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section 3 of the Investment Company Act of 1940 (15 
U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) of 
that Act. 
‘‘(30) The term ‘foreign private adviser’ means 
any investment adviser who— 
‘‘(A) has no place of business in the United 
States; 
‘‘(B) has, in total, fewer than 15 clients who 
are domiciled in or residents of the United 
States; 
‘‘(C) has aggregate assets under manage-
ment attributable to clients in the United States 
and investors in the United States in private 
funds advised by the investment adviser of less 
than $25,000,000, or such higher amount as the 
Commission may, by rule, deem appropriate in 
accordance with the purposes of this title; and 
‘‘(D) neither— 
‘‘(i) holds itself out generally to the 
public in the United States as an invest-
ment adviser; nor 
‘‘(ii) acts as— 
‘‘(I) an investment adviser to any 
investment company registered under
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the Investment Company Act of 1940; 
or 
‘‘(II) a company that has elected 
to be a business development company 
pursuant to section 54 of the Invest-
ment Company Act of 1940 (15 U.S.C. 
80a–53), and has not withdrawn its 
election.’’. 
(b) OTHER DEFINITIONS.—As used in this title, the 
terms ‘‘investment adviser’’ and ‘‘private fund’’ have the 
same meanings as in section 202 of the Investment Advisers 
Act of 1940, as amended by this title. 
SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; 
LIMITED EXEMPTION FOR FOREIGN PRIVATE 
ADVISERS; LIMITED INTRASTATE EXEMPTION. 
Section 203(b) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–3(b)) is amended— 
(1) in paragraph (1), by inserting ‘‘, other than 
an investment adviser who acts as an investment ad-
viser to any private fund,’’ before ‘‘all of whose’’; 
(2) by striking paragraph (3) and inserting the 
following: 
‘‘(3) any investment adviser that is a foreign 
private adviser;’’; and
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(3) in paragraph (5), by striking ‘‘or’’ at the 
end; 
(4) in paragraph (6), by striking the period at 
the end and inserting ‘‘; or’’; and 
(5) by adding at the end the following: 
‘‘(7) any investment adviser, other than any en-
tity that has elected to be regulated or is regulated as 
a business development company pursuant to section 
54 of the Investment Company Act of 1940 (15 U.S.C. 
80a–54), who solely advises— 
‘‘(A) small business investment companies 
that are licensees under the Small Business In-
vestment Act of 1958; 
‘‘(B) entities that have received from the 
Small Business Administration notice to proceed 
to qualify for a license as a small business in-
vestment company under the Small Business In-
vestment Act of 1958, which notice or license has 
not been revoked; or 
‘‘(C) applicants that are affiliated with 1 or 
more licensed small business investment compa-
nies described in subparagraph (A) and that 
have applied for another license under the Small 
Business Investment Act of 1958, which applica-
tion remains pending.’’.
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SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; 
EXAMINATIONS; DISCLOSURES. 
Section 204 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–4) is amended— 
(1) by redesignating subsections (b) and (c) as 
subsections (c) and (d), respectively; and 
(2) by inserting after subsection (a) the fol-
lowing: 
‘‘(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 
‘‘(1) IN
GENERAL.—The Commission may re-
quire any investment adviser registered under this 
title— 
‘‘(A) to maintain such records of, and file 
with the Commission such reports regarding, 
private funds advised by the investment adviser, 
as necessary and appropriate in the public inter-
est and for the protection of investors, or for the 
assessment of systemic risk by the Financial Sta-
bility Oversight Council (in this subsection re-
ferred to as the ‘Council’); and 
‘‘(B) to provide or make available to the 
Council those reports or records or the informa-
tion contained therein. 
‘‘(2) TREATMENT OF RECORDS.—The records and 
reports of any private fund to which an investment 
adviser registered under this title provides investment
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advice shall be deemed to be the records and reports 
of the investment adviser. 
‘‘(3) REQUIRED INFORMATION.—The records and 
reports required to be maintained by a private fund 
and subject to inspection by the Commission under 
this subsection shall include, for each private fund ad-
vised by the investment adviser, a description of— 
‘‘(A) the amount of assets under manage-
ment and use of leverage; 
‘‘(B) counterparty credit risk exposure; 
‘‘(C) trading and investment positions; 
‘‘(D) valuation policies and practices of the 
fund; 
‘‘(E) types of assets held; 
‘‘(F) side arrangements or side letters, 
whereby certain investors in a fund obtain more 
favorable rights or entitlements than other inves-
tors; 
‘‘(G) trading practices; and 
‘‘(H) such other information as the Com-
mission, in consultation with the Council, deter-
mines is necessary and appropriate in the public 
interest and for the protection of investors or for 
the assessment of systemic risk, which may in-
clude the establishment of different reporting re-
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quirements for different classes of fund advisers, 
based on the type or size of private fund being 
advised. 
‘‘(4) MAINTENANCE
OF
RECORDS.—An invest-
ment adviser registered under this title shall main-
tain such records of private funds advised by the in-
vestment adviser for such period or periods as the 
Commission, by rule, may prescribe as necessary and 
appropriate in the public interest and for the protec-
tion of investors, or for the assessment of systemic 
risk. 
‘‘(5) FILING
OF
RECORDS.—The Commission 
shall issue rules requiring each investment adviser to 
a private fund to file reports containing such infor-
mation as the Commission deems necessary and ap-
propriate in the public interest and for the protection 
of investors or for the assessment of systemic risk. 
‘‘(6) EXAMINATION OF RECORDS.— 
‘‘(A) PERIODIC
AND
SPECIAL
EXAMINA-
TIONS.—The Commission— 
‘‘(i) shall conduct periodic inspections 
of all records of private funds maintained 
by an investment adviser registered under 
this title in accordance with a schedule es-
tablished by the Commission; and
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‘‘(ii) may conduct at any time and 
from time to time such additional, special, 
and other examinations as the Commission 
may prescribe as necessary and appropriate 
in the public interest and for the protection 
of investors, or for the assessment of sys-
temic risk. 
‘‘(B) AVAILABILITY OF RECORDS.—An in-
vestment adviser registered under this title shall 
make available to the Commission any copies or 
extracts from such records as may be prepared 
without undue effort, expense, or delay, as the 
Commission or its representatives may reason-
ably request. 
‘‘(7) INFORMATION SHARING.— 
‘‘(A) IN GENERAL.—The Commission shall 
make available to the Council copies of all re-
ports, documents, records, and information filed 
with or provided to the Commission by an in-
vestment adviser under this subsection as the 
Council may consider necessary for the purpose 
of assessing the systemic risk posed by a private 
fund. 
‘‘(B) CONFIDENTIALITY.—The Council shall 
maintain the confidentiality of information re-
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ceived under this paragraph in all such reports, 
documents, records, and information, in a man-
ner consistent with the level of confidentiality es-
tablished by the Commission pursuant to para-
graph (8). The Council shall be exempt from sec-
tion 552 of title 5, United States Code, with re-
spect to any information in any report, docu-
ment, record, or information made available, to 
the Council under this subsection.’’. 
‘‘(8) COMMISSION
CONFIDENTIALITY
OF
RE-
PORTS.—Notwithstanding any other provision of law, 
the Commission may not be compelled to disclose any 
report or information contained therein required to be 
filed with the Commission under this subsection, ex-
cept that nothing in this subsection authorizes the 
Commission— 
‘‘(A) to withhold information from Con-
gress, upon an agreement of confidentiality; or 
‘‘(B) prevent the Commission from com-
plying with— 
‘‘(i) a request for information from 
any other Federal department or agency or 
any self-regulatory organization requesting 
the report or information for purposes with-
in the scope of its jurisdiction; or
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‘‘(ii) an order of a court of the United 
States in an action brought by the United 
States or the Commission. 
‘‘(9) OTHER
RECIPIENTS
CONFIDENTIALITY.— 
Any department, agency, or self-regulatory organiza-
tion that receives reports or information from the 
Commission under this subsection shall maintain the 
confidentiality of such reports, documents, records, 
and information in a manner consistent with the 
level of confidentiality established for the Commission 
under paragraph (8). 
‘‘(10) PUBLIC INFORMATION EXCEPTION.— 
‘‘(A) IN
GENERAL.—The Commission, the 
Council, and any other department, agency, or 
self-regulatory organization that receives infor-
mation, reports, documents, records, or informa-
tion from the Commission under this subsection, 
shall be exempt from the provisions of section 
552 of title 5, United States Code, with respect 
to any such report, document, record, or infor-
mation. Any proprietary information of an in-
vestment adviser ascertained by the Commission 
from any report required to be filed with the 
Commission pursuant to this subsection shall be 
subject to the same limitations on public disclo-
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sure as any facts ascertained during an exam-
ination, as provided by section 210(b) of this 
title. 
‘‘(B) 
PROPRIETARY
INFORMATION.—For 
purposes of this paragraph, proprietary informa-
tion includes— 
‘‘(i) sensitive, non-public information 
regarding the investment or trading strate-
gies of the investment adviser; 
‘‘(ii) analytical or research methodolo-
gies; 
‘‘(iii) trading data; 
‘‘(iv) computer hardware or software 
containing intellectual property; and 
‘‘(v) any additional information that 
the Commission determines to be propri-
etary. 
‘‘(11) ANNUAL
REPORT
TO
CONGRESS.—The 
Commission shall report annually to Congress on how 
the Commission has used the data collected pursuant 
to this subsection to monitor the markets for the pro-
tection of investors and the integrity of the markets.’’. 
SEC. 405. DISCLOSURE PROVISION ELIMINATED. 
Section 210(c) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b–10(c)) is amended by inserting before the
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period at the end the following: ‘‘or for purposes of assess-
ment of potential systemic risk’’. 
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY. 
Section 211 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–11) is amended— 
(1) in subsection (a), by inserting before the pe-
riod at the end of the first sentence the following: ‘‘, 
including rules and regulations defining technical, 
trade, and other terms used in this title, except that 
the Commission may not define the term ‘client’ for 
purposes of paragraphs (1) and (2) of section 206 to 
include an investor in a private fund managed by an 
investment adviser, if such private fund has entered 
into an advisory contract with such adviser’’; and 
(2) by adding at the end the following: 
‘‘(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The 
Commission and the Commodity Futures Trading Commis-
sion shall, after consultation with the Council but not later 
than 12 months after the date of enactment of the Private 
Fund Investment Advisers Registration Act of 2010, jointly 
promulgate rules to establish the form and content of the 
reports required to be filed with the Commission under sub-
section 204(b) and with the Commodity Futures Trading 
Commission by investment advisers that are registered both
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under this title and the Commodity Exchange Act (7 U.S.C. 
1a et seq.).’’. 
SEC. 407. EXEMPTION OF VENTURE CAPITAL FUND ADVIS-
ERS. 
Section 203 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–3) is amended by adding at the end the fol-
lowing: 
‘‘(l) EXEMPTION OF VENTURE CAPITAL FUND ADVIS-
ERS.—No investment adviser shall be subject to the registra-
tion requirements of this title with respect to the provision 
of investment advice relating to a venture capital fund. Not 
later than 6 months after the date of enactment of this sub-
section, the Commission shall issue final rules to define the 
term ‘venture capital fund’ for purposes of this subsection.’’. 
SEC. 408. EXEMPTION OF AND RECORD KEEPING BY PRI-
VATE EQUITY FUND ADVISERS. 
Section 203 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–3) is amended by adding at the end the fol-
lowing: 
‘‘(m) EXEMPTION OF AND REPORTING BY PRIVATE EQ-
UITY FUND ADVISERS.— 
‘‘(1) IN GENERAL.—Except as provided in this 
subsection, no investment adviser shall be subject to 
the registration or reporting requirements of this title
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with respect to the provision of investment advice re-
lating to a private equity fund or funds. 
‘‘(2) MAINTENANCE OF RECORDS AND ACCESS BY 
COMMISSION.—Not later than 6 months after the date 
of enactment of this subsection, the Commission shall 
issue final rules— 
‘‘(A) to require investment advisers de-
scribed in paragraph (1) to maintain such 
records and provide to the Commission such an-
nual or other reports as the Commission taking 
into account fund size, governance, investment 
strategy, risk, and other factors, as the Commis-
sion determines necessary and appropriate in the 
public interest and for the protection of inves-
tors; and 
‘‘(B) to define the term ‘private equity fund’ 
for purposes of this subsection.’’. 
SEC. 409. FAMILY OFFICES. 
(a) IN GENERAL.—Section 202(a)(11) of the Invest-
ment Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)) is 
amended by striking ‘‘or (G)’’ and inserting the following: 
‘‘; (G) any family office, as defined by rule, regulation, or 
order of the Commission, in accordance with the purposes 
of this title; or (H)’’.
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(b) RULEMAKING.—The rules, regulations, or orders 
issued 
by 
the 
Commission 
pursuant 
to 
section 
202(a)(11)(G) of the Investment Advisers Act of 1940, as 
added by this section, regarding the definition of the term 
‘‘family office’’ shall provide for an exemption that— 
(1) is consistent with the previous exemptive pol-
icy of the Commission, as reflected in exemptive or-
ders for family offices in effect on the date of enact-
ment of this Act; and 
(2) recognizes the range of organizational, man-
agement, and employment structures and arrange-
ments employed by family offices. 
SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET 
THRESHOLD FOR FEDERAL REGISTRATION 
OF INVESTMENT ADVISERS. 
Section 203A(a)(1) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b–3a(a)(1)) is amended— 
(1) in subparagraph (A)— 
(A) by striking ‘‘$25,000,000’’ and inserting 
‘‘$100,000,000’’; and 
(B) by striking ‘‘or’’ at the end; 
(2) in subparagraph (B), by striking the period 
at the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following:
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‘‘(C) is an adviser to a company that has 
elected to be a business development company 
pursuant to section 54 of the Investment Com-
pany Act of 1940, and has not withdrawn its 
election.’’. 
SEC. 411. CUSTODY OF CLIENT ASSETS. 
The Investment Advisers Act of 1940 (15 U.S.C. 80b– 
1 et seq.) is amended by adding at the end the following 
new section: 
‘‘SEC. 223. CUSTODY OF CLIENT ACCOUNTS. 
‘‘An investment adviser registered under this title shall 
take such steps to safeguard client assets over which such 
adviser has custody, including, without limitation, 
verification of such assets by an independent public ac-
countant, as the Commission may, by rule, prescribe.’’. 
SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STAND-
ARD. 
(a) IN GENERAL.—The Commission shall adjust any 
net worth standard for an accredited investor, as set forth 
in the rules of the Commission under the Securities Act of 
1933, so that the individual net worth of any natural per-
son, or joint net worth with the spouse of that person, at 
the time of purchase, is more than $1,000,000 (as such 
amount is adjusted periodically by rule of the Commission), 
excluding the value of the primary residence of such natural
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person, except that during the 4-year period that begins on 
the date of enactment of this Act, any net worth standard 
shall be $1,000,000, excluding the value of the primary resi-
dence of such natural person. 
(b) REVIEW AND ADJUSTMENT.— 
(1) INITIAL REVIEW AND ADJUSTMENT.— 
(A) INITIAL
REVIEW.—The Commission 
may undertake a review of the definition of the 
term ‘‘accredited investor’’, as such term applies 
to natural persons, to determine whether the re-
quirements of the definition, excluding the re-
quirement relating to the net worth standard de-
scribed in subsection (a), should be adjusted or 
modified for the protection of investors, in the 
public interest, and in light of the economy. 
(B) ADJUSTMENT OR MODIFICATION.—Upon 
completion of a review under subparagraph (A), 
the Commission may, by notice and comment 
rulemaking, make such adjustments to the defini-
tion of the term ‘‘accredited investor’’, excluding 
adjusting or modifying the requirement relating 
to the net worth standard described in subsection 
(a), as such term applies to natural persons, as 
the Commission may deem appropriate for the
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protection of investors, in the public interest, 
and in light of the economy. 
(2) SUBSEQUENT REVIEWS AND ADJUSTMENT.— 
(A) SUBSEQUENT
REVIEWS.—Not earlier 
than 4 years after the date of enactment of this 
Act, and not less frequently than once every 4 
years thereafter, the Commission shall undertake 
a review of the definition, in its entirety, of the 
term ‘‘accredited investor’’, as defined in section 
230.215 of title 17, Code of Federal Regulations, 
or any successor thereto, as such term applies to 
natural persons, to determine whether the re-
quirements of the definition should be adjusted or 
modified for the protection of investors, in the 
public interest, and in light of the economy. 
(B) ADJUSTMENT OR MODIFICATION.—Upon 
completion of a review under subparagraph (A), 
the Commission may, by notice and comment 
rulemaking, make such adjustments to the defini-
tion of the term ‘‘accredited investor’’, as defined 
in section 230.215 of title 17, Code of Federal 
Regulations, or any successor thereto, as such 
term applies to natural persons, as the Commis-
sion may deem appropriate for the protection of
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investors, in the public interest, and in light of 
the economy. 
SEC. 413. GAO STUDY AND REPORT ON ACCREDITED INVES-
TORS. 
The Comptroller General of the United States shall 
conduct a study on the appropriate criteria for determining 
the financial thresholds or other criteria needed to qualify 
for accredited investor status and eligibility to invest in 
private funds, and shall submit a report to the Committee 
on Banking, Housing, and Urban Affairs of the Senate and 
the Committee on Financial Services of the House of Rep-
resentatives on the results of such study not later than 3 
years after the date of enactment of this Act. 
SEC. 414. GAO STUDY ON SELF-REGULATORY ORGANIZA-
TION FOR PRIVATE FUNDS. 
The Comptroller General of the United States shall— 
(1) conduct a study of the feasibility of forming 
a self-regulatory organization to oversee private 
funds; and 
(2) submit a report to the Committee on Bank-
ing, Housing, and Urban Affairs of the Senate and 
the Committee on Financial Services of the House of 
Representatives on the results of such study, not later 
than 1 year after the date of enactment of this Act.
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SEC. 415. COMMISSION STUDY AND REPORT ON SHORT 
SELLING. 
(a) STUDY.—The Division of Risk, Strategy, and Fi-
nancial Innovation of the Commission shall conduct a 
study, taking into account current scholarship, on the state 
of short selling on national securities exchanges and in the 
over-the-counter markets, with particular attention to the 
impact of recent rule changes and the incidence of— 
(1) the failure to deliver shares sold short; or 
(2) delivery of shares on the fourth day following 
the short sale transaction. 
(b) REPORT.—The Division of Risk, Strategy, and Fi-
nancial Innovation shall submit a report, together with any 
recommendations for market improvements, including con-
sideration of real time reporting of short sale positions, to 
the Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial Services of 
the House of Representatives on the results of the study con-
ducted under subsection (a), not later than 2 years after 
the date of enactment of this Act. 
SEC. 416. TRANSITION PERIOD. 
Except as otherwise provided in this title, this title and 
the amendments made by this title shall become effective 
1 year after the date of enactment of this Act, except that 
any investment adviser may, at the discretion of the invest-
ment adviser, register with the Commission under the In-
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vestment Advisers Act of 1940 during that 1-year period, 
subject to the rules of the Commission. 
TITLE V—INSURANCE 
Subtitle A—Office of National 
Insurance 
SEC. 501. SHORT TITLE. 
This subtitle may be cited as the ‘‘Office of National 
Insurance Act of 2010’’. 
SEC. 502. ESTABLISHMENT OF OFFICE OF NATIONAL INSUR-
ANCE. 
(a) ESTABLISHMENT OF OFFICE.—Subchapter I of 
chapter 3 of subtitle I of title 31, United States Code, is 
amended— 
(1) by redesignating section 312 as section 315; 
(2) by redesignating section 313 as section 312; 
and 
(3) by inserting after section 312 (as so redesig-
nated) the following new sections: 
‘‘SEC. 313. OFFICE OF NATIONAL INSURANCE. 
‘‘(a) ESTABLISHMENT.—There is established within 
the Department of the Treasury the Office of National In-
surance. 
‘‘(b) LEADERSHIP.—The Office shall be headed by a 
Director, who shall be appointed by the Secretary of the 
Treasury. The position of Director shall be a career reserved
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position in the Senior Executive Service, as that position 
is defined under section 3132 of title 5, United States Code. 
‘‘(c) FUNCTIONS.— 
‘‘(1) AUTHORITY PURSUANT TO DIRECTION OF 
SECRETARY.—The Office, pursuant to the direction of 
the Secretary, shall have the authority— 
‘‘(A) to monitor all aspects of the insurance 
industry, including identifying issues or gaps in 
the regulation of insurers that could contribute 
to a systemic crisis in the insurance industry or 
the United States financial system; 
‘‘(B) to recommend to the Financial Sta-
bility Oversight Council that it designate an in-
surer, including the affiliates of such insurer, as 
an entity subject to regulation as a nonbank fi-
nancial company supervised by the Board of 
Governors pursuant to title I of the Restoring 
American Financial Stability Act of 2010; 
‘‘(C) to assist the Secretary in admin-
istering the Terrorism Insurance Program estab-
lished in the Department of the Treasury under 
the Terrorism Risk Insurance Act of 2002 (15 
U.S.C. 6701 note); 
‘‘(D) to coordinate Federal efforts and de-
velop Federal policy on prudential aspects of
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international insurance matters, including rep-
resenting the United States, as appropriate, in 
the International Association of Insurance Su-
pervisors (or a successor entity) and assisting the 
Secretary in negotiating International Insurance 
Agreements on Prudential Measures; 
‘‘(E) to determine, in accordance with sub-
section (f), whether State insurance measures are 
preempted by International Insurance Agree-
ments on Prudential Measures; 
‘‘(F) to consult with the States (including 
State insurance regulators) regarding insurance 
matters of national importance and prudential 
insurance matters of international importance; 
and 
‘‘(G) to perform such other related duties 
and authorities as may be assigned to the Office 
by the Secretary. 
‘‘(2) ADVISORY FUNCTIONS.—The Office shall ad-
vise the Secretary on major domestic and prudential 
international insurance policy issues. 
‘‘(d) SCOPE.—The authority of the Office shall extend 
to all lines of insurance except health insurance, as such 
insurance is determined by the Secretary based on section 
2791 of the Public Health Service Act (42 U.S.C. 300gg–
387 
† HR 4173 PP
91), and crop insurance, as established by the Federal Crop 
Insurance Act (7 U.S.C. 1501 et seq.). 
‘‘(e) GATHERING OF INFORMATION.— 
‘‘(1) IN GENERAL.—In carrying out the func-
tions required under subsection (c), the Office may— 
‘‘(A) receive and collect data and informa-
tion on and from the insurance industry and in-
surers; 
‘‘(B) enter into information-sharing agree-
ments; 
‘‘(C) analyze and disseminate data and in-
formation; and 
‘‘(D) issue reports regarding all lines of in-
surance except health insurance. 
‘‘(2) COLLECTION OF INFORMATION FROM INSUR-
ERS AND AFFILIATES.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraph (3), the Office may require an in-
surer, or any affiliate of an insurer, to submit 
such data or information as the Office may rea-
sonably require in carrying out the functions de-
scribed under subsection (c). 
‘‘(B) RULE
OF
CONSTRUCTION.—Notwith-
standing any other provision of this section, for 
purposes of subparagraph (A), the term ‘insurer’
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means any person that is authorized to write in-
surance or reinsure risks and issue contracts or 
policies in 1 or more States. 
‘‘(3) EXCEPTION FOR SMALL INSURERS.—Para-
graph (2) shall not apply with respect to any insurer 
or affiliate thereof that meets a minimum size thresh-
old that the Office may establish, whether by order or 
rule. 
