512 
HR 4173 RFS
not subject to a motion to postpone. A 
motion to reconsider the vote by which 
the motion is agreed to or disagreed 
to shall not be in order. If a motion 
to proceed to the consideration of the 
resolution is agreed to, the joint reso-
lution shall remain the unfinished 
business until disposed of. 
‘‘(II) DEBATE.—Debate on the 
joint resolution, and on all debatable 
motions and appeals in connection 
therewith, shall be limited to not more 
than 10 hours, which shall be divided 
equally between the majority and mi-
nority leaders or their designees. A 
motion further to limit debate is in 
order and not debatable. An amend-
ment to, or a motion to postpone, or 
a motion to proceed to the consider-
ation of other business, or a motion to 
recommit the joint resolution is not in 
order. 
‘‘(III) VOTE ON PASSAGE.—The 
vote on passage shall occur imme-
diately following the conclusion of the 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00512
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
513 
HR 4173 RFS
debate on a joint resolution, and a 
single quorum call at the conclusion of 
the debate if requested in accordance 
with the rules of the Senate. 
‘‘(IV) RULINGS
OF
THE
CHAIR 
ON
PROCEDURE.—Appeals from the 
decisions of the Chair relating to the 
application of the rules of the Senate, 
as the case may be, to the procedure 
relating to a joint resolution shall be 
decided without debate. 
‘‘(D) RULES RELATING TO SENATE AND 
HOUSE OF REPRESENTATIVES.— 
‘‘(i) COORDINATION WITH ACTION BY 
OTHER HOUSE.—If, before the passage by 
one House of a joint resolution of that 
House, that House receives from the other 
House a joint resolution, then the following 
procedures shall apply: 
‘‘(I) The joint resolution of the 
other House shall not be referred to a 
committee. 
‘‘(II) With respect to the joint 
resolution of the House receiving the 
resolution, the procedure in that 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00513
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
514 
HR 4173 RFS
House shall be the same as if no such 
joint resolution had been received 
from the other House; but the vote on 
passage shall be on the joint resolu-
tion of the other House. 
‘‘(ii) TREATMENT
OF
COMPANION 
MEASURES.—If, following passage of a 
joint resolution in the Senate, the Senate 
then receives the companion measure from 
the House of Representatives, the com-
panion measure shall not be debatable. 
‘‘(iii) FAILURE OF JOINT RESOLUTION 
IN THE SENATE.— 
‘‘(I) If, in the Senate, the motion 
to proceed to the consideration of the 
joint resolution fails on adoption, the 
Secretary of the Senate shall transmit 
a message to that effect to the House 
of Representatives. 
‘‘(II) If, in the Senate, the joint 
resolution fails on passage, the Sec-
retary of the Senate shall transmit a 
message to that effect to the House of 
Representatives. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00514
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
515 
HR 4173 RFS
‘‘(iv) RULES
OF
HOUSE
OF
REP-
RESENTATIVES AND SENATE.—This para-
graph and the preceding paragraphs are 
enacted by Congress— 
‘‘(I) as an exercise of the rule-
making power of the Senate and 
House of Representatives, respec-
tively, and as such it is deemed a part 
of the rules of each House, respec-
tively, but applicable only with respect 
to the procedure to be followed in that 
House in the case of a joint resolu-
tion, and it supersedes other rules 
only to the extent that it is incon-
sistent with such rules; and 
‘‘(II) with full recognition of the 
constitutional right of either House to 
change the rules (so far as relating to 
the procedure of that House) at any 
time, in the same manner, and to the 
same extent as in the case of any 
other rule of that House. 
‘‘(E) DEFINITION.—In this paragraph, the 
term ‘joint resolution’ means only a joint reso-
lution— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00515
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
516 
HR 4173 RFS
‘‘(i) which does not have a preamble; 
‘‘(ii) the title of which is as follows: 
‘Joint resolution relating to the use of au-
thority relevant to section 13(c) of the 
Federal Reserve Act under the Financial 
Stability Improvement Act of 2009.’; and 
‘‘(iii) the sole matter after the resolv-
ing clause of which is as follows: ‘That the 
Congress disapproves the use of authority 
pursuant to section 13(c) of the Federal 
Reserve Act transmitted to the Congress 
on lll by the Board of Governors of 
the Federal Reserve System’, the blank 
space being filled with the appropriate 
date. 
‘‘(F) NONSCORING OF JOINT RESOLUTIONS 
OF
DISAPPROVAL.—A joint resolution of dis-
approval shall be treated as having no budg-
etary effect by the Congressional Budget Office 
and the Office of Management and Budget for 
any purpose under the Rules of the House of 
Representatives, the Standing Rules of the Sen-
ate, the Congressional Budget Act of 1974, or 
any statutory pay-as-you-go requirement.’’. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00516
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
517 
HR 4173 RFS
SEC. 1702. CERTAIN RESTRICTIONS RELATED TO FOREIGN 
CURRENCY SWAP AUTHORITY. 
Section 14 of the Federal Reserve Act is amended 
by adding at the end the following new subsection: 
‘‘(h) CERTAIN RESTRICTIONS RELATED TO FOREIGN 
CURRENCY SWAP AUTHORITY.—A Federal reserve bank 
may not take any action pursuant to the authority pro-
vided under this section with respect to foreign currency 
swaps unless— 
‘‘(1) such action is approved in advance by the 
affirmative vote of not less than five members of the 
Board of Governors of the Federal Reserve System; 
and 
‘‘(2) such action is taken with the written con-
currence of the Secretary of the Treasury.’’. 
SEC. 1703. ADDITIONAL OVERSIGHT OF FINANCIAL REGU-
LATORY SYSTEM. 
(a) COUNCIL OF INSPECTORS GENERAL ON FINAN-
CIAL OVERSIGHT.— 
(1) 
ESTABLISHMENT
AND
MEMBERSHIP.— 
There is established a Council of Inspectors General 
on Financial Oversight (in this section referred to as 
the ‘‘Council of Inspectors General’’) chaired by the 
Inspector General of the Department of the Treas-
ury and composed of the inspectors general of the 
following: 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00517
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
518 
HR 4173 RFS
(A) The Board of Governors of the Federal 
Reserve System. 
(B) The Commodity Futures Trading 
Commission. 
(C) The Department of Housing and 
Urban Development. 
(D) The Department of the Treasury. 
(E) The Federal Deposit Insurance Cor-
poration. 
(F) The Federal Housing Finance Agency. 
(G) The National Credit Union Adminis-
tration. 
(H) The Securities and Exchange Commis-
sion. 
(I) The Troubled Asset Relief Program 
(until the termination of the authority of the 
Special Inspector General for such program 
under section 121(h) of the Emergency Eco-
nomic Stabilization Act of 2008 (12 U.S.C. 
5231(h))). 
(2) DUTIES.— 
(A) MEETINGS.—The Council of Inspec-
tors General shall meet not less than once each 
quarter, or more frequently if the chair con-
siders it appropriate, to facilitate the sharing of 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00518
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
519 
HR 4173 RFS
information among inspectors general and to 
discuss the ongoing work of each inspector gen-
eral who is a member of the Council of Inspec-
tors General, with a focus on concerns that may 
apply to the broader financial sector and ways 
to improve financial oversight. 
(B) ANNUAL REPORT.—The Council of In-
spectors General shall, each year within a time-
frame that permits consideration by the Finan-
cial Services Oversight Council (in this section 
referred to as the ‘‘Oversight Council’’) prior to 
the submission of its report for such year under 
section 1006, submit to the Oversight Council 
and to Congress a report including— 
(i) for each inspector general who is a 
member of the Council of Inspectors Gen-
eral, a section within the exclusive editorial 
control of such inspector general that high-
lights the concerns and recommendations 
of such inspector general in such inspector 
general’s ongoing and completed work, 
with a focus on issues that may apply to 
the broader financial sector; and 
(ii) a summary of the general observa-
tions of the Council of Inspectors General 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00519
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
520 
HR 4173 RFS
based on the views expressed by each in-
spector general as required by clause (i), 
with a focus on measures that should be 
taken to improve financial oversight. 
(3) COUNCIL OF INSPECTORS GENERAL WORK-
ING GROUPS.— 
(A) WORKING
GROUPS
TO
EVALUATE 
OVERSIGHT COUNCIL.— 
(i) CONVENING A WORKING GROUP.— 
The Council of Inspectors General may, by 
majority vote, convene a Council of Inspec-
tors General Working Group to evaluate 
the effectiveness and internal operations of 
the Oversight Council. 
(ii) PERSONNEL
AND
RESOURCES.— 
The inspectors general who are members 
of the Council of Inspectors General may 
detail staff and resources to a Council of 
Inspectors General Working Group estab-
lished under this subparagraph to enable it 
to carry out its duties. 
(iii) REPORTS.—A Council of Inspec-
tors General Working Group established 
under this subparagraph shall submit reg-
ular reports to the Oversight Council and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00520
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
521 
HR 4173 RFS
to Congress on its evaluations pursuant to 
this subparagraph. 
(B) WORKING
GROUPS
FOR
FINANCIAL 
COMPANIES UNDERGOING RESOLUTION.— 
(i) CONVENING A WORKING GROUP.— 
The Council of Inspectors General shall 
convene a Council of Inspectors General 
Working Group for each financial company 
for which the Secretary of the Treasury 
appoints the Federal Deposit Insurance 
Corporation as receiver under section 
1604. 
(ii) PERSONNEL
AND
RESOURCES.— 
The inspectors general who are members 
of the Council of Inspectors General may 
detail staff and resources to a Council of 
Inspectors General Working Group estab-
lished under this subparagraph to enable it 
to carry out its duties. 
(iii) REPORTS.—Not later than 270 
days after the appointment of the Federal 
Deposit Insurance Corporation as receiver 
for the financial company for which a 
Council of Inspectors General Working 
Group is convened under clause (i), such 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00521
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
522 
HR 4173 RFS
Working Group shall submit to the pri-
mary financial regulatory agency and to 
Congress a report that includes— 
(I) the reasons for such financial 
company’s failure; 
(II) the reasons for the Secretary 
of the Treasury’s appointment of the 
Federal Deposit Insurance Corpora-
tion as receiver for such financial 
company; and 
(III) recommendations for pre-
venting future failures of financial 
companies. 
(b) RESPONSE TO REPORT BY OVERSIGHT COUN-
CIL.—The Oversight Council shall include in its annual 
report under section 1006 responses to the concerns raised 
in the report of the Council of Inspectors General under 
subsection (a)(2)(B) for such year. 
Subtitle I—Miscellaneous 
SEC. 1801. INCLUSION OF MINORITIES AND WOMEN; DIVER-
SITY IN AGENCY WORKFORCE. 
(a) OFFICE
OF MINORITY
AND WOMEN INCLU-
SION.— 
(1) ESTABLISHMENT.—Not later than 180 days 
following the enactment of this title, each agency 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00522
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
523 
HR 4173 RFS
shall establish an Office of Minority and Women In-
clusion (hereinafter in this section referred to as the 
‘‘Office’’) that shall advise the agency administrator 
of the impact of policies and regulations of the agen-
cy on minority-owned and women-owned businesses 
(as such terms are defined in subsection (c)(1)), and 
shall be responsible for all matters of the agency re-
lating to diversity in management, employment, and 
business activities, including the coordination of 
technical assistance, in accordance with such stand-
ards and requirements as the Director of the Office 
shall establish. 
(2) CONSOLIDATION.—Each agency that has 
assigned these or comparable responsibilities to ex-
isting offices shall ensure that such responsibilities 
are consolidated within the Office. 
(b) DIRECTOR.— 
(1) IN GENERAL.—For each Office, the Presi-
dent shall appoint, by and with the advice and con-
sent of the Senate, a Director of Minority and 
Women Inclusion (hereinafter in this section re-
ferred to as the ‘‘Director’’), who shall also hold a 
title within such agency comparable to that of other 
senior level staff who are, as applicable, either ap-
pointed by the President, by and with the advice and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00523
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
524 
HR 4173 RFS
consent of the Senate, or act in a managerial capac-
ity that requires reporting directly to the agency ad-
ministrator. 
(2) DUTIES.—Each Director shall— 
(A) ensure equal employment opportunity 
and the racial, ethnic and gender diversity of 
the agency’s workforce and senior management; 
(B) increase the participation of minority- 
owned and women-owned businesses in the pro-
grams and contracts of the agency; 
(C) provide guidance to the agency admin-
istrator to ensure that the policies and regula-
tions of the agency strengthen minority-owned 
and women-owned businesses; and 
(D) conduct an assessment, as part of the 
examination process for the entities regulated 
or monitored by the agency of the diversity and 
inclusion efforts by such entities. 
(c) INCLUSION IN ALL LEVELS OF BUSINESS ACTIVI-
TIES.— 
(1) IN GENERAL.—Each Director shall develop 
and implement standards and procedures to ensure, 
to the maximum extent possible, the inclusion and 
utilization of minorities (as such term is defined in 
section 1204(c) of the Financial Institutions Re-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00524
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
525 
HR 4173 RFS
form, Recovery, and Enforcement Act of 1989 (12 
U.S.C. 1811 note)), women, and minority-owned and 
women-owned businesses (as such terms are defined 
in section 21A(r)(4) of the Federal Home Loan 
Bank Act (12 U.S.C. 1441a(r)(4)) (including finan-
cial institutions, investment banking firms, mortgage 
banking firms, asset management firms, broker-deal-
ers, financial services firms, underwriters, account-
ants, brokers, investment consultants, and providers 
of legal services) in all business and activities of the 
agency at all levels, including in procurement, insur-
ance, and all types of contracts (including, as appli-
cable, contracts for the issuance or guarantee of any 
debt, equity, or security, the sale of assets, the man-
agement of its assets, the making of its equity in-
vestments, and the implementation of programs to 
address economic recovery). 
