any member of the 
clearing agency, may be withdrawn and applied 
to such purposes, including the payment of com-
missions, brokerage, interest, taxes, storage, and 
other charges, lawfully accruing in connection 
with the cleared security-based swap. 
‘‘(2) 
COMMISSION
ACTION.—Notwithstanding 
subsection (b), in accordance with such terms and 
conditions as the Commission may prescribe by rule, 
regulation, or order, any money, securities, or prop-
erty of the security-based swaps customer of a broker, 
dealer, or security-based swap dealer described in sub-
section (b) may be commingled and deposited as pro-
vided in this section with any other money, securities, 
or property received by the broker, dealer, or security- 
based swap dealer and required by the Commission to 
be separately accounted for and treated and dealt 
with as belonging to the security-based swaps cus-
tomer of the broker, dealer, or security-based swap 
dealer.
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† HR 4173 EAS 
‘‘(d) PERMITTED INVESTMENTS.—Money described in 
subsection (b) may be invested in obligations of the United 
States, in general obligations of any State or of any polit-
ical subdivision of a State, and in obligations fully guaran-
teed as to principal and interest by the United States, or 
in any other investment that the Commission may by rule 
or regulation prescribe, and such investments shall be made 
in accordance with such rules and regulations and subject 
to such conditions as the Commission may prescribe. 
‘‘(e) PROHIBITION.—It shall be unlawful for any per-
son, including any clearing agency and any depository in-
stitution, that has received any money, securities, or prop-
erty for deposit in a separate account or accounts as pro-
vided in subsection (b) to hold, dispose of, or use any such 
money, securities, or property as belonging to the depositing 
broker, dealer, or security-based swap dealer or any person 
other than the swaps customer of the broker, dealer, or secu-
rity-based swap dealer.’’. 
(e) TRADING IN SECURITY-BASED SWAPS.—Section 6 
of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
amended by adding at the end the following: 
‘‘(l) SECURITY-BASED SWAPS.—It shall be unlawful 
for any person to effect a transaction in a security-based 
swap with or for a person that is not an eligible contract 
participant, unless such transaction is effected on a na-
828 
† HR 4173 EAS 
tional securities exchange registered pursuant to subsection 
(b).’’. 
(f) ADDITIONS OF SECURITY-BASED SWAPS TO CER-
TAIN ENFORCEMENT PROVISIONS.—Section 9(b) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78i(b)) is amend-
ed by striking paragraphs (1) through (3) and inserting 
the following: 
‘‘(1) any transaction in connection with any se-
curity whereby any party to such transaction ac-
quires— 
‘‘(A) any put, call, straddle, or other option 
or privilege of buying the security from or selling 
the security to another without being bound to do 
so; 
‘‘(B) any security futures product on the se-
curity; or 
‘‘(C) any security-based swap involving the 
security or the issuer of the security; 
‘‘(2) any transaction in connection with any se-
curity with relation to which such person has, di-
rectly or indirectly, any interest in any— 
‘‘(A) such put, call, straddle, option, or 
privilege; 
‘‘(B) such security futures product; or 
‘‘(C) such security-based swap; or
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† HR 4173 EAS 
‘‘(3) any transaction in any security for the ac-
count of any person who such person has reason to 
believe has, and who actually has, directly or indi-
rectly, any interest in any— 
‘‘(A) such put, call, straddle, option, or 
privilege; 
‘‘(B) such security futures product with re-
lation to such security; or 
‘‘(C) any security-based swap involving 
such security or the issuer of such security.’’. 
(g) RULEMAKING AUTHORITY TO PREVENT FRAUD, 
MANIPULATION AND DECEPTIVE CONDUCT IN SECURITY- 
BASED SWAPS.—Section 9 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78i) is amended by adding at the end 
the following: 
‘‘(j) It shall be unlawful for any person, directly or 
indirectly, by the use of any means or instrumentality of 
interstate commerce or of the mails, or of any facility of 
any national securities exchange, to effect any transaction 
in, or to induce or attempt to induce the purchase or sale 
of, any security-based swap, in connection with which such 
person engages in any fraudulent, deceptive, or manipula-
tive act or practice, makes any fictitious quotation, or en-
gages in any transaction, practice, or course of business 
which operates as a fraud or deceit upon any person. The
830 
† HR 4173 EAS 
Commission shall, for the purposes of this subsection, by 
rules and regulations define, and prescribe means reason-
ably designed to prevent, such transactions, acts, practices, 
and courses of business as are fraudulent, deceptive, or ma-
nipulative, and such quotations as are fictitious.’’. 
(h) POSITION LIMITS AND POSITION ACCOUNTABILITY 
FOR SECURITY-BASED SWAPS.—The Securities Exchange 
Act of 1934 is amended by inserting after section 10A (15 
U.S.C. 78j–1) the following: 
‘‘SEC. 10B. POSITION LIMITS AND POSITION ACCOUNT-
ABILITY FOR SECURITY-BASED SWAPS AND 
LARGE TRADER REPORTING. 
‘‘(a) POSITION LIMITS.—As a means reasonably de-
signed to prevent fraud and manipulation, the Commission 
shall, by rule or regulation, as necessary or appropriate in 
the public interest or for the protection of investors, estab-
lish limits (including related hedge exemption provisions) 
on the size of positions in any security-based swap that may 
be held by any person. In establishing such limits, the Com-
mission may require any person to aggregate positions in— 
‘‘(1) any security-based swap and any security 
or loan or group of securities or loans on which such 
security-based swap is based, which such security- 
based swap references, or to which such security-based 
swap is related as described in paragraph (68) of sec-
831 
† HR 4173 EAS 
tion 3(a), and any other instrument relating to such 
security or loan or group or index of securities or 
loans; or 
‘‘(2) any security-based swap and— 
‘‘(A) any security or group or index of secu-
rities, the price, yield, value, or volatility of 
which, or of which any interest therein, is the 
basis for a material term of such security-based 
swap as described in paragraph (68) of section 
3(a); and 
‘‘(B) any other instrument relating to the 
same security or group or index of securities de-
scribed under subparagraph (A). 
‘‘(b) EXEMPTIONS.—The Commission, by rule, regula-
tion, or order, may conditionally or unconditionally exempt 
any person or class of persons, any security-based swap or 
class of security-based swaps, or any transaction or class 
of transactions from any requirement the Commission may 
establish under this section with respect to position limits. 
‘‘(c) SRO RULES.— 
‘‘(1) IN GENERAL.—As a means reasonably de-
signed to prevent fraud or manipulation, the Com-
mission, by rule, regulation, or order, as necessary or 
appropriate in the public interest, for the protection 
of investors, or otherwise in furtherance of the pur-
832 
† HR 4173 EAS 
poses of this title, may direct a self-regulatory organi-
zation— 
‘‘(A) to adopt rules regarding the size of po-
sitions in any security-based swap that may be 
held by— 
‘‘(i) any member of such self-regulatory 
organization; or 
‘‘(ii) any person for whom a member 
of such self-regulatory organization effects 
transactions in such security-based swap; 
and 
‘‘(B) to adopt rules reasonably designed to 
ensure compliance with requirements prescribed 
by the Commission under this subsection. 
‘‘(2) 
REQUIREMENT
TO
AGGREGATE
POSI-
TIONS.—In establishing the limits under paragraph 
(1), the self-regulatory organization may require such 
member or person to aggregate positions in— 
‘‘(A) any security-based swap and any secu-
rity or loan or group or narrow-based security 
narrow-based security index of securities or loans 
on which such security-based swap is based, 
which such security-based swap references, or to 
which such security-based swap is related as de-
scribed in section 3(a)(68), and any other in-
833 
† HR 4173 EAS 
strument relating to such security or loan or 
group or narrow-based security index of securi-
ties or loans; or 
‘‘(B)(i) any security-based swap; and 
‘‘(ii) any security-based swap and any 
other instrument relating to the same security or 
group or narrow-based security index of securi-
ties. 
‘‘(d) LARGE TRADER REPORTING.—The Commission, 
by rule or regulation, may require any person that effects 
transactions for such person’s own account or the account 
of others in any securities-based swap or uncleared security- 
based swap and any security or loan or group or narrow- 
based security index of securities or loans as set forth in 
paragraphs (1) and (2) of subsection (a) under this section 
to report such information as the Commission may pre-
scribe regarding any position or positions in any security- 
based swap or uncleared security-based swap and any secu-
rity or loan or group or narrow-based security index of se-
curities or loans and any other instrument relating to such 
security or loan or group or narrow-based security index 
of securities or loans as set forth in paragraphs (1) and 
(2) of subsection (a) under this section.’’. 
(i) PUBLIC REPORTING AND REPOSITORIES FOR SE-
CURITY-BASED SWAPS.—Section 13 of the Securities Ex-
834 
† HR 4173 EAS 
change Act of 1934 (15 U.S.C. 78m) is amended by adding 
at the end the following: 
‘‘(m) PUBLIC
AVAILABILITY
OF
SECURITY-BASED 
SWAP TRANSACTION DATA.— 
‘‘(1) IN GENERAL.— 
‘‘(A) DEFINITION OF REAL-TIME PUBLIC RE-
PORTING.—In this paragraph, the term ‘real- 
time public reporting’ means to report data re-
lating to a security-based swap transaction as 
soon as technologically practicable after the time 
at which the security-based swap transaction has 
been executed. 
‘‘(B) PURPOSE.—The purpose of this section 
is to authorize the Commission to make security- 
based swap transaction and pricing data avail-
able to the public in such form and at such times 
as the Commission determines appropriate to en-
hance price discovery. 