‘‘(4) ADVANCE COORDINATION.—Before collecting 
any data or information under paragraph (2) from 
an insurer, or any affiliate of an insurer, the Office 
shall coordinate with each relevant State insurance 
regulator (or other relevant Federal or State regu-
latory agency, if any, in the case of an affiliate of an 
insurer) to determine if the information to be collected 
is available from, or may be obtained in a timely 
manner by, such State insurance regulator, individ-
ually or collectively, another regulatory agency, or 
publicly available sources. Notwithstanding any other 
provision of law, each such relevant State insurance 
regulator or other Federal or State regulatory agency 
is authorized to provide to the Office such data or in-
formation. 
‘‘(5) CONFIDENTIALITY.—
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‘‘(A) RETENTION OF PRIVILEGE.—The sub-
mission of any nonpublicly available data and 
information to the Office under this subsection 
shall not constitute a waiver of, or otherwise af-
fect, any privilege arising under Federal or State 
law (including the rules of any Federal or State 
court) to which the data or information is other-
wise subject. 
‘‘(B) CONTINUED
APPLICATION
OF
PRIOR 
CONFIDENTIALITY
AGREEMENTS.—Any require-
ment under Federal or State law to the extent 
otherwise applicable, or any requirement pursu-
ant to a written agreement in effect between the 
original source of any nonpublicly available 
data or information and the source of such data 
or information to the Office, regarding the pri-
vacy or confidentiality of any data or informa-
tion in the possession of the source to the Office, 
shall continue to apply to such data or informa-
tion after the data or information has been pro-
vided pursuant to this subsection to the Office. 
‘‘(C) INFORMATION SHARING AGREEMENT.— 
Any data or information obtained by the Office 
may be made available to State insurance regu-
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lators, individually or collectively, through an 
information sharing agreement that— 
‘‘(i) shall comply with applicable Fed-
eral law; and 
‘‘(ii) shall not constitute a waiver of, 
or otherwise affect, any privilege under Fed-
eral or State law (including the rules of any 
Federal or State Court) to which the data 
or information is otherwise subject. 
‘‘(D) 
AGENCY
DISCLOSURE
REQUIRE-
MENTS.—Section 552 of title 5, United States 
Code, shall apply to any data or information 
submitted to the Office by an insurer or an affil-
iate of an insurer. 
‘‘(6) SUBPOENAS AND ENFORCEMENT.—The Di-
rector shall have the power to require by subpoena the 
production of the data or information requested under 
paragraph (2), but only upon a written finding by 
the Director that such data or information is required 
to carry out the functions described under subsection 
(c) and that the Office has coordinated with such reg-
ulator or agency as required under paragraph (4). 
Subpoenas shall bear the signature of the Director 
and shall be served by any person or class of persons 
designated by the Director for that purpose. In the
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case of contumacy or failure to obey a subpoena, the 
subpoena shall be enforceable by order of any appro-
priate district court of the United States. Any failure 
to obey the order of the court may be punished by the 
court as a contempt of court. 
‘‘(f) PREEMPTION
OF
STATE
INSURANCE
MEAS-
URES.— 
‘‘(1) STANDARD.—A State insurance measure 
shall be preempted if, and only to the extent that the 
Director determines, in accordance with this sub-
section, that the measure— 
‘‘(A) results in less favorable treatment of a 
non-United States insurer domiciled in a foreign 
jurisdiction that is subject to an international 
insurance agreement on prudential measures 
than a United States insurer domiciled, licensed, 
or otherwise admitted in that State; and 
‘‘(B) is inconsistent with an International 
Insurance Agreement on Prudential Measures. 
‘‘(2) DETERMINATION.— 
‘‘(A) NOTICE
OF
POTENTIAL
INCONSIST-
ENCY.—Before making any determination under 
paragraph (1), the Director shall—
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‘‘(i) notify and consult with the appro-
priate State regarding any potential incon-
sistency or preemption; 
‘‘(ii) cause to be published in the Fed-
eral Register notice of the issue regarding 
the potential inconsistency or preemption, 
including a description of each State insur-
ance measure at issue and any applicable 
International Insurance Agreement on Pru-
dential Measures; 
‘‘(iii) provide interested parties a rea-
sonable opportunity to submit written com-
ments to the Office; and 
‘‘(iv) consider any comments received. 
‘‘(B) SCOPE OF REVIEW.—For purposes of 
this subsection, the determination of the Director 
regarding State insurance measures shall be lim-
ited to the subject matter contained within the 
international insurance agreement on prudential 
measure involved. 
‘‘(C) NOTICE OF DETERMINATION OF INCON-
SISTENCY.—Upon making any determination 
under paragraph (1), the Director shall—
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‘‘(i) notify the appropriate State of the 
determination and the extent of the incon-
sistency; 
‘‘(ii) establish a reasonable period of 
time, which shall not be less than 30 days, 
before the determination shall become effec-
tive; and 
‘‘(iii) notify the Committee on Bank-
ing, Housing, and Urban Affairs of the 
Senate and the Committee on Financial 
Services of the House of Representatives of 
the inconsistency. 
‘‘(3) NOTICE
OF
EFFECTIVENESS.—Upon the 
conclusion of the period referred to in paragraph 
(2)(C)(ii), if the basis for such determination still ex-
ists, the determination shall become effective and the 
Director shall— 
‘‘(A) cause to be published a notice in the 
Federal Register that the preemption has become 
effective, as well as the effective date; and 
‘‘(B) notify the appropriate State. 
‘‘(4) LIMITATION.—No State may enforce a State 
insurance measure to the extent that such measure 
has been preempted under this subsection.
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‘‘(g) APPLICABILITY
OF
ADMINISTRATIVE
PROCE-
DURES ACT.—Determinations of inconsistency made pursu-
ant to subsection (f)(2) shall be subject to the applicable 
provisions of subchapter II of chapter 5 of title 5, United 
States Code (relating to administrative procedure), and 
chapter 7 of such title (relating to judicial review). 
‘‘(h) REGULATIONS, POLICIES, AND PROCEDURES.— 
The Secretary may issue orders, regulations, policies, and 
procedures to implement this section. 
‘‘(i) CONSULTATION.—The Director shall consult with 
State insurance regulators, individually or collectively, to 
the extent the Director determines appropriate, in carrying 
out the functions of the Office. 
‘‘(j) SAVINGS PROVISIONS.—Nothing in this section 
shall— 
‘‘(1) preempt— 
‘‘(A) any State insurance measure that gov-
erns any insurer’s rates, premiums, under-
writing, or sales practices; 
‘‘(B) any State coverage requirements for 
insurance; 
‘‘(C) the application of the antitrust laws of 
any State to the business of insurance; or 
‘‘(D) any State insurance measure gov-
erning the capital or solvency of an insurer, ex-
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cept to the extent that such State insurance 
measure results in less favorable treatment of a 
non-United State insurer than a United States 
insurer; 
‘‘(2) be construed to alter, amend, or limit any 
provision of the Consumer Financial Protection Agen-
cy Act of 2010; or 
‘‘(3) affect the preemption of any State insur-
ance measure otherwise inconsistent with and pre-
empted by Federal law. 
‘‘(k) RETENTION OF EXISTING STATE REGULATORY 
AUTHORITY.—Nothing in this section or section 314 shall 
be construed to establish or provide the Office or the Depart-
ment of the Treasury with general supervisory or regulatory 
authority over the business of insurance. 
‘‘(l) ANNUAL REPORT TO CONGRESS.—Beginning Sep-
tember 30, 2011, the Director shall submit a report on or 
before September 30 of each calendar year to the President 
and to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial Serv-
ices of the House of Representatives on the insurance indus-
try, any actions taken by the Office pursuant to subsection 
(f) (regarding preemption of inconsistent State insurance 
measures), and any other information as deemed relevant 
by the Director or as requested by such Committees.
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‘‘(m) STUDY AND REPORT ON REGULATION OF INSUR-
ANCE.— 
‘‘(1) IN GENERAL.—Not later than 18 months 
after the date of enactment of this section, the Direc-
tor shall conduct a study and submit a report to Con-
gress on how to modernize and improve the system of 
insurance regulation in the United States. 
‘‘(2) CONSIDERATIONS.—The study and report 
required under paragraph (1) shall be based on and 
guided by the following considerations: 
‘‘(A) Systemic risk regulation with respect 
to insurance. 
‘‘(B) Capital standards and the relationship 
between capital allocation and liabilities, includ-
ing standards relating to liquidity and duration 
risk. 
‘‘(C) Consumer protection for insurance 
products and practices, including gaps in state 
regulation. 
‘‘(D) The degree of national uniformity of 
state insurance regulation. 
‘‘(E) The regulation of insurance companies 
and affiliates on a consolidated basis. 
‘‘(F) International coordination of insur-
ance regulation.
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‘‘(3) ADDITIONAL FACTORS.—The study and re-
port required under paragraph (1) shall also examine 
the following factors: 
‘‘(A) The costs and benefits of potential Fed-
eral regulation of insurance across various lines 
of insurance (except health insurance). 
‘‘(B) The feasibility of regulating only cer-
tain lines of insurance at the Federal level, while 
leaving other lines of insurance to be regulated 
at the State level. 
‘‘(C) The ability of any potential Federal 
regulation or Federal regulators to eliminate or 
minimize regulatory arbitrage. 
‘‘(D) The impact that developments in the 
regulation of insurance in foreign jurisdictions 
might have on the potential Federal regulation of 
insurance. 
‘‘(E) The ability of any potential Federal 
regulation or Federal regulator to provide robust 
consumer protection for policyholders. 
‘‘(F) The potential consequences of sub-
jecting insurance companies to a Federal resolu-
tion authority, including the effects of any Fed-
eral resolution authority—
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‘‘(i) on the operation of State insur-
ance guaranty fund systems, including the 
loss of guaranty fund coverage if an insur-
ance company is subject to a Federal resolu-
tion authority; 
‘‘(ii) on policyholder protection, in-
cluding the loss of the priority status of pol-
icyholder claims over other unsecured gen-
eral creditor claims; 
‘‘(iii) in the case of life insurance com-
panies, the loss of the special status of sepa-
rate account assets and separate account li-
abilities; and 
‘‘(iv) on the international competitive-
ness of insurance companies. 
‘‘(G) Such other factors as the Director de-
termines necessary or appropriate, consistent 
with the principles set forth in paragraph (2). 
‘‘(4) REQUIRED RECOMMENDATIONS.—The study 
and report required under paragraph (1) shall also 
contain any legislative, administrative, or regulatory 
recommendations, as the Director determines appro-
priate, to carry out or effectuate the findings set forth 
in such report.
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‘‘(5) CONSULTATION.—With respect to the study 
and report required under paragraph (1), the Direc-
tor shall consult with the National Association of In-
surance Commissioners, consumer organizations, rep-
resentatives of the insurance industry and policy-
holders, and other organizations and experts, as ap-
propriate. 
‘‘(n) USE OF EXISTING RESOURCES.—To carry out 
this section, the Office may employ personnel, facilities, and 
any other resource of the Department of the Treasury avail-
able to the Secretary. 
‘‘(o) DEFINITIONS.—In this section and section 314, 
the following definitions shall apply: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ means, 
with respect to an insurer, any person who controls, 
is controlled by, or is under common control with the 
insurer. 
‘‘(2) INSURER.—The term ‘insurer’ means any 
person engaged in the business of insurance, includ-
ing reinsurance. 
‘‘(3) INTERNATIONAL INSURANCE AGREEMENT ON 
PRUDENTIAL
MEASURES.—The term ‘International 
Insurance Agreement on Prudential Measures’ means 
a written bilateral or multilateral agreement entered 
into between the United States and a foreign govern-
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ment, authority, or regulatory entity regarding pru-
dential measures applicable to the business of insur-
ance or reinsurance. 
‘‘(4) NON-UNITED STATES INSURER.—The term 
‘non-United States insurer’ means an insurer that is 
organized under the laws of a jurisdiction other than 
a State, but does not include any United States 
branch of such an insurer. 
‘‘(5) OFFICE.—The term ‘Office’ means the Office 
of National Insurance established by this section. 
‘‘(6) STATE
INSURANCE
MEASURE.—The term 
‘State insurance measure’ means any State law, regu-
lation, administrative ruling, bulletin, guideline, or 
practice relating to or affecting prudential measures 
applicable to insurance or reinsurance. 
‘‘(7) STATE INSURANCE REGULATOR.—The term 
‘State insurance regulator’ means any State regu-
latory authority responsible for the supervision of in-
surers. 
‘‘(8) UNITED
STATES
INSURER.—The term 
‘United States insurer’ means— 
‘‘(A) an insurer that is organized under the 
laws of a State; or 
‘‘(B) a United States branch of a non- 
United States insurer.
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‘‘(p) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated for the Office for each 
fiscal year such sums as may be necessary. 
‘‘SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON 
PRUDENTIAL MEASURES. 
‘‘(a) IN GENERAL.—The Secretary of the Treasury is 
authorized to negotiate and enter into International Insur-
ance Agreements on Prudential Measures on behalf of the 
United States. 
‘‘(b) SAVINGS PROVISION.—Nothing in this section or 
section 313 shall be construed to affect the development and 
coordination of United States international trade policy or 
the administration of the United States trade agreements 
program. It is to be understood that the negotiation of 
International Insurance Agreements on Prudential Meas-
ures under such sections is consistent with the requirement 
of this subsection. 
‘‘(c) CONSULTATION.—The Secretary shall consult 
with the United States Trade Representative on the negotia-
tion of International Insurance Agreements on Prudential 
Measures, including prior to initiating and concluding any 
such agreements.’’. 
(b) DUTIES OF SECRETARY.—Section 321(a) of title 
31, United States Code, is amended—
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(1) in paragraph (7), by striking ‘‘; and’’ and 
inserting a semicolon; 
(2) in paragraph (8)(C), by striking the period 
at the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(9) advise the President on major domestic and 
international prudential policy issues in connection 
with all lines of insurance except health insurance.’’. 
(c) CLERICAL AMENDMENT.—The table of sections for 
subchapter I of chapter 3 of title 31, United States Code, 
is amended by striking the item relating to section 312 and 
inserting the following new items: 
‘‘Sec. 312. Terrorism and financial intelligence. 
‘‘Sec. 313. Office of National Insurance. 
‘‘Sec. 314. International insurance agreements on prudential measures. 
‘‘Sec. 315. Continuing in office.’’. 
Subtitle B—State-based Insurance 
Reform 
SEC. 511. SHORT TITLE. 
This subtitle may be cited as the ‘‘Nonadmitted and 
Reinsurance Reform Act of 2010’’. 
SEC. 512. EFFECTIVE DATE. 
Except as otherwise specifically provided in this sub-
title, this subtitle shall take effect upon the expiration of 
the 12-month period beginning on the date of the enactment 
of this subtitle.
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PART I—NONADMITTED INSURANCE 
SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PRE-
MIUM TAXES. 
(a) HOME
STATE’S
EXCLUSIVE
AUTHORITY.—No 
State other than the home State of an insured may require 
any premium tax payment for nonadmitted insurance. 
(b) 
ALLOCATION
OF
NONADMITTED
PREMIUM 
TAXES.— 
(1) IN GENERAL.—The States may enter into a 
compact or otherwise establish procedures to allocate 
among the States the premium taxes paid to an in-
sured’s home State described in subsection (a). 
(2) EFFECTIVE DATE.—Except as expressly oth-
erwise provided in such compact or other procedures, 
any such compact or other procedures— 
(A) if adopted on or before the expiration of 
the 330-day period that begins on the date of the 
enactment of this subtitle, shall apply to any 
premium taxes that, on or after such date of en-
actment, are required to be paid to any State 
that is subject to such compact or procedures; 
and 
(B) if adopted after the expiration of such 
330-day period, shall apply to any premium 
taxes that, on or after January 1 of the first cal-
endar year that begins after the expiration of
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such 330-day period, are required to be paid to 
any State that is subject to such compact or pro-
cedures. 
(3) REPORT.—Upon the expiration of the 330- 
day period referred to in paragraph (2), the NAIC 
may submit a report to the Committee on Financial 
Services and Committee on the Judiciary of the 
House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate 
identifying and describing any compact or other pro-
cedures for allocation among the States of premium 
taxes that have been adopted during such period by 
any States. 
(4) NATIONWIDE SYSTEM.—The Congress intends 
that each State adopt nationwide uniform require-
ments, forms, and procedures, such as an interstate 
compact, that provides for the reporting, payment, 
collection, and allocation of premium taxes for non-
admitted insurance consistent with this section. 
(c) ALLOCATION BASED
ON TAX ALLOCATION RE-
PORT.—To facilitate the payment of premium taxes among 
the States, an insured’s home State may require surplus 
lines brokers and insureds who have independently procured 
insurance to annually file tax allocation reports with the 
insured’s home State detailing the portion of the non-
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admitted insurance policy premium or premiums attrib-
utable to properties, risks, or exposures located in each 
State. The filing of a nonadmitted insurance tax allocation 
report and the payment of tax may be made by a person 
authorized by the insured to act as its agent. 
SEC. 522. REGULATION OF NONADMITTED INSURANCE BY 
INSURED’S HOME STATE. 
(a) HOME STATE AUTHORITY.—Except as otherwise 
provided in this section, the placement of nonadmitted in-
surance shall be subject to the statutory and regulatory re-
quirements solely of the insured’s home State. 
(b) BROKER LICENSING.—No State other than an in-
sured’s home State may require a surplus lines broker to 
be licensed in order to sell, solicit, or negotiate nonadmitted 
insurance with respect to such insured. 
(c) ENFORCEMENT PROVISION.—With respect to sec-
tion 521 and subsections (a) and (b) of this section, any 
law, regulation, provision, or action of any State that ap-
plies or purports to apply to nonadmitted insurance sold 
to, solicited by, or negotiated with an insured whose home 
State is another State shall be preempted with respect to 
such application. 
(d) WORKERS’ COMPENSATION EXCEPTION.—This sec-
tion may not be construed to preempt any State law, rule, 
or regulation that restricts the placement of workers’ com-
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pensation insurance or excess insurance for self-funded 
workers’ compensation plans with a nonadmitted insurer. 
SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATA-
BASE. 
After the expiration of the 2-year period beginning on 
the date of the enactment of this subtitle, a State may not 
collect any fees relating to licensing of an individual or en-
tity as a surplus lines broker in the State unless the State 
has in effect at such time laws or regulations that provide 
for participation by the State in the national insurance 
producer database of the NAIC, or any other equivalent uni-
form national database, for the licensure of surplus lines 
brokers and the renewal of such licenses. 
SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGI-
BILITY. 
A State may not— 
(1) impose eligibility requirements on, or other-
wise establish eligibility criteria for, nonadmitted in-
surers domiciled in a United States jurisdiction, ex-
cept in conformance with such requirements and cri-
teria in sections 5A(2) and 5C(2)(a) of the Non-Ad-
mitted Insurance Model Act, unless the State has 
adopted nationwide uniform requirements, forms, and 
procedures developed in accordance with section
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521(b) of this subtitle that include alternative nation-
wide uniform eligibility requirements; or 
(2) prohibit a surplus lines broker from placing 
nonadmitted insurance with, or procuring non-
admitted insurance from, a nonadmitted insurer 
domiciled outside the United States that is listed on 
the Quarterly Listing of Alien Insurers maintained 
by the International Insurers Department of the 
NAIC. 
SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL 
PURCHASERS. 
A surplus lines broker seeking to procure or place non-
admitted insurance in a State for an exempt commercial 
purchaser shall not be required to satisfy any State require-
ment to make a due diligence search to determine whether 
the full amount or type of insurance sought by such exempt 
commercial purchaser can be obtained from admitted insur-
ers if— 
(1) the broker procuring or placing the surplus 
lines insurance has disclosed to the exempt commer-
cial purchaser that such insurance may or may not 
be available from the admitted market that may pro-
vide greater protection with more regulatory over-
sight; and
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(2) the exempt commercial purchaser has subse-
quently requested in writing the broker to procure or 
place such insurance from a nonadmitted insurer. 
SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MAR-
KET. 
(a) IN GENERAL.—The Comptroller General of the 
United States shall conduct a study of the nonadmitted in-
surance market to determine the effect of the enactment of 
this part on the size and market share of the nonadmitted 
insurance market for providing coverage typically provided 
by the admitted insurance market. 
(b) CONTENTS.—The study shall determine and ana-
lyze— 
(1) the change in the size and market share of 
the nonadmitted insurance market and in the number 
of insurance companies and insurance holding com-
panies providing such business in the 18-month pe-
riod that begins upon the effective date of this subtitle; 
(2) the extent to which insurance coverage typi-
cally provided by the admitted insurance market has 
shifted to the nonadmitted insurance market; 
(3) the consequences of any change in the size 
and market share of the nonadmitted insurance mar-
ket, including differences in the price and availability
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† HR 4173 PP
of coverage available in both the admitted and non-
admitted insurance markets; 
(4) the extent to which insurance companies and 
insurance holding companies that provide both ad-
mitted and nonadmitted insurance have experienced 
shifts in the volume of business between admitted and 
nonadmitted insurance; and 
(5) the extent to which there has been a change 
in the number of individuals who have nonadmitted 
insurance policies, the type of coverage provided 
under such policies, and whether such coverage is 
available in the admitted insurance market. 
(c) CONSULTATION WITH NAIC.—In conducting the 
study under this section, the Comptroller General shall con-
sult with the NAIC. 
(d) REPORT.—The Comptroller General shall complete 
the study under this section and submit a report to the 
Committee on Banking, Housing, and Urban Affairs of the 
Senate and the Committee on Financial Services of the 
House of Representatives regarding the findings of the study 
not later than 30 months after the effective date of this sub-
title. 
SEC. 527. DEFINITIONS. 
For purposes of this part, the following definitions 
shall apply:
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(1) ADMITTED INSURER.—The term ‘‘admitted 
insurer’’ means, with respect to a State, an insurer 
licensed to engage in the business of insurance in such 
State. 
(2) AFFILIATE.—The term ‘‘affiliate’’ means, 
with respect to an insured, any entity that controls, 
is controlled by, or is under common control with the 
insured. 
(3) AFFILIATED
GROUP.—The term ‘‘affiliated 
group’’ means any group of entities that are all affili-
ated. 
(4) CONTROL.—An entity has ‘‘control’’ over an-
other entity if— 
(A) the entity directly or indirectly or act-
ing through 1 or more other persons owns, con-
trols, or has the power to vote 25 percent or more 
of any class of voting securities of the other enti-
ty; or 
(B) the entity controls in any manner the 
election of a majority of the directors or trustees 
of the other entity. 
(5) EXEMPT
COMMERCIAL
PURCHASER.—The 
term ‘‘exempt commercial purchaser’’ means any per-
son purchasing commercial insurance that, at the 
time of placement, meets the following requirements:
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(A) The person employs or retains a quali-
fied risk manager to negotiate insurance cov-
erage. 
(B) The person has paid aggregate nation-
wide commercial property and casualty insur-
ance premiums in excess of $100,000 in the im-
mediately preceding 12 months. 
(C)(i) The person meets at least 1 of the fol-
lowing criteria: 
(I) The person possesses a net worth in 
excess of $20,000,000, as such amount is ad-
justed pursuant to clause (ii). 
(II) The person generates annual reve-
nues in excess of $50,000,000, as such 
amount is adjusted pursuant to clause (ii). 
(III) The person employs more than 
500 full-time or full-time equivalent em-
ployees per individual insured or is a mem-
ber of an affiliated group employing more 
than 1,000 employees in the aggregate. 