(2) CONTRACTS.—The processes established by 
each agency for review and evaluation for contract 
proposals and to hire service providers shall include 
a component that gives consideration to the diversity 
of the applicant. 
(3) WRITTEN ASSURANCE.—All such contract 
proposals, provided such proposals are of an amount 
greater than $50,000 and the contractor employs 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00525
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
526 
HR 4173 RFS
more than 50 employees, shall include a written as-
surance, in a form and substance that the Director 
shall prescribe, that the contractor shall ensure, to 
the maximum extent possible, the inclusion of mi-
norities and women in its workforce and, as applica-
ble, by its subcontractors. 
(4) TERMINATION.—A Director may terminate 
any contract upon a finding that the contractor has 
failed to make a good faith effort to comply with 
paragraph (3), except that a contractor may appeal 
such finding and termination to the agency adminis-
trator within a reasonable amount of time as deter-
mined by the Director. 
(d) APPLICABILITY.—This section shall apply to all 
contracts of an agency for services of any kind, including 
services that require the services of investment banking, 
asset management entities, broker-dealers, financial serv-
ices entities, underwriters, accountants, investment con-
sultants, and providers of legal services. 
(e) REPORTS.—Not later than 90 days before the end 
of each Federal fiscal year, each Director shall report to 
the Congress detailed information describing the actions 
taken by the agency and the Director pursuant to this sec-
tion, which shall— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00526
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
527 
HR 4173 RFS
(1) to the extent contracts exceed the contract 
amount and employment levels established in sub-
section (c)(3), include a statement of the total 
amounts paid by the agency to third party contrac-
tors since the last such report; 
(2) the percentage of such amounts paid to 
businesses described in subsection (c)(1); 
(3) the successes achieved and challenges faced 
by the agency in operating minority and women out-
reach programs; 
(4) the challenges the agency may face in hiring 
qualified minority and women employees and con-
tracting with qualified minority-owned and women- 
owned businesses; and 
(5) such other information, findings, conclu-
sions, and recommendations for legislative or agency 
action, as the Director may determine to be appro-
priate to include in such report. 
(f) DIVERSITY
IN
AGENCY
WORKFORCE.—Each 
agency shall take affirmative steps to seek diversity in its 
workforce at all levels of the agency consistent with the 
demographic diversity of the United States and the Fed-
eral government, which shall include— 
(1) heavily recruiting at historically black col-
leges and universities, Hispanic-serving institutions, 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00527
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
528 
HR 4173 RFS
women’s colleges, and colleges that typically serve 
majority minority populations; 
(2) sponsoring and recruiting at job fairs in 
urban communities, and placing employment adver-
tisements in newspapers and magazines oriented to-
ward women and people of color; 
(3) partnering with organizations that are fo-
cused on developing opportunities for minorities and 
women to place talented young minorities and 
women in industry internships, summer employment, 
and full-time positions; 
(4) where feasible, partnering with inner-city 
high schools, girls’ high schools, and high schools 
with majority minority populations to establish or 
enhance financial literacy programs and provide 
mentoring; and 
(5) such other mass media communications that 
the Director determines are necessary. 
(g) DEFINITIONS.—For purposes of this section: 
(1) AGENCY.—The term ‘‘agency’’ means— 
(A) the Department of the Treasury; 
(B) the Federal Deposit Insurance Cor-
poration; 
(C) the Federal Housing Finance Agency; 
(D) each of the Federal reserve banks; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00528
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
529 
HR 4173 RFS
(E) the Board; 
(F) the National Credit Union Administra-
tion; 
(G) the Office of the Comptroller of the 
Currency; 
(H) the Office of Thrift Supervision; 
(I) the Securities and Exchange Commis-
sion; 
(J) the Consumer Financial Protection 
Agency; and 
(K) the Federal Insurance Office, 
and any successors to such entities. 
(2) 
AGENCY
ADMINISTRATOR.—The 
term 
‘‘agency administrator’’ means the head of an agen-
cy. 
SEC. 1802. FEDERAL HOUSING FINANCE AGENCY ADVISORY 
ROLE IN FIEC. 
After section 1007 of the Federal Financial Institu-
tions Examination Council Act of 1987 (12 U.S.C. 3306) 
insert the following new section: 
‘‘SEC. 1007A. FEDERAL HOUSING FINANCE AGENCY ADVI-
SORY ROLE. 
‘‘Whenever the Council takes any actions with respect 
to issues that relate to the Federal National Mortgage As-
sociation, the Federal Home Loan Mortgage Corporation, 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00529
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
530 
HR 4173 RFS
or the Federal home loan banks, the Federal Housing Fi-
nance Agency shall participate in the Council’s pro-
ceedings in an advisory role.’’. 
Subtitle J—International Policy 
Coordination 
SEC. 1901. INTERNATIONAL POLICY COORDINATION. 
The President of the United States, or a designee of 
the President, shall coordinate through all available inter-
national policy channels similar policies as found in United 
States law related to limiting the scope, nature, size, scale, 
concentration, and interconnectedness of financial compa-
nies in order to protect financial stability and the global 
economy. 
Subtitle K—International Financial 
Provisions 
SEC. 1951. ACCESS TO UNITED STATES FINANCIAL MARKET 
BY FOREIGN INSTITUTIONS. 
(a) ESTABLISHMENT OF FOREIGN BANK OFFICES IN 
THE UNITED STATES.—Subsection 7(d)(3) of the Inter-
national Banking Act of 1978 (12 U.S.C. 3105(d)(3)) is 
amended— 
(1) by striking ‘‘and’’ at the end of subpara-
graph (C); 
(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00530
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
531 
HR 4173 RFS
(3) by adding at the end the following new sub-
paragraph: 
‘‘(E) for a foreign bank that presents a 
systemic risk to the United States, whether the 
home country of the foreign bank has adopted, 
or is making demonstrable progress toward 
adopting, an appropriate system of financial 
regulation for the financial system of such 
home country to mitigate such systemic risk.’’. 
(b) TERMINATION OF FOREIGN BANK OFFICES IN 
THE UNITED STATES.—Subsection 7(e)(1) of the Inter-
national Banking Act of 1978 (12 U.S.C. 3105(e)(1)) is 
amended— 
(1) by striking ‘‘or’’ at the end of subparagraph 
(A); 
(2) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; or’’; and 
(3) by inserting after subparagraph (B), the 
following new subparagraph: 
‘‘(C) for a foreign bank that presents a 
systemic risk to the United States, the home 
country of the foreign bank has not adopted or 
made demonstrable progress toward adopting 
an appropriate system of financial regulation to 
mitigate such systemic risk.’’. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00531
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
532 
HR 4173 RFS
(c) REGISTRATION
OR
SUCCESSION
TO
UNITED 
STATES BROKERAGE OR DEALER AND TERMINATION OF 
SUCH REGISTRATION.—Section 15 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78o) is amended by adding 
at the end the following new subsections: 
‘‘(k) REGISTRATION OR SUCCESSION TO A UNITED 
STATES BROKER OR DEALER.—In determining whether 
to permit a foreign person or an affiliate of a foreign per-
son to register as a United States broker or dealer, or 
succeed to the registration of a United States broker or 
dealer, the Securities and Exchange Commission may con-
sider whether, for a foreign person, or an affiliate of a 
foreign person that presents a systemic risk to the United 
States, the home country of the foreign person has adopt-
ed or made demonstrable progress toward adopting an ap-
propriate system of financial regulation to mitigate such 
systemic risk. 
‘‘(l) TERMINATION OF A UNITED STATES BROKER 
OR DEALER.—For a foreign person or an affiliate of a 
foreign person that presents such a systemic risk to the 
United States, the Securities and Exchange Commission 
may determine to terminate the registration of such for-
eign person or an affiliate of such foreign person as a 
broker or dealer in the United States if the Commission 
determines that the home country of the foreign person 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00532
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
533 
HR 4173 RFS
has not adopted, or made demonstrable progress toward 
adopting, an appropriate system of financial regulation to 
mitigate such systemic risk.’’. 
SEC. 1952. REDUCING TARP FUNDS TO OFFSET COSTS. 
Section 115(a)(3) of the Emergency Economic Sta-
bilization Act of 2008 (12 U.S.C. 5225(a)(3)) is amended 
by striking ‘‘$700,000,000,000, as such amount is re-
duced by $1,259,000,000,, as such amount is reduced by 
$1,244,000,000, outstanding at any one time’’ and insert-
ing ‘‘$700,000,000,000, as such amount is reduced by 
$23,625,000,000, outstanding at any one time’’. 
Subtitle L—Securities Holding 
Companies 
SEC. 1961. SECURITIES HOLDING COMPANIES. 
(a) SUPERVISION OF A SECURITIES HOLDING COM-
PANY NOT HAVING A BANK OR SAVINGS ASSOCIATION 
AFFILIATE.— 
(1) IN
GENERAL.—A securities holding com-
pany that is required by a foreign regulator or for-
eign law to be subject to comprehensive consolidated 
supervision and that is not— 
(A) a financial holding company subject to 
stricter standards; 
(B) an affiliate of an insured bank (other 
than an institution described in subparagraphs 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00533
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
534 
HR 4173 RFS
(D) or (G) of section 2(c)(2) of the Bank Hold-
ing Company Act of 1956) or a savings associa-
tion; 
(C) a foreign bank, foreign company, or 
company that is described in section 8(a) of the 
International Banking Act of 1978; 
(D) a foreign bank that controls, directly 
or indirectly, a corporation chartered under sec-
tion 25A of the Federal Reserve Act (12 U.S.C. 
611 et seq.); or 
(E) subject to comprehensive consolidated 
supervision by a foreign regulator, 
may register with the Board to become supervised, 
pursuant to paragraph (2). Any securities holding 
company filing such a registration shall be super-
vised in accordance with this section and comply 
with the rules and orders prescribed by the Board 
applicable to supervised securities holding compa-
nies. 
(2) REGISTRATION AS A SUPERVISED SECURI-
TIES HOLDING COMPANY.—A securities holding com-
pany described in paragraph (1) shall register by fil-
ing with the Board such information and documents 
concerning such securities holding company as the 
Board, by regulation, may prescribe as necessary or 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00534
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
535 
HR 4173 RFS
appropriate in furtherance of the purposes of this 
section. Such supervision shall become effective 45 
days after the date of receipt of such registration by 
the Board or within such shorter time period as the 
Board, by rule or order, may determine. 
(b) SUPERVISION OF SECURITIES HOLDING COMPA-
NIES.— 
(1) RECORDKEEPING AND REPORTING.— 
(A) IN GENERAL.—Every supervised secu-
rities holding company and each affiliate of 
such company shall make and keep for pre-
scribed periods such records, furnish copies of 
records, and make such reports, as the Board 
determines to be necessary or appropriate for 
the Board to carry out the purposes of this sec-
tion, prevent evasions, and monitor compliance 
by the company or affiliate with applicable pro-
visions of law. 
(B) FORM AND CONTENTS.—Such records 
and reports shall be prepared in such form and 
according to such specifications (including cer-
tification by a registered public accounting 
firm), as the Board may require and shall be 
provided promptly at any time upon request by 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00535
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
536 
HR 4173 RFS
the Board. Such records and reports may in-
clude— 
(i) a balance sheet and income state-
ment; 
(ii) an assessment of the consolidated 
capital of the supervised securities holding 
company; 
(iii) an independent auditor’s report 
attesting to the supervised securities hold-
ing company’s compliance with its internal 
risk management and internal control ob-
jectives; and 
(iv) reports concerning the extent to 
which the company or affiliate has com-
plied with the provisions of this section 
and any regulations prescribed and orders 
issued under this section. 
(2) USE OF EXISTING REPORTS.— 
(A) IN GENERAL.—The Board shall, to the 
fullest extent possible, accept reports in fulfill-
ment of the requirements under this paragraph 
that the supervised securities holding company 
or its affiliates have been required to provide to 
another appropriate regulatory agency or self- 
regulatory organization. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00536
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
537 
HR 4173 RFS
(B) AVAILABILITY.—A supervised securi-
ties holding company or an affiliate of such 
company shall provide to the Board, at the re-
quest of the Board, any report referred to in 
subparagraph (A), as permitted by law. 
(3) EXAMINATION AUTHORITY.— 
(A) FOCUS
OF
EXAMINATION
AUTHOR-
ITY.—The Board may make examinations of 
any supervised securities holding company and 
any affiliate of such company to carry out the 
purposes of this subsection, prevent evasions 
thereof, and monitor compliance by the com-
pany or affiliate with applicable provisions of 
law. 