‘‘(C) GENERAL RULE.—The Commission is 
authorized to provide by rule for the public 
availability of security-based swap transaction 
and pricing data as follows: 
‘‘(i) With respect to those security- 
based swaps that are subject to the manda-
tory clearing requirement described in sec-
835 
† HR 4173 EAS 
tion 3C(a)(1) (including those security- 
based swaps that are exempted from the re-
quirement pursuant to section 3C(a)(10)), 
the Commission shall require real-time pub-
lic reporting for such transactions. 
‘‘(ii) With respect to those security- 
based swaps that are not subject to the man-
datory clearing requirement described in 
subsection section 3C(a)(1), but are cleared 
at a registered clearing agency, the Com-
mission shall require real-time public re-
porting for such transactions. 
‘‘(iii) With respect to security-based 
swaps that are not cleared at a registered 
clearing agency and which are reported to 
a security-based swap data repository or the 
Commission under section 3C(a), the Com-
mission shall make available to the public, 
in a manner that does not disclose the busi-
ness transactions and market positions of 
any person, aggregate data on such secu-
rity-based swap trading volumes and posi-
tions. 
‘‘(iv) With respect to security-based 
swaps that are exempt from the require-
836 
† HR 4173 EAS 
ments of section 3C(a)(1), but are subject to 
the requirements of section 3C(a)(8), the 
Commission shall require real-time public 
reporting for such transactions. 
‘‘(D) REGISTERED
ENTITIES
AND
PUBLIC 
REPORTING.—The Commission may require reg-
istered entities to publicly disseminate the secu-
rity-based swap transaction and pricing data re-
quired to be reported under this paragraph. 
‘‘(E) RULEMAKING
REQUIRED.—With re-
spect to the rule providing for the public avail-
ability of transaction and pricing data for secu-
rity-based swaps described in clauses (i) and (ii) 
of subparagraph (C), the rule promulgated by the 
Commission shall contain provisions— 
‘‘(i) to ensure such information does 
not identify the participants; 
‘‘(ii) to specify the criteria for deter-
mining what constitutes a large notional se-
curity-based swap transaction (block trade) 
for particular markets and contracts; 
‘‘(iii) to specify the appropriate time 
delay for reporting large notional security- 
based swap transactions (block trades) to 
the public; and
837 
† HR 4173 EAS 
‘‘(iv) that take into account whether 
the public disclosure will materially reduce 
market liquidity. 
‘‘(F) TIMELINESS OF REPORTING.—Parties 
to a security-based swap (including agents of the 
parties to a security-based swap) shall be respon-
sible for reporting security-based swap trans-
action information to the appropriate registered 
entity in a timely manner as may be prescribed 
by the Commission. 
‘‘(2) SEMIANNUAL AND ANNUAL PUBLIC REPORT-
ING OF AGGREGATE SECURITY-BASED SWAP DATA.— 
‘‘(A) IN
GENERAL.—In accordance with 
subparagraph (B), the Commission shall issue a 
written report on a semiannual and annual 
basis to make available to the public information 
relating to— 
‘‘(i) the trading and clearing in the 
major security-based swap categories; and 
‘‘(ii) the market participants and de-
velopments in new products. 
‘‘(B) USE; CONSULTATION.—In preparing a 
report under subparagraph (A), the Commission 
shall—
838 
† HR 4173 EAS 
‘‘(i) use information from security- 
based swap data repositories and deriva-
tives clearing organizations; and 
‘‘(ii) consult with the Office of the 
Comptroller of the Currency, the Bank for 
International Settlements, and such other 
regulatory bodies as may be necessary. 
‘‘(n) SECURITY-BASED SWAP DATA REPOSITORIES.— 
‘‘(1) REGISTRATION REQUIREMENT.—It shall be 
unlawful for any person, unless registered with the 
Commission, directly or indirectly, to make use of the 
mails or any means or instrumentality of interstate 
commerce to perform the functions of a security-based 
swap data repository. 
‘‘(2) INSPECTION AND EXAMINATION.—Each reg-
istered security-based swap data repository shall be 
subject to inspection and examination by any rep-
resentative of the Commission. 
‘‘(3) COMPLIANCE WITH CORE PRINCIPLES.— 
‘‘(A) IN GENERAL.—To be registered, and 
maintain registration, as a security-based swap 
data repository, the security-based swap data re-
pository shall comply with— 
‘‘(i) the core principles described in 
this subsection; and
839 
† HR 4173 EAS 
‘‘(ii) any requirement that the Com-
mission may impose by rule or regulation. 
‘‘(B) REASONABLE
DISCRETION
OF
SECU-
RITY-BASED
SWAP
DATA
REPOSITORY.—Unless 
otherwise determined by the Commission, by rule 
or regulation, a security-based swap data reposi-
tory described in subparagraph (A) shall have 
reasonable discretion in establishing the manner 
in which the security-based swap data repository 
complies with the core principles described in 
this subsection. 
‘‘(4) STANDARD SETTING.— 
‘‘(A) DATA IDENTIFICATION.—The Commis-
sion shall prescribe standards that specify the 
data elements for each security-based swap that 
shall be collected and maintained by each reg-
istered security-based swap data repository. 
‘‘(B) DATA
COLLECTION
AND
MAINTE-
NANCE.—The Commission shall prescribe data 
collection and data maintenance standards for 
security-based swap data repositories. 
‘‘(C) COMPARABILITY.—The standards pre-
scribed by the Commission under this subsection 
shall be comparable to the data standards im-
posed by the Commission on clearing agencies in
840 
† HR 4173 EAS 
connection with their clearing of security-based 
swaps. 
‘‘(5) DUTIES.—A security-based swap data re-
pository shall— 
‘‘(A) accept data prescribed by the Commis-
sion for each security-based swap under sub-
section (b); 
‘‘(B) confirm with both counterparties to 
the security-based swap the accuracy of the data 
that was submitted; 
‘‘(C) maintain the data described in sub-
paragraph (A) in such form, in such manner, 
and for such period as may be required by the 
Commission; 
‘‘(D)(i) provide direct electronic access to 
the Commission (or any designee of the Commis-
sion, including another registered entity); and 
‘‘(ii) provide the information described in 
subparagraph (A) in such form and at such fre-
quency as the Commission may require to com-
ply with the public reporting requirements set 
forth in subsection (m); 
‘‘(E) at the direction of the Commission, es-
tablish 
automated 
systems 
for 
monitoring,
842 
† HR 4173 EAS 
‘‘(II) foreign central banks; and 
‘‘(III) foreign ministries. 
‘‘(H) CONFIDENTIALITY AND INDEMNIFICA-
TION
AGREEMENT.—Before the security-based 
swap data repository may share information 
with any entity described in subparagraph 
(G)— 
‘‘(i) the security-based swap data re-
pository shall receive a written agreement 
from each entity stating that the entity 
shall abide by the confidentiality require-
ments described in section 24 relating to the 
information on security-based swap trans-
actions that is provided; and 
‘‘(ii) each entity shall agree to indem-
nify the security-based swap data repository 
and the Commission for any expenses aris-
ing from litigation relating to the informa-
tion provided under section 24. 
‘‘(6) DESIGNATION OF CHIEF COMPLIANCE OFFI-
CER.— 
‘‘(A) IN
GENERAL.—Each security-based 
swap data repository shall designate an indi-
vidual to serve as a chief compliance officer.
843 
† HR 4173 EAS 
‘‘(B) DUTIES.—The chief compliance officer 
shall— 
‘‘(i) report directly to the board or to 
the senior officer of the security-based swap 
data repository; 
‘‘(ii) review the compliance of the secu-
rity-based swap data repository with re-
spect to the core principles described in 
paragraph (7); 
‘‘(iii) in consultation with the board of 
the security-based swap data repository, a 
body performing a function similar to the 
board of the security-based swap data repos-
itory, or the senior officer of the security- 
based swap data repository, resolve any 
conflicts of interest that may arise; 
‘‘(iv) be responsible for administering 
each policy and procedure that is required 
to be established pursuant to this section; 
‘‘(v) ensure compliance with this title 
(including regulations) relating to agree-
ments, contracts, or transactions, including 
each rule prescribed by the Commission 
under this section;
844 
† HR 4173 EAS 
‘‘(vi) establish procedures for the reme-
diation of noncompliance issues identified 
by the chief compliance officer through 
any— 
‘‘(I) compliance office review; 
‘‘(II) look-back; 
‘‘(III) internal or external audit 
finding; 
‘‘(IV) self-reported error; or 
‘‘(V) validated complaint; and 
‘‘(vii) establish and follow appropriate 
procedures for the handling, management 
response, remediation, retesting, and closing 
of noncompliance issues. 
‘‘(C) ANNUAL REPORTS.— 
‘‘(i) IN GENERAL.—In accordance with 
rules prescribed by the Commission, the 
chief compliance officer shall annually pre-
pare and sign a report that contains a de-
scription of— 
‘‘(I) the compliance of the secu-
rity-based swap data repository of the 
chief compliance officer with respect to 
this title (including regulations); and
845 
† HR 4173 EAS 
‘‘(II) each policy and procedure of 
the security-based swap data repository 
of the chief compliance officer (includ-
ing the code of ethics and conflict of 
interest policies of the security-based 
swap data repository). 
‘‘(ii) REQUIREMENTS.—A compliance 
report under clause (i) shall— 
‘‘(I) accompany each appropriate 
financial report of the security-based 
swap data repository that is required 
to be furnished to the Commission pur-
suant to this section; and 
‘‘(II) include a certification that, 
under penalty of law, the compliance 
report is accurate and complete. 
‘‘(7) CORE PRINCIPLES APPLICABLE TO SECU-
RITY-BASED SWAP DATA REPOSITORIES.— 
‘‘(A) ANTITRUST CONSIDERATIONS.—Unless 
necessary or appropriate to achieve the purposes 
of this title, the swap data repository shall not— 
‘‘(i) adopt any rule or take any action 
that results in any unreasonable restraint of 
trade; or
846 
† HR 4173 EAS 
‘‘(ii) impose any material anticompeti-
tive burden on the trading, clearing, or re-
porting of transactions. 