(IV) The person is a not-for-profit or-
ganization or public entity generating an-
nual budgeted expenditures of at least 
$30,000,000, as such amount is adjusted 
pursuant to clause (ii).
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(V) The person is a municipality with 
a population in excess of 50,000 persons. 
(ii) Effective on the fifth January 1 occur-
ring after the date of the enactment of this sub-
title and each fifth January 1 occurring there-
after, the amounts in subclauses (I), (II), and 
(IV) of clause (i) shall be adjusted to reflect the 
percentage change for such 5-year period in the 
Consumer Price Index for All Urban Consumers 
published by the Bureau of Labor Statistics of 
the Department of Labor. 
(6) HOME STATE.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘‘home State’’ 
means, with respect to an insured— 
(i) the State in which an insured 
maintains its principal place of business or, 
in the case of an individual, the individ-
ual’s principal residence; or 
(ii) if 100 percent of the insured risk 
is located out of the State referred to in sub-
paragraph (A), the State to which the great-
est percentage of the insured’s taxable pre-
mium for that insurance contract is allo-
cated.
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(B) AFFILIATED GROUPS.—If more than 1 
insured from an affiliated group are named in-
sureds on a single nonadmitted insurance con-
tract, the term ‘‘home State’’ means the home 
State, as determined pursuant to subparagraph 
(A), of the member of the affiliated group that 
has the largest percentage of premium attributed 
to it under such insurance contract. 
(7) INDEPENDENTLY
PROCURED
INSURANCE.— 
The term ‘‘independently procured insurance’’ means 
insurance procured directly by an insured from a 
nonadmitted insurer. 
(8) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners or any 
successor entity. 
(9) NONADMITTED INSURANCE.—The term ‘‘non-
admitted insurance’’ means any property and cas-
ualty insurance permitted to be placed directly or 
through a surplus lines broker with a nonadmitted in-
surer eligible to accept such insurance. 
(10) NON-ADMITTED INSURANCE MODEL ACT.— 
The term ‘‘Non-Admitted Insurance Model Act’’ 
means the provisions of the Non-Admitted Insurance 
Model Act, as adopted by the NAIC on August 3,
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1994, and amended on September 30, 1996, December 
6, 1997, October 2, 1999, and June 8, 2002. 
(11) NONADMITTED INSURER.—The term ‘‘non-
admitted insurer’’— 
(A) means, with respect to a State, an in-
surer not licensed to engage in the business of in-
surance in such State; but 
(B) does not include a risk retention group, 
as that term is defined in section 2(a)(4) of the 
Liability Risk Retention Act of 1986 (15 U.S.C. 
3901(a)(4)). 
(12) QUALIFIED
RISK
MANAGER.—The term 
‘‘qualified risk manager’’ means, with respect to a 
policyholder of commercial insurance, a person who 
meets all of the following requirements: 
(A) The person is an employee of, or third 
party consultant retained by, the commercial 
policyholder. 
(B) The person provides skilled services in 
loss prevention, loss reduction, or risk and insur-
ance coverage analysis, and purchase of insur-
ance. 
(C) The person— 
(i)(I) has a bachelor’s degree or higher 
from an accredited college or university in
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† HR 4173 PP
risk management, business administration, 
finance, economics, or any other field deter-
mined by a State insurance commissioner 
or other State regulatory official or entity 
to demonstrate minimum competence in 
risk management; and 
(II)(aa) has 3 years of experience in 
risk financing, claims administration, loss 
prevention, risk and insurance analysis, or 
purchasing commercial lines of insurance; 
or 
(bb) has 1 of the following designa-
tions: 
(AA) a designation as a Chartered 
Property and Casualty Underwriter 
(in this subparagraph referred to as 
‘‘CPCU’’) issued by the American In-
stitute for CPCU/Insurance Institute of 
America; 
(BB) a designation as an Asso-
ciate in Risk Management (ARM) 
issued by the American Institute for 
CPCU/Insurance Institute of America; 
(CC) a designation as Certified 
Risk Manager (CRM) issued by the
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National Alliance for Insurance Edu-
cation & Research; 
(DD) a designation as a RIMS 
Fellow (RF) issued by the Global Risk 
Management Institute; or 
(EE) any other designation, cer-
tification, or license determined by a 
State insurance commissioner or other 
State insurance regulatory official or 
entity to demonstrate minimum com-
petency in risk management; 
(ii)(I) has at least 7 years of experi-
ence in risk financing, claims administra-
tion, loss prevention, risk and insurance 
coverage analysis, or purchasing commer-
cial lines of insurance; and 
(II) has any 1 of the designations spec-
ified in subitems (AA) through (EE) of 
clause (i)(II)(bb); 
(iii) has at least 10 years of experience 
in risk financing, claims administration, 
loss prevention, risk and insurance coverage 
analysis, or purchasing commercial lines of 
insurance; or
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(iv) has a graduate degree from an ac-
credited college or university in risk man-
agement, business administration, finance, 
economics, or any other field determined by 
a State insurance commissioner or other 
State regulatory official or entity to dem-
onstrate minimum competence in risk man-
agement. 
(13) PREMIUM TAX.—The term ‘‘premium tax’’ 
means, with respect to surplus lines or independently 
procured insurance coverage, any tax, fee, assessment, 
or other charge imposed by a government entity di-
rectly or indirectly based on any payment made as 
consideration for an insurance contract for such in-
surance, including premium deposits, assessments, 
registration fees, and any other compensation given 
in consideration for a contract of insurance. 
(14) SURPLUS LINES BROKER.—The term ‘‘sur-
plus lines broker’’ means an individual, firm, or cor-
poration which is licensed in a State to sell, solicit, 
or negotiate insurance on properties, risks, or expo-
sures located or to be performed in a State with non-
admitted insurers.
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PART II—REINSURANCE 
SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND 
REINSURANCE AGREEMENTS. 
(a) CREDIT FOR REINSURANCE.—If the State of domi-
cile of a ceding insurer is an NAIC-accredited State, or has 
financial solvency requirements substantially similar to the 
requirements necessary for NAIC accreditation, and recog-
nizes credit for reinsurance for the insurer’s ceded risk, then 
no other State may deny such credit for reinsurance. 
(b) ADDITIONAL PREEMPTION OF EXTRATERRITORIAL 
APPLICATION OF STATE LAW.—In addition to the applica-
tion of subsection (a), all laws, regulations, provisions, or 
other actions of a State that is not the domiciliary State 
of the ceding insurer, except those with respect to taxes and 
assessments on insurance companies or insurance income, 
are preempted to the extent that they— 
(1) restrict or eliminate the rights of the ceding 
insurer or the assuming insurer to resolve disputes 
pursuant to contractual arbitration to the extent such 
contractual provision is not inconsistent with the pro-
visions of title 9, United States Code; 
(2) require that a certain State’s law shall gov-
ern the reinsurance contract, disputes arising from 
the reinsurance contract, or requirements of the rein-
surance contract;
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(3) attempt to enforce a reinsurance contract on 
terms different than those set forth in the reinsurance 
contract, to the extent that the terms are not incon-
sistent with this part; or 
(4) otherwise apply the laws of the State to rein-
surance agreements of ceding insurers not domiciled 
in that State. 
SEC. 532. REGULATION OF REINSURER SOLVENCY. 
(a) DOMICILIARY STATE REGULATION.—If the State 
of domicile of a reinsurer is an NAIC-accredited State or 
has financial solvency requirements substantially similar 
to the requirements necessary for NAIC accreditation, such 
State shall be solely responsible for regulating the financial 
solvency of the reinsurer. 
(b) NONDOMICILIARY STATES.— 
(1) LIMITATION ON FINANCIAL INFORMATION RE-
QUIREMENTS.—If the State of domicile of a reinsurer 
is an NAIC-accredited State or has financial solvency 
requirements substantially similar to the require-
ments necessary for NAIC accreditation, no other 
State may require the reinsurer to provide any addi-
tional financial information other than the informa-
tion the reinsurer is required to file with its domi-
ciliary State.
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(2) RECEIPT OF INFORMATION.—No provision of 
this section shall be construed as preventing or pro-
hibiting a State that is not the State of domicile of 
a reinsurer from receiving a copy of any financial 
statement filed with its domiciliary State. 
SEC. 533. DEFINITIONS. 
For purposes of this part, the following definitions 
shall apply: 
(1) CEDING
INSURER.—The term ‘‘ceding in-
surer’’ means an insurer that purchases reinsurance. 
(2) DOMICILIARY STATE.—The terms ‘‘State of 
domicile’’ and ‘‘domiciliary State’’ mean, with re-
spect to an insurer or reinsurer, the State in which 
the insurer or reinsurer is incorporated or entered 
through, and licensed. 
(3) REINSURANCE.—The term ‘‘reinsurance’’ 
means the assumption by an insurer of all or part of 
a risk undertaken originally by another insurer. 
(4) REINSURER.— 
(A) IN
GENERAL.—The term ‘‘reinsurer’’ 
means an insurer to the extent that the in-
surer— 
(i) is principally engaged in the busi-
ness of reinsurance;
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(ii) 
does 
not 
conduct 
significant 
amounts of direct insurance as a percentage 
of its net premiums; and 
(iii) is not engaged in an ongoing 
basis in the business of soliciting direct in-
surance. 
(B) DETERMINATION.—A determination of 
whether an insurer is a reinsurer shall be made 
under the laws of the State of domicile in accord-
ance with this paragraph. 
PART III—RULE OF CONSTRUCTION 
SEC. 541. RULE OF CONSTRUCTION. 
Nothing in this subtitle or the amendments made by 
this subtitle shall be construed to modify, impair, or super-
sede the application of the antitrust laws. Any implied or 
actual conflict between this subtitle and any amendments 
to this subtitle and the antitrust laws shall be resolved in 
favor of the operation of the antitrust laws. 
SEC. 542. SEVERABILITY. 
If any section or subsection of this subtitle, or any ap-
plication of such provision to any person or circumstance, 
is held to be unconstitutional, the remainder of this subtitle, 
and the application of the provision to any other person 
or circumstance, shall not be affected.
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TITLE 
VI—IMPROVEMENTS 
TO 
REGULATION OF BANK AND 
SAVINGS ASSOCIATION HOLD-
ING COMPANIES AND DEPOSI-
TORY INSTITUTIONS 
SEC. 601. SHORT TITLE. 
This title may be cited as the ‘‘Bank and Savings Asso-
ciation Holding Company and Depository Institution Reg-
ulatory Improvements Act of 2010’’. 
SEC. 602. DEFINITION. 
In this title, the term ‘‘commercial firm’’ means any 
entity that derives not less than 15 percent of the consoli-
dated annual gross revenues of the entity, including all af-
filiates of the entity, from engaging in activities that are 
not financial in nature or incidental to activities that are 
financial in nature, as provided in section 4(k) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(k)). 
SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF 
CREDIT CARD BANKS, INDUSTRIAL LOAN 
COMPANIES, AND CERTAIN OTHER COMPA-
NIES UNDER THE BANK HOLDING COMPANY 
ACT OF 1956. 
(a) MORATORIUM.— 
(1) DEFINITIONS.—In this subsection—
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(A) the term ‘‘credit card bank’’ means an 
institution described in section 2(c)(2)(F) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(F)); 
(B) the term ‘‘industrial bank’’ means an 
institution described in section 2(c)(2)(H) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(H)); and 
(C) the term ‘‘trust bank’’ means an institu-
tion described in section 2(c)(2)(D) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(D)). 
(2) MORATORIUM ON PROVISION OF DEPOSIT IN-
SURANCE.—The Corporation may not approve an ap-
plication for deposit insurance under section 5 of the 
Federal Deposit Insurance Act (12 U.S.C. 1815) that 
is received after November 10, 2009, for an industrial 
bank, a credit card bank, or a trust bank that is di-
rectly or indirectly owned or controlled by a commer-
cial firm. 
(3) CHANGE IN CONTROL.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the appropriate Federal 
banking agency shall disapprove a change in 
control, as provided in section 7(j) of the Federal
424 
† HR 4173 PP
Deposit Insurance Act (12 U.S.C. 1817(j)), of an 
industrial bank, a credit card bank, or a trust 
bank if the change in control would result in di-
rect or indirect control of the industrial bank, 
credit card bank, or trust bank by a commercial 
firm. 
(B) EXCEPTIONS.—Subparagraph (A) shall 
not apply to a change in control of an industrial 
bank, credit card bank, or trust bank that— 
(i) is in danger of default, as deter-
mined by the appropriate Federal banking 
agency; or 
(ii) results from the merger or whole 
acquisition of a commercial firm that di-
rectly or indirectly controls the industrial 
bank, credit card bank, or trust bank in a 
bona fide merger with or acquisition by an-
other commercial firm, as determined by the 
appropriate Federal banking agency. 
(4) SUNSET.—This subsection shall cease to have 
effect 3 years after the date of enactment of this Act. 
(b) GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF 
EXCEPTIONS UNDER THE BANK HOLDING COMPANY ACT 
OF 1956.—
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(1) STUDY REQUIRED.—The Comptroller General 
of the United States shall carry out a study to deter-
mine whether it is necessary, in order to strengthen 
the safety and soundness of institutions or the sta-
bility of the financial system, to eliminate the excep-
tions under section 2 of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841) for institutions de-
scribed in— 
(A) section 2(a)(5)(E) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(a)(5)(E)); 
(B) section 2(a)(5)(F) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(a)(5)(F)); 
(C) section 2(c)(2)(D) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)); 
(D) section 2(c)(2)(F) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(c)(2)(F)); 
(E) section 2(c)(2)(H) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(c)(2)(H)); 
and 
(F) section 2(c)(2)(B) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(c)(2)(B)). 
(2) CONTENT OF STUDY.— 
(A) IN
GENERAL.—The study required 
under paragraph (1), with respect to the institu-
tions referenced in each of subparagraphs (A)
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† HR 4173 PP
through (E) of paragraph (1), shall, to the extent 
feasible be based on information provided to the 
Comptroller General by the appropriate Federal 
or State regulator, and shall— 
(i) identify the types and number of 
institutions excepted from section 2 of the 
Bank Holding Company Act of 1956 (12 
U.S.C. 1841) under each of the subpara-
graphs described in subparagraphs (A) 
through (E) of paragraph (1); 
(ii) generally describe the size and geo-
graphic locations of the institutions de-
scribed in clause (i); 
(iii) determine the extent to which the 
institutions described in clause (i) are held 
by holding companies that are commercial 
firms; 
(iv) determine whether the institutions 
described in clause (i) have any affiliates 
that are commercial firms; 
(v) identify the Federal banking agen-
cy responsible for the supervision of the in-
stitutions described in clause (i) on and 
after the transfer date;
427 
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(vi) determine the adequacy of the Fed-
eral bank regulatory framework applicable 
to each category of institution described in 
clause (i), including any restrictions (in-
cluding limitations on affiliate transactions 
or cross-marketing) that apply to trans-
actions between an institution, the holding 
company of the institution, and any other 
affiliate of the institution; and 
(vii) 
evaluate 
the 
potential 
con-
sequences of subjecting the institutions de-
scribed in clause (i) to the requirements of 
the Bank Holding Company Act of 1956, 
including with respect to the availability 
and allocation of credit, the stability of the 
financial system and the economy, the safe 
and sound operation of each category of in-
stitution, and the impact on the types of ac-
tivities in which such institutions, and the 
holding companies of such institutions, may 
engage. 
(B) SAVINGS ASSOCIATIONS.—With respect 
to institutions described in paragraph (1)(F), the 
study required under paragraph (1) shall—
428 
† HR 4173 PP
(i) determine the adequacy of the Fed-
eral bank regulatory framework applicable 
to such institutions, including any restric-
tions (including limitations on affiliate 
transactions or cross-marketing) that apply 
to transactions between an institution, the 
holding company of the institution, and 
any other affiliate of the institution; and 
(ii) evaluate the potential consequences 
of subjecting the institutions described in 
paragraph (1)(F) to the requirements of the 
Bank Holding Company Act of 1956, in-
cluding with respect to the availability and 
allocation of credit, the stability of the fi-
nancial system and the economy, the safe 
and sound operation of such institutions, 
and the impact on the types of activities in 
which such institutions, and the holding 
companies of such institutions, may engage. 
(3) REPORT.—Not later than 18 months after the 
date of enactment of this Act, the Comptroller General 
shall submit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Committee 
on Financial Services of the House of Representatives 
a report on the study required under paragraph (1).
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† HR 4173 PP
SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COM-
PANIES; 
REGULATION 
OF 
FUNCTIONALLY 
REGULATED SUBSIDIARIES. 
(a) REPORTS BY BANK HOLDING COMPANIES.—Sec-
tions 5(c)(1) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844(c)(1)) is amended— 
(1) by striking subparagraph (B) and inserting 
the following: 
‘‘(B) USE
OF
EXISTING
REPORTS
AND 
OTHER
SUPERVISORY
INFORMATION.—The ap-
propriate Federal banking agency for a bank 
holding company shall, to the fullest extent pos-
sible, use— 
‘‘(i) reports and other supervisory in-
formation that the bank holding company 
or any subsidiary thereof has been required 
to provide to other Federal or State regu-
latory agencies; 
‘‘(ii) externally audited financial state-
ments of the bank holding company or sub-
sidiary; 
‘‘(iii) information otherwise available 
from Federal or State regulatory agencies; 
and 
‘‘(iv) information that is otherwise re-
quired to be reported publicly.’’; and
430 
† HR 4173 PP
(2) by adding at the end the following: 
‘‘(C) AVAILABILITY.—Upon the request of 
the appropriate Federal banking agency for a 
bank holding company, the bank holding com-
pany or a subsidiary of the bank holding com-
pany shall promptly provide to the appropriate 
Federal banking agency any information de-
scribed in clauses (i) through (iii) of subpara-
graph (B).’’. 
(b) EXAMINATIONS OF BANK HOLDING COMPANIES.— 
Section 5(c)(2) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1844(c)(2)) is amended to read as follows: 
‘‘(2) EXAMINATIONS.— 
‘‘(A) IN GENERAL.—The appropriate Fed-
eral banking agency for a bank holding company 
may make examinations of the bank holding 
company and each subsidiary of the bank hold-
ing company in order to— 
‘‘(i) inform such appropriate Federal 
banking agency of— 
‘‘(I) the nature of the operations 
and financial condition of the bank 
holding company and the subsidiary; 
‘‘(II) the financial, operational, 
and other risks within the bank hold-
431 
† HR 4173 PP
ing company system that may pose a 
threat to— 
‘‘(aa) the safety and sound-
ness of the bank holding company 
or of any depository institution 
subsidiary of the bank holding 
company; or 
‘‘(bb) the stability of the fi-
nancial system of the United 
States; and 
‘‘(III) the systems of the bank 
holding company for monitoring and 
controlling the risks described in sub-
clause (II); and 
‘‘(ii) enforce the compliance of the bank 
holding company and the subsidiary with 
this Act and any other Federal law that 
such appropriate Federal banking agency 
has specific jurisdiction to enforce against 
the bank holding company or subsidiary. 
‘‘(B) USE OF REPORTS TO REDUCE EXAMI-
NATIONS.—For purposes of this paragraph, the 
appropriate Federal banking agency for a bank 
holding company shall, to the fullest extent pos-
sible, rely on—
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‘‘(i) examination reports made by 
other Federal or State regulatory agencies 
relating to the bank holding company and 
any subsidiary of the bank holding com-
pany; and 
‘‘(ii) the reports and other information 
required under paragraph (1). 
‘‘(C) COORDINATION
WITH
OTHER
REGU-
LATORS.—The 
appropriate 
Federal 
banking 
agency for a bank holding company shall— 
‘‘(i) provide reasonable notice to, and 
consult with, the appropriate Federal bank-
ing agency or State regulatory agency of a 
subsidiary that is a depository institution 
or a functionally regulated subsidiary before 
commencing an examination of the sub-
sidiary under this section; and 
‘‘(ii) to the fullest extent possible, avoid 
duplication of examination activities, re-
porting requirements, and requests for in-
formation.’’. 
(c) AUTHORITY TO REGULATE FUNCTIONALLY REGU-
LATED SUBSIDIARIES OF BANK HOLDING COMPANIES.— 
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 
et seq.) is amended—
433 
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(1) in section 5(c) (12 U.S.C. 1844(c)), by strik-
ing paragraphs (3) and (4) and inserting the fol-
lowing: 
‘‘(3) [Reserved] 
‘‘(4) [Reserved]’’; and 
(2) by striking section 10A (12 U.S.C. 1848a). 
(d) ACQUISITIONS OF BANKS.—Section 3(c) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1842(c)) 
is amended by adding at the end the following: 
‘‘(7) FINANCIAL STABILITY.—In every case, the 
appropriate Federal banking agency of a bank hold-
ing company shall take into consideration the extent 
to which a proposed acquisition, merger, or consolida-
tion would result in greater or more concentrated 
risks to the stability of the United States banking or 
financial system.’’. 
(e) ACQUISITIONS OF NONBANKS.— 
(1) NOTICE PROCEDURES.—Section 4(j)(2)(A) of 
the Bank Holding Company Act of 1956 (12 U.S.C. 
1843(j)(2)(A)) is amended by striking ‘‘or unsound 
banking practices’’ and inserting ‘‘unsound banking 
practices, or risk to the stability of the United States 
banking or financial system’’. 
(2) ACTIVITIES
THAT
ARE
FINANCIAL
IN
NA-
TURE.—Section 4(k)(6)(B) of the Bank Holding Com-
434 
† HR 4173 PP
pany Act of 1956 (12 U.S.C. 1843(k)(6)(B)) is 
amended to read as follows: 
‘‘(B) APPROVAL NOT REQUIRED FOR CER-
TAIN FINANCIAL ACTIVITIES.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), a financial holding company 
may commence any activity or acquire any 
company, pursuant to paragraph (4) or 
any regulation prescribed or order issued 
under paragraph (5), without prior ap-
proval of the appropriate Federal banking 
agency for the financial holding company. 
‘‘(ii) EXCEPTION.—A financial holding 
company may not acquire a company, 
without the prior approval of the appro-
priate Federal banking agency for the fi-
nancial holding company, in a transaction 
in which the total consolidated assets to be 
acquired by the financial holding company 
exceed $25,000,000,000.’’. 
(f) BANK
MERGER
ACT
TRANSACTIONS.—Section 
18(c)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
1828(c)(5)) is amended, in the matter immediately fol-
lowing subparagraph (B), by striking ‘‘and the convenience 
and needs of the community to be served’’ and inserting
435 
† HR 4173 PP
‘‘the convenience and needs of the community to be served, 
and the risk to the stability of the United States banking 
or financial system’’. 
(g) REPORTS BY SAVINGS AND LOAN HOLDING COMPA-
NIES.—Section 10(b)(2) of the Home Owners’ Loan Act (12 
U.S.C. 1467a(b)(2) is amended— 
(1) by striking ‘‘Each savings’’ and inserting the 
following: 
‘‘(A) IN GENERAL.—Each savings’’; and 
(2) by adding at the end the following: 
‘‘(B) USE
OF
EXISTING
REPORTS
AND 
OTHER
SUPERVISORY
INFORMATION.—The ap-
propriate Federal banking agency for a savings 
and loan holding company shall, to the fullest 
extent possible, use— 
‘‘(i) reports and other supervisory in-
formation that the savings and loan holding 
company or any subsidiary thereof has been 
required to provide to other Federal or 
State regulatory agencies; 
‘‘(ii) externally audited financial state-
ments of the savings and loan holding com-
pany or subsidiary;
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† HR 4173 PP
‘‘(iii) information that is otherwise 
available from Federal or State regulatory 
agencies; and 
‘‘(iv) information that is otherwise re-
quired to be reported publicly. 