(B) DEFERENCE
TO
OTHER
EXAMINA-
TIONS.—For purposes of this subparagraph, the 
Board shall, to the fullest extent possible, use 
the reports of examination made by other ap-
propriate Federal or State regulatory authori-
ties with respect to any functionally regulated 
subsidiary, as defined under section 5(c)(1) of 
the Bank Holding Company Act of 1956 (12 
U.S.C. 1844(c)(1)), or an institution described 
in subparagraphs (D) or (G) of section 
1841(c)(2). 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00537
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
538 
HR 4173 RFS
(c) CAPITAL AND RISK MANAGEMENT.— 
(1) The Board shall, by regulation or order, 
prescribe capital adequacy and other risk manage-
ment standards for a supervised securities holding 
company appropriate to protect the safety and 
soundness of the company and address the risks 
posed to financial stability by a supervised securities 
holding company. Standards imposed under this sub-
paragraph shall take account of differences among 
types of business activities and— 
(A) the amount and nature of the com-
pany’s financial assets; 
(B) the amount and nature of the com-
pany’s liabilities, including the degree of reli-
ance on short-term funding; 
(C) the extent and nature of the company’s 
off-balance sheet exposures; 
(D) the extent and nature of the com-
pany’s transactions and relationships with other 
financial companies; 
(E) the company’s importance as a source 
of credit for households, businesses, and State 
and local governments and as a source of li-
quidity for the financial system; and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00538
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
539 
HR 4173 RFS
(F) the nature, scope, and mix of the com-
pany’s activities. 
(2) In imposing standards under this sub-
section, the Board may differentiate among super-
vised securities holding companies on an individual 
basis or by category, taking into consideration the 
criteria specified above. 
(3) Any capital requirements imposed under 
this subsection shall not take effect until the expira-
tion of 180 days after a supervised securities holding 
company is provided notice of such requirement. 
(d) OTHER PROVISIONS.— 
(1) Subsections (b), (c) through (s), and (u) of 
section 8 of the Federal Deposit Insurance Act shall 
apply to any supervised securities holding company, 
and to any subsidiary (other than a bank) of a su-
pervised securities holding company, in the same 
manner as they apply to a bank holding company. 
For purposes of applying such subsections to a su-
pervised securities holding company or a subsidiary 
(other than a bank) of a supervised securities hold-
ing company, the Board shall be considered the ap-
propriate Federal banking agency for the supervised 
securities holding company or subsidiary. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00539
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
540 
HR 4173 RFS
(2) Except as the Board may otherwise provide 
by regulation or order, a supervised securities hold-
ing 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 that bank holding companies are subject to 
such provisions, except that any such supervised se-
curities holding company shall not by reason of this 
subparagraph be deemed a bank holding company 
for purposes of section 4 of the Bank Holding Com-
pany Act of 1956. 
(e) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) SECURITIES HOLDING COMPANY.—The term 
‘‘securities holding company’’ means— 
(A) any person other than a natural per-
son that owns or controls one or more brokers 
or dealers as defined in section 3 of the Securi-
ties Exchange Act; and 
(B) the associated persons of the securities 
holding company. 
(2) SUPERVISED
SECURITIES
HOLDING
COM-
PANY.—The term ‘‘supervised securities holding 
company’’ means any securities holding company 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00540
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
541 
HR 4173 RFS
that is supervised by the Board pursuant to this sec-
tion. 
(3) OTHER BANKING TERMS.—The terms ‘‘af-
filiate’’, ‘‘bank’’, ‘‘bank holding company’’, ‘‘com-
pany’’, ‘‘control’’, ‘‘savings association’’, and ‘‘sub-
sidiary’’ have the same meanings as in section 2 of 
the Bank Holding Company Act of 1956. 
(4) INSURED BANK.—The term ‘‘insured bank’’ 
has the same meaning as in section 13 of the Fed-
eral Deposit Insurance Act. 
(5) FOREIGN BANK.—The term ‘‘foreign bank’’ 
has the same meaning as in section 1(b)(7) of the 
International Banking Act of 1978. 
(6) ASSOCIATED PERSONS.—The terms ‘‘person 
associated with a securities holding company’’ and 
‘‘associated person of a securities holding company’’ 
mean any person directly or indirectly controlling, 
controlled by, or under common control with, a secu-
rities holding company. 
TITLE II—CORPORATE AND FI-
NANCIAL INSTITUTION COM-
PENSATION FAIRNESS ACT 
SEC. 2001. SHORT TITLE. 
This title may be cited as the ‘‘Corporate and Finan-
cial Institution Compensation Fairness Act of 2009’’. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00541
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
542 
HR 4173 RFS
SEC. 2002. SHAREHOLDER VOTE ON EXECUTIVE COM-
PENSATION DISCLOSURES. 
Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(i) ANNUAL SHAREHOLDER APPROVAL OF EXECU-
TIVE COMPENSATION.— 
‘‘(1) ANNUAL VOTE.—Any proxy or consent or 
authorization (the solicitation of which is subject to 
the rules of the Commission pursuant to subsection 
(a)) for an annual meeting of the shareholders to 
elect directors (or a special meeting in lieu of such 
meeting) where proxies are solicited in respect of 
any security registered under section 12 occurring 
on or after the date that is 6 months after the date 
on which final rules are issued under paragraph (4), 
shall provide for a separate shareholder vote to ap-
prove the compensation of executives as disclosed 
pursuant to the Commission’s compensation disclo-
sure rules for named executive officers (which disclo-
sure shall include the compensation committee re-
port, the compensation discussion and analysis, the 
compensation tables, and any related materials, to 
the extent required by such rules). The shareholder 
vote shall not be binding on the issuer or the board 
of directors and shall not be construed as overruling 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00542
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
543 
HR 4173 RFS
a decision by such board, nor to create or imply any 
additional fiduciary duty by such board, nor shall 
such vote be construed to restrict or limit the ability 
of shareholders to make proposals for inclusion in 
such proxy materials related to executive compensa-
tion. 
‘‘(2) SHAREHOLDER
APPROVAL
OF
GOLDEN 
PARACHUTE COMPENSATION.— 
‘‘(A) DISCLOSURE.—In any proxy or con-
sent solicitation material (the solicitation of 
which is subject to the rules of the Commission 
pursuant to subsection (a)) for a meeting of the 
shareholders occurring on or after the date that 
is 6 months after the date on which final rules 
are issued under paragraph (4), at which share-
holders are asked to approve an acquisition, 
merger, consolidation, or proposed sale or other 
disposition of all or substantially all the assets 
of an issuer, the person making such solicita-
tion shall disclose in the proxy or consent solici-
tation material, in a clear and simple form in 
accordance with regulations to be promulgated 
by the Commission, any agreements or under-
standings that such person has with any named 
executive officers of such issuer (or of the ac-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00543
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
544 
HR 4173 RFS
quiring issuer, if such issuer is not the acquir-
ing issuer) concerning any type of compensation 
(whether present, deferred, or contingent) that 
is based on or otherwise relates to the acquisi-
tion, merger, consolidation, sale, or other dis-
position of all or substantially all of the assets 
of the issuer and the aggregate total of all such 
compensation that may (and the conditions 
upon which it may) be paid or become payable 
to or on behalf of such executive officer. 
‘‘(B) 
SHAREHOLDER
APPROVAL.—Any 
proxy or consent or authorization relating to 
the proxy or consent solicitation material con-
taining the disclosure required by subparagraph 
(A) shall provide for a separate shareholder 
vote to approve such agreements or under-
standings and compensation as disclosed, unless 
such agreements or understandings have been 
subject to a shareholder vote under paragraph 
(1). A vote by the shareholders shall not be 
binding on the issuer or the board of directors 
of the issuer or the person making the solicita-
tion and shall not be construed as overruling a 
decision by any such person or issuer, nor to 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00544
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
545 
HR 4173 RFS
create or imply any additional fiduciary duty by 
any such person or issuer. 
‘‘(3) DISCLOSURE
OF
VOTES.—Every institu-
tional investment manager subject to section 13(f) 
shall report at least annually how it voted on any 
shareholder vote pursuant to paragraph (1) or (2) of 
this section, unless such vote is otherwise required to 
be reported publicly by rule or regulation of the 
Commission. 
‘‘(4) RULEMAKING.—Not later than 6 months 
after the date of the enactment of the Corporate and 
Financial Institution Compensation Fairness Act of 
2009, the Commission shall issue final rules to im-
plement this subsection. 
‘‘(5) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt certain categories of issuers from 
the requirements of this subsection, where appro-
priate in view of the purpose of this subsection. In 
determining appropriate exemptions, the Commis-
sion shall take into account, among other consider-
ations, the potential impact on smaller reporting 
issuers.’’. 
SEC. 2003. COMPENSATION COMMITTEE INDEPENDENCE. 
(a) STANDARDS RELATING TO COMPENSATION COM-
MITTEES.—The Securities Exchange Act of 1934 (15 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00545
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
546 
HR 4173 RFS
U.S.C. 78a et seq.) is amended by inserting after section 
10A the following new section: 
‘‘SEC. 10B. STANDARDS RELATING TO COMPENSATION COM-
MITTEES. 
‘‘(a) COMMISSION RULES.— 
‘‘(1) IN GENERAL.—Effective not later than 9 
months after the date of enactment of the Corporate 
and Financial Institution Compensation Fairness 
Act of 2009, the Commission shall, by rule, direct 
the national securities exchanges and national secu-
rities associations to prohibit the listing of any class 
of equity security of an issuer that is not in compli-
ance with the requirements of any portion of sub-
sections (b) through (f). 
‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The 
rules of the Commission under paragraph (1) shall 
provide for appropriate procedures for an issuer to 
have an opportunity to cure any defects that would 
be the basis for a prohibition under paragraph (1) 
before the imposition of such prohibition. 
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt certain categories of issuers from 
the requirements of subsections (b) through (f), 
where appropriate in view of the purpose of this sec-
tion. In determining appropriate exemptions, the 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00546
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
547 
HR 4173 RFS
Commission shall take into account, among other 
considerations, the potential impact on smaller re-
porting issuers. 
‘‘(b) INDEPENDENCE OF COMPENSATION COMMIT-
TEES.— 
‘‘(1) IN GENERAL.—Each member of the com-
pensation committee of the board of directors of the 
issuer shall be independent. 
‘‘(2) CRITERIA.—In order to be considered to 
be independent for purposes of this subsection, a 
member of a compensation committee of an issuer 
may not, other than in his or her capacity as a 
member of the compensation committee, the board 
of directors, or any other board committee accept 
any consulting, advisory, or other compensatory fee 
from the issuer. 
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt from the requirements of para-
graph (2) a particular relationship with respect to 
compensation committee members, where appro-
priate in view of the purpose of this section. 
‘‘(4) DEFINITION.—As used in this section, the 
term ‘compensation committee’ means— 
‘‘(A) a committee (or equivalent body) es-
tablished by and amongst the board of directors 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00547
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
548 
HR 4173 RFS
of an issuer for the purpose of determining and 
approving the compensation arrangements for 
the executive officers of the issuer; and 
‘‘(B) if no such committee exists with re-
spect to an issuer, the independent members of 
the entire board of directors. 
‘‘(c) INDEPENDENCE STANDARDS FOR COMPENSA-
TION CONSULTANTS
AND OTHER COMMITTEE ADVI-
SORS.—Any compensation consultant or other similar ad-
viser to the compensation committee of any issuer shall 
meet standards for independence established by the Com-
mission by regulation. 
‘‘(d) COMPENSATION COMMITTEE AUTHORITY RE-
LATING TO COMPENSATION CONSULTANTS.— 
‘‘(1) IN
GENERAL.—The compensation com-
mittee of each issuer, in its capacity as a committee 
of the board of directors, shall have the authority, 
in its sole discretion, to retain and obtain the advice 
of a compensation consultant meeting the standards 
for independence promulgated pursuant to sub-
section (c), and the compensation committee shall be 
directly responsible for the appointment, compensa-
tion, and oversight of the work of such independent 
compensation consultant. This provision shall not be 
construed to require the compensation committee to 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00548
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
549 
HR 4173 RFS
implement or act consistently with the advice or rec-
ommendations of the compensation consultant, and 
shall not otherwise affect the compensation commit-
tee’s ability or obligation to exercise its own judg-
ment in fulfillment of its duties. 
‘‘(2) DISCLOSURE.—In any proxy or consent 
solicitation material for an annual meeting of the 
shareholders (or a special meeting in lieu of the an-
nual meeting) occurring on or after the date that is 
1 year after the date of enactment of the Corporate 
and Financial Institution Compensation Fairness 
Act of 2009, each issuer shall disclose in the proxy 
or consent material, in accordance with regulations 
to be promulgated by the Commission whether the 
compensation committee of the issuer retained and 
obtained the advice of a compensation consultant 
meeting the standards for independence promulgated 
pursuant to subsection (c). 
‘‘(3) REGULATIONS.—In promulgating regula-
tions under this subsection or any other provision of 
law with respect to compensation consultants, the 
Commission shall ensure that such regulations are 
competitively neutral among categories of consult-
ants and preserve the ability of compensation com-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00549
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
550 
HR 4173 RFS
mittees to retain the services of members of any 
such category. 