‘‘(B) GOVERNANCE ARRANGEMENTS.—Each 
security-based swap data repository shall estab-
lish governance arrangements that are trans-
parent— 
‘‘(i) to fulfill public interest require-
ments; and 
‘‘(ii) to support the objectives of the 
Federal Government, owners, and partici-
pants. 
‘‘(C) CONFLICTS OF INTEREST.—Each secu-
rity-based swap data repository shall— 
‘‘(i) establish and enforce rules to min-
imize conflicts of interest in the decision- 
making process of the security-based swap 
data repository; and 
‘‘(ii) establish a process for resolving 
any conflicts of interest described in clause 
(i). 
‘‘(8) REQUIRED REGISTRATION FOR SECURITY- 
BASED SWAP DATA REPOSITORIES.—Any person that 
is required to be registered as a security-based swap 
data repository under this subsection shall register
847 
† HR 4173 EAS 
with the Commission, regardless of whether that per-
son is also licensed under the Commodity Exchange 
Act as a swap data repository. 
‘‘(9) RULES.—The Commission shall adopt rules 
governing persons that are registered under this sub-
section.’’. 
SEC. 764. REGISTRATION AND REGULATION OF SECURITY- 
BASED SWAP DEALERS AND MAJOR SECU-
RITY-BASED SWAP PARTICIPANTS. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 15E (15 
U.S.C. 78o–7) the following: 
‘‘SEC. 15F. REGISTRATION AND REGULATION OF SECURITY- 
BASED SWAP DEALERS AND MAJOR SECU-
RITY-BASED SWAP PARTICIPANTS. 
‘‘(a) REGISTRATION.— 
‘‘(1) SECURITY-BASED SWAP DEALERS.—It shall 
be unlawful for any person to act as a security-based 
swap dealer unless the person is registered as a secu-
rity-based swap dealer with the Commission. 
‘‘(2) MAJOR
SECURITY-BASED
SWAP
PARTICI-
PANTS.—It shall be unlawful for any person to act as 
a major security-based swap participant unless the 
person is registered as a major security-based swap 
participant with the Commission.
848 
† HR 4173 EAS 
‘‘(b) REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A person shall register as a 
security-based swap dealer or major security-based 
swap participant by filing a registration application 
with the Commission. 
‘‘(2) CONTENTS.— 
‘‘(A) IN GENERAL.—The application shall 
be made in such form and manner as prescribed 
by the Commission, and shall contain such infor-
mation, as the Commission considers necessary 
concerning the business in which the applicant is 
or will be engaged. 
‘‘(B) CONTINUAL
REPORTING.—A person 
that is registered as a security-based swap dealer 
or major security-based swap participant shall 
continue to submit to the Commission reports 
that contain such information pertaining to the 
business of the person as the Commission may 
require. 
‘‘(3) EXPIRATION.—Each registration under this 
section shall expire at such time as the Commission 
may prescribe by rule or regulation. 
‘‘(4) RULES.—Except as provided in subsections 
(c), (e), and (f), the Commission may prescribe rules 
applicable to security-based swap dealers and major
849 
† HR 4173 EAS 
security-based swap participants, including rules that 
limit the activities of non-bank security-based swap 
dealers and non-bank major security-based swap par-
ticipants. 
‘‘(5) TRANSITION.—Not later than 1 year after 
the date of enactment of the Wall Street Transparency 
and Accountability Act of 2010, the Commission shall 
issue rules under this section to provide for the reg-
istration of security-based swap dealers and major se-
curity-based swap participants. 
‘‘(6) STATUTORY DISQUALIFICATION.—Except to 
the extent otherwise specifically provided by rule, reg-
ulation, or order of the Commission, it shall be un-
lawful for a security-based swap dealer or a major se-
curity-based swap participant to permit any person 
associated with a security-based swap dealer or a 
major security-based swap participant who is subject 
to a statutory disqualification to effect or be involved 
in effecting security-based swaps on behalf of the secu-
rity-based swap dealer or major security-based swap 
participant, if the security-based swap dealer or 
major security-based swap participant knew, or in 
the exercise of reasonable care should have known, of 
the statutory disqualification. 
‘‘(c) DUAL REGISTRATION.—
850 
† HR 4173 EAS 
‘‘(1) SECURITY-BASED SWAP DEALER.—Any per-
son that is required to be registered as a security- 
based swap dealer under this section shall register 
with the Commission, regardless of whether the person 
also is registered with the Commodity Futures Trad-
ing Commission as a swap dealer. 
‘‘(2) MAJOR
SECURITY-BASED
SWAP
PARTICI-
PANT.—Any person that is required to be registered 
as a major security-based swap participant under 
this section shall register with the Commission, re-
gardless of whether the person also is registered with 
the Commodity Futures Trading Commission as a 
major swap participant. 
‘‘(d) RULEMAKING.— 
‘‘(1) IN GENERAL.—The Commission shall adopt 
rules for persons that are registered as security-based 
swap dealers or major security-based swap partici-
pants under this section. 
‘‘(2) EXCEPTION
FOR
PRUDENTIAL
REQUIRE-
MENTS.— 
‘‘(A) IN GENERAL.—The Commission may 
not prescribe rules imposing prudential require-
ments on security-based swap dealers or major 
security-based swap participants that are deposi-
tory institutions, as that term is defined in sec-
851 
† HR 4173 EAS 
tion 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813). 
‘‘(B) APPLICABILITY.—Subparagraph (A) 
does not limit the authority of the Commission 
to prescribe appropriate business conduct, re-
porting, and recordkeeping requirements on secu-
rity-based swap dealers or major security-based 
swap participants that are depository institu-
tions to protect investors. 
‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT
ARE
DEPOSITORY
INSTITUTIONS.—Each 
registered security-based swap dealer and major 
security-based swap participant that is a deposi-
tory institution, as that term is defined in sec-
tion 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813), shall meet such minimum capital 
requirements and minimum initial and vari-
ation margin requirements as the appropriate 
Federal banking agency shall by rule or regula-
tion prescribe under paragraph (2)(A) to help 
ensure the safety and soundness of the security-
852 
† HR 4173 EAS 
based swap dealer or major security-based swap 
participant. 
‘‘(B) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT
ARE
NOT
DEPOSITORY
INSTITUTIONS.— 
Each registered security-based swap dealer and 
major security-based swap participant that is 
not a depository institution, as that term is de-
fined in section 3 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813), shall meet such min-
imum capital requirements and minimum ini-
tial and variation margin requirements as the 
Commission shall by rule or regulation prescribe 
under paragraph (2)(B) to help ensure the safety 
and soundness of the security-based swap dealer 
or major security-based swap participant. 
‘‘(2) RULES.— 
‘‘(A) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE DEPOSITORY INSTITUTIONS.—The ap-
propriate Federal banking agencies, in consulta-
tion with the Commission and the Commodity 
Futures Trading Commission, shall adopt rules 
imposing capital and margin requirements 
under this subsection for security-based swap
853 
† HR 4173 EAS 
dealers and major security-based swap partici-
pants that are depository institutions, as that 
term is defined in section 3 of the Federal De-
posit Insurance Act (12 U.S.C. 1813). 
‘‘(B) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 
Commission shall adopt rules imposing capital 
and margin requirements under this subsection 
for security-based swap dealers and major secu-
rity-based swap participants that are not deposi-
tory institutions, as that term is defined in sec-
tion 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813). 
‘‘(3) CAPITAL.— 
‘‘(A) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE DEPOSITORY INSTITUTIONS.—The cap-
ital requirements prescribed under paragraph 
(2)(A) for security-based swap dealers and major 
security-based swap participants that are deposi-
tory institutions shall contain— 
‘‘(i) a capital requirement that is 
greater than zero for security-based swaps 
that are cleared by a clearing agency; and
854 
† HR 4173 EAS 
‘‘(ii) to offset the greater risk to the se-
curity-based swap dealer or major security- 
based swap participant and to the financial 
system arising from the use of security- 
based swaps that are not cleared, substan-
tially higher capital requirements for secu-
rity-based swaps that are not cleared by a 
clearing agency than for security-based 
swaps that are cleared. 
‘‘(B) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 
capital requirements prescribed under paragraph 
(2)(B) for security-based swap dealers and major 
security-based swap participants that are not de-
pository institutions shall be as strict as or 
stricter than the capital requirements prescribed 
for security-based swap dealers and major secu-
rity-based swap participants that are depository 
institutions under paragraph (2)(A). 
‘‘(C) RULE OF CONSTRUCTION.— 
‘‘(i) IN GENERAL.—Nothing in this sec-
tion shall limit, or be construed to limit, the 
authority—
855 
† HR 4173 EAS 
‘‘(I) of the Commission to set fi-
nancial responsibility rules for a 
broker or dealer registered pursuant to 
section 
15(b) 
(except 
for 
section 
15(b)(11) thereof) in accordance with 
section 15(c)(3); or 
‘‘(II) of the Commodity Futures 
Trading Commission to set financial 
responsibility rules for a futures com-
mission 
merchant 
or 
introducing 
broker registered pursuant to section 
4f(a) of the Commodity Exchange Act 
(except for section 4f(a)(3) thereof) in 
accordance with section 4f(b) of the 
Commodity Exchange Act. 
‘‘(ii) 
FUTURES
COMMISSION
MER-
CHANTS AND OTHER DEALERS.—A futures 
commission merchant, introducing broker, 
broker, or dealer shall maintain sufficient 
capital to comply with the stricter of any 
applicable capital requirements to which 
such futures commission merchant, intro-
ducing broker, broker, or dealer is subject to 
under this title or the Commodity Exchange 
Act.