‘‘(C) AVAILABILITY.—Upon the request of 
the appropriate Federal banking agency for a 
savings and loan holding company, the savings 
and loan holding company or a subsidiary of the 
savings and loan holding company shall prompt-
ly provide to the appropriate Federal banking 
agency any information described in clauses (i) 
through (iii) of subparagraph (B).’’. 
(h) EXAMINATION OF SAVINGS AND LOAN HOLDING 
COMPANIES.— 
(1) DEFINITIONS.—Section 2 of the Home Own-
ers’ Loan Act (12 U.S.C. 1462) is amended by adding 
at the end the following: 
‘‘(10) 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)). 
‘‘(11) 
FUNCTIONALLY
REGULATED
SUB-
SIDIARY.—The term ‘functionally regulated sub-
sidiary’ has the same meaning as in section 5(c)(5)
437 
† HR 4173 PP
of the Bank Holding Company Act of 1956 (12 
U.S.C. 1844(c)(5)).’’. 
(2) EXAMINATION.—Section 10(b) of the Home 
Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended 
by striking paragraph (4) and inserting the following: 
‘‘(4) EXAMINATIONS.— 
‘‘(A) IN GENERAL.—The appropriate Fed-
eral banking agency for a savings and loan hold-
ing company may make examinations of the sav-
ings and loan holding company and each sub-
sidiary of the savings and loan holding company 
system, in order to— 
‘‘(i) inform such appropriate Federal 
banking agency of— 
‘‘(I) the nature of the operations 
and financial condition of the savings 
and loan holding company and the 
subsidiary; 
‘‘(II) the financial, operational, 
and other risks within the savings and 
loan holding company that may pose a 
threat to— 
‘‘(aa) the safety and sound-
ness of the savings and loan hold-
ing company or of any depository
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† HR 4173 PP
institution subsidiary of the sav-
ings and loan holding company; 
or 
‘‘(bb) the stability of the fi-
nancial system of the United 
States; and 
‘‘(III) the systems of the savings 
and loan holding company for moni-
toring and controlling the risks de-
scribed in subclause (II); and 
‘‘(ii) enforce the compliance of the sav-
ings and loan holding company and the 
subsidiary with this Act and any other Fed-
eral law that such appropriate Federal 
banking agency has specific jurisdiction to 
enforce against the savings and loan hold-
ing company or subsidiary. 
‘‘(B) USE OF REPORTS TO REDUCE EXAMI-
NATIONS.—For purposes of this subsection, the 
appropriate Federal banking agency for a sav-
ings and loan holding company shall, to the full-
est extent possible, rely on— 
‘‘(i) the examination reports made by 
other Federal or State regulatory agencies
439 
† HR 4173 PP
relating to the savings and loan holding 
company and any subsidiary; and 
‘‘(ii) the reports and other information 
required under paragraph (2). 
‘‘(C) COORDINATION
WITH
OTHER
REGU-
LATORS.—The 
appropriate 
Federal 
banking 
agency for a savings and loan holding company 
shall— 
‘‘(i) provide reasonable notice to, and 
consult with, the appropriate Federal bank-
ing agency or State regulatory agency of a 
subsidiary that is a depository institution 
or a functionally regulated subsidiary before 
commencing an examination of the sub-
sidiary under this section; and 
‘‘(ii) to the fullest extent possible, avoid 
duplication of examination activities, re-
porting requirements, and requests for in-
formation.’’. 
(i) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date.
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† HR 4173 PP
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMIS-
SIBLE ACTIVITIES OF DEPOSITORY INSTITU-
TION SUBSIDIARIES OF HOLDING COMPA-
NIES. 
Section 6 of the Bank Holding Company Act of 1956 
(12 U.S.C. 1845) is amended to read as follows: 
‘‘SEC. 6. ASSURING CONSISTENT OVERSIGHT OF PERMIS-
SIBLE ACTIVITIES OF DEPOSITORY INSTITU-
TION SUBSIDIARIES OF HOLDING COMPA-
NIES. 
‘‘(a) DEFINITIONS.— 
‘‘(1) DEFINITIONS.—In this section— 
‘‘(A) the term ‘depository institution hold-
ing company’ has the same meaning as in sec-
tion 3(w) of the Federal Deposit Insurance Act 
(12 U.S.C. 1813(w)); 
‘‘(B) the term ‘functionally regulated sub-
sidiary’ has the same meaning as in section 
5(c)(5); and 
‘‘(C) the term ‘lead Federal banking agency’ 
means— 
‘‘(i) the Office of the Comptroller of the 
Currency, in the case of any depository in-
stitution holding company having— 
‘‘(I) a subsidiary that is an in-
sured depository institution, if all such
441 
† HR 4173 PP
insured depository institutions are 
Federal depository institutions; or 
‘‘(II) a subsidiary that is a Fed-
eral depository institution and a sub-
sidiary that is a State depository in-
stitution, if the total consolidated as-
sets of all subsidiaries that are Federal 
depository institutions exceed the total 
consolidated assets of all subsidiaries 
that are State depository institutions; 
and 
‘‘(ii) the Federal Deposit Insurance 
Corporation, in the case of any depository 
institution holding company having— 
‘‘(I) a subsidiary that is an in-
sured depository institution, if all such 
insured depository institutions are 
State depository institutions; or 
‘‘(II) a subsidiary that is a Fed-
eral depository institution and a sub-
sidiary that is a State depository in-
stitution, if the total consolidated as-
sets of all subsidiaries that are State 
depository institutions exceed the total 
consolidated assets of all subsidiaries
442 
† HR 4173 PP
that are Federal depository institu-
tions. 
‘‘(2) DETERMINATION OF TOTAL CONSOLIDATED 
ASSETS.—For purposes of paragraph (1)(A), the total 
consolidated assets of a depository institution shall be 
determined in the same manner that total consoli-
dated assets of depository institutions are determined 
for purposes of section 3(q) of the Federal Deposit In-
surance Act (12 U.S.C. 1813(q)). 
‘‘(b) LEAD AGENCY SUPERVISION.— 
‘‘(1) IN
GENERAL.—The lead Federal banking 
agency for each depository institution holding com-
pany shall make examinations of the activities of each 
nondepository institution subsidiary (other than a 
functionally regulated subsidiary) of the depository 
institution holding company that are permissible for 
depository institution subsidiaries of the depository 
institution holding company, to determine whether 
the activities— 
‘‘(A) present safety and soundness risks to 
any depository institution subsidiary of the de-
pository institution holding company; 
‘‘(B) are conducted in accordance with ap-
plicable law; and
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† HR 4173 PP
‘‘(C) are subject to appropriate systems for 
monitoring and controlling the financial, oper-
ating, and other risks of the activity and pro-
tecting the depository institution subsidiaries of 
the holding company. 
‘‘(2) PROCESS FOR EXAMINATION.—An examina-
tion under paragraph (1) shall be carried out under 
the authority of the lead Federal banking agency, as 
if the nondepository institution subsidiary were an 
insured depository institution for which the lead Fed-
eral banking agency is the appropriate Federal bank-
ing agency. 
‘‘(c) COORDINATION.—For each depository institution 
holding company for which the Board of Governors is the 
appropriate Federal banking agency, the lead Federal bank-
ing agency of the depository institution holding company 
shall coordinate the supervision of the activities of subsidi-
aries described in subsection (b) with the Board of Gov-
ernors, in a manner that— 
‘‘(1) avoids duplication; 
‘‘(2) shares information relevant to the super-
vision of the depository institution holding company 
by each agency; 
‘‘(3) achieves the objectives of subsection (b); and
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‘‘(4) ensures that the depository institution hold-
ing company and the subsidiaries of the depository 
institution holding company are not subject to con-
flicting supervisory demands by the 2 agencies. 
‘‘(d) REFERRALS FOR ENFORCEMENT.— 
‘‘(1) RECOMMENDATION OF ACTION BY BOARD OF 
GOVERNORS.—The lead Federal banking agency for a 
depository institution holding company, based on in-
formation obtained pursuant to the responsibilities of 
the agency under subsection (b), may submit to the 
Board of Governors, in writing, a recommendation 
that the Board of Governors take enforcement action 
against a nondepository institution subsidiary (other 
than a functionally regulated subsidiary) of the de-
pository institution holding company, together with 
an explanation of the concerns giving rise to the rec-
ommendation. 
‘‘(2) BACK-UP AUTHORITY OF THE LEAD FED-
ERAL BANKING AGENCY.—If, within the 60-day period 
beginning on the date on which the Board of Gov-
ernors receives a recommendation under paragraph 
(1), the Board of Governors does not take enforcement 
action against a nondepository institution subsidiary 
or provide a plan for enforcement action that is ac-
ceptable to the lead Federal banking agency, the lead
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Federal banking agency (upon the authorization of 
the Comptroller, or the Federal Deposit Insurance 
Corporation, upon a vote of its members, as applica-
ble) may take the recommended enforcement action, in 
the same manner as if the subsidiary were an insured 
depository institution for which the lead Federal 
banking agency is the appropriate Federal banking 
agency.’’. 
SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COM-
PANIES TO REMAIN WELL CAPITALIZED AND 
WELL MANAGED. 
(a) AMENDMENT.—Section 4(l)(1) of the Bank Hold-
ing Company Act of 1956 (12 U.S.C. 1843(l)(1)) is amend-
ed— 
(1) in subparagraph (B), by striking ‘‘and’’ at 
the end; 
(2) by redesignating subparagraph (C) as sub-
paragraph (D); 
(3) by inserting after subparagraph (B) the fol-
lowing: 
‘‘(C) the bank holding company is well cap-
italized and well managed; and’’; and 
(4) in subparagraph (D)(ii), as so redesignated, 
by striking ‘‘subparagraphs (A) and (B)’’ and insert-
ing ‘‘subparagraphs (A), (B), and (C)’’.
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(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date. 
SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS. 
(a) ACQUISITION OF BANKS.—Section 3(d)(1)(A) of 
the Bank Holding Company Act of 1956 (12 U.S.C. 
1842(d)(1)(A)) is amended by striking ‘‘adequately capital-
ized and adequately managed’’ and inserting ‘‘well capital-
ized and well managed’’. 
(b) 
INTERSTATE
BANK
MERGERS.—Section 
44(b)(4)(B) of the Federal Deposit Insurance Act (12 U.S.C. 
1831u(b)(4)(B)) is amended by striking ‘‘will continue to 
be adequately capitalized and adequately managed’’ and in-
serting ‘‘will be well capitalized and well managed’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date. 
SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK 
TRANSACTIONS WITH AFFILIATES. 
(a) AFFILIATE TRANSACTIONS.—Section 23A of the 
Federal Reserve Act (12 U.S.C. 371c) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1), by striking subpara-
graph (D) and inserting the following: 
‘‘(D) any investment fund with respect to 
which a member bank or affiliate thereof is an 
investment adviser; and’’; and
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(B) in paragraph (7)— 
(i) in subparagraph (A), by inserting 
before the semicolon at the end the fol-
lowing: ‘‘, including a purchase of assets 
subject to an agreement to repurchase’’; 
(ii) in subparagraph (C), by striking 
‘‘, including assets subject to an agreement 
to repurchase,’’; 
(iii) in subparagraph (D)— 
(I) by inserting ‘‘or other debt ob-
ligations’’ after ‘‘acceptance of securi-
ties’’; and 
(II) by striking ‘‘or’’ at the end; 
and 
(iv) by adding at the end the following: 
‘‘(F) a transaction with an affiliate that in-
volves the borrowing or lending of securities, to 
the extent that the transaction causes a member 
bank or a subsidiary to have credit exposure to 
the affiliate; or 
‘‘(G) a derivative transaction, as defined in 
paragraph (3) of section 5200(b) of the Revised 
Statutes of the United States (12 U.S.C. 84(b)), 
with an affiliate, to the extent that the trans-
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action causes a member bank or a subsidiary to 
have credit exposure to the affiliate;’’; 
(2) in subsection (c)— 
(A) in paragraph (1)— 
(i) in the matter preceding subpara-
graph (A), by striking ‘‘subsidiary’’ and all 
that follows through ‘‘time of the trans-
action’’ and inserting ‘‘subsidiary, and any 
credit exposure of a member bank or a sub-
sidiary to an affiliate resulting from a secu-
rities borrowing or lending transaction, or 
a derivative transaction, shall be secured at 
all times’’; and 
(ii) in each of subparagraphs (A) 
through (D), by striking ‘‘or letter of credit’’ 
and inserting ‘‘letter of credit, or credit ex-
posure’’; 
(B) by striking paragraph (2); 
(C) 
by 
redesignating 
paragraphs 
(3) 
through (5) as paragraphs (2) through (4), re-
spectively; 
(D) in paragraph (2), as so redesignated, by 
inserting before the period at the end ‘‘, or credit 
exposure to an affiliate resulting from a securi-
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ties borrowing or lending transaction, or deriva-
tive transaction’’; and 
(E) in paragraph (3), as so redesignated— 
(i) by inserting ‘‘or other debt obliga-
tions’’ after ‘‘securities’’; and 
(ii) by striking ‘‘or guarantee’’ and all 
that follows through ‘‘behalf of,’’ and insert-
ing ‘‘guarantee, acceptance, or letter of cred-
it issued on behalf of, or credit exposure 
from a securities borrowing or lending 
transaction, or derivative transaction to,’’; 
(3) in subsection (d)(4), in the matter preceding 
subparagraph (A), by striking ‘‘or issuing’’ and all 
that follows through ‘‘behalf of,’’ and inserting 
‘‘issuing a guarantee, acceptance, or letter of credit on 
behalf of, or having credit exposure resulting from a 
securities borrowing or lending transaction, or deriva-
tive transaction to,’’; and 
(4) in subsection (f)— 
(A) in paragraph (2)— 
(i) by striking ‘‘or order’’; 
(ii) by striking ‘‘if it finds’’ and all 
that follows through the end of the para-
graph and inserting the following: ‘‘if—
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‘‘(i) the Board finds the exemption to 
be in the public interest and consistent with 
the purposes of this section, and notifies the 
Federal Deposit Insurance Corporation of 
such finding; and 
‘‘(ii) before the end of the 60-day pe-
riod beginning on the date on which the 
Federal Deposit Insurance Corporation re-
ceives notice of the finding under clause (i), 
the Federal Deposit Insurance Corporation 
does not object, in writing, to the finding, 
based on a determination that the exemp-
tion presents an unacceptable risk to the 
Deposit Insurance Fund.’’; 
(iii) by striking the Board and insert-
ing the following: 
‘‘(A) IN GENERAL.—The Board’’; and 
(iv) by adding at the end the following: 
‘‘(B) ADDITIONAL EXEMPTIONS.— 
‘‘(i) NATIONAL
BANKS.—The Comp-
troller of the Currency may, by order, ex-
empt a transaction of a national bank from 
the requirements of this section if— 
‘‘(I) the Board and the Office of 
the Comptroller of the Currency jointly
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find the exemption to be in the public 
interest and consistent with the pur-
poses of this section and notify the 
Federal Deposit Insurance Corporation 
of such finding; and 
‘‘(II) before the end of the 60-day 
period beginning on the date on which 
the Federal Deposit Insurance Cor-
poration receives notice of the finding 
under subclause (I), the Federal De-
posit Insurance Corporation does not 
object, in writing, to the finding, based 
on a determination that the exemption 
presents an unacceptable risk to the 
Deposit Insurance Fund. 
‘‘(ii) STATE BANKS.—The Federal De-
posit Insurance Corporation may, by order, 
exempt a transaction of a State nonmember 
bank, and the Board may, by order, exempt 
a transaction of a State member bank, from 
the requirements of this section if— 
‘‘(I) the Board and the Federal 
Deposit Insurance Corporation jointly 
find that the exemption is in the public
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interest and consistent with the pur-
poses of this section; and 
‘‘(II) the Federal Deposit Insur-
ance Corporation finds that the exemp-
tion does not present an unacceptable 
risk to the Deposit Insurance Fund.’’; 
and 
(B) by adding at the end the following: 
‘‘(4) AMOUNTS
OF
COVERED
TRANSACTIONS.— 
The Board may issue such regulations or interpreta-
tions as the Board determines are necessary or appro-
priate with respect to the manner in which a netting 
agreement may be taken into account in determining 
the amount of a covered transaction between a mem-
ber bank or a subsidiary and an affiliate, including 
the extent to which netting agreements between a 
member bank or a subsidiary and an affiliate may be 
taken into account in determining whether a covered 
transaction is fully secured for purposes of subsection 
(d)(4). An interpretation under this paragraph with 
respect to a specific member bank, subsidiary, or affil-
iate shall be issued jointly with the appropriate Fed-
eral banking agency for such member bank, sub-
sidiary, or affiliate.’’.
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(b) 
TRANSACTIONS
WITH
AFFILIATES.—Section 
23B(e) of the Federal Reserve Act (12 U.S.C. 371c–1(e)) is 
amended— 
(1) by striking the undesignated matter following 
subparagraph (B); 
(2) by redesignating subparagraphs (A) and (B) 
as clauses (i) and (ii), respectively, and adjusting the 
clause margins accordingly; 
(3) by redesignating paragraphs (1) and (2) as 
subparagraphs (A) and (B), respectively, and adjust-
ing the subparagraph margins accordingly; 
(4) by striking ‘‘The Board’’ and inserting the 
following: 
‘‘(1) IN GENERAL.—The Board’’; 
(5) in paragraph (1)(B), as so redesignated— 
(A) in the matter preceding clause (i), by 
inserting before ‘‘regulations’’ the following: 
‘‘subject to paragraph (2), if the Board finds 
that an exemption or exclusion is in the public 
interest and is consistent with the purposes of 
this section, and notifies the Federal Deposit In-
surance Corporation of such finding,’’; and 
(B) in clause (ii), by striking the comma at 
the end and inserting a period; and 
(6) by adding at the end the following:
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‘‘(2) EXCEPTION.—The Board may grant an ex-
emption or exclusion under this subsection only if, 
during the 60-day period beginning on the date of re-
ceipt of notice of the finding from the Board under 
paragraph (1)(B), the Federal Deposit Insurance Cor-
poration does not object, in writing, to such exemp-
tion or exclusion, based on a determination that the 
exemption presents an unacceptable risk to the De-
posit Insurance Fund.’’. 
(c) HOME OWNERS’ LOAN ACT.—Section 11 of the 
Home Owners’ Loan Act (12 U.S.C. 1468) is amended by 
adding at the end the following: 
‘‘(d) EXEMPTIONS.— 
‘‘(1) FEDERAL
SAVINGS
ASSOCIATIONS.—The 
Comptroller of the Currency may, by order, exempt a 
transaction of a Federal savings association from the 
requirements of this section if— 
‘‘(A) the Board and the Office of the Comp-
troller of the Currency jointly find the exemption 
to be in the public interest and consistent with 
the purposes of this section and notify the Fed-
eral Deposit Insurance Corporation of such find-
ing; and 
‘‘(B) before the end of the 60-day period be-
ginning on the date on which the Federal De-
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posit Insurance Corporation receives notice of the 
finding under subparagraph (A), the Federal De-
posit Insurance Corporation does not object, in 
writing, to the finding, based on a determination 
that the exemption presents an unacceptable risk 
to the Deposit Insurance Fund. 
‘‘(2) STATE SAVINGS ASSOCIATION.—The Federal 
Deposit Insurance Corporation may, by order, exempt 
a transaction of a State savings association from the 
requirements of this section if the Board and the Fed-
eral Deposit Insurance Corporation jointly find 
that— 
‘‘(A) the exemption is in the public interest 
and consistent with the purposes of this section; 
and 
‘‘(B) the exemption does not present an un-
acceptable risk to the Deposit Insurance Fund.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall take effect 1 year after the transfer date. 
SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS 
WITH FINANCIAL SUBSIDIARIES. 
(a) AMENDMENT.—Section 23A(e) of the Federal Re-
serve Act (12 U.S.C. 371c(e)) is amended— 
(1) by striking paragraph (3); and
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(2) by redesignating paragraph (4) as para-
graph (3). 
(b) PROSPECTIVE APPLICATION OF AMENDMENT.—The 
amendments made by this section shall apply with respect 
to any covered transaction between a bank and a subsidiary 
of the bank, as those terms are defined in section 23A of 
the Federal Reserve Act (12 U.S.C. 371c), that is entered 
into on or after the date of enactment of this Act. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect 1 year after the transfer date. 
SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPO-
SURE ON DERIVATIVE TRANSACTIONS, RE-
PURCHASE AGREEMENTS, REVERSE REPUR-
CHASE AGREEMENTS, AND SECURITIES LEND-
ING AND BORROWING TRANSACTIONS. 
(a) NATIONAL BANKS.—Section 5200(b) of the Revised 
Statutes of the United States (12 U.S.C. 84(b)) is amend-
ed— 
(1) in paragraph (1), by striking ‘‘shall include’’ 
and all that follows through the end of the paragraph 
and inserting the following: ‘‘shall include— 
‘‘(A) all direct or indirect advances of funds 
to a person made on the basis of any obligation 
of that person to repay the funds or repayable
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from specific property pledged by or on behalf of 
the person; 
‘‘(B) to the extent specified by the Comp-
troller of the Currency, any liability of a na-
tional banking association to advance funds to 
or on behalf of a person pursuant to a contrac-
tual commitment; and 
‘‘(C) any credit exposure to a person aris-
ing from a derivative transaction, repurchase 
agreement, reverse repurchase agreement, securi-
ties lending transaction, or securities borrowing 
transaction between the national banking asso-
ciation and the person;’’; 
(2) in paragraph (2), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(3) the term ‘derivative transaction’ includes 
any transaction that is a contract, agreement, swap, 
warrant, note, or option that is based, in whole or in 
part, on the value of, any interest in, or any quan-
titative measure or the occurrence of any event relat-
ing to, one or more commodities, securities, cur-
rencies, interest or other rates, indices, or other as-
sets.’’.
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(b) SAVINGS ASSOCIATIONS.—Section 5(u)(3) of the 
Home Owners’ Loan Act (12 U.S.C. 1464(u)(3)) is amended 
by striking ‘‘Director’’ each place that term appears and 
inserting ‘‘Comptroller of the Currency’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect 1 year after the transfer date. 
SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIM-
ITS TO INSURED STATE BANKS. 
(a) AMENDMENT.—Section 18 of the Federal Deposit 
Insurance Act (12 U.S.C. 1828) is amended by adding at 
the end the following: 
‘‘(y) APPLICATION OF LENDING LIMITS TO INSURED 
STATE BANKS.—Section 5200 of the Revised Statutes of the 
United States (12 U.S.C. 84) shall apply to each insured 
State bank, in the same manner and to the same extent 
as if the insured State bank were a national banking asso-
ciation.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall take effect 1 year after the transfer date. 
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED 
BANKS. 
(a) CONVERSION OF A NATIONAL BANKING ASSOCIA-
TION TO A STATE BANK.—The Act entitled ‘‘An Act to pro-
vide for the conversion of national banking associations into 
and their merger or consolidation with State banks, and
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for other purposes.’’ (12 U.S.C. 214 et seq.) is amended by 
adding at the end the following: 
‘‘SEC. 10. PROHIBITION ON CONVERSION. 
‘‘A national banking association may not convert to 
a State bank or State savings association during any pe-
riod in which the national banking association is subject 
to a cease and desist order (or other formal enforcement 
order) issued by, or a memorandum of understanding en-
tered into with, the Comptroller of the Currency with re-
spect to a significant supervisory matter.’’. 