‘‘(e) AUTHORITY TO ENGAGE INDEPENDENT COUN-
SEL
AND OTHER ADVISORS.—The compensation com-
mittee of each issuer, in its capacity as a committee of 
the board of directors, shall have the authority, in its sole 
discretion, to retain and obtain the advice of independent 
counsel and other advisers meeting the standards for inde-
pendence promulgated pursuant to subsection (c), and the 
compensation committee shall be directly responsible for 
the appointment, compensation, and oversight of the work 
of such independent counsel and other advisers. This pro-
vision shall not be construed to require the compensation 
committee to implement or act consistently with the advice 
or recommendations of such independent counsel and 
other advisers, and shall not otherwise affect the com-
pensation committee’s ability or obligation to exercise its 
own judgment in fulfillment of its duties. 
‘‘(f) FUNDING.—Each issuer shall provide for appro-
priate funding, as determined by the compensation com-
mittee, in its capacity as a committee of the board of direc-
tors, for payment of compensation— 
‘‘(1) to any compensation consultant to the 
compensation committee that meets the standards 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00550
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
551 
HR 4173 RFS
for independence promulgated pursuant to sub-
section (c); and 
‘‘(2) to any independent counsel or other ad-
viser to the compensation committee.’’. 
(b) STUDY AND REVIEW REQUIRED.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall conduct a study and review 
of the use of compensation consultants meeting the 
standards for independence promulgated pursuant to 
section 10B(c) of the Securities Exchange Act of 
1934 (as added by subsection (a)), and the effects 
of such use. 
(2) REPORT TO CONGRESS.—Not later than 2 
years after the rules required by the amendment 
made by this section take effect, the Commission 
shall submit a report to the Congress on the results 
of the study and review required by this paragraph. 
SEC. 2004. ENHANCED COMPENSATION STRUCTURE RE-
PORTING 
TO 
REDUCE 
PERVERSE 
INCEN-
TIVES. 
(a) ENHANCED DISCLOSURE
AND REPORTING
OF 
COMPENSATION ARRANGEMENTS.— 
(1) IN
GENERAL.—Not later than 9 months 
after the date of enactment of this title, the appro-
priate Federal regulators jointly shall prescribe regu-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00551
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
552 
HR 4173 RFS
lations to require each covered financial institution 
to disclose to the appropriate Federal regulator the 
structures of all incentive-based compensation ar-
rangements offered by such covered financial institu-
tions sufficient to determine whether the compensa-
tion structure— 
(A) is aligned with sound risk manage-
ment; 
(B) is structured to account for the time 
horizon of risks; and 
(C) meets such other criteria as the appro-
priate Federal regulators jointly may determine 
to be appropriate to reduce unreasonable incen-
tives offered by such institutions for employees 
to take undue risks that— 
(i) could threaten the safety and 
soundness of covered financial institutions; 
or 
(ii) could have serious adverse effects 
on economic conditions or financial sta-
bility. 
(2) RULES
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed as requiring the 
reporting of the actual compensation of particular 
individuals. Nothing in this subsection shall be con-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00552
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
553 
HR 4173 RFS
strued to require a covered financial institution that 
does not have an incentive-based payment arrange-
ment to make the disclosures required under this 
subsection. 
(b) PROHIBITION ON CERTAIN COMPENSATION AR-
RANGEMENTS.—Not later than 9 months after the date 
of enactment of this title, and taking into account the fac-
tors described in subparagraphs (A), (B), and (C) of sub-
section (a)(1), the appropriate Federal regulators shall 
jointly prescribe regulations that prohibit any incentive- 
based payment arrangement, or any feature of any such 
arrangement, that the regulators determine encourages in-
appropriate risks by covered financial institutions that— 
(1) could threaten the safety and soundness of 
covered financial institutions; or 
(2) could have serious adverse effects on eco-
nomic conditions or financial stability. 
(c) ENFORCEMENT.—The provisions of this section 
shall be enforced under section 505 of the Gramm-Leach- 
Bliley Act and, for purposes of such section, a violation 
of this section shall be treated as a violation of subtitle 
A of title V of such Act. 
(d) DEFINITIONS.—As used in this section— 
(1) the term ‘‘appropriate Federal regulator’’ 
means— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00553
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
554 
HR 4173 RFS
(A) the Board of Governors of the Federal 
Reserve System; 
(B) the Office of the Comptroller of the 
Currency; 
(C) the Board of Directors of the Federal 
Deposit Insurance Corporation; 
(D) the Director of the Office of Thrift 
Supervision; 
(E) the National Credit Union Administra-
tion Board; 
(F) the Securities and Exchange Commis-
sion; and 
(G) the Federal Housing Finance Agency; 
and 
(2) the term ‘‘covered financial institution’’ 
means— 
(A) a depository institution or depository 
institution holding company, as such terms are 
defined in section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813); 
(B) a broker-dealer registered under sec-
tion 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o); 
(C) a credit union, as described in section 
19(b)(1)(A)(iv) of the Federal Reserve Act; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00554
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
555 
HR 4173 RFS
(D) an investment advisor, as such term is 
defined in section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)); 
(E) the Federal National Mortgage Asso-
ciation; 
(F) the Federal Home Loan Mortgage 
Corporation; and 
(G) any other financial institution that the 
appropriate Federal regulators, jointly, by rule, 
determine should be treated as a covered finan-
cial institution for purposes of this section. 
(e) EXEMPTION FOR CERTAIN FINANCIAL INSTITU-
TIONS.—The requirements of this section shall not apply 
to covered financial institutions with assets of less than 
$1,000,000,000. 
(f) LIMITATION.—No regulation promulgated pursu-
ant to this section shall be allowed to require the recovery 
of incentive-based compensation under compensation ar-
rangements in effect on the date of enactment of this title, 
provided such compensation agreements are for a period 
of no more than 24 months. Nothing in this title shall 
prevent or limit the recovery of incentive-based compensa-
tion under any other applicable law. 
(g) GAO STUDY.— 
(1) STUDY REQUIRED.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00555
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
556 
HR 4173 RFS
(A) IN GENERAL.—The Comptroller Gen-
eral of the United States shall carry out a 
study to determine whether there is a correla-
tion between compensation structures and ex-
cessive risk taking. 
(B) FACTORS TO CONSIDER.—In carrying 
out the study required under subparagraph (A), 
the Comptroller General shall— 
(i) consider compensation structures 
used by companies from 2000 to 2008; and 
(ii) compare companies that failed, or 
nearly failed but for government assist-
ance, to companies that remained viable 
throughout the housing and credit market 
crisis of 2007 and 2008, including the 
compensation practices of all such compa-
nies. 
(C) 
DETERMINING
COMPANIES
THAT 
FAILED OR NEARLY FAILED.—In determining 
whether a company failed, or nearly failed but 
for government assistance, for purposes of sub-
paragraph (B)(ii), the Comptroller General 
shall focus on— 
(i) companies that received excep-
tional assistance under the Troubled Asset 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00556
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
557 
HR 4173 RFS
Relief Program under title I of the Emer-
gency Economic Stabilization Act of 2008 
(12 U.S.C. 5211 et seq.) or other forms of 
significant government assistance, includ-
ing under the Automotive Industry Financ-
ing Program, the Targeted Investment 
Program, the Asset Guarantee Program, 
and the Systemically Significant Failing 
Institutions Program; 
(ii) the Federal National Mortgage 
Association; 
(iii) the Federal Home Loan Mort-
gage Corporation; and 
(iv) companies that participated in the 
Security and Exchange Commission’s Con-
solidated Supervised Entities Program as 
of January 2008. 
(2) REPORT.—Not later than the end of the 1- 
year period beginning on the date of the enactment 
of this title, the Comptroller General shall issue a re-
port to the Congress containing the results of the 
study required under paragraph (1). 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00557
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
558 
HR 4173 RFS
TITLE 
III—DERIVATIVE 
MAR-
KETS 
TRANSPARENCY 
AND 
ACCOUNTABILITY ACT 
SEC. 3001. SHORT TITLE. 
This title may be cited as the ‘‘Derivative Markets 
Transparency and Accountability Act of 2009’’. 
SEC. 3002. REVIEW OF REGULATORY AUTHORITY. 
(a) CONSULTATION.— 
(1) CFTC.—Before commencing any rule-
making or issuing an order regarding swaps, swap 
dealers, major swap participants, swap repositories, 
persons associated with a swap dealer or major swap 
participant, eligible contract participants, or swap 
execution facilities pursuant to subtitle A, the Com-
modity Futures Trading Commission shall consult 
with the Securities and Exchange Commission and 
the Prudential Regulators. 
(2) SEC.—Before commencing any rulemaking 
or issuing an order regarding security-based swaps, 
security-based swap dealers, major security-based 
swap participants, security-based swap repositories, 
persons associated with a security-based swap dealer 
or major security-based swap participant, eligible 
contract participants with regard to security-based 
swaps, or swap execution facilities pursuant to sub-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00558
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
559 
HR 4173 RFS
title B, the Securities and Exchange Commission 
shall consult with the Commodity Futures Trading 
Commission and the Prudential Regulators. 
(3) In developing and promulgating rules or or-
ders pursuant to this subsection, the Commodity Fu-
tures Trading Commission and the Securities and 
Exchange Commission shall consider each other’s 
views and the views of the Prudential Regulators. 
(4) In adopting a rule or order described in 
paragraph (1) or (2), the Commodity Futures Trad-
ing Commission and the Securities and Exchange 
Commission shall treat functionally or economically 
similar products or entities similarly. 
(5) Paragraph (4) shall not be construed to re-
quire the Commodity Futures Trading Commission 
or the Securities Exchange Commission to adopt a 
rule or order that treats functionally or economically 
similar products or entities identically. 
(b) LIMITATION.— 
(1) CFTC.—Nothing in this title, unless spe-
cifically provided, shall be construed to confer juris-
diction on the Commodity Futures Trading Commis-
sion to issue a rule, regulation, or order providing 
for oversight or regulation of— 
(A) security-based swaps; or 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00559
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
560 
HR 4173 RFS
(B) with regard to their activities or func-
tions concerning security-based swaps— 
(i) security-based swap dealers; 
(ii) major security-based swap partici-
pants; 
(iii) security-based swap repositories; 
(iv) persons associated with a secu-
rity-based swap dealer or major security- 
based swap participant; 
(v) eligible contract participants with 
respect to security-based swaps; or 
(vi) swap execution facilities. 
(2) SEC.—Nothing in this title, unless specifi-
cally provided, shall be construed to confer jurisdic-
tion on the Securities and Exchange Commission to 
issue a rule, regulation, or order providing for over-
sight or regulation of— 
(A) swaps; or 
(B) with regard to their activities or func-
tions concerning swaps— 
(i) swap dealers; 
(ii) major swap participants; 
(iii) swap repositories; 
(iv) persons associated with a swap 
dealer or major swap participant; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00560
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
561 
HR 4173 RFS
(v) eligible contract participants with 
respect to swaps; or 
(vi) swap execution facilities. 
(c) OBJECTION TO COMMISSION REGULATION.— 
(1) FILING OF PETITION FOR REVIEW.—If ei-
ther Commission referred to in this section believes 
that a final rule, regulation, or order of the other 
such Commission conflicts with subsection (a)(4) or 
(b), then the complaining Commission may obtain 
review thereof in the United States Court of Appeals 
for the District of Columbia Circuit by filing in the 
court, not later than 60 days after the date of publi-
cation of the final rule, regulation, or order, a writ-
ten petition requesting that the rule, regulation, or 
order be set aside. Any such proceeding shall be ex-
pedited by the Court of Appeals. 
(2) 
TRANSMITTAL
OF
PETITION
AND 
RECORD.—A copy of a petition described in para-
graph (1) shall be transmitted not later than 1 busi-
ness day after filing by the complaining Commission 
to the Secretary of the responding Commission. On 
receipt of the petition, the responding Commission 
shall file with the court a copy of the rule, regula-
tion, or order under review and any documents re-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00561
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
562 
HR 4173 RFS
ferred to therein, and any other materials prescribed 
by the court. 
(3) STANDARD OF REVIEW.—The court, giving 
deference to the views of neither Commission, shall 
determine to affirm or set aside a rule, regulation, 
or order of the responding Commission under this 
subsection, based on the determination of the court, 
as to whether the rule, regulation, or order is in con-
flict 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 court is final (including any appeal of the deter-
mination). 
(d) DEFINITIONS.—In this section, the terms ‘‘Pru-
dential Regulators’’, ‘‘swap’’, ‘‘swap dealer’’, ‘‘major swap 
participant’’, ‘‘swap repository’’, ‘‘person associated with 
a swap dealer or major swap participant’’, ‘‘eligible con-
tract participant’’, ‘‘swap execution facility’’, ‘‘security- 
based swap’’, ‘‘security-based swap dealer’’, ‘‘major secu-
rity-based swap participant’’, ‘‘security-based swap reposi-
tory’’, and ‘‘person associated with a security-based swap 
dealer or major security-based swap participant’’ shall 
have the meanings provided, respectively, in the Com-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00562
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
563 
HR 4173 RFS
modity Exchange Act, including any modification of the 
meanings under section 3101(b) of this Act. 
(e)(1) Notwithstanding subsections (b) and (c), the 
Commodity Futures Trading Commission and the Securi-
ties Exchange Commission shall jointly adopt rules to— 
(A) define the terms ‘‘security-based swap 
agreement’’ in section 3(a)(76) of the Securities Ex-
change Act of 1934 and ‘‘swap’’ in section 
1a(35)(A)(v) of the Commodity Exchange Act; 
(B) require the maintenance of records of all 
activities related to transactions defined in subpara-
graph (A) that are not cleared; and 
(C) make available to the Securities and Ex-
change Commission information relating to trans-
actions defined in subparagraph (A) that are 
uncleared. 