856 
† HR 4173 EAS 
‘‘(4) MARGIN.— 
‘‘(A) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE DEPOSITORY INSTITUTIONS.—The ap-
propriate Federal banking agency for security- 
based swap dealers and major security-based 
swap participants that are depository institu-
tions shall impose both initial and variation 
margin requirements in accordance with para-
graph (2)(A) on all security-based swaps that 
are not cleared by a clearing agency. 
‘‘(B) SECURITY-BASED SWAP DEALERS AND 
MAJOR
SECURITY-BASED
SWAP
PARTICIPANTS 
THAT ARE NOT DEPOSITORY INSTITUTIONS.—The 
Commission shall impose both initial and vari-
ation margin requirements in accordance with 
paragraph (2)(B) for security-based swap dealers 
and major security-based swap participants that 
are not depository institutions on all security- 
based swaps that are not cleared by a clearing 
agency. Any such initial and variation margin 
requirements shall be as strict as or stricter than 
the margin requirements prescribed under para-
graph (4)(A).
857 
† HR 4173 EAS 
‘‘(5) MARGIN
REQUIREMENTS.—In prescribing 
margin requirements under this subsection, the ap-
propriate Federal banking agency with respect to se-
curity-based swap dealers and major security-based 
swap participants that are depository institutions, 
and the Commission with respect to security-based 
swap dealers and major security-based swap partici-
pants that are not depository institutions may permit 
the use of noncash collateral, as the agency or the 
Commission determines to be consistent with— 
‘‘(A) preserving the financial integrity of 
markets trading security-based swaps; and 
‘‘(B) preserving the stability of the United 
States financial system. 
‘‘(6) COMPARABILITY OF CAPITAL AND MARGIN 
REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The appropriate Fed-
eral banking agencies, the Commission, and the 
Securities and Exchange Commission shall peri-
odically (but not less frequently than annually) 
consult on minimum capital requirements and 
minimum initial and variation margin require-
ments. 
‘‘(B) COMPARABILITY.—The entities de-
scribed in subparagraph (A) shall, to the max-
858 
† HR 4173 EAS 
imum extent practicable, establish and maintain 
comparable minimum capital requirements and 
minimum initial and variation margin require-
ments, including the use of noncash collateral, 
for— 
‘‘(i) security-based swap dealers; and 
‘‘(ii) major security-based swap par-
ticipants. 
‘‘(7) REQUESTED MARGIN.—If any party to a se-
curity-based swap that is exempt from the margin re-
quirements of paragraph (4)(A) or paragraph (4)(B) 
requests that such security-based swap be margined, 
then— 
‘‘(A) the exemption shall not apply; and 
‘‘(B) the counterparty to such security-based 
swap shall provide the requested margin. 
‘‘(8) 
APPLICABILITY
WITH
RESPECT
TO 
COUNTERPARTIES.—Paragraphs (4) and (5) shall not 
apply to initial and variation margin for security- 
based swaps in which 1 of the counterparties is not— 
‘‘(A) a security-based swap dealer; 
‘‘(B) a major security-based swap partici-
pant; or 
‘‘(C) a financial entity as described in sec-
tion 3C(a)(10)(A)(ii), and such counterparty is
859 
† HR 4173 EAS 
eligible for and utilizing the commercial end user 
clearing exemption under section 3C(a)(10). 
‘‘(f) REPORTING AND RECORDKEEPING.— 
‘‘(1) IN
GENERAL.—Each registered security- 
based swap dealer and major security-based swap 
participant— 
‘‘(A) shall make such reports as are re-
quired by the Commission, by rule or regulation, 
regarding the transactions and positions and fi-
nancial condition of the registered security-based 
swap dealer or major security-based swap partic-
ipant; 
‘‘(B)(i) for which there is a prudential regu-
lator, shall keep books and records of all activi-
ties related to the business as a security-based 
swap dealer or major security-based swap partic-
ipant in such form and manner and for such pe-
riod as may be prescribed by the Commission by 
rule or regulation; and 
‘‘(ii) for which there is no prudential regu-
lator, shall keep books and records in such form 
and manner and for such period as may be pre-
scribed by the Commission by rule or regulation; 
and
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† HR 4173 EAS 
‘‘(C) shall keep books and records described 
in subparagraph (B) open to inspection and ex-
amination by any representative of the Commis-
sion. 
‘‘(2) RULES.—The Commission shall adopt rules 
governing reporting and recordkeeping for security- 
based swap dealers and major security-based swap 
participants. 
‘‘(g) DAILY TRADING RECORDS.— 
‘‘(1) IN
GENERAL.—Each registered security- 
based swap dealer and major security-based swap 
participant shall maintain daily trading records of 
the security-based swaps of the registered security- 
based swap dealer and major security-based swap 
participant and all related records (including related 
cash or forward transactions) and recorded commu-
nications, including electronic mail, instant messages, 
and recordings of telephone calls, for such period as 
may be required by the Commission by rule or regula-
tion. 
‘‘(2) INFORMATION REQUIREMENTS.—The daily 
trading records shall include such information as the 
Commission shall require by rule or regulation. 
‘‘(3) CUSTOMER RECORDS.—Each registered se-
curity-based swap dealer and major security-based
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† HR 4173 EAS 
swap participant shall maintain daily trading 
records for each customer or counterparty in a man-
ner and form that is identifiable with each security- 
based swap transaction. 
‘‘(4) AUDIT
TRAIL.—Each registered security- 
based swap dealer and major security-based swap 
participant shall maintain a complete audit trail for 
conducting comprehensive and accurate trade recon-
structions. 
‘‘(5) RULES.—The Commission shall adopt rules 
governing daily trading records for security-based 
swap dealers and major security-based swap partici-
pants. 
‘‘(h) BUSINESS CONDUCT STANDARDS.— 
‘‘(1) IN
GENERAL.—Each registered security- 
based swap dealer and major security-based swap 
participant shall conform with such business conduct 
standards as may be prescribed by the Commission, 
by rule or regulation, that relate to— 
‘‘(A) fraud, manipulation, and other abu-
sive practices involving security-based swaps (in-
cluding security-based swaps that are offered but 
not entered into);
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† HR 4173 EAS 
‘‘(B) diligent supervision of the business of 
the registered security-based swap dealer and 
major security-based swap participant; 
‘‘(C) adherence to all applicable position 
limits; and 
‘‘(D) such other matters as the Commission 
determines to be appropriate. 
‘‘(2) SPECIAL RULE; FIDUCIARY DUTIES TO CER-
TAIN ENTITIES.— 
‘‘(A) GOVERNMENTAL
ENTITIES.—A secu-
rity-based swap dealer that provides advice re-
garding, or offers to enter into, or enters into a 
security-based swap with a State, State agency, 
city, county, municipality, or other political sub-
division of a State, or a Federal agency shall 
have a fiduciary duty to the State, State agency, 
city, county, municipality, or other political sub-
division of the State, or the Federal agency, as 
appropriate. 
‘‘(B) PENSION
PLANS; ENDOWMENTS; RE-
TIREMENT PLANS.—A security-based swap dealer 
that provides advice regarding, or offers to enter 
into, or enters into a security-based swap with 
a pension plan, endowment, or retirement plan
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† HR 4173 EAS 
shall have a fiduciary duty to the pension plan, 
endowment, or retirement plan, as appropriate. 
‘‘(3) BUSINESS
CONDUCT
REQUIREMENTS.— 
Business conduct requirements adopted by the Com-
mission under this subsection shall— 
‘‘(A) establish the standard of care for a se-
curity-based swap dealer or major security-based 
swap 
participant 
to 
verify 
that 
any 
counterparty meets the eligibility standards for 
an eligible contract participant; 
‘‘(B) require disclosure by the security-based 
swap dealer or major security-based swap partic-
ipant to any counterparty to the transaction 
(other than a security-based swap dealer or a 
major security-based swap participant) of— 
‘‘(i) information about the material 
risks and characteristics of the security- 
based swap; 
‘‘(ii) the source and amount of any fees 
or other material remuneration that the se-
curity-based swap dealer or major security- 
based swap participant would directly or 
indirectly expect to receive in connection 
with the security-based swap;
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† HR 4173 EAS 
‘‘(iii) any other material incentives or 
conflicts of interest that the security-based 
swap dealer or major security-based swap 
participant may have in connection with 
the security-based swap; and 
‘‘(iv)(I) 
for 
cleared 
security-based 
swaps, upon the request of the counterparty, 
the daily mark from the appropriate clear-
ing agency; and 
‘‘(II) 
for 
uncleared 
security-based 
swaps, the daily mark of the security-based 
swap dealer or the major security-based 
swap participant; 
‘‘(C) establish a standard of conduct for a 
security-based swap dealer or major security- 
based swap participant to communicate in a 
fair and balanced manner based on principles of 
fair dealing and good faith; 
‘‘(D) establish a standard of conduct for a 
security-based swap dealer or major security- 
based swap participant, with respect to a 
counterparty that is an eligible contract partici-
pant within the meaning of subclause (I) or (II) 
of clause (vii) of section 1a(18) of the Com-
modity Exchange Act, to have a reasonable basis
865 
† HR 4173 EAS 
to believe that the counterparty has an inde-
pendent representative that— 
‘‘(i) has sufficient knowledge to evalu-
ate the transaction and risks; 
‘‘(ii) is not subject to a statutory dis-
qualification; 
‘‘(iii) is independent of the security- 
based swap dealer or major security-based 
swap participant; 
‘‘(iv) undertakes a duty to act in the 
best interests of the counterparty it rep-
resents; 
‘‘(v) makes appropriate disclosures; 
and 
‘‘(vi) will provide written representa-
tions to the eligible contract participant re-
garding fair pricing and the appropriate-
ness of the transaction; and 
‘‘(E) establish such other standards and re-
quirements as the Commission may determine 
are appropriate in the public interest, for the 
protection of investors, or otherwise in further-
ance of the purposes of this title. 