(b) CONVERSION OF A STATE BANK TO A NATIONAL 
BANK.—Section 5154 of the Revised Statutes of the United 
States (12 U.S.C. 35) is amended by adding at the end the 
following: ‘‘The Comptroller of the Currency may not ap-
prove the conversion of a State bank or State savings asso-
ciation to a national banking association during any pe-
riod in which the State bank or State savings association 
is subject to a cease and desist order (or other formal en-
forcement order) issued by, or a memorandum of under-
standing entered into with, a State bank supervisor or the 
appropriate Federal banking agency with respect to a sig-
nificant supervisory matter.’’. 
(c) CONVERSION OF A FEDERAL SAVINGS ASSOCIATION 
TO A NATIONAL OR STATE BANK OR STATE SAVINGS ASSO-
CIATION.—Section 5(i) of the Home Owners’ Loan Act (12
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U.S.C. 1464(i)) is amended by adding at the end the fol-
lowing: 
‘‘(6) LIMITATION ON CERTAIN CONVERSIONS BY 
FEDERAL SAVINGS ASSOCIATIONS.—A Federal savings 
association may not convert to a national bank or 
State bank or State savings association during any 
period in which the Federal savings association is 
subject to a cease and desist order (or other formal en-
forcement order) issued by, or a memorandum of un-
derstanding entered into with, the Office of Thrift Su-
pervision or the Comptroller of the Currency with re-
spect to a significant supervisory matter.’’. 
SEC. 613. DE NOVO BRANCHING INTO STATES. 
(a) NATIONAL BANKS.—Section 5155(g)(1)(A) of the 
Revised Statutes of the United States (12 U.S.C. 
36(g)(1)(A)) is amended to read as follows: 
‘‘(A) the law of the State in which the 
branch is located, or is to be located, would per-
mit establishment of the branch, if the national 
bank were a State bank chartered by such State; 
and’’. 
(b) STATE INSURED BANKS.—Section 18(d)(4)(A)(i) 
of the Federal Deposit Insurance Act (12 U.S.C. 
1828(d)(4)(A)(i)) is amended to read as follows:
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‘‘(i) the law of the State in which the 
branch is located, or is to be located, would 
permit establishment of the branch, if the 
bank were a State bank chartered by such 
State; and’’. 
SEC. 614. LENDING LIMITS TO INSIDERS. 
(a) EXTENSIONS OF CREDIT.—Section 22(h)(9)(D)(i) 
of the Federal Reserve Act (12 U.S.C. 375b(9)(D)(i)) is 
amended— 
(1) by striking the period at the end and insert-
ing ‘‘; or’’; 
(2) by striking ‘‘a person’’ and inserting ‘‘the 
person’’; 
(3) by striking ‘‘extends credit by making’’ and 
inserting the following: ‘‘extends credit to a person 
by— 
‘‘(I) making’’; and 
(4) by adding at the end the following: 
‘‘(II) having credit exposure to the 
person arising from a derivative trans-
action (as defined in section 5200(b) of 
the Revised Statutes of the United 
States (12 U.S.C. 84(b))), repurchase 
agreement, reverse repurchase agree-
ment, securities lending transaction, or
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securities borrowing transaction be-
tween the member bank and the per-
son.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect 1 year after the transfer date. 
SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM 
INSIDERS. 
(a) AMENDMENT TO THE FEDERAL DEPOSIT INSUR-
ANCE ACT.—Section 18 of the Federal Deposit Insurance 
Act (12 U.S.C. 1828) is amended by adding at the end the 
following: 
‘‘(z) GENERAL PROHIBITION ON SALE OF ASSETS.— 
‘‘(1) IN GENERAL.—An insured depository insti-
tution may not purchase an asset from, or sell an 
asset to, an executive officer, director, or principal 
shareholder of the insured depository institution, or 
any related interest of such person (as such terms are 
defined in section 22(h) of Federal Reserve Act), un-
less— 
‘‘(A) the transaction is on market terms; 
and 
‘‘(B) if the transaction represents more than 
10 percent of the capital stock and surplus of the 
insured depository institution, the transaction 
has been approved in advance by a majority of
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the members of the board of directors of the in-
sured depository institution who do not have an 
interest in the transaction. 
‘‘(2) RULEMAKING.—The Board of Governors of 
the Federal Reserve System may issue such rules as 
may be necessary to define terms and to carry out the 
purposes this subsection. Before proposing or adopting 
a rule under this paragraph, the Board of Governors 
of the Federal Reserve System shall consult with the 
Comptroller of the Currency and the Corporation as 
to the terms of the rule.’’. 
(b) AMENDMENTS TO THE FEDERAL RESERVE ACT.— 
Section 22(d) of the Federal Reserve Act (12 U.S.C. 375) 
is amended to read as follows: 
‘‘(d) [Reserved]’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date. 
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF 
HOLDING COMPANIES. 
(a) CAPITAL LEVELS
OF BANK HOLDING COMPA-
NIES.—Section 5(b) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1844(b)) is amended by inserting after 
‘‘regulations’’ the following: ‘‘(including regulations relat-
ing to the capital requirements of bank holding compa-
nies)’’.
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(b) CAPITAL LEVELS OF SAVINGS AND LOAN HOLDING 
COMPANIES.—Section 10(g)(1) of the Home Owners’ Loan 
Act (12 U.S.C. 1467a(g)(1)) is amended by inserting after 
‘‘orders’’ the following: ‘‘(including regulations relating to 
capital requirements for savings and loan holding compa-
nies)’’. 
(c) SOURCE OF STRENGTH.—The Federal Deposit In-
surance Act (12 U.S.C. 1811 et seq.) is amended by insert-
ing after section 38 (12 U.S.C. 1831o) the following: 
‘‘SEC. 38A. SOURCE OF STRENGTH. 
‘‘(a) HOLDING COMPANIES.—The appropriate Federal 
banking agency for a bank holding company or savings and 
loan holding company shall require the bank holding com-
pany or savings and loan holding company to serve as a 
source of financial strength for any subsidiary of the bank 
holding company or savings and loan holding company 
that is a depository institution. 
‘‘(b) OTHER COMPANIES.—If an insured depository 
institution is not the subsidiary of a bank holding company 
or savings and loan holding company, the appropriate Fed-
eral banking agency for the insured depository institution 
shall require any company that directly or indirectly con-
trols the insured depository institution to serve as a source 
of financial strength for such institution.
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‘‘(c) REPORTS.—The appropriate Federal banking 
agency for an insured depository institution described in 
subsection (b) may, from time to time, require the company, 
or a company that directly or indirectly controls the in-
sured depository institution to submit a report, under oath, 
for the purposes of— 
‘‘(1) assessing the ability of such company to 
comply with the requirement under subsection (b); 
and 
‘‘(2) enforcing the compliance of such company 
with the requirement under subsection (b). 
‘‘(d) RULES.—Not later than 1 year after the transfer 
date, as defined in section 311 of the Enhancing Financial 
Institution Safety and Soundness Act of 2010, the appro-
priate Federal banking agencies shall jointly issue final 
rules to carry out this section. 
‘‘(e) DEFINITION.—In this section, the term ‘source of 
financial strength’ means the ability of a company that di-
rectly or indirectly owns or controls an insured depository 
institution to provide financial assistance to such insured 
depository institution in the event of the financial distress 
of the insured depository institution.’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date.
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SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK 
HOLDING COMPANY FRAMEWORK. 
(a) AMENDMENT.—Section 17 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78q) is amended— 
(1) by striking subsection (i); and 
(2) by redesignating subsections (j) and (k) as 
subsections (i) and (j), respectively. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the transfer date. 
SEC. 618. SECURITIES HOLDING COMPANIES. 
(a) DEFINITIONS.—In this section— 
(1) the term ‘‘associated person of a securities 
holding company’’ means a person directly or indi-
rectly controlling, controlled by, or under common 
control with, a securities holding company; 
(2) the term ‘‘foreign bank’’ has the same mean-
ing as in section 1(b)(7) of the International Banking 
Act of 1978 (12 U.S.C. 3101(b)(7)); 
(3) the term ‘‘insured bank’’ has the same mean-
ing as in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813); 
(4) the term ‘‘securities holding company’’— 
(A) means— 
(i) a person (other than a natural per-
son) that owns or controls 1 or more brokers
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or dealers registered with the Commission; 
and 
(ii) the associated persons of a person 
described in clause (i); and 
(B) does not include a person that is— 
(i) a nonbank financial company su-
pervised by the Board under title I; 
(ii) an affiliate of an insured bank 
(other than an institution described in sub-
paragraphs (D), (F), or (H) of section 
2(c)(2) of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1841(c)(2)) or an affil-
iate of a savings association; 
(iii) a foreign bank, foreign company, 
or company that is described in section 8(a) 
of the International Banking Act of 1978 
(12 U.S.C. 3106(a)); 
(iv) a foreign bank that controls, di-
rectly or indirectly, a corporation chartered 
under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.); or 
(v) subject to comprehensive consoli-
dated supervision by a foreign regulator; 
(5) the term ‘‘supervised securities holding com-
pany’’ means a securities holding company that is su-
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termines to be necessary or appropriate to carry 
out this section, to prevent evasions thereof, and 
to monitor compliance by the supervised securi-
ties holding company or affiliate with applicable 
provisions of law. 
(B) FORM AND CONTENTS.— 
(i) IN GENERAL.—Any record or report 
required to be made, furnished, or kept 
under this paragraph shall— 
(I) be prepared in such form and 
according to such specifications (in-
cluding certification by a registered 
public accounting firm), as the Board 
of Governors may require; and 
(II) be provided promptly to the 
Board of Governors at any time, upon 
request by the Board of Governors. 
(ii) CONTENTS.—Records and reports 
required to be made, furnished, or kept 
under this paragraph may include— 
(I) a balance sheet or income 
statement of the supervised securities 
holding company or an affiliate of a 
supervised securities holding company;
471 
† HR 4173 PP
(II) an assessment of the consoli-
dated capital and liquidity of the su-
pervised securities holding company; 
(III) a report by an independent 
auditor attesting to the compliance of 
the supervised securities holding com-
pany with the internal risk manage-
ment and internal control objectives of 
the supervised securities holding com-
pany; and 
(IV) a report concerning the ex-
tent to which the supervised securities 
holding company or affiliate has com-
plied with the provisions of this section 
and any regulations prescribed and or-
ders issued under this section. 
(2) USE OF EXISTING REPORTS.— 
(A) IN GENERAL.—The Board of Governors 
shall, to the fullest extent possible, accept reports 
in fulfillment of the requirements of this para-
graph that a supervised securities holding com-
pany or an affiliate of a supervised securities 
holding company has been required to provide to 
another regulatory agency or a self-regulatory 
organization.
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(B) AVAILABILITY.—A supervised securities 
holding company or an affiliate of a supervised 
securities holding company shall promptly pro-
vide to the Board of Governors, at the request of 
the Board of Governors, any report described in 
subparagraph (A), as permitted by law. 
(3) EXAMINATION AUTHORITY.— 
(A) FOCUS OF EXAMINATION AUTHORITY.— 
The Board of Governors may make examinations 
of any supervised securities holding company 
and any affiliate of a supervised securities hold-
ing company to carry out this subsection, to pre-
vent evasions thereof, and to monitor compliance 
by the supervised securities holding company or 
affiliate with applicable provisions of law. 
(B) DEFERENCE
TO
OTHER
EXAMINA-
TIONS.—For purposes of this subparagraph, the 
Board of Governors shall, to the fullest extent 
possible, use the reports of examination made by 
other appropriate Federal or State regulatory 
authorities with respect to any functionally regu-
lated subsidiary or any institution described in 
subparagraph (D), (F), or (H) of section 2(c)(2) 
of the Bank Holding Company Act of 1956 (12 
U.S.C. 1841(c)(2)).
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(d) CAPITAL AND RISK MANAGEMENT.— 
(1) IN GENERAL.—The Board of Governors shall, 
by regulation or order, prescribe capital adequacy 
and other risk management standards for supervised 
securities holding companies that are appropriate to 
protect the safety and soundness of the supervised se-
curities holding companies and address the risks 
posed to financial stability by supervised securities 
holding companies. 
(2) DIFFERENTIATION.—In imposing standards 
under this subsection, the Board of Governors may 
differentiate among supervised securities holding com-
panies on an individual basis, or by category, taking 
into consideration the requirements under paragraph 
(3). 
(3) CONTENT.—Any standards imposed on a su-
pervised securities holding company under this sub-
section shall take into account— 
(A) the differences among types of business 
activities carried out by the supervised securities 
holding company; 
(B) the amount and nature of the financial 
assets of the supervised securities holding com-
pany;
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† HR 4173 PP
(C) the amount and nature of the liabilities 
of the supervised securities holding company, in-
cluding the degree of reliance on short-term fund-
ing; 
(D) the extent and nature of the off-balance 
sheet exposures of the supervised securities hold-
ing company; 
(E) the extent and nature of the trans-
actions and relationships of the supervised secu-
rities holding company with other financial com-
panies; 
(F) the importance of the supervised securi-
ties holding company as a source of credit for 
households, businesses, and State and local gov-
ernments, and as a source of liquidity for the fi-
nancial system; and 
(G) the nature, scope, and mix of the activi-
ties of the supervised securities holding company. 
(4) NOTICE.—A capital requirement imposed 
under this subsection may not take effect earlier than 
180 days after the date on which a supervised securi-
ties holding company is provided notice of the capital 
requirement.
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(e) EXCEPTION FOR BANKS.—No bank shall be subject 
to any of the requirements set forth in subsections (c) and 
(d). 
(f) OTHER PROVISIONS OF LAW APPLICABLE TO SU-
PERVISED SECURITIES HOLDING COMPANIES.— 
(1) FEDERAL DEPOSIT INSURANCE ACT.—Sub-
sections (b), (c) through (s), and (u) of section 8 of 
the Federal Deposit Insurance Act (12 U.S.C. 1818) 
shall apply to any supervised securities holding com-
pany, and to any subsidiary (other than a bank or 
an institution described in subparagraph (D), (F), or 
(H) of section 2(c)(2) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(c)(2))) of a supervised 
securities holding company, in the same manner as 
such subsections apply to a bank holding company for 
which the Board of Governors is the appropriate Fed-
eral banking agency. For purposes of applying such 
subsections to a supervised securities holding com-
pany or a subsidiary (other than a bank or an insti-
tution described in subparagraph (D), (F), or (H) of 
section 2(c)(2) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1841(c)(2))) of a supervised securi-
ties holding company, the Board of Governors shall be 
deemed the appropriate Federal banking agency for
476 
† HR 4173 PP
the supervised securities holding company or sub-
sidiary. 
(2) BANK HOLDING COMPANY ACT OF 1956.—Ex-
cept as the Board of Governors may otherwise provide 
by regulation or order, a supervised securities holding 
company shall be subject to the provisions of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.) in the same manner and to the same extent a 
bank holding company is subject to such provisions, 
except that a supervised securities holding company 
may not, by reason of this paragraph, be deemed to 
be a bank holding company for purposes of section 4 
of the Bank Holding Company Act of 1956 (12 
U.S.C. 1843). 
SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY 
BANKS AND BANK HOLDING COMPANIES. 
(a) DEFINITIONS.—In this section— 
(1) the terms ‘‘hedge fund’’ and ‘‘private equity 
fund’’ mean a company or other entity that is exempt 
from registration as an investment company pursu-
ant to section 3(c)(1) or 3(c)(7) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–3(c)(1) or 80a– 
3(c)(7)), or a similar fund, as jointly determined by 
the appropriate Federal banking agencies; 
(2) the term ‘‘proprietary trading’’—
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(3) the term ‘‘sponsoring’’, when used with re-
spect to a hedge fund or private equity fund, means— 
(A) serving as a general partner, managing 
member, or trustee of the fund; 
(B) in any manner selecting or controlling 
(or having employees, officers, directors, or 
agents who constitute) a majority of the direc-
tors, trustees, or management of the fund; or 
(C) sharing with the fund, for corporate, 
marketing, promotional, or other purposes, the 
same name or a variation of the same name. 
(b) PROHIBITION ON PROPRIETARY TRADING.— 
(1) IN GENERAL.—Subject to the recommenda-
tions and modifications of the Council under sub-
section (g), and except as provided in paragraph (2) 
or (3), the appropriate Federal banking agencies 
shall, through a rulemaking under subsection (g), 
jointly prohibit proprietary trading by an insured de-
pository institution, a company that controls, directly 
or indirectly, an insured depository institution or is 
treated as a bank holding company for purposes of 
the Bank Holding Company Act of 1956 (12 U.S.C. 
1841 et seq.), and any subsidiary of such institution 
or company. 
(2) EXCEPTED OBLIGATIONS.—
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(A) IN GENERAL.—The prohibition under 
this subsection shall not apply with respect to an 
investment that is otherwise authorized by Fed-
eral law in— 
(i) obligations of the United States or 
any agency of the United States, including 
obligations fully guaranteed as to principal 
and interest by the United States or an 
agency of the United States; 
(ii) 
obligations, 
participations, 
or 
other instruments of, or issued by, the Gov-
ernment National Mortgage Association, the 
Federal National Mortgage Association, or 
the Federal Home Loan Mortgage Corpora-
tion, including obligations fully guaranteed 
as to principal and interest by such enti-
ties; and 
(iii) obligations of any State or any 
political subdivision of a State. 
(B) CONDITIONS.—The appropriate Federal 
banking agencies may impose conditions on the 
conduct of investments described in subpara-
graph (A). 
(C) RULE OF CONSTRUCTION.—Nothing in 
subparagraph (A) may be construed to grant
480 
† HR 4173 PP
any authority to any person that is not other-
wise provided in Federal law. 
(3) FOREIGN ACTIVITIES.—An investment or ac-
tivity conducted by a company pursuant to para-
graph (9) or (13) of section 4(c) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(c)) solely out-
side of the United States shall not be subject to the 
prohibition under paragraph (1), provided that the 
company is not directly or indirectly controlled by a 
company that is organized under the laws of the 
United States or of a State. 
(c) PROHIBITION ON SPONSORING AND INVESTING IN 
HEDGE FUNDS AND PRIVATE EQUITY FUNDS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), and subject to the recommendations and 
modifications of the Council under subsection (g), the 
appropriate Federal banking agencies shall, through a 
rulemaking under subsection (g), jointly prohibit an 
insured depository institution, a company that con-
trols, directly or indirectly, an insured depository in-
stitution or is treated as a bank holding company for 
purposes of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841 et seq.), or any subsidiary of such 
institution or company, from sponsoring or investing 
in a hedge fund or a private equity fund.
481 
† HR 4173 PP
(2) APPLICATION
TO
FOREIGN
ACTIVITIES
OF 
FOREIGN
FIRMS.—An investment or activity con-
ducted by a company pursuant to paragraph (9) or 
(13) of section 4(c) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1843(c)) solely outside of the 
United States shall not be subject to the prohibitions 
and restrictions under paragraph (1), provided that 
the company is not directly or indirectly controlled 
by a company that is organized under the laws of the 
United States or of a State. 
(d) INVESTMENTS IN SMALL BUSINESS INVESTMENT 
COMPANIES AND INVESTMENTS DESIGNED TO PROMOTE 
THE PUBLIC WELFARE.— 
(1) IN GENERAL.—A prohibition imposed by the 
appropriate Federal banking agencies under sub-
section (c) shall not apply with respect an investment 
otherwise authorized under Federal law that is— 
(A) an investment in a small business in-
vestment company, as that term is defined in 
section 103 of the Small Business Investment Act 
of 1958 (15 U.S.C. 662); or 
(B) designed primarily to promote the pub-
lic welfare, as provided in the 11th paragraph of 
section 5136 of the Revised Statutes (12 U.S.C. 
24).
482 
† HR 4173 PP
(2) RULE OF CONSTRUCTION.—Nothing in para-
graph (1) may be construed to grant any authority 
to any person that is not otherwise provided in Fed-
eral law. 
(e) LIMITATIONS ON RELATIONSHIPS WITH HEDGE 
FUNDS AND PRIVATE EQUITY FUNDS.— 
(1) COVERED
TRANSACTIONS.—An insured de-
pository institution, a company that controls, directly 
or indirectly, an insured depository institution or is 
treated as a bank holding company for purposes of 
the Bank Holding Company Act of 1956 (12 U.S.C. 
1841 et seq.), and any subsidiary of such institution 
or company that serves, directly or indirectly, as the 
investment manager or investment adviser to a hedge 
fund or private equity fund may not enter into a cov-
ered transaction, as defined in section 23A of the Fed-
eral Reserve Act (12 U.S.C. 371c) with such hedge 
fund or private equity fund. 
(2) AFFILIATION.—An insured depository insti-
tution, a company that controls, directly or indi-
rectly, an insured depository institution or is treated 
as a bank holding company for purposes of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841 et 
seq.), and any subsidiary of such institution or com-
pany that serves, directly or indirectly, as the invest-
483 
† HR 4173 PP
ment manager or investment adviser to a hedge fund 
or private equity fund shall be subject to section 23B 
of the Federal Reserve Act (12 U.S.C. 371c–1) as if 
such institution, company, or subsidiary were a mem-
ber bank and such hedge fund or private equity fund 
were an affiliate. 
(f) CAPITAL
AND QUANTITATIVE LIMITATIONS
FOR 
CERTAIN NONBANK FINANCIAL COMPANIES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), and subject to the recommendations and 
modifications of the Council under subsection (g), the 
Board of Governors shall adopt rules imposing addi-
tional capital requirements and specifying additional 
quantitative limits for nonbank financial companies 
supervised by the Board of Governors under section 
113 that engage in proprietary trading or sponsoring 
and investing in hedge funds and private equity 
funds. 
(2) EXCEPTIONS.—The rules under this sub-
section shall not apply with respect to the trading of 
an investment that is otherwise authorized by Federal 
law— 
(A) in obligations of the United States or 
any agency of the United States, including obli-
gations fully guaranteed as to principal and in-
484 
† HR 4173 PP
terest by the United States or an agency of the 
United States; 
(B) in obligations, participations, or other 
instruments of, or issued by, the Government Na-
tional Mortgage Association, the Federal Na-
tional Mortgage Association, or the Federal 
Home Loan Mortgage Corporation, including ob-
ligations fully guaranteed as to principal and 
interest by such entities; 
(C) in obligations of any State or any polit-
ical subdivision of a State; 
(D) in a small business investment com-
pany, as that term is defined in section 103 of 
the Small Business Investment Act of 1958 (15 
U.S.C. 662); or 
(E) that is designed primarily to promote 
the public welfare, as provided in the 11th para-
graph of section 5136 of the Revised Statutes (12 
U.S.C. 24). 