(2) In the event that the Commodity Futures Trading 
Commission and the Securities Exchange Commission fail 
to jointly prescribe rules pursuant to paragraph (1) in a 
timely manner, at the request of either Commission, the 
Financial Services Oversight Council shall resolve the dis-
pute— 
(A) within a reasonable time after receiving the 
request; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00563
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
564 
HR 4173 RFS
(B) after consideration of relevant information 
provided by each Commission; and 
(C) by agreeing with one of the Commissions 
regarding the entirety of the matter or by deter-
mining a compromise position. 
SEC. 3003. INTERNATIONAL HARMONIZATION. 
(a) In order to promote effective and consistent global 
regulation of contracts of sale of swaps and security-based 
swaps, the Commodity Futures Trading Commission, the 
Securities and Exchange Commission, and the Prudential 
Regulators (as defined in section 1a(42) of the Commodity 
Exchange Act), as appropriate, shall consult and coordi-
nate with foreign regulatory authorities on the establish-
ment of consistent international standards with respect to 
the regulation of contracts of sale of swaps and security- 
based swaps, and may agree to such information-sharing 
arrangements as may be deemed to be necessary or appro-
priate in the public interest or for the protection of inves-
tors, swap counterparties, and security-based swap 
counterparties. 
(b) In order to promote effective and consistent global 
regulation of contracts of sale of a commodity for future 
delivery, the Commodity Futures Trading Commission 
shall consult and coordinate with foreign regulatory au-
thorities on the establishment of consistent international 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00564
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
565 
HR 4173 RFS
standards with respect to the regulation of contracts of 
sale of a commodity for future delivery, and may agree 
to such information-sharing arrangements as may be 
deemed necessary or appropriate in the public interest for 
the protection users of contracts of sale of a commodity 
for future delivery. 
SEC. 3004. PROHIBITION AGAINST GOVERNMENT ASSIST-
ANCE. 
(a) IN GENERAL.—No provision of this title shall be 
construed to authorize Federal assistance to support clear-
ing operations or liquidation of a derivatives clearing orga-
nization described in the Commodity Exchange Act or a 
clearing agency described in the Securities Exchange Act 
of 1934, except where explicitly authorized by an Act of 
Congress. 
(b) DEFINITION.—For the purposes of this section, 
the term ‘‘Federal assistance’’ means the use of public 
funds for the purposes of— 
(1) making loans to, or purchasing any debt ob-
ligation of, a derivatives clearing organization, a 
clearing agency, or a subsidiary of either; 
(2) purchasing assets of a derivatives clearing 
organization, a clearing agency, or a subsidiary of ei-
ther; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00565
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
566 
HR 4173 RFS
(3) assuming or guaranteeing the obligations of 
a derivatives clearing organization, a clearing agen-
cy, or a subsidiary of either; or 
(4) acquiring any type of equity interest or se-
curity of a derivatives clearing organization, a clear-
ing agency, or a subsidiary of either. 
SEC. 3005. STUDIES. 
(a) STUDY ON EFFECTS OF POSITION LIMITS ON 
TRADING ON EXCHANGES IN THE UNITED STATES.— 
(1) STUDY.—The Commodity Futures Trading 
Commission, in consultation with each entity that is 
a designated contract market under the Commodity 
Exchange Act, shall conduct a study of the effects 
(if any) of the position limits imposed pursuant to 
the other provisions of this title on excessive specula-
tion and on the movement of transactions from ex-
changes in the United States to trading venues out-
side the United States. 
(2) REPORT
TO
THE
CONGRESS.—Within 12 
months after the imposition of position limits pursu-
ant to the other provisions of this title, the Com-
modity Futures Trading Commission, in consultation 
with each entity that is a designated contract mar-
ket under the Commodity Exchange Act, shall sub-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00566
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
567 
HR 4173 RFS
mit to the Congress a report on the matters de-
scribed in paragraph (1). 
(3) Within 30 legislative days after the submis-
sion to the Congress of the report described in para-
graph (2), the Committee on Agriculture of the 
House of Representatives shall hold a hearing exam-
ining the findings of the report. 
(4) In addition to the study required in para-
graph (1), the Chairman of the Commodity Futures 
Trading Commission shall prepare and submit to the 
Congress biennial reports on the growth or decline 
of the derivatives markets in the United States and 
abroad, which shall include assessments of the 
causes of any such growth or decline, the effective-
ness of regulatory regimes in managing systemic 
risk, a comparison of the costs of compliance at the 
time of the report for market participants subject to 
regulation by the United States with the costs of 
compliance in December 2008 for the market par-
ticipants, and the quality of the available data. In 
preparing the report, the Chairman shall solicit the 
views of, consult with, and address the concerns 
raised by, market participants, regulators, legisla-
tors, and other interested parties. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00567
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
568 
HR 4173 RFS
(b) STUDY ON FEASIBILITY OF REQUIRING USE OF 
STANDARDIZED ALGORITHMIC DESCRIPTIONS
FOR FI-
NANCIAL DERIVATIVES.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission and the Commodity Futures 
Trading Commission shall conduct a joint study of 
the feasibility of requiring the derivatives industry to 
adopt standardized computer-readable algorithmic 
descriptions which may be used to describe complex 
and standardized financial derivatives. 
(2) GOALS.—The algorithmic descriptions de-
fined in the study shall be designed to facilitate com-
puterized analysis of individual derivative contracts 
and to calculate net exposures to complex deriva-
tives. The algorithmic descriptions shall be optimized 
for simultaneous use by: 
(A) commercial users and traders of de-
rivatives; 
(B) derivative clearing houses, exchanges 
and electronic trading platforms; 
(C) trade repositories and regulator inves-
tigations of market activities; and 
(D) systemic risk regulators. 
The study will also examine the extent to which the 
algorithmic description, together with standardized 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00568
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
569 
HR 4173 RFS
and extensible legal definitions, may serve as the 
binding legal definition of derivative contracts. The 
study will examine the logistics of possible imple-
mentations of standardized algorithmic descriptions 
for derivatives contracts. The study shall be limited 
to electronic formats for exchange of derivative con-
tract descriptions and will not contemplate disclo-
sure of proprietary valuation models. 
(3) INTERNATIONAL
COORDINATION.—In con-
ducting the study, the Securities and Exchange 
Commission and the Commodity Futures Trading 
Commission shall coordinate the study with inter-
national financial institutions and regulators as ap-
propriate and practical. 
(4) REPORT.—Within 8 months after the date 
of the enactment of this Act, the Securities and Ex-
change Commission and the Commodity Futures 
Trading Commission shall jointly submit to the 
Committees on Agriculture and on Financial Serv-
ices of the House of Representatives and the Com-
mittees on Agriculture, Nutrition, and Forestry and 
on Banking, Housing, and Urban Affairs of the Sen-
ate a written report which contains the results of the 
study required by paragraphs (1) through (3). 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00569
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
570 
HR 4173 RFS
(c) STUDY OF DESIRABILITY AND FEASIBILITY OF 
ESTABLISHING SINGLE REGULATOR
FOR ALL TRANS-
ACTIONS INVOLVING FINANCIAL DERIVATIVES.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury, the Commodity Futures Trading Commission, 
and the Securities and Exchange Commission shall 
conduct a joint study of the desirability and feasi-
bility of establishing, by January 1, 2012, a single 
regulator for all transactions involving financial de-
rivatives. 
(2) REPORT
TO
THE
CONGRESS.—Not later 
than December 1, 2010, Secretary of the Treasury, 
the Commodity Futures Trading Commission, and 
the Securities and Exchange Commission shall joint-
ly submit to the Committees on Agriculture and on 
Financial Services of the House of Representatives 
and the Committees on Agriculture, Nutrition, and 
Forestry and on Banking, Housing, and Urban Af-
fairs of the Senate a written report that contains the 
results of the study required by paragraph (1). 
SEC. 3006. RECOMMENDATIONS FOR CHANGES TO INSOL-
VENCY LAWS. 
Not later than 180 days after the date of the enact-
ment of this Act, the Securities and Exchange Commis-
sion, the Commodity Futures Trading Commission, and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00570
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
571 
HR 4173 RFS
the Prudential Regulators (as defined in section 1a of the 
Commodity Exchange Act, as amended by section 3111 
of this Act) shall transmit to Congress recommendations 
for legislative changes to the Federal insolvency laws— 
(1) in order to enhance the legal certainty with 
respect to swap participants clearing non-proprietary 
swap positions with a swap clearinghouse, includ-
ing— 
(A) customer rights to recover margin de-
posits or custodial property held at or through 
an insolvent swap clearinghouse, or clearing 
participant; and 
(B) the enforceability of clearing rules re-
lating to the portability of customer swap posi-
tions (and associated margin) upon the insol-
vency of a clearing participant; 
(2) to clarify and harmonize the insolvency law 
framework applicable to entities that are both com-
modity brokers (as defined in section 101(6) of title 
11, United States Code) and registered brokers or 
dealers (as defined in section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a))); and 
(3) to facilitate the portfolio margining of secu-
rities and commodity futures and options positions 
held through entities that are both futures commis-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00571
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
572 
HR 4173 RFS
sion merchants (as defined in section 1a of the Com-
modity Exchange Act) and registered brokers or 
dealers (as defined in section 3 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a))). 
SEC. 3007. ABUSIVE SWAPS. 
The Commodity Futures Trading Commission and 
the Securities and Exchange Commission may, by rule or 
order, jointly collect information as may be necessary con-
cerning the markets for any types of swap (as defined in 
section 1a(35) of the Commodity Exchange Act) or secu-
rity-based swap (as defined in section 1a(38) of such Act) 
and jointly issue a report with respect to any types of 
swaps or security-based swaps which the Commodity Fu-
tures Trading Commission and the Securities and Ex-
change Commission find are detrimental to the stability 
of a financial market or of participants in a financial mar-
ket. 
SEC. 3008. AUTHORITY TO PROHIBIT PARTICIPATION IN 
SWAP ACTIVITIES. 
If the Commodity Futures Trading Commission or 
the Securities and Exchange Commission determines that 
the regulation of swaps or security-based swaps markets 
in a foreign country undermines the stability of the United 
States financial system, either Commission, in consulta-
tion with the Secretary of the Treasury, may prohibit an 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00572
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
573 
HR 4173 RFS
entity domiciled in that country from participating in the 
United States in any swap or security-based swap activi-
ties. 
SEC. 3009. MEMORANDUM. 
(a)(1) The Commodity Futures Trading Commission 
and the Federal Energy Regulatory Commission shall, not 
later than 180 days after the date of the enactment of 
this section, negotiate a memorandum of understanding 
to establish procedures for— 
(A) applying their respective authorities in a 
manner so as to ensure effective and efficient regula-
tion in the public interest; 
(B) resolving conflicts concerning overlapping 
jurisdiction between the two agencies; and 
(C) avoiding, to the extent possible, conflicting 
or duplicative regulation. 
(2) Such memorandum and any subsequent amend-
ments to the memorandum shall be promptly submitted 
to the appropriate committees of Congress. 
(b) The Commodity Futures Trading Commission 
and the Federal Energy Regulatory Commission shall, not 
later than 180 days after the date of the enactment of 
this section, negotiate a memorandum of understanding 
to share information that may be requested where either 
Commission is conducting an investigation into potential 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00573
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
574 
HR 4173 RFS
manipulation, fraud, or market power abuse in markets 
subject to such Commission’s regulation or oversight. 
Shared information shall remain subject to the same re-
strictions on disclosure applicable to the Commission ini-
tially holding the information. 
Subtitle A—Regulation of Swap 
Markets 
SEC. 3101. DEFINITIONS. 