‘‘(4) RULES.—The Commission shall prescribe 
rules under this subsection governing business conduct
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† HR 4173 EAS 
standards for security-based swap dealers and major 
security-based swap participants. 
‘‘(i) DOCUMENTATION
AND BACK OFFICE STAND-
ARDS.— 
‘‘(1) IN
GENERAL.—Each registered security- 
based swap dealer and major security-based swap 
participant shall conform with such standards as 
may be prescribed by the Commission, by rule or reg-
ulation, that relate to timely and accurate confirma-
tion, processing, netting, documentation, and valu-
ation of all security-based swaps. 
‘‘(2) RULES.—The Commission shall adopt rules 
governing documentation and back office standards 
for security-based swap dealers and major security- 
based swap participants. 
‘‘(j) DUTIES.—Each registered security-based swap 
dealer and major security-based swap participant shall, at 
all times, comply with the following requirements: 
‘‘(1) MONITORING OF TRADING.—The security- 
based swap dealer or major security-based swap par-
ticipant shall monitor its trading in security-based 
swaps to prevent violations of applicable position 
limits. 
‘‘(2) RISK MANAGEMENT PROCEDURES.—The se-
curity-based swap dealer or major security-based
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† HR 4173 EAS 
swap participant shall establish robust and profes-
sional risk management systems adequate for man-
aging the day-to-day business of the security-based 
swap dealer or major security-based swap partici-
pant. 
‘‘(3) DISCLOSURE OF GENERAL INFORMATION.— 
The security-based swap dealer or major security- 
based swap participant shall disclose to the Commis-
sion and to the prudential regulator for the security- 
based swap dealer or major security-based swap par-
ticipant, as applicable, information concerning— 
‘‘(A) terms and conditions of its security- 
based swaps; 
‘‘(B) security-based swap trading oper-
ations, mechanisms, and practices; 
‘‘(C) financial integrity protections relating 
to security-based swaps; and 
‘‘(D) other information relevant to its trad-
ing in security-based swaps. 
‘‘(4) ABILITY TO OBTAIN INFORMATION.—The se-
curity-based swap dealer or major security-based 
swap participant shall— 
‘‘(A) establish and enforce internal systems 
and procedures to obtain any necessary informa-
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† HR 4173 EAS 
tion to perform any of the functions described in 
this section; and 
‘‘(B) provide the information to the Com-
mission and to the prudential regulator for the 
security-based swap dealer or major security- 
based swap participant, as applicable, on re-
quest. 
‘‘(5) CONFLICTS
OF
INTEREST.—The security- 
based swap dealer and major security-based swap 
participant shall implement conflict-of-interest sys-
tems and procedures that— 
‘‘(A) establish structural and institutional 
safeguards to ensure that the activities of any 
person within the firm relating to research or 
analysis of the price or market for any security- 
based swap or acting in a role of providing 
clearing activities or making determinations as 
to accepting clearing customers are separated by 
appropriate informational partitions within the 
firm from the review, pressure, or oversight of 
persons whose involvement in pricing, trading, 
or clearing activities might potentially bias their 
judgment or supervision and contravene the core 
principles of open access and the business con-
duct standards described in this title; and
870 
† HR 4173 EAS 
swap dealer and major security-based swap par-
ticipant requirements described in this section; 
‘‘(C) in consultation with the board of di-
rectors, a body performing a function similar to 
the board, or the senior officer of the organiza-
tion, resolve any conflicts of interest that may 
arise; 
‘‘(D) be responsible for administering each 
policy and procedure that is required to be estab-
lished pursuant to this section; 
‘‘(E) ensure compliance with this title (in-
cluding regulations) relating to security-based 
swaps, including each rule prescribed by the 
Commission under this section; 
‘‘(F) establish procedures for the remedi-
ation of noncompliance issues identified by the 
chief compliance officer through any— 
‘‘(i) compliance office review; 
‘‘(ii) look-back; 
‘‘(iii) internal or external audit find-
ing; 
‘‘(iv) self-reported error; or 
‘‘(v) validated complaint; and 
‘‘(G) establish and follow appropriate proce-
dures for the handling, management response, re-
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† HR 4173 EAS 
mediation, retesting, and closing of noncompli-
ance issues. 
‘‘(3) ANNUAL REPORTS.— 
‘‘(A) IN
GENERAL.—In accordance with 
rules prescribed by the Commission, the chief 
compliance officer shall annually prepare and 
sign a report that contains a description of— 
‘‘(i) the compliance of the security- 
based swap dealer or major swap partici-
pant with respect to this title (including 
regulations); and 
‘‘(ii) each policy and procedure of the 
security-based swap dealer or major secu-
rity-based swap participant of the chief 
compliance officer (including the code of 
ethics and conflict of interest policies). 
‘‘(B) REQUIREMENTS.—A compliance re-
port under subparagraph (A) shall— 
‘‘(i) accompany each appropriate fi-
nancial report of the security-based swap 
dealer or major security-based swap partici-
pant that is required to be furnished to the 
Commission pursuant to this section; and
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† HR 4173 EAS 
‘‘(ii) include a certification that, under 
penalty of law, the compliance report is ac-
curate and complete. 
‘‘(l) ENFORCEMENT
AND
ADMINISTRATIVE
PRO-
CEEDING AUTHORITY.— 
‘‘(1) PRIMARY ENFORCEMENT AUTHORITY.— 
‘‘(A) SECURITIES AND EXCHANGE COMMIS-
SION.—Except as provided in subparagraph (B), 
the Commission shall have primary authority to 
enforce subtitle B, and the amendments made by 
subtitle B of the Wall Street Transparency and 
Accountability Act of 2010, with respect to any 
person. 
‘‘(B) 
APPROPRIATE
FEDERAL
BANKING 
AGENCIES.—The appropriate Federal banking 
agency for security-based swap dealers or major 
security-based swap participants that are deposi-
tory institutions, as that term is defined under 
section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813), shall have exclusive authority 
to enforce the provisions of subsection (e) and 
other prudential requirements of this title, with 
respect to depository institutions that are secu-
rity-based swap dealers or major security-based 
swap participants.
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† HR 4173 EAS 
‘‘(C) REFERRAL.— 
‘‘(i) VIOLATIONS
OF
NONPRUDENTIAL 
REQUIREMENTS.—If the appropriate Fed-
eral banking agency for security-based swap 
dealers or major security-based swap par-
ticipants that are depository institutions 
has cause to believe that such security-based 
swap dealer or major security-based swap 
participant may have engaged in conduct 
that constitutes a violation of the non-
prudential requirements of this section or 
rules adopted by the Commission there-
under, the agency may recommend in writ-
ing to the Commission that the Commission 
initiate an enforcement proceeding as au-
thorized under this title. The recommenda-
tion shall be accompanied by a written ex-
planation of the concerns giving rise to the 
recommendation. 
‘‘(ii) VIOLATIONS OF PRUDENTIAL RE-
QUIREMENTS.—If the Commission has cause 
to believe that a securities-based swap deal-
er or major securities-based swap partici-
pant that has a prudential regulator may 
have engaged in conduct that constitute a
874 
† HR 4173 EAS 
violation of the prudential requirements of 
subsection (e) or rules adopted thereunder, 
the Commission may recommend in writing 
to the prudential regulator that the pruden-
tial regulator initiate an enforcement pro-
ceeding as authorized under this title. The 
recommendation shall be accompanied by a 
written explanation of the concerns giving 
rise to the recommendation. 
‘‘(2) CENSURE, DENIAL, SUSPENSION; NOTICE 
AND HEARING.—The Commission, by order, shall cen-
sure, place limitations on the activities, functions, or 
operations of, or revoke the registration of any secu-
rity-based swap dealer or major security-based swap 
participant that has registered with the Commission 
pursuant to subsection (b) if the Commission finds, 
on the record after notice and opportunity for hear-
ing, that such censure, placing of limitations, or rev-
ocation is in the public interest and that such secu-
rity-based swap dealer or major security-based swap 
participant, or any person associated with such secu-
rity-based swap dealer or major security-based swap 
participant effecting or involved in effecting trans-
actions in security-based swaps on behalf of such secu-
rity-based swap dealer or major security-based swap
875 
† HR 4173 EAS 
participant, whether prior or subsequent to becoming 
so associated— 
‘‘(A) has committed or omitted any act, or 
is subject to an order or finding, enumerated in 
subparagraph (A), (D), or (E) of paragraph (4) 
of section 15(b); 
‘‘(B) has been convicted of any offense speci-
fied in subparagraph (B) of such paragraph (4) 
within 10 years of the commencement of the pro-
ceedings under this subsection; 
‘‘(C) is enjoined from any action, conduct, 
or practice specified in subparagraph (C) of such 
paragraph (4); 
‘‘(D) is subject to an order or a final order 
specified in subparagraph (F) or (H), respec-
tively, of such paragraph (4); or 
‘‘(E) has been found by a foreign financial 
regulatory authority to have committed or omit-
ted any act, or violated any foreign statute or 
regulation, enumerated in subparagraph (G) of 
such paragraph (4). 