(g) COUNCIL STUDY AND RULEMAKING.— 
(1) STUDY AND RECOMMENDATIONS.—Not later 
than 6 months after the date of enactment of this Act, 
the Council— 
(A) shall complete a study of the definitions 
under subsection (a) and the other provisions
485 
† HR 4173 PP
under subsections (b) through (f), to assess the 
extent to which the definitions under subsection 
(a) and the implementation of subsections (a) 
through (f) would— 
(i) promote and enhance the safety and 
soundness of depository institutions and the 
affiliates of depository institutions; 
(ii) protect taxpayers and enhance fi-
nancial stability by minimizing the risk 
that depository institutions and the affili-
ates of depository institutions will engage 
in unsafe and unsound activities; 
(iii) limit the inappropriate transfer of 
Federal subsidies from institutions that ben-
efit from deposit insurance and liquidity fa-
cilities of the Federal Government to un-
regulated entities; 
(iv) reduce inappropriate conflicts of 
interest between the self-interest of deposi-
tory institutions, affiliates of depository in-
stitutions, and financial companies super-
vised by the Board, and the interests of the 
customers of such institutions and compa-
nies;
486 
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(v) raise the cost of credit or other fi-
nancial services, reduce the availability of 
credit or other financial services, or impose 
other costs on households and businesses in 
the United States; 
(vi) limit activities that have caused 
undue risk or loss in depository institu-
tions, affiliates of depository institutions, 
and financial companies supervised by the 
Board of Governors, or that might reason-
ably be expected to create undue risk or loss 
in such institutions, affiliates, and compa-
nies; and 
(vii) appropriately accommodates the 
business of insurance within an insurance 
company subject to regulation in accordance 
with State insurance company investment 
laws; 
(B) shall make recommendations regarding 
the definitions under subsection (a) and the im-
plementation of other provisions under sub-
sections (b) through (f), including any modifica-
tions to the definitions, prohibitions, require-
ments, and limitations contained therein that the
487 
† HR 4173 PP
Council determines would more effectively imple-
ment the purposes of this section; and 
(C) may make recommendations for prohib-
iting the conduct of the activities described in 
subsections (b) and (c) above a specific threshold 
amount and imposing additional capital re-
quirements on activities conducted below such 
threshold amount. 
(2) RULEMAKING.—Not earlier than the date of 
completion of the study required under paragraph 
(1), and not later than 9 months after the date of 
completion of such study— 
(A) the appropriate Federal banking agen-
cies shall jointly issue final regulations imple-
menting subsections (b) through (e), which shall 
reflect any recommendations or modifications 
made by the Council pursuant to paragraph 
(1)(B); and 
(B) the Board of Governors shall issue final 
regulations implementing subsection (f), which 
shall reflect any recommendations or modifica-
tions made by the Council pursuant to para-
graph (1)(B). 
(h) TRANSITION.—
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(1) IN GENERAL.—The final regulations issued 
by the appropriate Federal banking agencies and the 
Board of Governors under subsection (g)(2) shall pro-
vide that, effective 2 years after the date on which 
such final regulations are issued, no insured deposi-
tory institution, company that controls, directly or 
indirectly, an insured depository institution, com-
pany that is treated as a bank holding company for 
purposes of the Bank Holding Company Act of 1956 
(12 U.S.C. 1841 et seq.), or subsidiary of such institu-
tion or company, may retain any investment or rela-
tionship prohibited under such regulations. 
(2) EXTENSION.— 
(A) IN GENERAL.—The appropriate Federal 
banking agency for an insured depository insti-
tution or a company described in paragraph (1) 
may, upon the application of any such company, 
extend the 2-year period under paragraph (1) 
with respect to such company, if the appropriate 
Federal banking agency determines that an ex-
tension would not be detrimental to the public 
interest. 
(B) TIME PERIOD FOR EXTENSION.—An ex-
tension granted under subparagraph (A) may 
not exceed—
489 
† HR 4173 PP
(i) 1 year for each determination made 
by the appropriate Federal banking agency 
under subparagraph (A); and 
(ii) a total of 3 years with respect to 
any 1 company. 
SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL 
FIRMS. 
The Bank Holding Company Act of 1956 (12 U.S.C. 
1841 et seq.) is amended by adding at the end the following: 
‘‘SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL 
FIRMS. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘Council’ means the Financial Sta-
bility Oversight Council; 
‘‘(2) the term ‘financial company’ means— 
‘‘(A) an insured depository institution; 
‘‘(B) a bank holding company; 
‘‘(C) a savings and loan holding company; 
‘‘(D) a company that controls an insured 
depository institution; 
‘‘(E) a nonbank financial company super-
vised by the Board under title I of the Restoring 
American Financial Stability Act of 2010; and
490 
† HR 4173 PP
‘‘(F) a foreign bank or company that is 
treated as a bank holding company for purposes 
of this Act; and 
‘‘(3) the term ‘liabilities’ means— 
‘‘(A) with respect to a United States finan-
cial company— 
‘‘(i) the total risk-weighted assets of the 
financial company, as determined under the 
risk-based capital rules applicable to bank 
holding companies, as adjusted to reflect ex-
posures that are deducted from regulatory 
capital; less 
‘‘(ii) the total regulatory capital of the 
financial company under the risk-based 
capital rules applicable to bank holding 
companies; 
‘‘(B) with respect to a foreign-based finan-
cial company— 
‘‘(i) the total risk-weighted assets of the 
United States operations of the financial 
company, as determined under the applica-
ble risk-based capital rules, as adjusted to 
reflect exposures that are deducted from reg-
ulatory capital; less
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† HR 4173 PP
‘‘(ii) the total regulatory capital of the 
United States operations of the financial 
company, as determined under the applica-
ble risk-based capital rules; and 
‘‘(C) with respect to an insurance company 
or other nonbank financial company supervised 
by the Board, such assets of the company as the 
Board shall specify by rule, in order to provide 
for consistent and equitable treatment of such 
companies. 
‘‘(b) CONCENTRATION LIMIT.—Subject to the rec-
ommendations by the Council under subsection (e), a finan-
cial company may not merge or consolidate with, acquire 
all or substantially all of the assets of, or otherwise acquire 
control of, another company, if the total consolidated liabil-
ities of the acquiring financial company upon consumma-
tion of the transaction would exceed 10 percent of the aggre-
gate consolidated liabilities of all financial companies at 
the end of the calendar year preceding the transaction. 
‘‘(c) EXCEPTION TO CONCENTRATION LIMIT.—With the 
prior written consent of the Board, the concentration limit 
under subsection (b) shall not apply to an acquisition— 
‘‘(1) of a bank in default or in danger of default; 
‘‘(2) with respect to which assistance is provided 
by the Federal Deposit Insurance Corporation under
492 
† HR 4173 PP
section 13(c) of the Federal Deposit Insurance Act (12 
U.S.C. 1823(c)); or 
‘‘(3) that would result only in a de minimis in-
crease in the liabilities of the financial company. 
‘‘(d) RULEMAKING AND GUIDANCE.—The Board shall 
issue regulations implementing this section in accordance 
with the recommendations of the Council under subsection 
(e), including the definition of terms, as necessary. The 
Board may issue interpretations or guidance regarding the 
application of this section to an individual financial com-
pany or to financial companies in general. 
‘‘(e) COUNCIL STUDY AND RULEMAKING.— 
‘‘(1) STUDY AND RECOMMENDATIONS.—Not later 
than 6 months after the date of enactment of this sec-
tion, the Council shall— 
‘‘(A) complete a study of the extent to which 
the concentration limit under this section would 
affect financial stability, moral hazard in the fi-
nancial system, the efficiency and competitive-
ness of United States financial firms and finan-
cial markets, and the cost and availability of 
credit and other financial services to households 
and businesses in the United States; and 
‘‘(B) make recommendations regarding any 
modifications to the concentration limit that the
493 
† HR 4173 PP
Council determines would more effectively imple-
ment this section. 
‘‘(2) RULEMAKING.—Not later than 9 months 
after the date of completion of the study under para-
graph (1), and notwithstanding subsections (b) and 
(d), the Board shall issue final regulations imple-
menting this section, which shall reflect any rec-
ommendations by the Council under paragraph 
(1)(B).’’. 
TITLE VII—WALL STREET TRANS-
PARENCY 
AND 
ACCOUNT-
ABILITY 
SEC. 701. SHORT TITLE. 
This title may be cited as the ‘‘Wall Street Trans-
parency and Accountability Act of 2010’’. 
Subtitle A—Regulation of Over-the- 
Counter Swaps Markets 
PART I—REGULATORY AUTHORITY 
SEC. 711. DEFINITIONS. 
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’’, ‘‘eligible contract participant’’, 
‘‘swap execution facility’’, ‘‘security-based swap’’, ‘‘secu-
rity-based swap dealer’’, ‘‘major security-based swap par-
494 
† HR 4173 PP
ticipant’’, ‘‘swap data repository’’, and ‘‘associated person 
of a security-based swap dealer or major security-based 
swap participant’’ have the meanings given the terms in 
section 1a of the Commodity Exchange Act (7 U.S.C. 1a). 
SEC. 712. REVIEW OF REGULATORY AUTHORITY. 
(a) REGULATORY AUTHORITY.— 
(1) IN GENERAL.—Except as provided in para-
graphs (4) and (8), the Commodity Futures Trading 
Commission and the Securities and Exchange Com-
mission shall each prescribe such regulations as may 
be necessary to carry out the purposes of this title. 
(2) COORDINATION, CONSISTENCY, AND
COM-
PARABILITY.—Both 
Commissions 
required 
under 
paragraph (1) to prescribe regulations shall consult 
and coordinate with each other for the purposes of as-
suring, to the extent possible, that the regulations pre-
scribed by each such Commission are consistent and 
comparable with the regulations prescribed by the 
other. 
(3) PROCEDURES AND DEADLINE.—Such regula-
tions shall be prescribed in accordance with applica-
ble requirements of title 5, United States Code, and, 
shall be issued in final form not later than 180 days 
after the date of enactment of this Act.
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† HR 4173 PP
(4) APPLICABILITY.—The requirements of para-
graph (1) shall not apply to an order issued— 
(A) in connection with or arising from a 
violation or potential violation of any provision 
of the Commodity Exchange Act (7 U.S.C. 1 et 
seq.); 
(B) in connection with or arising from a 
violation or potential violation of any provision 
of the securities laws; or 
(C) in any proceeding that is conducted on 
the record in accordance with sections 556 and 
557 of title 5, United States Code. 
(5) EFFECT.—Nothing in this subsection author-
izes any consultation or procedure for consultation 
that is not consistent with the requirements of sub-
chapter II of chapter 5, and chapter 7, of title 5, 
United States Code (commonly known as the ‘‘Admin-
istrative Procedure Act’’). 
(6) RULES; ORDERS.—In developing and pro-
mulgating rules or orders pursuant to this subsection, 
each Commission shall consider the views of the pru-
dential regulators. 
(7) TREATMENT OF SIMILAR PRODUCTS AND EN-
TITIES.—
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† HR 4173 PP
vided, confers jurisdiction on the Commodity Futures 
Trading Commission to issue a rule, regulation, or 
order providing for oversight or regulation of— 
(A) security-based swaps; or 
(B) with regard to its activities or functions 
concerning security-based swaps— 
(i) security-based swap dealers; 
(ii) major security-based swap partici-
pants; 
(iii) security-based swap data reposi-
tories; 
(iv) persons associated with a security- 
based swap dealer or major security-based 
swap participant; 
(v) eligible contract participants with 
respect to security-based swaps; or 
(vi) swap execution facilities with re-
spect to security-based swaps. 
(2) SECURITIES AND EXCHANGE COMMISSION.— 
Nothing in this title, unless specifically provided, con-
fers jurisdiction on the Securities and Exchange Com-
mission or State securities regulators to issue a rule, 
regulation, or order providing for oversight or regula-
tion of— 
(A) swaps; or
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† HR 4173 PP
(B) with regard to its activities or functions 
concerning swaps— 
(i) swap dealers; 
(ii) major swap participants; 
(iii) swap data repositories; 
(iv) persons associated with a swap 
dealer or major swap participant; 
(v) eligible contract participants with 
respect to swaps; or 
(vi) swap execution facilities with re-
spect to swaps. 
(3) PROHIBITION ON CERTAIN FUTURES ASSO-
CIATIONS
AND
NATIONAL
SECURITIES
ASSOCIA-
TIONS.— 
(A) 
FUTURES
ASSOCIATIONS.—Notwith-
standing any other provision of law (including 
regulations), unless otherwise authorized by this 
title, no futures association registered under sec-
tion 17 of the Commodity Exchange Act (7 
U.S.C. 21) may issue a rule, regulation, or order 
for the oversight or regulation of, or otherwise as-
sert jurisdiction over, for any purpose, any secu-
rity-based swap, except that this shall not limit 
the authority of a national futures association to
499 
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examine for compliance with and enforce its 
rules on advertising and capital adequacy. 
(B) 
NATIONAL
SECURITIES
ASSOCIA-
TIONS.—Notwithstanding any other provision of 
law (including regulations), unless otherwise au-
thorized by this title, no national securities asso-
ciation registered under section 15A of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78o–3) 
may issue a rule, regulation, or order for the 
oversight or regulation of, or otherwise assert ju-
risdiction over, for any purpose, any swap, ex-
cept that this shall not limit the authority of a 
national securities association to examine for 
compliance with and enforce its rules on adver-
tising and capital adequacy. 
(c) OBJECTION TO COMMISSION REGULATION.— 
(1) FILING OF PETITION FOR REVIEW.— 
(A) IN GENERAL.—If either Commission re-
ferred to in this section determines that a final 
rule, regulation, or order of the other Commis-
sion conflicts with subsection (a)(4) or (b), then 
the complaining Commission may obtain review 
of the final rule, regulation, or order in the 
United States Court of Appeals for the District 
of Columbia Circuit by filing in the court, not
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later than 60 days after the date of publication 
of the final rule, regulation, or order, a written 
petition requesting that the rule, regulation, or 
order be set aside. 
(B) 
EXPEDITED
PROCEEDING.—A 
pro-
ceeding described in subparagraph (A) shall be 
expedited by the United States Court of Appeals 
for the District of Columbia Circuit. 
(2) TRANSMITTAL OF PETITION AND RECORD.— 
(A) IN GENERAL.—A copy of a petition de-
scribed in paragraph (1) shall be transmitted not 
later than 1 business day after the date of filing 
by the complaining Commission to the Secretary 
of the responding Commission. 
(B) DUTY OF RESPONDING COMMISSION.— 
On receipt of the copy of a petition described in 
paragraph (1), the responding Commission shall 
file with the United States Court of Appeals for 
the District of Columbia Circuit— 
(i) a copy of the rule, regulation, or 
order under review (including any docu-
ments referred to therein); and 
(ii) any other materials prescribed by 
the United States Court of Appeals for the 
District of Columbia Circuit.
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(3) STANDARD OF REVIEW.—The United States 
Court of Appeals for the District of Columbia Circuit 
shall— 
(A) give deference to the views of neither 
Commission; and 
(B) determine to affirm or set aside a rule, 
regulation, or order of the responding Commis-
sion under this subsection, based on the deter-
mination of the court as to whether the rule, reg-
ulation, or order is in conflict with subsection 
(a)(4) or (b), as applicable. 
(4) JUDICIAL STAY.—The filing of a petition by 
the complaining Commission pursuant to paragraph 
(1) shall operate as a stay of the rule, regulation, or 
order until the date on which the determination of the 
United States Court of Appeals for the District of Co-
lumbia Circuit is final (including any appeal of the 
determination). 
(d) ADOPTION OF RULES ON UNCLEARED SWAPS.— 
Notwithstanding subsections (b) and (c), the Commodity 
Futures Trading Commission and the Securities and Ex-
change Commission shall, after consulting with each other 
Commission, adopt rules— 
(1) to require the maintenance of records of all 
activities relating to transactions in swaps and secu-
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under this title or an amendment made by this title not 
later than 180 days after the date of enactment of this Act. 
(g) EXPEDITED RULEMAKING PROCESS.—The Com-
modity Futures Trading Commission or the Securities and 
Exchange Commission, or both, may use emergency and ex-
pedited procedures (including any administrative or other 
procedure as appropriate) to carry out this title and the 
amendments made by this title if, in either of the Commis-
sions’ discretion, it considers it necessary to do so. 
SEC. 713. RECOMMENDATIONS FOR CHANGES TO PORT-
FOLIO MARGINING LAWS. 
Not later than 180 days after the date of enactment 
of this Act, the Securities and Exchange Commission, the 
Commodity Futures Trading Commission, and the pruden-
tial regulators shall submit to the appropriate committees 
of Congress recommendations for legislative changes to the 
Federal laws to facilitate the portfolio margining of securi-
ties and commodity futures and options, commodity op-
tions, swaps, and other financial instrument positions. 
SEC. 714. ABUSIVE SWAPS. 
The Commodity Futures Trading Commission or the 
Securities and Exchange Commission, or both, individually 
may, by rule or order— 
(1) collect information as may be necessary con-
cerning the markets for any types of—
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(A) swap (as defined in section 1a of the 
Commodity Exchange Act (7 U.S.C. 1a)); or 
(B) security-based swap (as defined in sec-
tion 1a of the Commodity Exchange Act (7 
U.S.C. 1a)); and 
(2) issue a report with respect to any types of 
swaps or security-based swaps that the Commodity 
Futures Trading Commission or the Securities and 
Exchange Commission determines to be detrimental 
to— 
(A) the stability of a financial market; or 
(B) participants in a financial market. 
SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN 
SWAP ACTIVITIES. 
Except as provided in section 4 of the Commodity Ex-
change Act (7 U.S.C. 6) (as amended by section 738), if 
the Commodity Futures Trading Commission or the Securi-
ties and Exchange Commission determines that the regula-
tion of swaps or security-based swaps markets in a foreign 
country undermines the stability of the United States fi-
nancial system, either Commission, in consultation with the 
Secretary of the Treasury, may prohibit an entity domi-
ciled in the foreign country from participating in the 
United States in any swap or security-based swap activi-
ties.
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SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT 
BAILOUTS OF SWAPS ENTITIES. 
(a) PROHIBITION
ON FEDERAL ASSISTANCE.—Not-
withstanding any other provision of law (including regula-
tions), no Federal assistance may be provided to any swaps 
entity with respect to any swap, security-based swap, or 
other activity of the swaps entity. 
(b) DEFINITIONS.—In this section: 
(1) FEDERAL ASSISTANCE.—The term ‘‘Federal 
assistance’’ means the use of any funds, including ad-
vances from any Federal Reserve credit facility, dis-
count window, or pursuant to the third undesignated 
paragraph of section 13 of the Federal Reserve Act 
(12 U.S.C. 343) (relating to emergency lending au-
thority), Federal Deposit Insurance Corporation in-
surance, or guarantees for the purpose of— 
(A) making any loan to, or purchasing any 
stock, equity interest, or debt obligation of, any 
swaps entity; 
(B) purchasing the assets of any swaps enti-
ty; 
(C) guaranteeing any loan or debt issuance 
of any swaps entity; or 
(D) entering into any assistance arrange-
ment (including tax breaks), loss sharing, or 
profit sharing with any swaps entity.
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(2) SWAPS ENTITY.—The term ‘‘swaps entity’’ 
means any swap dealer, security-based swap dealer, 
major swap participant, major security-based swap 
participant, swap execution facility, designated con-
tract market, national securities exchange, central 
counterparty, clearing house, clearing agency, or de-
rivatives clearing organization that is registered 
under— 
(A) the Commodity Exchange Act (7 U.S.C. 
1 et seq.); 
(B) the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.); or 
(C) any other Federal or State law (includ-
ing regulations). 
SEC. 717. NEW PRODUCT APPROVAL—CFTC—SEC PROCESS. 
(a) AMENDMENTS
TO
THE COMMODITY EXCHANGE 
ACT.—Section 2(a)(1)(C) of the Commodity Exchange Act 
(7 U.S.C. 2(a)(1)(C)) is amended— 
(1) in clause (i) by striking ‘‘This’’ and insert-
ing ‘‘(I) Except as provided in subclause (II), this’’; 
and 
(2) by adding at the end of clause (i) the fol-
lowing: 
‘‘(II) This Act shall apply to and 
the Commission shall have jurisdiction
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with respect to accounts, agreements, 
and transactions involving, and may 
permit the listing for trading pursuant 
to section 5c(c) of, a put, call, or other 
option on 1 or more securities (as de-
fined in section 2(a)(1) of the Securi-
ties Act of 1933 or section 3(a)(10) of 
the Securities Exchange Act of 1934 on 
the date of enactment of the Futures 
Trading Act of 1982), including any 
group or index of such securities, or 
any interest therein or based on the 
value thereof, that is exempted by the 
Securities and Exchange Commission 
pursuant to section 36(a)(1) of the Se-
curities Exchange Act of 1934 with the 
condition that the Commission exercise 
concurrent jurisdiction over such put, 
call, or other option; provided, how-
ever, that nothing in this paragraph 
shall be construed to affect the jurisdic-
tion and authority of the Securities 
and Exchange Commission over such 
put, call, or other option.’’.
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(b) AMENDMENT TO THE SECURITIES EXCHANGE ACT 
OF 1934.—The Securities Exchange Act of 1934 is amended 
by adding the following section after section 3A (15 U.S.C. 
78c–1): 
‘‘SEC. 3B. SECURITIES-RELATED DERIVATIVES. 
‘‘(a) Any agreement, contract, or transaction (or class 
thereof) that is exempted by the Commodity Futures Trad-
ing Commission pursuant to section 4(c)(1) of the Com-
modity Exchange Act (7 U.S.C. 6(c)(1)) with the condition 
that the Commission exercise concurrent jurisdiction over 
such agreement, contract, or transaction (or class thereof) 
shall be deemed a security for purposes of the securities 
laws. 
‘‘(b) With respect to any agreement, contract, or trans-
action (or class thereof) that is exempted by the Commodity 
Futures Trading Commission pursuant to section 4(c)(1) 
of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the 
condition that the Commission exercise concurrent jurisdic-
tion over such agreement, contract, or transaction (or class 
thereof), references in the securities laws to the ‘purchase’ 
or ‘sale’ of a security shall be deemed to include the execu-
tion, termination (prior to its scheduled maturity date), as-
signment, exchange, or similar transfer or conveyance of, 
or extinguishing of rights or obligations under such agree-
ment, contract, or transaction, as the context may require.’’.
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(c) AMENDMENT TO SECURITIES EXCHANGE ACT OF 
1934.—Section 19(b) of the Securities Exchange Act of 1934 
(15 U.S.C. 78s(b)) is amended by adding at the end the 
following: 
‘‘(10) Notwithstanding the provisions of para-
graph (2), the time period within which the Commis-
sion is required by order to approve a proposed rule 
change or institute proceedings to determine whether 
the proposed rule change should be disapproved is 
stayed pending a determination by the Commission 
upon the request of the Commodity Futures Trading 
Commission or its Chairman that the Commission 
issue a determination as to whether a product that is 
the subject of such proposed rule change is a security 
pursuant to section 718 of the Wall Street Trans-
parency and Accountability Act of 2010.’’. 
(d) AMENDMENT TO COMMODITY EXCHANGE ACT.— 
Section 5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 
7a–2(c)(1)) is amended— 
(1) by striking ‘‘Subject to paragraph (2)’’ and 
inserting the following: 
‘‘(A) ELECTION.—Subject to paragraph 
(2)’’; and 
(2) by adding at the end the following:
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‘‘(B) CERTIFICATION.—The certification of 
a product pursuant to this paragraph shall be 
stayed pending a determination by the Commis-
sion upon the request of the Securities and Ex-
change Commission or its Chairman that the 
Commission issue a determination as to whether 
the product that is the subject of such certifi-
cation is a contract of sale of a commodity for 
future delivery, an option on such a contract, or 
an option on a commodity pursuant to section 
718 of the Wall Street Transparency and Ac-
countability Act of 2010.’’. 
SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE 
PRODUCTS. 
(a) PROCESS FOR DETERMINING THE STATUS OF A 
NOVEL DERIVATIVE PRODUCT.— 
(1) NOTICE.— 
(A) IN GENERAL.—Any person filing a pro-
posal to list or trade a novel derivative product 
that may have elements of both securities and 
contracts of sale of a commodity for future deliv-
ery (or options on such contracts or options on 
commodities) may concurrently provide notice 
and furnish a copy of such filing with both the 
Securities and Exchange Commission and the
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Commodity Futures Trading Commission. Any 
such notice shall state that notice has been made 
with both Commissions. 