(a) AMENDMENTS TO DEFINITIONS IN THE COM-
MODITY EXCHANGE ACT.—Section 1a of the Commodity 
Exchange Act (7 U.S.C. 1a) is amended— 
(1) in paragraph (12)(A)— 
(A) 
in 
clause 
(vii)(III), 
by 
striking 
‘‘$25,000,000’’ and inserting ‘‘$50,000,000’’; 
and 
(B) in clause (xi), by striking ‘‘total assets 
in an amount’’ and inserting ‘‘amounts invested 
on a discretionary basis’’; 
(2) in paragraph (29)— 
(A) in subparagraph (D), by striking 
‘‘and’’; 
(B) by redesignating subparagraph (E) as 
subparagraph (G); and 
(C) by inserting after subparagraph (D) 
the following: 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00574
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
575 
HR 4173 RFS
‘‘(E) a swap execution facility registered 
under section 5h; 
‘‘(F) a swap repository; and’’; and 
(3) by adding at the end the following: 
‘‘(35) SWAP.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘swap’ means any 
agreement, contract, or transaction that— 
‘‘(i) is a put, call, cap, floor, collar, or 
similar option of any kind for the purchase 
or sale of, or based on the value of, 1 or 
more interest or other rates, currencies, 
commodities, securities, instruments of in-
debtedness, indices, quantitative measures, 
or other financial or economic interests or 
property of any kind; 
‘‘(ii) provides for any purchase, sale, 
payment, or delivery (other than a dividend 
on an equity security) that is dependent on 
the occurrence, non-occurrence, or the ex-
tent of the occurrence of an event or con-
tingency associated with a potential finan-
cial, economic, or commercial consequence; 
‘‘(iii) provides on an executory basis 
for the exchange, on a fixed or contingent 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00575
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
576 
HR 4173 RFS
basis, of 1 or more payments based on the 
value or level of 1 or more interest or other 
rates, currencies, commodities, securities, 
instruments of indebtedness, indices, quan-
titative measures, or other financial or eco-
nomic 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 
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, and includes 
any agreement, contract, or transaction 
commonly known as an interest rate swap, 
a rate floor, rate cap, rate collar, cross-cur-
rency rate swap, basis swap, currency 
swap, total return swap, equity index swap, 
equity swap, debt index swap, debt swap, 
credit spread, credit default swap, credit 
swap, weather swap, energy swap, metal 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00576
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
577 
HR 4173 RFS
swap, agricultural swap, emissions swap, 
or commodity swap; 
‘‘(iv) is, or in the future becomes, 
commonly known to the trade as a swap; 
‘‘(v) meets the definition of ‘swap 
agreement’ as defined in section 206A of 
the Gramm-Leach-Bliley Act of which a 
material term of which is based on the 
price, yield, value, or volatility of any secu-
rity or any group or index of securities, or 
any interest therein; or 
‘‘(vi) is any combination or permuta-
tion of, or option on, any agreement, con-
tract, 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 any option 
on such a contract) or security futures 
product traded on or subject to the rules 
of any board of trade designated as a con-
tract market under section 5 or 5f; 
‘‘(ii) any sale of a nonfinancial com-
modity or security for deferred shipment or 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00577
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
578 
HR 4173 RFS
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 the Se-
curities Act of 1933 (15 U.S.C. 77a et 
seq.) and the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.); 
‘‘(iv) any put, call, straddle, option, or 
privilege relating to 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 
transaction providing for the purchase or 
sale of 1 or more securities on a fixed basis 
that is subject to the Securities Act of 
1933 (15 U.S.C. 77a et seq.) and the Se-
curities Exchange Act of 1934 (15 U.S.C. 
78a et seq.); 
‘‘(vi) any agreement, contract, or 
transaction providing for the purchase or 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00578
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
579 
HR 4173 RFS
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 
Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), unless the agreement, 
contract, or transaction predicates the pur-
chase 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 trans-
action; 
‘‘(vii) any note, bond, or evidence of 
indebtedness that is a security as defined 
in section 2(a)(1) of the Securities Act of 
1933 (15 U.S.C. 77b(a)(1)); 
‘‘(viii) any agreement, contract, or 
transaction that is— 
‘‘(I) based on a security; and 
‘‘(II) entered into directly or 
through an underwriter (as defined in 
section 2(a)(11) of the Securities Act 
of 1933) (15 U.S.C. 77b(a)(11)) by 
the issuer of the security for the pur-
poses of raising capital, unless the 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00579
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
580 
HR 4173 RFS
agreement, contract, or transaction is 
entered into to manage a risk associ-
ated with capital-raising; 
‘‘(ix) any foreign exchange forward; 
‘‘(x) any foreign exchange swap; 
‘‘(xi) any agreement, contract, or 
transaction a counterparty of which is a 
Federal Reserve bank, the United States 
government or an agency of the United 
States government that is expressly backed 
by the full faith and credit of the United 
States; and 
‘‘(xii) any security-based swap. 
‘‘(C) RULE OF CONSTRUCTION REGARDING 
MASTER AGREEMENTS.—The term ‘swap’ shall 
be construed to include a master agreement 
that provides for an agreement, contract, or 
transaction that is a swap pursuant to subpara-
graph (A), together with all supplements to any 
such master agreement, without regard to 
whether the master agreement contains an 
agreement, contract, or transaction that is not 
a swap pursuant to subparagraph (A), except 
that the master agreement shall be considered 
to be a swap only with respect to each agree-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00580
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
581 
HR 4173 RFS
ment, contract, or transaction under the master 
agreement that is a swap pursuant to subpara-
graph (A). 
‘‘(D) FOREIGN
EXCHANGE
SWAPS
AND 
FORWARDS EXCEPTION.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
clauses (ix) and (x) of subparagraph (B), 
foreign exchange swaps and foreign ex-
change forwards shall be considered swaps 
under this paragraph if the Commission 
makes a determination that either foreign 
exchange swaps or foreign exchange for-
wards or both should be regulated as 
swaps under this Act and the Secretary 
concurs with such determination. 
‘‘(ii) SCOPE OF AUTHORITY.— 
‘‘(I) The Commission and the 
Secretary 
shall 
jointly 
determine 
which of the authorities under this 
Act regarding swaps the Commission 
shall exercise over foreign exchange 
swaps and foreign exchange forwards. 
Such authorities shall subsequently be 
exercised solely by the Commission. 
The Commission and the Secretary 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00581
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
582 
HR 4173 RFS
may jointly amend any previously 
made determination under this sub-
clause. 
‘‘(II) Notwithstanding clause (i), 
the Commission and the Secretary of 
the Treasury may determine that ei-
ther foreign exchange swaps or for-
eign exchange forwards or both should 
not be regulated as swaps under this 
Act if such determination is jointly 
made. 
‘‘(iii) REPORTING.—Notwithstanding 
clauses (ix) and (x) of subparagraph (B) 
and subparagraph (D)(ii), all foreign ex-
change swaps and foreign exchange for-
wards shall be reported to either a swap 
repository, or, if there is no swap reposi-
tory that would accept such swaps or for-
wards, to the Commission pursuant to sec-
tion 4r within such time period as the 
Commission may by rule or regulation pre-
scribe. 
‘‘(iv) SECRETARY.—For purposes of 
this subparagraph only, the term ‘Sec-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00582
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
583 
HR 4173 RFS
retary’ means the Secretary of the Treas-
ury. 
‘‘(36) BOARD.—The term ‘Board’ means the 
Board of Governors of the Federal Reserve System. 
‘‘(37) SECURITY-BASED SWAP.—The term ‘se-
curity-based swap’ has the same meaning as in sec-
tion 3(a)(68) of the Securities and Exchange Act of 
1934. 
‘‘(38) SWAP DEALER.— 
‘‘(A) IN GENERAL.—The term ‘swap deal-
er’ 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 of swaps and their resale to cus-
tomers in the ordinary course of a busi-
ness; 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) A person may be designated a swap 
dealer for a single type or single class or cat-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00583
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
584 
HR 4173 RFS
egory of swap and considered not a swap dealer 
for other types, classes, or categories of swaps. 
‘‘(C) DE MINIMUS EXCEPTION.—The Com-
mission shall make a determination to exempt 
from designation as a swap dealer an entity 
that engages in a de minimus amount of swap 
dealing in connection with transactions with or 
on the behalf of its customers. 
‘‘(39) 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 net posi-
tion in outstanding swaps, excluding posi-
tions held primarily for hedging, reducing 
or otherwise mitigating its commercial 
risk, including operating and balance sheet 
risk; or 
‘‘(ii) whose outstanding swaps create 
substantial 
net 
counterparty 
exposure 
among the aggregate of its counterparties 
that could expose those counterparties to 
significant credit losses. 
‘‘(B) DEFINITION
OF
SUBSTANTIAL
NET 
POSITION.—The Commission shall define by 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00584
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
585 
HR 4173 RFS
rule or regulation the terms ‘substantial net po-
sition’, ‘substantial net counterparty exposure’, 
and ‘significant credit losses’ at thresholds that 
the Commission determines prudent for the ef-
fective monitoring, management and oversight 
of entities which are systemically important or 
can significantly impact the financial system 
through counterparty credit risk. In setting the 
definitions, the Commission shall consider the 
person’s relative position in uncleared as op-
posed to cleared swaps. 
‘‘(C) A person may be designated a major 
swap participant for 1 or more individual types 
of swaps without being classified as a major 
swap participant for all classes of swaps. 
‘‘(40) MAJOR SECURITY-BASED SWAP PARTICI-
PANT.—The term ‘major security-based swap partic-
ipant’ has the same meaning as in section 3(a)(67) 
of the Securities Exchange Act of 1934. 
‘‘(41) 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)). 
‘‘(42) PRUDENTIAL
REGULATOR.—The term 
‘Prudential Regulator’ means— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00585
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
586 
HR 4173 RFS
‘‘(A) the Board in the case of a swap deal-
er, major swap participant, security-based swap 
dealer, or major security-based swap participant 
that is— 
‘‘(i) a State-chartered bank that is a 
member of the Federal Reserve System; or 
‘‘(ii) a State-chartered branch or 
agency of a foreign bank; 
‘‘(B) the Office of the Comptroller of the 
Currency in the case of a swap dealer, major 
swap participant, security-based swap dealer, or 
major security-based swap participant that is— 
‘‘(i) a national bank; or 
‘‘(ii) a federally chartered branch or 
agency of a foreign bank; and 
‘‘(C) the Federal Deposit Insurance Cor-
poration in the case of a swap dealer, major 
swap participant, security-based swap dealer, or 
major security-based swap participant that is a 
State-chartered bank that is not a member of 
the Federal Reserve System. 
‘‘(43) SECURITY-BASED
SWAP
DEALER.—The 
term ‘security-based swap dealer’ has the same 
meaning as in section 3(a)(71) of the Securities Ex-
change Act of 1934. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00586
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
587 
HR 4173 RFS
‘‘(44) FOREIGN
EXCHANGE
FORWARD.—The 
term ‘foreign exchange forward’ means a transaction 
that solely involves the exchange of 2 different cur-
rencies on a specific future date at a fixed rate 
agreed at the inception of the contract. 
‘‘(45) FOREIGN EXCHANGE SWAP.—The term 
‘foreign exchange swap’ means a transaction that 
solely involves the exchange of 2 different currencies 
on a specific date at a fixed rate agreed at the incep-
tion of the contract, and a reverse exchange of the 
same 2 currencies at a date further in the future 
and at a fixed rate agreed at the inception of the 
contract. 
‘‘(46) PERSON ASSOCIATED WITH A SECURITY- 
BASED SWAP DEALER OR MAJOR SECURITY-BASED 
SWAP PARTICIPANT.—The term ‘person associated 
with a security-based swap dealer or major security- 
based swap participant’ or ‘associated person of a 
security-based swap dealer or major security-based 
swap participant’ has the same meaning as in sec-
tion 3(a)(70) of the Securities Exchange Act of 
1934. 
‘‘(47) PERSON
ASSOCIATED
WITH
A
SWAP 
DEALER OR MAJOR SWAP PARTICIPANT.—The term 
‘person associated with a swap dealer or major swap 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00587
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
588 
HR 4173 RFS
participant’ or ‘associated person of a swap dealer or 
major swap participant’ means any partner, officer, 
director, or branch manager of a swap dealer or 
major swap participant (or any person occupying a 
similar status or performing similar functions), any 
person directly or indirectly controlling, controlled 
by, or under common control with a swap dealer or 
major swap participant, or any employee of a swap 
dealer or major swap participant, except that any 
person associated with a swap dealer or major swap 
participant whose functions are solely clerical or 
ministerial shall not be included in the meaning of 
the term other than for purposes of section 4s(b)(6). 
‘‘(48) SWAP REPOSITORY.—The term ‘swap re-
pository’ means any person that collects, calculates, 
prepares or maintains information or records with 
respect to transactions or positions in or the terms 
and conditions of swaps entered into by third par-
ties. 
‘‘(49) SWAP EXECUTION FACILITY.—The term 
‘swap execution facility’ means a person or entity 
that facilitates the execution or trading of swaps be-
tween two persons through any means of interstate 
commerce, but which is not a designated contract 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00588
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
589 
HR 4173 RFS
market, including any electronic trade execution or 
voice brokerage facility. 
‘‘(50) 
DERIVATIVE.—The 
term 
‘derivative’ 
means— 
‘‘(A) a contract of sale of a commodity for 
future delivery; or 
‘‘(B) a swap.’’. 
(b) AUTHORITY TO FURTHER DEFINE TERMS.—The 
Commodity Futures Trading Commission shall adopt a 
rule further defining the terms ‘‘swap’’, ‘‘swap dealer’’, 
‘‘major swap participant’’, and ‘‘eligible contract partici-
pant’’ for the purpose of including transactions and enti-
ties that have been structured to evade this title. 
(c) EXEMPTIONS.—Section 4(c) of the Commodity 
Exchange Act (7 U.S.C. 4(c)) is amended by adding at 
the end the following: ‘‘The Commission shall not have 
the authority to grant exemptions from the provisions of 
sections 3101(a), 3101(c), 3104, 3105, 3106, 3107, 3109, 
3110, 3113, 3115, 3120, and 3121 of the Derivative Mar-
kets Transparency and Accountability Act of 2009, except 
as expressly authorized under the provisions of that Act. 
Notwithstanding the preceding sentence, the Commodity 
Futures Trading Commission may exempt from any provi-
sion of the Commodity Exchange Act, pursuant to this 
subsection, an agreement, contract, or transaction that is 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00589
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
590 
HR 4173 RFS
entered into pursuant to a tariff approved by the Federal 
Energy Regulatory Commission, if the Commodity Fu-
tures Trading Commission determines that the exemption 
would be consistent with the public interest, and shall con-
sider and not unreasonably deny any request made by the 
Federal Energy Regulatory Commission for such an ex-
emption.’’. 