‘‘(3) ASSOCIATED
PERSONS.—With respect to 
any person who is associated, who is seeking to be-
come associated, or, at the time of the alleged mis-
conduct, who was associated or was seeking to become
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† HR 4173 EAS 
associated with a security-based swap dealer or major 
security-based swap participant for the purpose of ef-
fecting or being involved in effecting security-based 
swaps on behalf of such security-based swap dealer or 
major security-based swap participant, the Commis-
sion, by order, shall censure, place limitations on the 
activities or functions of such person, or suspend for 
a period not exceeding 12 months, or bar such person 
from being associated with a security-based swap 
dealer or major security-based swap participant, if 
the Commission finds, on the record after notice and 
opportunity for a hearing, that such censure, placing 
of limitations, suspension, or bar is in the public in-
terest and that such person— 
‘‘(A) has committed or omitted any act, or 
is subject to an order or finding, enumerated in 
subparagraph (A), (D), or (E) of paragraph (4) 
of section 15(b); 
‘‘(B) has been convicted of any offense speci-
fied in subparagraph (B) of such paragraph (4) 
within 10 years of the commencement of the pro-
ceedings under this subsection; 
‘‘(C) is enjoined from any action, conduct, 
or practice specified in subparagraph (C) of such 
paragraph (4);
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† HR 4173 EAS 
‘‘(D) is subject to an order or a final order 
specified in subparagraph (F) or (H), respec-
tively, of such paragraph (4); or 
‘‘(E) has been found by a foreign financial 
regulatory authority to have committed or omit-
ted any act, or violated any foreign statute or 
regulation, enumerated in subparagraph (G) of 
such paragraph (4). 
‘‘(4) UNLAWFUL CONDUCT.—It shall be unlaw-
ful— 
‘‘(A) for any person as to whom an order 
under paragraph (3) is in effect, without the 
consent of the Commission, willfully to become, 
or to be, associated with a security-based swap 
dealer or major security-based swap participant 
in contravention of such order; or 
‘‘(B) for any security-based swap dealer or 
major security-based swap participant to permit 
such a person, without the consent of the Com-
mission, to become or remain a person associated 
with the security-based swap dealer or major se-
curity-based swap participant in contravention 
of such order, if such security-based swap dealer 
or major security-based swap participant knew,
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† HR 4173 EAS 
or in the exercise of reasonable care should have 
known, of such order.’’. 
SEC. 765. RULEMAKING ON CONFLICT OF INTEREST. 
(a) IN GENERAL.—Not later than 180 days after the 
date of enactment of the Wall Street Transparency and Ac-
countability Act of 2010, the Securities and Exchange Com-
mission shall determine whether to adopt rules to establish 
limits on the control of any clearing agency that clears secu-
rity-based swaps, or on the control of any security-based 
swap execution facility or national securities exchange that 
posts or makes available for trading security-based swaps, 
by a bank holding company (as defined in section 2 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841)) 
with total consolidated assets of $50,000,000,000 or more, 
a nonbank financial company (as defined in section 102) 
supervised by the Board of Governors of the Federal Reserve 
System, affiliate of such a bank holding company or 
nonbank financial company, a security-based swap dealer, 
major security-based swap participant, or person associated 
with a security-based swap dealer or major security-based 
swap participant. 
(b) PURPOSES.—The Commission shall adopt rules if 
the Commission determines, after the review described in 
subsection (a), that such rules are necessary or appropriate 
to improve the governance of, or to mitigate systemic risk,
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† HR 4173 EAS 
promote competition, or mitigate conflicts of interest in 
connection with a security-based swap dealer or major secu-
rity-based swap participant’s conduct of business with, a 
clearing agency, national securities exchange, or security- 
based swap execution facility that clears, posts, or makes 
available for trading security-based swaps and in which 
such security-based swap dealer or major security-based 
swap participant has a material debt or equity investment. 
SEC. 766. REPORTING AND RECORDKEEPING. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended by inserting after 
section 13 the following: 
‘‘SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN 
SECURITY-BASED SWAPS. 
‘‘(a) REQUIRED
REPORTING
OF
SECURITY-BASED 
SWAPS NOT ACCEPTED BY ANY CLEARING AGENCY OR DE-
RIVATIVES CLEARING ORGANIZATION.— 
‘‘(1) IN
GENERAL.—Each security-based swap 
that is not accepted for clearing by any clearing 
agency or derivatives clearing organization shall be 
reported to— 
‘‘(A) a security-based swap data repository 
described in section 10B(n); or 
‘‘(B) in the case in which there is no secu-
rity-based swap data repository that would ac-
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† HR 4173 EAS 
cept the security-based swap, to the Commission 
pursuant to this section within such time period 
as the Commission may by rule or regulation 
prescribe. 
‘‘(2) TRANSITION RULE FOR PREENACTMENT SE-
CURITY-BASED SWAPS.— 
‘‘(A) SECURITY-BASED
SWAPS
ENTERED 
INTO BEFORE THE DATE OF ENACTMENT OF THE 
WALL
STREET
TRANSPARENCY
AND
ACCOUNT-
ABILITY ACT OF 2010.—Each security-based swap 
entered into before the date of enactment of the 
Wall Street Transparency and Accountability 
Act of 2010, the terms of which have not expired 
as of the date of enactment of that Act, shall be 
reported to a registered security-based swap data 
repository or the Commission by a date that is 
not later than— 
‘‘(i) 30 days after issuance of the in-
terim final rule; or 
‘‘(ii) such other period as the Commis-
sion determines to be appropriate. 
‘‘(B) COMMISSION RULEMAKING.—The Com-
mission shall promulgate an interim final rule 
within 90 days of the date of enactment of this 
section providing for the reporting of each secu-
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† HR 4173 EAS 
rity-based swap entered into before the date of 
enactment as referenced in subparagraph (A). 
‘‘(C) EFFECTIVE DATE.—The reporting pro-
visions described in this section shall be effective 
upon the date of the enactment of this section. 
‘‘(3) REPORTING OBLIGATIONS.— 
‘‘(A) SECURITY-BASED
SWAPS
IN
WHICH 
ONLY
COUNTERPARTY
IS
A
SECURITY-BASED 
SWAP DEALER OR MAJOR SECURITY-BASED SWAP 
PARTICIPANT.—With respect to a security-based 
swap in which only 1 counterparty is a security- 
based swap dealer or major security-based swap 
participant, the security-based swap dealer or 
major security-based swap participant shall re-
port the security-based swap as required under 
paragraphs (1) and (2). 
‘‘(B) SECURITY-BASED SWAPS IN WHICH 1 
COUNTERPARTY
IS
A
SECURITY-BASED
SWAP 
DEALER AND THE OTHER A MAJOR SECURITY- 
BASED SWAP PARTICIPANT.—With respect to a 
security-based swap in which 1 counterparty is 
a security-based swap dealer and the other a 
major security-based swap participant, the secu-
rity-based swap dealer shall report the security-
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† HR 4173 EAS 
based swap as required under paragraphs (1) 
and (2). 
‘‘(C) OTHER
SECURITY-BASED
SWAPS.— 
With respect to any other security-based swap 
not described in subparagraph (A) or (B), the 
counterparties to the security-based swap shall 
select a counterparty to report the security-based 
swap as required under paragraphs (1) and (2). 
‘‘(b) DUTIES OF CERTAIN INDIVIDUALS.—Any indi-
vidual or entity that enters into a security-based swap shall 
meet each requirement described in subsection (c) if the in-
dividual or entity did not— 
‘‘(1) clear the security-based swap in accordance 
with section 3C(a)(1); or 
‘‘(2) have the data regarding the security-based 
swap accepted by a security-based swap data reposi-
tory in accordance with rules (including timeframes) 
adopted by the Commission under this title. 
‘‘(c) REQUIREMENTS.—An individual or entity de-
scribed in subsection (b) shall— 
‘‘(1) upon written request from the Commission, 
provide reports regarding the security-based swaps 
held by the individual or entity to the Commission in 
such form and in such manner as the Commission 
may request; and
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† HR 4173 EAS 
‘‘(2) maintain books and records pertaining to 
the security-based swaps held by the individual or en-
tity in such form, in such manner, and for such pe-
riod as the Commission may require, which shall be 
open to inspection by— 
‘‘(A) any representative of the Commission; 
‘‘(B) an appropriate prudential regulator; 
‘‘(C) the Commodity Futures Trading Com-
mission; 
‘‘(D) the Financial Stability Oversight 
Council; and 
‘‘(E) the Department of Justice. 
‘‘(d) IDENTICAL DATA.—In prescribing rules under 
this section, the Commission shall require individuals and 
entities described in subsection (b) to submit to the Commis-
sion a report that contains data that is not less comprehen-
sive than the data required to be collected by security-based 
swap data repositories under this title.’’. 
(b) BENEFICIAL OWNERSHIP REPORTING.—Section 13 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 
is amended— 
(1) in subsection (d)(1), by inserting ‘‘or other-
wise becomes or is deemed to become a beneficial 
owner of any of the foregoing upon the purchase or 
sale of a security-based swap that the Commission
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† HR 4173 EAS 
may define by rule, and’’ after ‘‘Alaska Native Claims 
Settlement Act,’’; and 
(2) in subsection (g)(1), by inserting ‘‘or other-
wise becomes or is deemed to become a beneficial 
owner of any security of a class described in sub-
section (d)(1) upon the purchase or sale of a security- 
based swap that the Commission may define by rule’’ 
after ‘‘subsection (d)(1) of this section’’. 
(c) REPORTS BY INSTITUTIONAL INVESTMENT MAN-
AGERS.—Section 13(f)(1) of the Securities Exchange Act of 
1934 (15 U.S.C. 78m(f)(1)) is amended by inserting ‘‘or 
otherwise becomes or is deemed to become a beneficial owner 
of any security of a class described in subsection (d)(1) 
upon the purchase or sale of a security-based swap that the 
Commission may define by rule,’’ after ‘‘subsection (d)(1) 
of this section’’. 