(B) NOTIFICATION.—If no concurrent notice 
is made pursuant to subparagraph (A), within 5 
business days after determining that a proposal 
that seeks to list or trade a novel derivative 
product may have elements of both securities and 
contracts of sale of a commodity for future deliv-
ery (or options on such contracts or options on 
commodities), the Securities and Exchange Com-
mission or the Commodity Futures Trading 
Commission, as applicable, shall notify the other 
Commission and provide a copy of such filing to 
the other Commission. 
(2) REQUEST FOR DETERMINATION.— 
(A) IN GENERAL.—No later than 21 days 
after receipt of a notice under paragraph (1), or 
upon its own initiative if no such notice is re-
ceived, the Commodity Futures Trading Com-
mission may request that the Securities and Ex-
change Commission issue a determination as to 
whether a product is a security, as defined in 
section 3(a)(10) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(a)(10)).
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(B) REQUEST.—No later than 21 days after 
receipt of a notice under paragraph (1), or upon 
its own initiative if no such notice is received, 
the Securities and Exchange Commission may 
request that the Commodity Futures Trading 
Commission issue a determination as to whether 
a product is a contract of sale of a commodity 
for future delivery, an option on such a contract, 
or an option on a commodity subject to the Com-
modity Futures Trading Commission’s exclusive 
jurisdiction under section 2(a)(1)(A) of the Com-
modity Exchange Act (7 U.S.C. 2(a)(1)(A)). 
(C) 
REQUIREMENT
RELATING
TO
RE-
QUEST.—A request under subparagraph (A) or 
(B) shall be made by submitting such request, in 
writing, to the Securities and Exchange Com-
mission or the Commodity Futures Trading 
Commission, as applicable. 
(D) EFFECT.—Nothing in this paragraph 
shall be construed to prevent— 
(i) the Commodity Futures Trading 
Commission from requesting that the Secu-
rities and Exchange Commission grant an 
exemption pursuant to section 36(a)(1) of 
the Securities Exchange Act of 1934 (15
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U.S.C. 78mm(a)(1)) with respect to a prod-
uct that is the subject of a filing under 
paragraph (1); or 
(ii) the Securities and Exchange Com-
mission from requesting that the Com-
modity Futures Trading Commission grant 
an exemption pursuant to section 4(c)(1) of 
the Commodity Exchange Act (7 U.S.C. 
6(c)(1)) with respect to a product that is the 
subject of a filing under paragraph (1). 
Provided, however, that nothing in this subpara-
graph shall be construed to require the Com-
modity Futures Trading Commission or the Se-
curities and Exchange Commission to issue an 
exemption requested pursuant to this subpara-
graph; provided further, That an order granting 
or denying an exemption described in this sub-
paragraph and issued under paragraph (3)(B) 
shall not be subject to judicial review pursuant 
to subsection (b). 
(E) WITHDRAWAL OF REQUEST.—A request 
under subparagraph (A) or (B) may be with-
drawn by the Commission making the request at 
any time prior to a determination being made 
pursuant to paragraph (3) for any reason by
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providing written notice to the head of the other 
Commission. 
(3) 
DETERMINATION.—Notwithstanding 
any 
other provision of law, no later than 120 days after 
the date of receipt of a request— 
(A) under subparagraph (A) or (B) of para-
graph (2), unless such request has been with-
drawn pursuant to paragraph (2)(E), the Secu-
rities and Exchange Commission or the Com-
modity Futures Trading Commission, as appli-
cable, shall, by order, issue the determination re-
quested in subparagraph (A) or (B) of para-
graph (2), as applicable, and the reasons there-
fore; or 
(B) under paragraph (2)(D), unless such re-
quest has been withdrawn, the Securities and 
Exchange Commission or the Commodity Fu-
tures Trading Commission, as applicable, shall 
grant an exemption or provide reasons for not 
granting such exemption, provided that any de-
cision by the Securities and Exchange Commis-
sion not to grant such exemption shall not be re-
viewable under section 25 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78y). 
(b) JUDICIAL RESOLUTION.—
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(1) IN
GENERAL.—The Commodity Futures 
Trading Commission or the Securities and Exchange 
Commission may petition the United States Court of 
Appeals for the District of Columbia Circuit for re-
view of a final order of the other Commission, with 
respect to a novel derivative product that may have 
elements of both securities and contracts of sale of a 
commodity for future delivery (or options on such 
contracts or options on commodities) that it believes 
affects its statutory jurisdiction, including an order 
or orders issued under subsection (a)(3)(A), by filing 
in such court, within 60 days after the date of entry 
of such order, a written petition requesting a review 
of the order. Any such proceeding shall be expedited 
by the Court of Appeals. 
(2) TRANSMITTAL OF PETITION AND RECORD.— 
A copy of a petition described in paragraph (1) shall 
be transmitted not later than 1 business day after fil-
ing by the complaining Commission to the responding 
Commission. On receipt of the petition, the respond-
ing Commission shall file with the court a copy of the 
order under review and any documents referred to 
therein, and any other materials prescribed by the 
court.
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(3) STANDARD OF REVIEW.—The court, in con-
sidering a petition filed pursuant to paragraph (1), 
shall give no deference to, or presumption in favor of, 
the views of either Commission. 
(4) JUDICIAL STAY.—The filing of a petition by 
the complaining Commission pursuant to paragraph 
(1) shall operate as a stay of the order, until the date 
on which the determination of the court is final (in-
cluding any appeal of the determination). 
PART II—REGULATION OF SWAP MARKETS 
SEC. 721. DEFINITIONS. 
(a) IN GENERAL.—Section 1a of the Commodity Ex-
change Act (7 U.S.C. 1a) is amended— 
(1) by redesignating paragraphs (2), (3) and (4), 
(5) through (17), (18) through (23), (24) through 
(28), (29), (30), (31) through (33), and (34) as para-
graphs (6), (8) and (9), (11) through (23), (26) 
through (31), (34) through (38), (40), (41), (44) 
through (46), and (51), respectively; 
(2) by inserting after paragraph (1) the fol-
lowing: 
‘‘(2) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘appropriate Federal banking agency’ 
has the meaning given the term in section 3 of the 
Federal Deposit Insurance Act (12 U.S.C. 1813).
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‘‘(3) ASSOCIATED PERSON OF A SECURITY-BASED 
SWAP DEALER OR MAJOR SECURITY-BASED SWAP PAR-
TICIPANT.—The term ‘associated person of a security- 
based swap dealer or major security-based swap par-
ticipant’ has the meaning given the term in section 
3(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)). 
‘‘(4) ASSOCIATED PERSON OF A SWAP DEALER 
OR MAJOR SWAP PARTICIPANT.— 
‘‘(A) IN
GENERAL.—The term ‘associated 
person of a swap dealer or major swap partici-
pant’ means— 
‘‘(i) any partner, officer, director, or 
branch manager of a swap dealer or major 
swap participant (including any individual 
who holds a similar status or performs a 
similar function with respect to any part-
ner, officer, director, or branch manager of 
a swap dealer or major swap participant); 
‘‘(ii) any person that directly or indi-
rectly controls, is controlled by, or is under 
common control with, a swap dealer or 
major swap participant; and 
‘‘(iii) any employee of a swap dealer 
or major swap participant.
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‘‘(B) EXCLUSION.—Other than for purposes 
of section 4s(b)(6), the term ‘associated person of 
a swap dealer or major swap participant’ does 
not include any person associated with a swap 
dealer or major swap participant the functions 
of which are solely clerical or ministerial. 
‘‘(5) BOARD.—The term ‘Board’ means the 
Board of Governors of the Federal Reserve System.’’; 
(3) by inserting after paragraph (6) (as redesig-
nated by paragraph (1)) the following: 
‘‘(7) CLEARED SWAP.—The term ‘cleared swap’ 
means any swap that is, directly or indirectly, sub-
mitted to and cleared by a derivatives clearing orga-
nization registered with the Commission.’’; 
(4) in paragraph (9) (as redesignated by para-
graph (1)), by striking ‘‘except onions’’ and all that 
follows through the period at the end and inserting 
the following: ‘‘except onions (as provided in section 
13–1) and motion picture box office receipts (or any 
index, measure, value, or data related to such re-
ceipts), and all services, rights, and interests (except 
motion picture box office receipts, or any index, meas-
ure, value or data related to such receipts) in which 
contracts for future delivery are presently or in the 
future dealt in.’’;
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(5) by inserting after paragraph (9) (as redesig-
nated by paragraph (1)) the following: 
‘‘(10) COMMODITY POOL.— 
‘‘(A) IN GENERAL.—The term ‘commodity 
pool’ means any investment trust, syndicate, or 
similar form of enterprise operated for the pur-
pose of trading in commodity interests, includ-
ing any— 
‘‘(i) commodity for future delivery, se-
curity futures product, or swap; 
‘‘(ii) agreement, contract, or trans-
action described in section 2(c)(2)(C)(i) or 
section 2(c)(2)(D)(i); 
‘‘(iii) commodity option authorized 
under section 4c; or 
‘‘(iv) leverage transaction authorized 
under section 19. 
‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘commodity pool’ any 
investment trust, syndicate, or similar form of 
enterprise if the Commission determines that the 
rule or regulation will effectuate the purposes of 
this Act.’’;
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(6) by striking paragraph (11) (as redesignated 
by paragraph (1)) and inserting the following: 
‘‘(11) COMMODITY POOL OPERATOR.— 
‘‘(A) IN GENERAL.—The term ‘commodity 
pool operator’ means any person— 
‘‘(i) engaged in a business that is of 
the nature of a commodity pool, investment 
trust, syndicate, or similar form of enter-
prise, and who, in connection therewith, so-
licits, accepts, or receives from others, funds, 
securities, or property, either directly or 
through capital contributions, the sale of 
stock or other forms of securities, or other-
wise, for the purpose of trading in com-
modity interest, including any— 
‘‘(I) commodity for future deliv-
ery, security futures product, or swap; 
‘‘(II) 
agreement, 
contract, 
or 
transaction 
described 
in 
section 
2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 
‘‘(III) commodity option author-
ized under section 4c; or 
‘‘(IV) leverage transaction author-
ized under section 19; or
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‘‘(ii) who is registered with the Com-
mission as a commodity pool operator. 
‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘commodity pool oper-
ator’ any person engaged in a business that is of 
the nature of a commodity pool, investment 
trust, syndicate, or similar form of enterprise if 
the Commission determines that the rule or regu-
lation will effectuate the purposes of this Act.’’; 
(7) in paragraph (12) (as redesignated by para-
graph (1)), in subparagraph (A)— 
(A) in clause (i)— 
(i) in subclause (I), by striking ‘‘made 
or to be made on or subject to the rules of 
a contract market or derivatives transaction 
execution facility’’ and inserting ‘‘, security 
futures product, or swap’’; 
(ii) by redesignating subclauses (II) 
and (III) as subclauses (III) and (IV); 
(iii) by inserting after subclause (I) the 
following: 
‘‘(II) any agreement, contract, or 
transaction 
described 
in 
section
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† HR 4173 PP
2(c)(2)(C)(i) or section 2(c)(2)(D)(i)’’; 
and 
(iv) in subclause (IV) (as so redesig-
nated), by striking ‘‘or’’; 
(B) in clause (ii), by striking the period at 
the end and inserting a semicolon; and 
(C) by adding at the end the following: 
‘‘(iii) is registered with the Commis-
sion as a commodity trading advisor; or 
‘‘(iv) the Commission, by rule or regu-
lation, may include if the Commission de-
termines that the rule or regulation will ef-
fectuate the purposes of this Act.’’; 
(8) in paragraph (17) (as redesignated by para-
graph (1)), in subparagraph (A), in the matter pre-
ceding clause (i), by striking ‘‘paragraph (12)(A)’’ 
and inserting ‘‘paragraph (18)(A)’’; 
(9) in paragraph (18) (as redesignated by para-
graph (1))— 
(A) in subparagraph (A)— 
(i) in the matter following clause 
(vii)(III)— 
(I) 
by 
striking 
‘‘section 
1a 
(11)(A)’’ and inserting ‘‘paragraph 
(17)(A)’’; and
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(II) by striking ‘‘$25,000,000’’ 
and inserting ‘‘$50,000,000’’; and 
(ii) in clause (xi), in the matter pre-
ceding subclause (I), by striking ‘‘total as-
sets in an amount’’ and inserting ‘‘amounts 
invested on a discretionary basis, the aggre-
gate of which is’’; 
(10) by striking paragraph (22) (as redesignated 
by paragraph (1)) and inserting the following: 
‘‘(22) FLOOR BROKER.— 
‘‘(A) IN GENERAL.—The term ‘floor broker’ 
means any person— 
‘‘(i) who, in or surrounding any pit, 
ring, post, or other place provided by a con-
tract market for the meeting of persons 
similarly engaged, shall purchase or sell for 
any other person— 
‘‘(I) any commodity for future de-
livery, security futures product, or 
swap; or 
‘‘(II) any commodity option au-
thorized under section 4c; or 
‘‘(ii) who is registered with the Com-
mission as a floor broker.
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‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘floor broker’ any per-
son in or surrounding any pit, ring, post, or 
other place provided by a contract market for the 
meeting of persons similarly engaged who trades 
for any other person if the Commission deter-
mines that the rule or regulation will effectuate 
the purposes of this Act.’’; 
(11) by striking paragraph (23) (as redesignated 
by paragraph (1)) and inserting the following: 
‘‘(23) FLOOR TRADER.— 
‘‘(A) IN GENERAL.—The term ‘floor trader’ 
means any person— 
‘‘(i) who, in or surrounding any pit, 
ring, post, or other place provided by a con-
tract market for the meeting of persons 
similarly engaged, purchases, or sells solely 
for such person’s own account— 
‘‘(I) any commodity for future de-
livery, security futures product, or 
swap; or 
‘‘(II) any commodity option au-
thorized under section 4c; or
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‘‘(ii) who is registered with the Com-
mission as a floor trader. 
‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘floor trader’ any per-
son in or surrounding any pit, ring, post, or 
other place provided by a contract market for the 
meeting of persons similarly engaged who trades 
solely for such person’s own account if the Com-
mission determines that the rule or regulation 
will effectuate the purposes of this Act.’’; 
(12) by inserting after paragraph (23) (as redes-
ignated by paragraph (1)) the following: 
‘‘(24) FOREIGN EXCHANGE FORWARD.—The term 
‘foreign exchange forward’ means a transaction that 
solely involves the exchange of 2 different currencies 
on a specific future date at a fixed rate agreed upon 
on the inception of the contract covering the exchange. 
‘‘(25) FOREIGN
EXCHANGE
SWAP.—The term 
‘foreign exchange swap’ means a transaction that 
solely involves— 
‘‘(A) an exchange of 2 different currencies 
on a specific date at a fixed rate that is agreed 
upon on the inception of the contract covering 
the exchange; and
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‘‘(B) a reverse exchange of the 2 currencies 
described in subparagraph (A) at a later date 
and at a fixed rate that is agreed upon on the 
inception of the contract covering the exchange.’’; 
(13) by striking paragraph (28) (as redesignated 
by paragraph (1)) and inserting the following: 
‘‘(28) FUTURES COMMISSION MERCHANT.— 
‘‘(A) IN GENERAL.—The term ‘futures com-
mission merchant’ means an individual, associa-
tion, partnership, corporation, or trust— 
‘‘(i) that— 
‘‘(I) is engaged in soliciting or in 
accepting orders for— 
‘‘(aa) the purchase or sale of 
a commodity for future delivery; 
‘‘(bb) a security futures prod-
uct; 
‘‘(cc) a swap; 
‘‘(dd) any agreement, con-
tract, or transaction described in 
section 2(c)(2)(C)(i) or section 
2(c)(2)(D)(i); 
‘‘(ee) any commodity option 
authorized under section 4c; or
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‘‘(ff) any leverage transaction 
authorized under section 19; or 
‘‘(II) is acting as a counterparty 
in any agreement, contract, or trans-
action 
described 
in 
section 
2(c)(2)(C)(i) or section 2(c)(2)(D)(i); 
and 
‘‘(III) in or in connection with 
the activities described in subclause (I) 
or (II), accepts any money, securities, 
or property (or extends credit in lieu 
thereof) to margin, guarantee, or secure 
any trades or contracts that result or 
may result therefrom; or 
‘‘(ii) that is registered with the Com-
mission as a futures commission merchant. 
‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘futures commission 
merchant’ any person who engages in soliciting 
or accepting orders for, or acting as a 
counterparty in, any agreement, contract, or 
transaction subject to this Act, and who accepts 
any money, securities, or property (or extends 
credit in lieu thereof) to margin, guarantee, or
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secure any trades or contracts that result or may 
result therefrom, if the Commission determines 
that the rule or regulation will effectuate the 
purposes of this Act.’’; 
(14) in paragraph (30) (as redesignated by 
paragraph (1)), in subparagraph (B), by striking 
‘‘state’’ and inserting ‘‘State’’; 
(15) by striking paragraph (31) (as redesignated 
by paragraph (1)) and inserting the following: 
‘‘(31) INTRODUCING BROKER.— 
‘‘(A) IN GENERAL.—The term ‘introducing 
broker’ means any person (except an individual 
who elects to be and is registered as an associ-
ated person of a futures commission merchant)— 
‘‘(i) who— 
‘‘(I) is engaged in soliciting or in 
accepting orders for— 
‘‘(aa) the purchase or sale of 
any commodity for future deliv-
ery, security futures product, or 
swap; 
‘‘(bb) any agreement, con-
tract, or transaction described in 
section 2(c)(2)(C)(i) or section 
2(c)(2)(D)(i);
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‘‘(cc) any commodity option 
authorized under section 4c; or 
‘‘(dd) any leverage trans-
action authorized under section 
19; and 
‘‘(II) does not accept any money, 
securities, or property (or extend credit 
in lieu thereof) to margin, guarantee, 
or secure any trades or contracts that 
result or may result therefrom; or 
‘‘(ii) who is registered with the Com-
mission as an introducing broker. 
‘‘(B) FURTHER DEFINITION.—The Commis-
sion, by rule or regulation, may include within, 
or exclude from, the term ‘introducing broker’ 
any person who engages in soliciting or accept-
ing orders for any agreement, contract, or trans-
action subject to this Act, and who does not ac-
cept any money, securities, or property (or ex-
tend credit in lieu thereof) to margin, guarantee, 
or secure any trades or contracts that result or 
may result therefrom, if the Commission deter-
mines that the rule or regulation will effectuate 
the purposes of this Act.’’;
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(16) by inserting after paragraph (31) (as redes-
ignated by paragraph (1)) the following: 
‘‘(32) MAJOR
SECURITY-BASED
SWAP
PARTICI-
PANT.—The term ‘major security-based swap partici-
pant’ has the meaning given the term in section 3(a) 
of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)). 
‘‘(33) MAJOR SWAP PARTICIPANT.— 
‘‘(A) IN GENERAL.—The term ‘major swap 
participant’ means any person who is not a 
swap dealer, and— 
‘‘(i) maintains a substantial position 
in swaps for any of the major swap cat-
egories as determined by the Commission, 
excluding— 
‘‘(I) positions held for hedging or 
mitigating commercial risk; and 
‘‘(II) positions maintained by any 
employee benefit plan (or any contract 
held by such a plan) as defined in 
paragraphs (3) and (32) of section 3 of 
the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1002) for 
the primary purpose of hedging or
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mitigating any risk directly associated 
with the operation of the plan; or 
‘‘(ii) whose outstanding swaps create 
substantial 
counterparty 
exposure 
that 
could have serious adverse effects on the fi-
nancial stability of the United States bank-
ing system or financial markets; or 
‘‘(iii)(I) is a financial entity, other 
than an entity predominantly engaged in 
providing financing for the purchase of an 
affiliate’s merchandise or manufactured 
goods, that is highly leveraged relative to 
the amount of capital it holds; and 
‘‘(II) maintains a substantial position 
in outstanding swaps in any major swap 
category as determined by the Commission. 
‘‘(B) DEFINITION
OF
SUBSTANTIAL
POSI-
TION.—For purposes of subparagraph (A), the 
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.
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‘‘(C) SCOPE
OF
DESIGNATION.—For pur-
poses of subparagraph (A), a person may be des-
ignated as a major swap participant for 1 or 
more categories of swaps without being classified 
as a major swap participant for all classes of 
swaps. 
‘‘(D) CAPITAL.—In setting capital require-
ments for a person that is designated as a major 
swap participant for a single type or single class 
or category of swaps or activities, the prudential 
regulator and the Commission shall take into ac-
count the risks associated with other types of 
swaps or classes of swaps or categories of swaps 
engaged in and the other activities conducted by 
that person that are not otherwise subject to reg-
ulation applicable to that person by virtue of the 
status of the person as a major swap partici-
pant.’’; 
(17) by inserting after paragraph (38) (as redes-
ignated by paragraph (1)) the following: 
‘‘(39) 
PRUDENTIAL
REGULATOR.—The 
term 
‘prudential regulator’ means— 
‘‘(A) the Office of the Comptroller of the 
Currency, in the case of— 
‘‘(i) any national banking association;
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‘‘(ii) any Federal branch or agency of 
a foreign bank; or 
‘‘(iii) any Federal savings association; 
‘‘(B) the Federal Deposit Insurance Cor-
poration, in the case of— 
‘‘(i) any insured State bank; 
‘‘(ii) any foreign bank having an in-
sured branch; or 
‘‘(iii) any State savings association; 
‘‘(C) the Board of Governors of the Federal 
Reserve System, in the case of— 
‘‘(i) any noninsured State member 
bank; 
‘‘(ii) any branch or agency of a foreign 
bank with respect to any provision of the 
Federal Reserve Act (12 U.S.C. 221 et seq.) 
which is made applicable under the Inter-
national Banking Act of 1978 (12 U.S.C. 
3101 et seq.); 
‘‘(iii) any foreign bank which does not 
operate an insured branch; 
‘‘(iv) any agency or commercial lend-
ing company other than a Federal agency; 
or
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† HR 4173 PP
‘‘(v) supervisory or regulatory pro-
ceedings arising from the authority given to 
the Board of Governors under section 
7(c)(1) of the International Banking Act of 
1978 (12 U.S.C. 3105(c)(1)), including such 
proceedings under the Financial Institu-
tions Supervisory Act of 1966 (12 U.S.C. 