SEC. 3102. JURISDICTION. 
(a) EXCLUSIVE JURISDICTION.—Section 2(a)(1) of 
the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is 
amended— 
(1) in the 1st sentence of subparagraph (A)— 
(A) by striking ‘‘(c) through (i)’’ and in-
serting ‘‘(c) and (f)’’; 
(B) by inserting ‘‘swaps, or’’ before ‘‘con-
tracts of sale’’; 
(C) by striking ‘‘derivatives transaction 
execution facility’’ and inserting ‘‘swap execu-
tion facility’’; and 
(D) by striking ‘‘5a’’ and inserting ‘‘5h’’; 
and 
(2) by adding at the end the following: 
‘‘(G)(i) Nothing in this paragraph shall 
limit the jurisdiction conferred on the Securities 
and Exchange Commission by the Derivative 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00590
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
591 
HR 4173 RFS
Markets Transparency and Accountability Act 
of 2009 with regard to security-based swap 
agreements as defined pursuant to section 
3002(e) of such Act, and security-based swaps. 
‘‘(ii) In addition to the authority of the Se-
curities Exchange Commission described in 
clause (i), nothing in this subparagraph shall 
limit or affect any statutory authority of the 
Commission with respect to an agreement, con-
tract, or transaction described in clause (i). 
‘‘(H)(i) Nothing in this Act shall limit or 
affect any statutory authority of the Federal 
Energy Regulatory Commission with respect to 
an agreement, contract, or transaction that is— 
‘‘(I) not executed, traded, or cleared 
on a registered entity or trading facility; 
and 
‘‘(II) entered into pursuant to a tariff 
or rate schedule approved by the Federal 
Energy Regulatory Commission. 
‘‘(ii) In addition to the authority of the 
Federal Energy Regulatory Commission de-
scribed in clause (i), nothing in this subpara-
graph shall limit or affect any statutory author-
ity of the Commission with respect to an agree-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00591
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
592 
HR 4173 RFS
ment, contract, or transaction described in 
clause (i).’’. 
(b) ADDITIONS.—Section 2(c)(2)(A) of such 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’’. 
(c) Section 12(e) of such Act (7 U.S.C. 16(e)) is 
amended— 
(1) in paragraph (1)(B), by inserting ‘‘or (3)’’ 
after ‘‘paragraph (2)’’; 
(2) in paragraph (2), by striking subparagraphs 
(A) and (B) and inserting the following: 
‘‘(A) a swap; and 
‘‘(B) an agreement, contract, or trans-
action that is excluded from this Act under sec-
tion 2(c) or 2(f) of this Act or title IV of the 
Commodity Futures Modernization Act of 2000 
or exempted under section 4(c) of this Act (re-
gardless of whether any such agreement, con-
tract, or transaction is otherwise subject to this 
Act).’’; and 
(3) by adding at the end the following: 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00592
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
593 
HR 4173 RFS
‘‘(3) A swap may not be regulated as an insur-
ance contract under State law. 
‘‘(4) The provisions of this Act relating to 
swaps that were enacted by the Derivative Markets 
Transparency and Accountability Act of 2009, in-
cluding any rule or regulation thereunder, shall not 
apply to activities outside the United States unless 
those activities— 
‘‘(A) have a direct and significant connec-
tion with activities in or effect on United States 
commerce; or 
‘‘(B) contravene such rules or regulations 
as the Commission may prescribe as necessary 
or appropriate to prevent the evasion of any 
provision of this Act that was enacted by the 
Derivative Markets Transparency and Account-
ability Act of 2009.’’. 
(d) Nothing in the Derivative Markets Transparency 
and Accountability Act of 2009 or the amendments to the 
Commodity Exchange Act made by such Act shall limit 
or affect any statutory enforcement authority of the Fed-
eral Energy Regulatory Commission pursuant to Section 
222 of the Federal Power Act and Section 4A of the Nat-
ural Gas Act that existed prior to the date of enactment 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00593
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
594 
HR 4173 RFS
of the Derivative Markets Transparency and Account-
ability Act of 2009. 
SEC. 3103. CLEARING AND EXECUTION TRANSPARENCY. 
(a) CLEARING AND EXECUTION TRANSPARENCY RE-
QUIREMENTS.— 
(1) Section 2 of the Commodity Exchange Act 
(7 U.S.C. 2) is amended by striking subsections (d), 
(e), (g), and (h). 
(2)(A) Prior to the final effective dates in this 
title, a person may petition the Commodity Futures 
Trading Commission to remain subject to para-
graphs (3) through (7) of section 2(h) of the Com-
modity Exchange Act. 
(B) The Commodity Futures Trading Commis-
sion shall consider any petition submitted under sub-
paragraph (A) in a prompt manner and may allow 
a person to continue operating subject to paragraphs 
(3) through (7) of section 2(h) of the Commodity 
Exchange Act for up to one year after the effective 
date of this subtitle. 
(3) Section 2 of such Act (7 U.S.C. 2) is fur-
ther amended by inserting after subsection (c) the 
following: 
‘‘(d) SWAPS.—Nothing in this Act (other than sub-
sections (a)(1)(A), (a)(1)(B), (c)(2)(A)(ii), (e), (f), (j), 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00594
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
595 
HR 4173 RFS
and (k), sections 4a, 4b, 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 
4t, 5, 5b, 5c, 5h, 6(c), 6(d), 6c, 6d, 8, 8a, 9, 12(e)(2), 
12(f), 13(a), 13(b), 21, and 22(a)(4) and such other provi-
sions of this Act as are applicable by their terms to reg-
istered entities and Commission registrants) governs or 
applies to a swap. 
‘‘(e) LIMITATION ON PARTICIPATION.—It shall be 
unlawful for any person, other than an eligible contract 
participant, to enter into a swap unless the swap is en-
tered into on or subject to the rules of a board of trade 
designated as a contract market under section 5.’’. 
(4) Section 2 of such Act (7 U.S.C. 2) is fur-
ther amended by inserting after subsection (i) the 
following: 
‘‘(j) CLEARING REQUIREMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) STANDARD FOR CLEARING.—A swap 
shall be submitted for clearing if a derivatives 
clearing organization that is registered under 
this Act will accept the swap for clearing, and 
the Commission has determined under para-
graph (2)(B)(ii) that the swap is required to be 
cleared. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00595
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
596 
HR 4173 RFS
‘‘(B) OPEN ACCESS.—The rules of a de-
rivatives clearing organization described in sub-
paragraph (A) shall— 
‘‘(i) prescribe that all swaps submitted 
to the derivatives clearing organization 
with the same terms and conditions are 
economically equivalent within the deriva-
tives clearing organization and may be off-
set with each other within the derivatives 
clearing organization; and 
‘‘(ii) provide for non-discriminatory 
clearing of a swap executed bilaterally or 
on or through the rules of an unaffiliated 
designated contract market or swap execu-
tion facility. 
‘‘(2) COMMISSION REVIEW.— 
‘‘(A) COMMISSION-INITIATED REVIEW.— 
‘‘(i) The Commission shall review each 
swap, or any group, category, type or class 
of swaps to make a determination as to 
whether the swap or group, category, type, 
or class of swaps should be required to be 
cleared. 
‘‘(ii) The Commission shall provide at 
least a 30-day public comment period re-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00596
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
597 
HR 4173 RFS
garding any determination made under 
clause (i). 
‘‘(B) SWAP SUBMISSIONS.— 
‘‘(i) A derivatives clearing organiza-
tion shall submit to the Commission each 
swap, or any group, category, type or class 
of swaps that it plans to accept for clear-
ing, and provide notice to its members (in 
a manner to be determined by the Com-
mission) of the submission. 
‘‘(ii) The Commission shall— 
‘‘(I) make available to the public 
any submission received under clause 
(i); 
‘‘(II) review each submission 
made under clause (i), and determine 
whether the swap, or group, category, 
type, or class of swaps described in 
the submission is required to be 
cleared; and 
‘‘(III) provide at least a 30-day 
public comment period regarding its 
determination as to whether the clear-
ing requirement under paragraph 
(1)(A) shall apply to the submission. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00597
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
598 
HR 4173 RFS
‘‘(C) DEADLINE.—The Commission shall 
make its determination under subparagraph 
(B)(ii) not later than 90 days after receiving a 
submission made under subparagraph (B)(i), 
unless the submitting derivatives clearing orga-
nization agrees to an extension for the time lim-
itation established under this subparagraph. 
‘‘(D) DETERMINATION.— 
‘‘(i) In reviewing a submission made 
under subparagraph (B), the Commission 
shall review whether the submission is con-
sistent with section 5b(c)(2). 
‘‘(ii) In reviewing a swap, group of 
swaps, or class of swaps pursuant to sub-
paragraph (A) or a submission made under 
subparagraph (B), the Commission shall 
take into account the following factors: 
‘‘(I) The existence of significant 
outstanding notional exposures, trad-
ing liquidity and adequate pricing 
data. 
‘‘(II) The availability of rule 
framework, capacity, operational ex-
pertise and resources, and credit sup-
port infrastructure to clear the con-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00598
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
599 
HR 4173 RFS
tract on terms that are consistent 
with the material terms and trading 
conventions on which the contract is 
then traded. 
‘‘(III) The effect on the mitiga-
tion of systemic risk, taking into ac-
count the size of the market for such 
contract and the resources of the de-
rivatives clearing organization avail-
able to clear the contract. 
‘‘(IV) The effect on competition, 
including appropriate fees and charges 
applied to clearing. 
‘‘(V) The existence of reasonable 
legal certainty in the event of the in-
solvency of the relevant derivatives 
clearing organization or 1 or more of 
its clearing members with regard to 
the treatment of customer and swap 
counterparty positions, funds, and 
property. 
‘‘(iii) In making a determination 
under subparagraph (B)(ii) that the clear-
ing requirement shall apply, the Commis-
sion may require such terms and condi-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00599
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
600 
HR 4173 RFS
tions to the requirement as the Commis-
sion determines to be appropriate. 
‘‘(E) RULES.—Not later than 1 year after 
the date of the enactment of the Derivative 
Markets Transparency and Accountability Act 
of 2009, the Commission shall adopt rules for 
a derivatives clearing organization’s submission 
for review, pursuant to this paragraph, of a 
swap, or a group, category, type or class of 
swaps, that it seeks to accept for clearing. 
‘‘(3) STAY OF CLEARING REQUIREMENT.— 
‘‘(A) After a determination pursuant to 
paragraph (2)(B), the Commission, on applica-
tion of a counterparty to a swap or on its own 
initiative, may stay the clearing requirement of 
paragraph (1) until the Commission completes 
a review of the terms of the swap (or the group, 
category, type or class of swaps) and the clear-
ing arrangement. 
‘‘(B) DEADLINE.—The Commission shall 
complete a review undertaken pursuant to sub-
paragraph (A) not later than 90 days after 
issuance of the stay, unless the derivatives 
clearing organization that clears the swap, or 
group, category, type or class of swaps, agrees 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00600
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
601 
HR 4173 RFS
to an extension of the time limitation estab-
lished under this subparagraph. 
‘‘(C) DETERMINATION.—Upon completion 
of the review undertaken pursuant to subpara-
graph (A), the Commission may— 
‘‘(i) determine, unconditionally or sub-
ject to such terms and conditions as the 
Commission determines to be appropriate, 
that the swap, or group, category, type or 
class of swaps, must be cleared pursuant 
to this subsection if it finds that such 
clearing is consistent with paragraph 
(2)(D); or 
‘‘(ii) determine that the clearing re-
quirement of paragraph (1) shall not apply 
to the swap, or group, category, type or 
class of swaps. 
‘‘(D) RULES.—Not later than 1 year after 
the date of the enactment of the Derivative 
Markets Transparency and Accountability Act 
of 2009, the Commission shall adopt rules for 
reviewing, pursuant to this paragraph, a deriva-
tives clearing organization’s clearing of a swap, 
or a group, category, type or class of swaps, 
that it has accepted for clearing. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00601
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
602 
HR 4173 RFS
‘‘(4) PREVENTION OF EVASION.—The Commis-
sion may prescribe rules under this subsection, or 
issue interpretations of the rules, as necessary to 
prevent evasions of this subsection. 
‘‘(5) REQUIRED REPORTING.— 
‘‘(A) IN GENERAL.—All swaps that are not 
accepted for clearing by any derivatives clearing 
organization shall be reported either to a swap 
repository described in section 21 or, if there is 
no repository that would accept the swap, to the 
Commission pursuant to section 4r within such 
time period as the Commission may by rule or 
regulation prescribe. Counterparties to a swap 
may agree which counterparty will report the 
swap as required by this paragraph. 
‘‘(B) SWAP DEALER DESIGNATION.—With 
regard to swaps where only 1 counterparty is a 
swap dealer, the swap dealer shall report the 
swap as required by this paragraph. 
‘‘(6) REPORTING
TRANSITION
RULES.—Rules 
adopted by the Commission under this section shall 
provide for the reporting of data, as follows: 
‘‘(A) Swaps entered into before the date of 
the enactment of this subsection shall be re-
ported to a registered swap repository or the 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00602
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
603 
HR 4173 RFS
Commission no later than 180 days after the 
effective date of this subsection; and 
‘‘(B) Swaps entered into on or after such 
date of enactment shall be reported to a reg-
istered swap repository or the Commission no 
later than the later of— 
‘‘(i) 90 days after such effective date; 
or 
‘‘(ii) such other time after entering 
into the swap as the Commission may pre-
scribe by rule or regulation. 