(d) ADMINISTRATIVE PROCEEDING AUTHORITY.—Sec-
tion 15(b)(4) of the Securities Exchange Act of 1934 (15 
U.S.C. 78o(b)(4)) is amended— 
(1) in subparagraph (C), by inserting ‘‘security- 
based swap dealer, major security-based swap partici-
pant,’’ after ‘‘government securities dealer,’’; and 
(2) in subparagraph (F), by striking ‘‘broker or 
dealer’’ and inserting ‘‘broker, dealer, security-based
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† HR 4173 EAS 
swap dealer, or a major security-based swap partici-
pant’’. 
(e) SECURITY-BASED
SWAP
BENEFICIAL
OWNER-
SHIP.—Section 13 of the Securities Exchange Act of 1934 
(15 U.S.C. 78m) is amended by adding at the end the fol-
lowing: 
‘‘(o) BENEFICIAL OWNERSHIP.—For purposes of this 
section and section 16, a person shall be deemed to acquire 
beneficial ownership of an equity security based on the pur-
chase or sale of a security-based swap, only to the extent 
that the Commission, by rule, determines after consultation 
with the prudential regulators and the Secretary of the 
Treasury, that the purchase or sale of the security-based 
swap, or class of security-based swap, provides incidents of 
ownership comparable to direct ownership of the equity se-
curity, and that it is necessary to achieve the purposes of 
this section that the purchase or sale of the security-based 
swaps, or class of security-based swap, be deemed the acqui-
sition of beneficial ownership of the equity security.’’. 
SEC. 767. STATE GAMING AND BUCKET SHOP LAWS. 
Section 28(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78bb(a)) is amended to read as follows: 
‘‘(a) LIMITATION ON JUDGMENTS.— 
‘‘(1) IN
GENERAL.—No person permitted to 
maintain a suit for damages under the provisions of
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this title shall recover, through satisfaction of judg-
ment in 1 or more actions, a total amount in excess 
of the actual damages to that person on account of the 
act complained of. Except as otherwise specifically 
provided in this title, nothing in this title shall affect 
the jurisdiction of the securities commission (or any 
agency or officer performing like functions) of any 
State over any security or any person insofar as it 
does not conflict with the provisions of this title or the 
rules and regulations under this title. 
‘‘(2) RULE OF CONSTRUCTION.—Except as pro-
vided in subsection (f), the rights and remedies pro-
vided by this title shall be in addition to any and all 
other rights and remedies that may exist at law or in 
equity. 
‘‘(3) STATE BUCKET SHOP LAWS.—No State law 
which prohibits or regulates the making or promoting 
of wagering or gaming contracts, or the operation of 
‘bucket shops’ or other similar or related activities, 
shall invalidate— 
‘‘(A) any put, call, straddle, option, privi-
lege, or other security subject to this title (except 
any security that has a pari-mutuel payout or 
otherwise is determined by the Commission, act-
ing by rule, regulation, or order, to be appro-
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priately subject to such laws), or apply to any 
activity which is incidental or related to the 
offer, purchase, sale, exercise, settlement, or close-
out of any such security; 
‘‘(B) any security-based swap between eligi-
ble contract participants; or 
‘‘(C) any security-based swap effected on a 
national securities exchange registered pursuant 
to section 6(b). 
‘‘(4) OTHER STATE PROVISIONS.—No provision 
of State law regarding the offer, sale, or distribution 
of securities shall apply to any transaction in a secu-
rity-based swap or a security futures product, except 
that this paragraph may not be construed as limiting 
any State antifraud law of general applicability. A 
security-based swap may not be regulated as an in-
surance contract under any provision of State law.’’. 
SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; 
TREATMENT OF SECURITY-BASED SWAPS. 
(a) DEFINITIONS.—Section 2(a) of the Securities Act 
of 1933 (15 U.S.C. 77b(a)) is amended— 
(1) in paragraph (1), by inserting ‘‘security- 
based swap,’’ after ‘‘security future,’’; 
(2) in paragraph (3), by adding at the end the 
following: ‘‘Any offer or sale of a security-based swap
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by or on behalf of the issuer of the securities upon 
which such security-based swap is based or is ref-
erenced, an affiliate of the issuer, or an underwriter, 
shall constitute a contract for sale of, sale of, offer for 
sale, or offer to sell such securities.’’; and 
(3) by adding at the end the following: 
‘‘(17) The terms ‘swap’ and ‘security-based swap’ 
have the same meanings as in section 1a of the Com-
modity Exchange Act (7 U.S.C. 1a). 
‘‘(18) The terms ‘purchase’ or ‘sale’ of a security- 
based swap shall be deemed to mean the execution, 
termination (prior to its scheduled maturity date), 
assignment, exchange, or similar transfer or convey-
ance of, or extinguishing of rights or obligations 
under, a security-based swap, as the context may re-
quire.’’. 
(b) REGISTRATION OF SECURITY-BASED SWAPS.—Sec-
tion 5 of the Securities Act of 1933 (15 U.S.C. 77e) is 
amended by adding at the end the following: 
‘‘(d) Notwithstanding the provisions of section 3 or 4, 
unless a registration statement meeting the requirements of 
section 10(a) is in effect as to a security-based swap, it shall 
be unlawful for any person, directly or indirectly, to make 
use of any means or instruments of transportation or com-
munication in interstate commerce or of the mails to offer
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to sell, offer to buy or purchase or sell a security-based swap 
to any person who is not an eligible contract participant 
as defined in section 1a(18) of the Commodity Exchange 
Act (7 U.S.C. 1a(18)).’’. 
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY 
ACT OF 1940. 
Section 2(a) of the Investment Company Act of 1940 
(15 U.S.C. 80a–2) is amended by adding at the end the 
following: 
‘‘(54) The terms ‘commodity pool’, ‘commodity 
pool operator’, ‘commodity trading advisor’, ‘major 
swap participant’, ‘swap’, ‘swap dealer’, and ‘swap 
execution facility’ have the same meanings as in sec-
tion 1a of the Commodity Exchange Act (7 U.S.C. 
1a).’’. 
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVI-
SORS ACT OF 1940. 
Section 202(a) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–2) is amended by adding at the end the 
following: 
‘‘(29) The terms ‘commodity pool’, ‘commodity 
pool operator’, ‘commodity trading advisor’, ‘major 
swap participant’, ‘swap’, ‘swap dealer’, and ‘swap 
execution facility’ have the same meanings as in sec-
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tion 1a of the Commodity Exchange Act (7 U.S.C. 
1a).’’. 
SEC. 771. OTHER AUTHORITY. 
Unless otherwise provided by its terms, this subtitle 
does not divest any appropriate Federal banking agency, 
the Securities and Exchange Commission, the Commodity 
Futures Trading Commission, or any other Federal or State 
agency, of any authority derived from any other provision 
of applicable law. 
SEC. 772. JURISDICTION. 
(a) IN GENERAL.—Section 36 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78mm) is amended by add-
ing at the end the following: 
‘‘(c) DERIVATIVES.—The Commission shall not grant 
exemptions from the security-based swap provisions of the 
Wall Street Transparency and Accountability Act of 2010 
or the amendments made by that Act, except as expressly 
authorized under the provisions of that Act.’’. 
(b) RULE OF CONSTRUCTION.—Section 30 of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78dd) is amended 
by adding at the end the following: 
‘‘(c) RULE OF CONSTRUCTION.—No provision of this 
title that was added by the Wall Street Transparency and 
Accountability Act of 2010, or any rule or regulation there-
under, shall apply to any person insofar as such person
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transacts a business in security-based swaps without the ju-
risdiction of the United States, unless such person transacts 
such business in contravention of such rules and regulations 
as the Commission may prescribe as necessary or appro-
priate to prevent the evasion of any provision of this title 
that was added by the Wall Street Transparency and Ac-
countability Act of 2010. This subsection shall not be con-
strued to limit the jurisdiction of the Commission under 
any provision of this title, as in effect prior to the date 
of enactment of the Wall Street Transparency and Account-
ability Act of 2010.’’. 
SEC. 773. EFFECTIVE DATE. 
Unless otherwise specifically provided in this subtitle, 
this subtitle, the provisions of this subtitle, and the amend-
ments made by this subtitle shall become effective 180 days 
after the date of enactment of this Act. 
TITLE 
VIII—PAYMENT, 
CLEAR-
ING, AND SETTLEMENT SU-
PERVISION 
SEC. 801. SHORT TITLE. 
This title may be cited as the ‘‘Payment, Clearing, and 
Settlement Supervision Act of 2010’’. 
SEC. 802. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress finds the following:
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(1) The proper functioning of the financial mar-
kets is dependent upon safe and efficient arrange-
ments for the clearing and settlement of payment, se-
curities, and other financial transactions. 
(2) Financial market utilities that conduct or 
support multilateral payment, clearing, or settlement 
activities may reduce risks for their participants and 
the broader financial system, but such utilities may 
also concentrate and create new risks and thus must 
be well designed and operated in a safe and sound 
manner. 
(3) Payment, clearing, and settlement activities 
conducted by financial institutions also present im-
portant risks to the participating financial institu-
tions and to the financial system. 
(4) Enhancements to the regulation and super-
vision of systemically important financial market 
utilities and the conduct of systemically important 
payment, clearing, and settlement activities by finan-
cial institutions are necessary— 
(A) to provide consistency; 
(B) to promote robust risk management and 
safety and soundness; 
(C) to reduce systemic risks; and
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(D) to support the stability of the broader 
financial system. 
(b) PURPOSE.—The purpose of this title is to mitigate 
systemic risk in the financial system and promote financial 
stability by— 
(1) authorizing the Board of Governors to pre-
scribe uniform standards for the— 
(A) management of risks by systemically 
important financial market utilities; and 
(B) conduct of systemically important pay-
ment, clearing, and settlement activities by fi-
nancial institutions; 
(2) providing the Board of Governors an en-
hanced role in the supervision of risk management 
standards for systemically important financial mar-
ket utilities; 
(3) strengthening the liquidity of systemically 
important financial market utilities; and 
(4) providing the Board of Governors an en-
hanced role in the supervision of risk management 
standards for systemically important payment, clear-
ing, and settlement activities by financial institu-
tions. 