1464 et seq.); and 
‘‘(D) the Farm Credit Administration, in 
the case of a swap dealer, major swap partici-
pant, security-based swap dealer, or major secu-
rity-based swap participant that is an institu-
tion chartered under the Farm Credit Act of 
1971 (12 U.S.C. 2001 et seq.).’’; 
(18) in paragraph (40) (as redesignated by 
paragraph (1))— 
(A) by striking subparagraph (B); 
(B) by redesignating subparagraphs (C), 
(D), and (E) as subparagraphs (B), (C), and 
(F), respectively; 
(C) in subparagraph (C) (as so redesig-
nated), by striking ‘‘and’’; 
(D) by inserting after subparagraph (C) (as 
so redesignated) the following:
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value, of 1 or more interest or other rates, 
currencies, commodities, securities, instru-
ments of indebtedness, indices, quantitative 
measures, or other financial or economic in-
terests or property of any kind; 
‘‘(ii) that provides for any purchase, 
sale, payment, or delivery (other than a 
dividend on an equity security) that is de-
pendent on the occurrence, nonoccurrence, 
or the extent of the occurrence of an event 
or contingency associated with a potential 
financial, economic, or commercial con-
sequence; 
‘‘(iii) that provides on an executory 
basis for the exchange, on a fixed or contin-
gent basis, of 1 or more payments based on 
the value or level of 1 or more interest or 
other rates, currencies, commodities, securi-
ties, instruments of indebtedness, indices, 
quantitative measures, or other financial or 
economic interests or property of any kind, 
or any interest therein or based on the value 
thereof, and that transfers, as between the 
parties to the transaction, in whole or in 
part, the financial risk associated with a
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† HR 4173 PP
future change in any such value or level 
without also conveying a current or future 
direct or indirect ownership interest in an 
asset (including any enterprise or invest-
ment pool) or liability that incorporates the 
financial risk so transferred, including any 
agreement, contract, or transaction com-
monly known as— 
‘‘(I) an interest rate swap; 
‘‘(II) a rate floor; 
‘‘(III) a rate cap; 
‘‘(IV) a rate collar; 
‘‘(V) a cross-currency rate swap; 
‘‘(VI) a basis swap; 
‘‘(VII) a currency swap; 
‘‘(VIII) a foreign exchange swap; 
‘‘(IX) a total return swap; 
‘‘(X) an equity index swap; 
‘‘(XI) an equity swap; 
‘‘(XII) a debt index swap; 
‘‘(XIII) a debt swap; 
‘‘(XIV) a credit spread; 
‘‘(XV) a credit default swap; 
‘‘(XVI) a credit swap; 
‘‘(XVII) a weather swap;
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‘‘(XVIII) an energy swap; 
‘‘(XIX) a metal swap; 
‘‘(XX) an agricultural swap; 
‘‘(XXI) an emissions swap; and 
‘‘(XXII) a commodity swap; 
‘‘(iv) that is an agreement, contract, or 
transaction that is, or in the future becomes 
commonly known to the trade as a swap; 
‘‘(v) including any security-based swap 
agreement which meets the definition of 
‘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 secu-
rities, or any interest therein; or 
‘‘(vi) that is any combination or per-
mutation of, or option on, any agreement, 
contract, or transaction described in any of 
clauses (i) through (v). 
‘‘(B) EXCLUSIONS.—The term ‘swap’ does 
not include— 
‘‘(i) any contract of sale of a com-
modity for future delivery (or option on 
such a contract), leverage contract author-
539 
† HR 4173 PP
ized under section 19, security futures prod-
uct, or agreement, contract, or transaction 
described in section 2(c)(2)(C)(i) or section 
2(c)(2)(D)(i); 
‘‘(ii) any sale of a nonfinancial com-
modity or security for deferred shipment or 
delivery, so long as the transaction is in-
tended to be physically settled; 
‘‘(iii) any put, call, straddle, option, or 
privilege on any security, certificate of de-
posit, or group or index of securities, in-
cluding any interest therein or based on the 
value thereof, that is subject to— 
‘‘(I) the Securities Act of 1933 (15 
U.S.C. 77a et seq.); and 
‘‘(II) the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.); 
‘‘(iv) any put, call, straddle, option, or 
privilege relating to a foreign currency en-
tered into on a national securities exchange 
registered pursuant to section 6(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 
78f(a)); 
‘‘(v) any agreement, contract, or trans-
action providing for the purchase or sale of
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† HR 4173 PP
1 or more securities on a fixed basis that is 
subject to— 
‘‘(I) the Securities Act of 1933 (15 
U.S.C. 77a et seq.); and 
‘‘(II) the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.); 
‘‘(vi) any agreement, contract, or 
transaction providing for the purchase or 
sale of 1 or more securities on a contingent 
basis that is subject to the Securities Act of 
1933 (15 U.S.C. 77a et seq.) and the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78a 
et seq.), unless the agreement, contract, or 
transaction predicates the purchase or sale 
on the occurrence of a bona fide contingency 
that might reasonably be expected to affect 
or be affected by the creditworthiness of a 
party other than a party to the agreement, 
contract, or transaction; 
‘‘(vii) any note, bond, or evidence of 
indebtedness that is a security, as defined 
in section 2(a) of the Securities Act of 1933 
(15 U.S.C. 77b(a)); 
‘‘(viii) any agreement, contract, or 
transaction that is—
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† HR 4173 PP
‘‘(I) based on a security; and 
‘‘(II) entered into directly or 
through an underwriter (as defined in 
section 2(a) of the Securities Act of 
1933 (15 U.S.C. 77b(a))) by the issuer 
of such security for the purposes of 
raising capital, unless the agreement, 
contract, or transaction is entered into 
to manage a risk associated with cap-
ital raising; 
‘‘(ix) any agreement, contract, or 
transaction a counterparty of which is a 
Federal Reserve bank, the Federal Govern-
ment, or a Federal agency that is expressly 
backed by the full faith and credit of the 
United States; and 
‘‘(x) any security-based swap, other 
than a security-based swap as described in 
subparagraph (D). 
‘‘(C) RULE OF CONSTRUCTION REGARDING 
MASTER AGREEMENTS.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), the term ‘swap’ includes a 
master agreement that provides for an 
agreement, contract, or transaction that is a
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† HR 4173 PP
swap under subparagraph (A), together 
with each supplement to any master agree-
ment, without regard to whether the master 
agreement contains an agreement, contract, 
or transaction that is not a swap pursuant 
to subparagraph (A). 
‘‘(ii) EXCEPTION.—For purposes of 
clause (i), the master agreement shall be 
considered to be a swap only with respect to 
each agreement, contract, or transaction 
covered by the master agreement that is a 
swap pursuant to subparagraph (A). 
‘‘(D) MIXED
SWAP.—The term ‘security- 
based swap’ includes any agreement, contract, or 
transaction that is as described in section 
3(a)(68)(A) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(68)(A)) and also is based 
on the value of 1 or more interest or other rates, 
currencies, commodities, instruments of indebted-
ness, indices, quantitative measures, other finan-
cial or economic interest or property of any kind 
(other than a single security or a narrow-based 
security index), or the occurrence, non-occur-
rence, or the extent of the occurrence of an event 
or contingency associated with a potential finan-
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† HR 4173 PP
cial, economic, or commercial consequence (other 
than an event described in subparagraph 
(A)(iii)). 
‘‘(E) TREATMENT OF FOREIGN EXCHANGE 
SWAPS AND FORWARDS.— 
‘‘(i) IN
GENERAL.—Foreign exchange 
swaps and foreign exchange forwards shall 
be considered swaps under this paragraph 
unless the Secretary makes a written deter-
mination that either foreign exchange swaps 
or foreign exchange forwards or both— 
‘‘(I) should be not be regulated as 
swaps under this Act; and 
‘‘(II) are not structured to evade 
the Wall Street Transparency and Ac-
countability Act of 2010 in violation of 
any rule promulgated by the Commis-
sion pursuant to section 111(c) of that 
Act. 
‘‘(ii) CONGRESSIONAL NOTICE; EFFEC-
TIVENESS.—The Secretary shall submit any 
written determination under clause (i) to 
the appropriate committees of Congress, in-
cluding the Committee on Agriculture, Nu-
trition, and Forestry of the Senate and the
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† HR 4173 PP
Committee on Agriculture of the House of 
Representatives. Any such written deter-
mination by the Secretary shall not be effec-
tive until it is submitted to the appropriate 
committees of Congress. 
‘‘(iii) REPORTING.—Notwithstanding a 
written determination by the Secretary 
under clause (i), all foreign exchange swaps 
and foreign exchange forwards shall be re-
ported to either a swap data repository, or, 
if there is no swap data repository that 
would accept such swaps or forwards, to the 
Commission pursuant to section 4r within 
such time period as the Commission may by 
rule or regulation prescribe. 
‘‘(iv) 
BUSINESS
STANDARDS.—Not-
withstanding clauses (ix) and (x) of sub-
paragraph (B) and clause (ii), any party to 
a foreign exchange swap or forward that is 
a swap dealer or major swap participant 
shall conform to the business conduct stand-
ards contained in section 4s(h). 
‘‘(v) SECRETARY.—For purposes of this 
subparagraph only, the term ‘Secretary’ 
means the Secretary of the Treasury.
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† HR 4173 PP
‘‘(F) EXCEPTION FOR CERTAIN FOREIGN EX-
CHANGE SWAPS AND FORWARDS.— 
‘‘(i) REGISTERED ENTITIES.—Any for-
eign exchange swap and any foreign ex-
change forward that is listed and traded on 
or subject to the rules of a designated con-
tract market or a swap execution facility, 
or that is cleared by a derivatives clearing 
organization shall not be exempt from any 
provision of this Act or amendments made 
by the Wall Street Transparency and Ac-
countability Act of 2010 prohibiting fraud 
or manipulation. 
‘‘(ii) RETAIL TRANSACTIONS.—Nothing 
in subparagraph (E) shall affect, or be con-
strued to affect, the applicability of this Act 
or the jurisdiction of the Commission with 
respect to agreements, contracts, or trans-
actions in foreign currency pursuant to sec-
tion 2(c)(2). 
‘‘(48) SWAP DATA REPOSITORY.—The term ‘swap 
data repository’ means any person that collects, cal-
culates, prepares, or maintains information or 
records with respect to transactions or positions in, or
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† HR 4173 PP
the terms and conditions of, swaps entered into by 
third parties. 
‘‘(49) SWAP DEALER.— 
‘‘(A) IN GENERAL.—The term ‘swap dealer’ 
means any person who— 
‘‘(i) holds itself out as a dealer in 
swaps; 
‘‘(ii) makes a market in swaps; 
‘‘(iii) regularly engages in the pur-
chase and sale of swaps in the ordinary 
course of business; or 
‘‘(iv) engages in any activity causing 
the person to be commonly known in the 
trade as a dealer or market maker in 
swaps. 
‘‘(B) INCLUSION.—A person may be des-
ignated as a swap dealer for a single type or sin-
gle class or category of swap or activities and 
considered not to be a swap dealer for other 
types, classes, or categories of swaps or activities. 
‘‘(C) CAPITAL.—In setting capital require-
ments for a person that is designated as a swap 
dealer for a single type or single class or cat-
egory of swap or activities, the prudential regu-
lator and the Commission shall take into account
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† HR 4173 PP
the risks associated with other types of swaps or 
classes of swaps or categories of swaps engaged 
in and the other activities conducted by that per-
son that are not otherwise subject to regulation 
applicable to that person by virtue of the status 
of the person as a swap dealer. 
‘‘(D) EXCEPTION.—The term ‘swap dealer’ 
does not include a person that buys or sells 
swaps for such person’s own account, either indi-
vidually or in a fiduciary capacity, but not as 
a part of a regular business. 
‘‘(50) SWAP
EXECUTION
FACILITY.—The term 
‘swap execution facility’ means a facility in which 
multiple participants have the ability to execute or 
trade swaps by accepting bids and offers made by 
other participants that are open to multiple partici-
pants in the facility or system, through any means of 
interstate commerce, including any trading facility, 
that— 
‘‘(A) facilitates the execution of swaps be-
tween persons; and 
‘‘(B) is not a designated contract market.’’; 
and
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† HR 4173 PP
(22) in paragraph (51) (as redesignated by 
paragraph (1)), in subparagraph (A)(i), by striking 
‘‘partipants’’ and inserting ‘‘participants’’. 
(b) AUTHORITY TO DEFINE TERMS.—The Commodity 
Futures Trading Commission may adopt a rule to define— 
(1) the term ‘‘commercial risk’’; and 
(2) any other term included in an amendment to 
the Commodity Exchange Act (7 U.S.C. 1 et seq.) 
made by this subtitle. 
(c) MODIFICATION
OF
DEFINITIONS.—To include 
transactions and entities that have been structured to evade 
this subtitle (or an amendment made by this subtitle), the 
Commodity Futures Trading Commission shall adopt a 
rule to further define the terms ‘‘swap’’, ‘‘swap dealer’’, 
‘‘major swap participant’’, and ‘‘eligible contract partici-
pant’’. 
(d) EXEMPTIONS.—Section 4(c)(1) of the Commodity 
Exchange Act (7 U.S.C. 6(c)(1)) is amended by striking 
‘‘except that’’ and all that follows through the period at the 
end and inserting the following: ‘‘except that— 
‘‘(A) unless the Commission is expressly au-
thorized by any provision described in this sub-
paragraph to grant exemptions, with respect to 
amendments made by subtitle A of the Wall
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† HR 4173 PP
Street Transparency and Accountability Act of 
2010— 
‘‘(i) with respect to— 
‘‘(I) paragraphs (2), (3), (4), (5), 
and (7), clause (vii)(III) of paragraph 
(17), paragraphs (23), (24), (31), (32), 
(38), (39), (41), (42), (46), (47), (48), 
and (49) of section 1a, and sections 
2(a)(13), 2(c)(D), 4a(a), 4a(b), 4d(c), 
4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 
5(h), 5b(c), 5b(i), 8e, and 21; and 
‘‘(II) 
section 
206(e) 
of 
the 
Gramm-Leach-Bliley Act (Public Law 
106–102; 15 U.S.C. 78c note); and 
‘‘(ii) in subsection (c) of section 111 
and section 132; and 
‘‘(B) the Commission and the Securities 
and Exchange Commission may by rule, regula-
tion, or order jointly exclude any agreement, 
contract, or transaction from section 2(a)(1)(D)) 
if the Commission determines that the exemption 
would be consistent with the public interest.’’. 
(e) CONFORMING AMENDMENTS.—
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(1) Section 2(c)(2)(B)(i)(II) of the Commodity 
Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amend-
ed— 
(A) in item (cc)— 
(i) in subitem (AA), by striking ‘‘sec-
tion 1a(20)’’ and inserting ‘‘section 1a’’; 
and 
(ii) in subitem (BB), by striking ‘‘sec-
tion 1a(20)’’ and inserting ‘‘section 1a’’; 
and 
(B) in item (dd), by striking ‘‘section 
1a(12)(A)(ii)’’ 
and 
inserting 
‘‘section 
1a(18)(A)(ii)’’. 
(2) Section 4m(3) of the Commodity Exchange 
Act (7 U.S.C. 6m(3)) is amended by striking ‘‘section 
1a(6)’’ and inserting ‘‘section 1a’’. 
(3) Section 4q(a)(1) of the Commodity Exchange 
Act (7 U.S.C. 6o–1(a)(1)) is amended by striking 
‘‘section 1a(4)’’ and inserting ‘‘section 1a(9)’’. 
(4) Section 5(e)(1) of the Commodity Exchange 
Act (7 U.S.C. 7(e)(1)) is amended by striking ‘‘section 
1a(4)’’ and inserting ‘‘section 1a(9)’’. 
(5) Section 5a(b)(2)(F) of the Commodity Ex-
change Act (7 U.S.C. 7a(b)(2)(F)) is amended by
551 
† HR 4173 PP
striking ‘‘section 1a(4)’’ and inserting ‘‘section 
1a(9)’’. 
(6) Section 5b(a) of the Commodity Exchange 
Act (7 U.S.C. 7a–1(a)) is amended, in the matter pre-
ceding paragraph (1), by striking ‘‘section 1a(9)’’ and 
inserting ‘‘section 1a’’. 
(7) Section 5c(c)(2)(B) of the Commodity Ex-
change Act (7 U.S.C. 7a–2(c)(2)(B)) is amended by 
striking ‘‘section 1a(4)’’ and inserting ‘‘section 
1a(9)’’. 
(8) Section 6(g)(5)(B)(i) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is 
amended— 
(A) in subclause (I), by striking ‘‘section 
1a(12)(B)(ii)’’ 
and 
inserting 
‘‘section 
1a(18)(B)(ii)’’; and 
(B) in subclause (II), by striking ‘‘section 
1a(12)’’ and inserting ‘‘section 1a(18)’’. 
(9) The Legal Certainty for Bank Products Act 
of 2000 (7 U.S.C. 27 et seq.) is amended— 
(A) in section 402— 
(i) in subsection (a)(7), by striking 
‘‘section 1a(20)’’ and inserting ‘‘section 1a’’; 
(ii) in subsection (b)(2), by striking 
‘‘section 1a(12)’’ and inserting ‘‘section 1a’’;
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† HR 4173 PP
(iii) in subsection (c), by striking ‘‘sec-
tion 1a(4)’’ and inserting ‘‘section 1a’’; and 
(iv) in subsection (d)— 
(I) in the matter preceding para-
graph (1), by striking ‘‘section 1a(4)’’ 
and inserting ‘‘section 1a(9)’’; 
(II) in paragraph (1)— 
(aa) in subparagraph (A), by 
striking ‘‘section 1a(12)’’ and in-
serting ‘‘section 1a’’; and 
(bb) in subparagraph (B), by 
striking ‘‘section 1a(33)’’ and in-
serting ‘‘section 1a’’; 
(III) in paragraph (2)— 
(aa) in subparagraph (A), by 
striking ‘‘section 1a(10)’’ and in-
serting ‘‘section 1a’’; 
(bb) in subparagraph (B), by 
striking ‘‘section 1a(12)(B)(ii)’’ 
and 
inserting 
‘‘section 
1a(18)(B)(ii)’’; 
(cc) in subparagraph (C), by 
striking ‘‘section 1a(12)’’ and in-
serting ‘‘section 1a(18)’’; and
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(dd) in subparagraph (D), 
by striking ‘‘section 1a(13)’’ and 
inserting ‘‘section 1a’’; and 
(B) in section 404(1), by striking ‘‘section 
1a(4)’’ and inserting ‘‘section 1a’’. 
SEC. 722. JURISDICTION. 
(a) EXCLUSIVE JURISDICTION.—Section 2(a)(1)(A) of 
the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is 
amended in the first sentence— 
(1) by inserting ‘‘the Wall Street Transparency 
and Accountability Act of 2010 (including an amend-
ment made by that Act) and’’ after ‘‘otherwise pro-
vided in’’; 
(2) by striking ‘‘(c) through (i) of this section’’ 
and inserting ‘‘(c) and (f)’’; 
(3) by striking ‘‘contracts of sale’’ and inserting 
‘‘swaps or contracts of sale’’; and 
(4) by striking ‘‘or derivatives transaction execu-
tion facility registered pursuant to section 5 or 5a’’ 
and inserting ‘‘pursuant to section 5’’. 
(b) REGULATION OF SWAPS UNDER FEDERAL AND 
STATE LAW.—Section 12 of the Commodity Exchange Act 
(7 U.S.C. 16) is amended by adding at the end the fol-
lowing:
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‘‘(h) REGULATION OF SWAPS AS INSURANCE UNDER 
STATE LAW.—A swap— 
‘‘(1) shall not be considered to be insurance; and 
‘‘(2) may not be regulated as an insurance con-
tract under the law of any State.’’. 
(c) AGREEMENTS, CONTRACTS, AND TRANSACTIONS 
TRADED
ON
AN
ORGANIZED
EXCHANGE.—Section 
2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 
2(c)(2)(A)) is amended— 
(1) in clause (i), by striking ‘‘or’’ at the end; 
(2) by redesignating clause (ii) as clause (iii); 
and 
(3) by inserting after clause (i) the following: 
‘‘(ii) a swap; or’’. 
(d) APPLICABILITY.—Section 2 of the Commodity Ex-
change Act (7 U.S.C. 2) (as amended by section 723(a)(3)) 
is amended by adding at the end the following: 
‘‘(i) APPLICABILITY.—The provisions of this Act relat-
ing to swaps that were enacted by the Wall Street Trans-
parency and Accountability Act of 2010 (including any 
rule prescribed or regulation promulgated under that Act), 
shall not apply to activities outside the United States unless 
those activities—
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‘‘(1) have a direct and significant connection 
with activities in, or effect on, commerce of the 
United States; or 
‘‘(2) contravene such rules or regulations as the 
Commission may prescribe or promulgate as are nec-
essary or appropriate to prevent the evasion of any 
provision of this Act that was enacted by the Wall 
Street Transparency and Accountability Act of 
2010.’’. 
(e) 
JUST
AND
REASONABLE
RATES.—Section 
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 
2(a)(1)(C)) (as amended by section 717(a)) is amended by 
adding at the end the following: 
‘‘(vi) Notwithstanding the exclusive ju-
risdiction of the Commission with respect to 
accounts, agreements, and transactions in-
volving swaps or contracts of sale of a com-
modity for future delivery under this Act, 
no provision of this Act shall be construed— 
‘‘(I) to supersede or limit the au-
thority of the Federal Energy Regu-
latory Commission under the Federal 
Power Act (16 U.S.C. 791a et seq.) or 
the Natural Gas Act (15 U.S.C. 717 et 
seq.);
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‘‘(II) to restrict the Federal En-
ergy Regulatory Commission from car-
rying out the duties and responsibil-
ities of the Federal Energy Regulatory 
Commission to ensure just and reason-
able rates and protect the public inter-
est under the Acts described in sub-
clause (I); or 
‘‘(III) to supersede or limit the 
authority of a State regulatory author-
ity (as defined in section 3(21) of the 
Federal Power Act (16 U.S.C. 796(21)) 
that has jurisdiction to regulate rates 
and charges for the sale of electric en-
ergy within the State, or restrict that 
State regulatory authority from car-
rying out the duties and responsibil-
ities of the State regulatory authority 
pursuant to the jurisdiction of the 
State regulatory authority to regulate 
rates and charges for the transmission 
or sale of electric energy. 
‘‘(vii) Nothing in clause (vi) shall af-
fect the Commission’s authority with respect 
to the trading, execution, or clearing of any
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agreement, contract, or transaction on or 
subject to the rules of a registered entity, in-
cluding a designated contract market, de-
rivatives clearing organization, or swaps 
execution facility.’’. 
(f) PUBLIC INTEREST WAIVER.—Section 4(c) of the 
Commodity Exchange Act (7 U.S.C. 6(c)) (as amended by 
section 721(d)) is amended by adding at the end the fol-
lowing: 
‘‘(6) If the Commission determines that the ex-
emption would be consistent with the public interest 
and the purposes of this Act, the Commission shall, 
in accordance with paragraphs (1) and (2), exempt 
from the requirements of this Act an agreement, con-
tract, or transaction that is entered into— 
‘‘(A) pursuant to a tariff or rate schedule 
approved or permitted to take effect by the Fed-
eral Energy Regulatory Commission; 
‘‘(B) pursuant to a tariff or rate schedule 
establishing rates or charges for, or protocols gov-
erning, the sale of electric energy approved or 
permitted to take effect by the regulatory author-
ity of the State or municipality having jurisdic-
tion to regulate rates and charges for the sale of
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electric energy within the State or municipality; 
or 
‘‘(C) between entities described in section 
201(f) of the Federal Power Act (16 U.S.C. 
824(f)).’’. 
SEC. 723. CLEARING. 
(a) CLEARING REQUIREMENT.— 
(1) IN GENERAL.—Section 2 of the Commodity 
Exchange Act (7 U.S.C. 2) is amended— 
(A) by striking subsections (d), (e), (g), and 
(h); and 
(B) by redesignating subsection (i) as sub-
section (g). 
(2) SWAPS; LIMITATION
ON
PARTICIPATION.— 
Section 2 of the Commodity Exchange Act (7 U.S.C. 
2) (as amended by paragraph (1)) is amended by in-
serting after subsection (c) the following: 
‘‘(d) SWAPS.—Nothing in this Act (other than sub-
paragraphs (A), (B), (C), and (D) of subsection (a)(1), sub-
sections (f) and (g), sections 1a, 2(c)(2)(A)(ii), 2(e), 2(h), 
4(c), 4a, 4b, and 4b–1, subsections (a), (b), and (g) of sec-
tion 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 
4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections (c) and 
(d) of section 6, sections 6c, 6d, 8, 8a, and 9, subsections 
(e)(2) and (f) of section 12, subsections (a) and (b) of section