SEC. 803. DEFINITIONS. 
In this title, the following definitions shall apply:
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(1) APPROPRIATE FINANCIAL REGULATOR.—The 
term ‘‘appropriate financial regulator’’ means— 
(A) the primary financial regulatory agen-
cy, as defined in section 2 of this Act; 
(B) the National Credit Union Administra-
tion, with respect to any insured credit union 
under the Federal Credit Union Act (12 U.S.C. 
1751 et seq.); and 
(C) the Board of Governors, with respect to 
organizations operating under section 25A of the 
Federal Reserve Act (12 U.S.C. 611), and any 
other financial institution engaged in a des-
ignated activity. 
(2) DESIGNATED
ACTIVITY.—The term ‘‘des-
ignated activity’’ means a payment, clearing, or set-
tlement activity that the Council has designated as 
systemically important under section 804. 
(3) DESIGNATED FINANCIAL MARKET UTILITY.— 
The term ‘‘designated financial market utility’’ means 
a financial market utility that the Council has des-
ignated as systemically important under section 804. 
(4) FINANCIAL INSTITUTION.—The term ‘‘finan-
cial institution’’ means—
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(A) a depository institution, as defined in 
section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813); 
(B) a branch or agency of a foreign bank, 
as defined in section 1(b) of the International 
Banking Act of 1978 (12 U.S.C. 3101); 
(C) an organization operating under section 
25 or 25A of the Federal Reserve Act (12 U.S.C. 
601–604a and 611 through 631); 
(D) a credit union, as defined in section 
101 of the Federal Credit Union Act (12 U.S.C. 
1752); 
(E) a broker or dealer, as defined in section 
3 of the Securities Exchange Act of 1934 (15 
U.S.C. 78c); 
(F) an investment company, as defined in 
section 3 of the Investment Company Act of 1940 
(15 U.S.C. 80a–3); 
(G) an insurance company, as defined in 
section 2 of the Investment Company Act of 1940 
(15 U.S.C. 80a–2); 
(H) an investment adviser, as defined in 
section 202 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–2);
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(I) a futures commission merchant, com-
modity trading advisor, or commodity pool oper-
ator, as defined in section 1a of the Commodity 
Exchange Act (7 U.S.C. 1a); and 
(J) any company engaged in activities that 
are financial in nature or incidental to a finan-
cial activity, as described in section 4 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 
1843(k)). 
(5) FINANCIAL MARKET UTILITY.—The term ‘‘fi-
nancial market utility’’ means any person that man-
ages or operates a multilateral system for the purpose 
of transferring, clearing, or settling payments, securi-
ties, or other financial transactions among financial 
institutions or between financial institutions and the 
person. 
(6) PAYMENT, CLEARING, OR SETTLEMENT ACTIV-
ITY.— 
(A) IN
GENERAL.—The term ‘‘payment, 
clearing, or settlement activity’’ means an activ-
ity carried out by 1 or more financial institu-
tions to facilitate the completion of financial 
transactions.
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(B) FINANCIAL
TRANSACTION.—For the 
purposes of subparagraph (A), the term ‘‘finan-
cial transaction’’ includes— 
(i) funds transfers; 
(ii) securities contracts; 
(iii) contracts of sale of a commodity 
for future delivery; 
(iv) forward contracts; 
(v) repurchase agreements; 
(vi) swaps; 
(vii) security-based swaps; 
(viii) swap agreements; 
(ix) security-based swap agreements; 
(x) foreign exchange contracts; 
(xi) financial derivatives contracts; 
and 
(xii) any similar transaction that the 
Council determines to be a financial trans-
action for purposes of this title. 
(C) INCLUDED
ACTIVITIES.—When con-
ducted with respect to a financial transaction, 
payment, clearing, and settlement activities may 
include—
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(i) the calculation and communication 
of unsettled financial transactions between 
counterparties; 
(ii) the netting of transactions; 
(iii) provision and maintenance of 
trade, contract, or instrument information; 
(iv) the management of risks and ac-
tivities associated with continuing financial 
transactions; 
(v) transmittal and storage of payment 
instructions; 
(vi) the movement of funds; 
(vii) the final settlement of financial 
transactions; and 
(viii) other similar functions that the 
Council may determine. 
(7) SUPERVISORY AGENCY.— 
(A) IN GENERAL.—The term ‘‘Supervisory 
Agency’’ means the Federal agency that has pri-
mary jurisdiction over a designated financial 
market utility under Federal banking, securities, 
or commodity futures laws, as follows: 
(i) The Securities and Exchange Com-
mission, with respect to a designated finan-
cial market utility that is a clearing agency
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registered with the Securities and Exchange 
Commission. 
(ii) The Commodity Futures Trading 
Commission, with respect to a designated fi-
nancial market utility that is a derivatives 
clearing organization registered with the 
Commodity Futures Trading Commission. 
(iii) The appropriate Federal banking 
agency, with respect to a designated finan-
cial market utility that is an institution de-
scribed in section 3(q) of the Federal De-
posit Insurance Act. 
(iv) The Board of Governors, with re-
spect to a designated financial market util-
ity that is otherwise not subject to the juris-
diction of any agency listed in clauses (i), 
(ii), and (iii). 
(B) MULTIPLE AGENCY JURISDICTION.—If a 
designated financial market utility is subject to 
the jurisdictional supervision of more than 1 
agency listed in subparagraph (A), then such 
agencies should agree on 1 agency to act as the 
Supervisory Agency, and if such agencies cannot 
agree on which agency has primary jurisdiction,
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the Council shall decide which agency is the Su-
pervisory Agency for purposes of this title. 
(8) SYSTEMICALLY
IMPORTANT
AND
SYSTEMIC 
IMPORTANCE.—The terms ‘‘systemically important’’ 
and ‘‘systemic importance’’ mean a situation where 
the failure of or a disruption to the functioning of a 
financial market utility or the conduct of a payment, 
clearing, or settlement activity could create, or in-
crease, the risk of significant liquidity or credit prob-
lems spreading among financial institutions or mar-
kets and thereby threaten the stability of the financial 
system. 
SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE. 
(a) DESIGNATION.— 
(1) FINANCIAL
STABILITY
OVERSIGHT
COUN-
CIL.—The Council, on a nondelegable basis and by a 
vote of not fewer than 2⁄3 of members then serving, in-
cluding an affirmative vote by the Chairperson of the 
Council, shall designate those financial market utili-
ties or payment, clearing, or settlement activities that 
the Council determines are, or are likely to become, 
systemically important. 
(2) CONSIDERATIONS.—In determining whether 
a financial market utility or payment, clearing, or 
settlement activity is, or is likely to become, system-
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(B) the imminent risk of substantial harm 
precludes the Board of Governors’ use of the pro-
cedures in subsection (e). 
(2) ENFORCEMENT AUTHORITY.—For purposes of 
taking enforcement action under paragraph (1), a 
designated financial market utility shall be subject to, 
and the Board of Governors shall have authority 
under the provisions of subsections (b) through (n) of 
section 8 of the Federal Deposit Insurance Act (12 
U.S.C. 1818) in the same manner and to the same ex-
tent as if the designated financial market utility was 
an insured depository institution and the Board of 
Governors was the appropriate Federal banking agen-
cy for such insured depository institution. 
(3) PROMPT NOTICE TO SUPERVISORY AGENCY OF 
ENFORCEMENT ACTION.—Within 24 hours of taking 
an enforcement action under this subsection, the 
Board of Governors shall provide written notice to the 
designated financial market utility’s Supervisory 
Agency containing a detailed analysis of the action of 
the Board of Governors, with supporting documenta-
tion included.
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SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS 
AGAINST FINANCIAL INSTITUTIONS SUBJECT 
TO STANDARDS FOR DESIGNATED ACTIVI-
TIES. 
(a) EXAMINATION.—The appropriate financial regu-
lator is authorized to examine a financial institution sub-
ject to the standards prescribed by the Board of Governors 
for a designated activity in order to determine the fol-
lowing: 
(1) The nature and scope of the designated ac-
tivities engaged in by the financial institution. 
(2) The financial and operational risks the des-
ignated activities engaged in by the financial institu-
tion may pose to the safety and soundness of the fi-
nancial institution. 
(3) The financial and operational risks the des-
ignated activities engaged in by the financial institu-
tion may pose to other financial institutions, critical 
markets, or the broader financial system. 
(4) The resources available to and the capabili-
ties of the financial institution to monitor and con-
trol the risks described in paragraphs (2) and (3). 
(5) The financial institution’s compliance with 
this title and the rules and orders prescribed by the 
Board of Governors under this title.
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otherwise in furtherance of the purposes of this 
title.’’; 
(B) by inserting after the second sentence 
the following: ‘‘If the Commission takes such ac-
tion, the Commission shall institute proceedings 
under paragraph (2)(B) to determine whether 
the proposed rule should be approved or dis-
approved.’’; and 
(C) in the third sentence, by striking ‘‘the 
preceding sentence’’ and inserting ‘‘this subpara-
graph’’. 
(d) CONFORMING CHANGE.—Section 19(b)(4)(D) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) 
is amended to read as follows: 
‘‘(D)(i) The Commission shall order the 
temporary suspension of any change in the rules 
of a clearing agency made by a proposed rule 
change that has taken effect under paragraph 
(3), if the appropriate regulatory agency for the 
clearing agency notifies the Commission not 
later than 30 days after the date on which the 
proposed rule change was filed of— 
‘‘(I) the determination by the appro-
priate regulatory agency that the rules of 
such clearing agency, as so changed, may be