‘‘(7) CLEARING TRANSITION RULES.— 
‘‘(A) Swaps entered into before the date of 
the enactment of this subsection are exempt 
from the clearing requirements of this sub-
section if reported pursuant to paragraph 
(6)(A). 
‘‘(B) Swaps entered into before application 
of the clearing requirement pursuant to this 
subsection are exempt from the clearing re-
quirements of this subsection if reported pursu-
ant to paragraph (6)(B). 
‘‘(8) EXCEPTIONS.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00603
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
604 
HR 4173 RFS
‘‘(A) IN GENERAL.—The requirements of 
paragraph (1) shall not apply to a swap if one 
of the counterparties to the swap— 
‘‘(i) is not a swap dealer or major 
swap participant; 
‘‘(ii) is using swaps to hedge or miti-
gate commercial risk, including operating 
or balance sheet risk; and 
‘‘(iii) notifies the Commission, in a 
manner set forth by the Commission, how 
it generally meets its financial obligations 
associated with entering into non-cleared 
swaps. 
‘‘(B) ABUSE OF EXCEPTION.—The Com-
mission may prescribe rules under this sub-
section, or issue interpretations of the rules, as 
necessary to prevent abuse of the exemption in 
subparagraph (A) by swap dealers and major 
swap participants. 
‘‘(C) OPTION TO CLEAR.—The application 
of the clearing exception in subparagraph (A) is 
solely at the discretion of the counterparty to 
the swap that meets the conditions of clauses 
(i) through (iii) of subparagraph (A). 
‘‘(k) EXECUTION TRANSPARENCY.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00604
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
605 
HR 4173 RFS
‘‘(1) REQUIREMENT.—A swap that is subject to 
the clearing requirement of subsection (j) shall not 
be traded except on or through a board of trade des-
ignated as a contract market under section 5, or on 
or through a swap execution facility registered under 
section 5h, that makes the swap available for trad-
ing. 
‘‘(2) EXCEPTIONS.—The requirement of para-
graph (1) shall not apply to a swap if no designated 
contract market or swap execution facility makes the 
swap available for trading. 
‘‘(3) AGRICULTURAL SWAPS.—No person shall 
offer to enter into, enter into or confirm the execu-
tion of, any swap in an agricultural commodity (as 
defined by the Commission) that is subject to para-
graphs (1) and (2) except pursuant to a rule or reg-
ulation of the Commission allowing the swap under 
such terms and conditions as the Commission shall 
prescribe. 
‘‘(4) REQUIRED REPORTING.—If the exception 
of paragraph (2) applies and there is no facility that 
makes the swap available to trade, the counterpar-
ties shall comply with any recordkeeping and trans-
action reporting requirements that may be pre-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00605
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
606 
HR 4173 RFS
scribed by the Commission with respect to swaps 
subject to the requirements of paragraph (1). 
‘‘(5) EXCHANGE TRADING.—In adopting rules 
and regulations, the Commission shall endeavor to 
eliminate unnecessary impediments to the trading on 
boards of trade designated as contract markets 
under section 5 of contracts, agreements, or trans-
actions that would be security-based swaps but for 
the trading of such contracts, agreements or trans-
actions on such a designated contract market.’’. 
(b) DERIVATIVES CLEARING ORGANIZATIONS.— 
(1) Subsections (a) and (b) of section 5b of 
such Act (7 U.S.C. 7a–1) are amended to read as 
follows: 
‘‘(a) REGISTRATION REQUIREMENT.— 
‘‘(1) IN GENERAL.—It shall be unlawful for any 
entity, unless registered with the Commission, di-
rectly or indirectly to make use of the mails or any 
means or instrumentality of interstate commerce to 
perform the functions of a derivatives clearing orga-
nization described in section 1a(10) of this Act with 
respect to— 
‘‘(A) a contract of sale of a commodity for 
future delivery (or option on such a contract) or 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00606
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
607 
HR 4173 RFS
option on a commodity, in each case unless the 
contract or option is— 
‘‘(i) excluded from this Act by section 
2(a)(1)(C)(i), 2(c), or 2(f); or 
‘‘(ii) 
a 
security 
futures 
product 
cleared by a clearing agency registered 
with the Securities and Exchange Commis-
sion under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.); or 
‘‘(B) a swap. 
‘‘(2) EXISTING BANKS AND CLEARING AGEN-
CIES.—A bank or a clearing agency registered with 
the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 required to be reg-
istered as a derivatives clearing organization under 
this section is deemed to be registered under this 
section to the extent that the bank cleared swaps, as 
defined in this Act, as a multilateral clearing organi-
zation or the clearing agency cleared swaps, as de-
fined in this Act, before the enactment of this sub-
section. A bank to which this paragraph applies 
may, by the vote of the shareholders owning not less 
than 51 percent of the voting interests of the bank, 
be converted into a State corporation, partnership, 
limited liability company, or other similar legal form 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00607
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
608 
HR 4173 RFS
pursuant to a plan of conversion, if the conversion 
is not in contravention of applicable State law. 
‘‘(b) VOLUNTARY REGISTRATION.—A person that 
clears agreements, contracts, or transactions that are not 
required to be cleared under this Act may register with 
the Commission as a derivatives clearing organization.’’. 
(2) Section 5b of such Act (7 U.S.C. 7a–1) is 
amended by adding at the end the following: 
‘‘(g) RULES.—Not later than 1 year after the date 
of the enactment of the Derivative Markets Transparency 
and Accountability Act of 2009, the Commission shall 
adopt rules governing persons that are registered as de-
rivatives clearing organizations for swaps under this sub-
section. 
‘‘(h) EXEMPTIONS.— 
‘‘(1) IN GENERAL.—The Commission may ex-
empt, conditionally or unconditionally, a derivatives 
clearing organization from registration under this 
section for the clearing of swaps if the Commission 
finds that the derivatives clearing organization is 
subject to comparable, comprehensive supervision 
and regulation on a consolidated basis by a Pruden-
tial Regulator or the appropriate governmental au-
thorities in the organization’s home country. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00608
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
609 
HR 4173 RFS
‘‘(2) A person that is required to be registered 
as a derivatives clearing organization under this sec-
tion, whose principal business is clearing securities 
and options on securities and which is a clearing 
agency registered with the Securities Exchange 
Commission under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.), shall be uncondition-
ally exempt from registration under this section sole-
ly for the purpose of clearing swaps, unless the Com-
mission finds that the clearing agency is not subject 
to comparable, comprehensive supervision and regu-
lation by the Securities and Exchange Commission. 
‘‘(i) DESIGNATION OF COMPLIANCE OFFICER.— 
‘‘(1) IN GENERAL.—Each derivatives clearing 
organization shall designate an individual to serve as 
a compliance officer. 
‘‘(2) DUTIES.—The compliance officer— 
‘‘(A) shall report directly to the board or 
to the senior officer of the derivatives clearing 
organization; and 
‘‘(B) shall— 
‘‘(i) review compliance with the core 
principles in section 5b(c)(2). 
‘‘(ii) in consultation with the board of 
the derivatives clearing organization, a 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00609
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
610 
HR 4173 RFS
body performing a function similar to that 
of a board, or the senior officer of the de-
rivatives clearing organization, resolve any 
conflicts of interest that may arise; 
‘‘(iii) be responsible for administering 
the policies and procedures required to be 
established pursuant to this section; and 
‘‘(iv) ensure compliance with this Act 
and the rules and regulations issued under 
this Act; and 
‘‘(C) shall establish procedures for remedi-
ation of non-compliance issues found during 
compliance office reviews, lookbacks, internal or 
external audit findings, self-reported errors, or 
through validated complaints. The procedures 
shall establish the handling, management re-
sponse, remediation, re-testing, and closing of 
non-compliant issues. 
‘‘(3) ANNUAL REPORTS REQUIRED.—The com-
pliance officer shall annually prepare and sign a re-
port on the compliance of the derivatives clearing or-
ganization with this Act and the policies and proce-
dures of the derivatives clearing organization, includ-
ing the code of ethics and conflict of interest policies 
of the derivatives clearing organization, in accord-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00610
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
611 
HR 4173 RFS
ance with rules prescribed by the Commission. The 
compliance report shall accompany the financial re-
ports of the derivatives clearing organization that 
are required to be furnished to the Commission pur-
suant to this section and shall include a certification 
that, under penalty of law, the report is accurate 
and complete.’’. 
(3) Section 5b(c)(2) of such Act (7 U.S.C. 7a– 
1(c)(2)) is amended to read as follows: 
‘‘(2) CORE
PRINCIPLES
FOR
DERIVATIVES 
CLEARING ORGANIZATIONS.— 
‘‘(A) IN GENERAL.—To be registered and 
to maintain registration as a derivatives clear-
ing organization, a derivatives clearing organi-
zation shall comply with the core principles 
specified in this paragraph and any requirement 
that the Commission may impose by rule or 
regulation pursuant to section 8a(5). Except 
where the Commission determines otherwise by 
rule or regulation, a derivatives clearing organi-
zation shall have reasonable discretion in estab-
lishing the manner in which the organization 
complies with the core principles. 
‘‘(B) FINANCIAL RESOURCES.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00611
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
612 
HR 4173 RFS
‘‘(i) The derivatives clearing organiza-
tion shall have adequate financial, oper-
ational, and managerial resources to dis-
charge the responsibilities of the organiza-
tion. 
‘‘(ii) The financial resources of the de-
rivatives clearing organization shall at a 
minimum exceed the total amount that 
would— 
‘‘(I) enable the organization to 
meet the financial obligations of the 
organization to the members of, and 
participants in, the organization, not-
withstanding a default by the member 
or participant creating the largest fi-
nancial exposure for the organization 
in extreme but plausible market condi-
tions; and 
‘‘(II) enable the organization to 
cover the operating costs of the orga-
nization for a period of 1 year, cal-
culated on a rolling basis. 
‘‘(C) PARTICIPANT AND PRODUCT ELIGI-
BILITY.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00612
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
613 
HR 4173 RFS
‘‘(i) The derivatives clearing organiza-
tion shall establish— 
‘‘(I) appropriate admission and 
continuing eligibility standards (in-
cluding sufficient financial resources 
and operational capacity to meet obli-
gations arising from participation in 
the organization) for members of and 
participants in the organization; and 
‘‘(II) appropriate standards for 
determining eligibility of agreements, 
contracts, or transactions submitted 
to the organization for clearing. 
‘‘(ii) The derivatives clearing organi-
zation shall have procedures in place to 
verify that participation and membership 
requirements are met on an ongoing basis. 
‘‘(iii) The participation and member-
ship requirements of the derivatives clear-
ing organization shall be objective, publicly 
disclosed, and permit fair and open access. 
‘‘(D) RISK MANAGEMENT.— 
‘‘(i) The derivatives clearing organiza-
tion shall have the ability to manage the 
risks associated with discharging the re-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00613
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
615 
HR 4173 RFS
‘‘(v) The models and parameters used 
in setting margin requirements shall be 
risk-based and reviewed regularly. 
‘‘(E) 
SETTLEMENT
PROCEDURES.—The 
derivatives clearing organization shall— 
‘‘(i) complete money settlements on a 
timely basis, and not less than once each 
business day; 
‘‘(ii) employ money settlement ar-
rangements that eliminate or strictly limit 
the exposure of the organization to settle-
ment bank risks, such as credit and liquid-
ity risks from the use of banks to effect 
money settlements; 
‘‘(iii) ensure money settlements are 
final when effected; 
‘‘(iv) maintain an accurate record of 
the flow of funds associated with each 
money settlement; 
‘‘(v) have the ability to comply with 
the terms and conditions of any permitted 
netting or offset arrangements with other 
clearing organizations; and 
‘‘(vi) for physical settlements, estab-
lish rules that clearly state the obligations 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00615
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
616 
HR 4173 RFS
of the organization with respect to physical 
deliveries, including how risks from these 
obligations shall be identified and man-
aged. 
‘‘(F) TREATMENT OF FUNDS.— 
‘‘(i) The derivatives clearing organiza-
tion shall have standards and procedures 
designed to protect and ensure the safety 
of member and participant funds and as-
sets. 
‘‘(ii) The derivatives clearing organi-
zation shall hold member and participant 
funds and assets in a manner whereby risk 
of loss or of delay in the access of the or-
ganization to the assets and funds is mini-
mized. 
‘‘(iii) Assets and funds invested by the 
derivatives clearing organization shall be 
held in instruments with minimal credit, 
market, and liquidity risks. 
‘‘(G) 
DEFAULT
RULES
AND
PROCE-
DURES.— 
‘‘(i) The derivatives clearing organiza-
tion shall have rules and procedures de-
signed to allow for the efficient, fair, and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00616
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
617 
HR 4173 RFS
safe management of events when members 
or participants become insolvent or other-
wise default on their obligations to the or-
ganization. 
‘‘(ii) The default procedures of the de-
rivatives clearing organization shall be 
clearly stated, and they shall ensure that 
the organization can take timely action to 
contain losses and liquidity pressures and 
to continue meeting the obligations of the 
organization. 
‘‘(iii) The default procedures shall be 
publicly available. 
‘‘(H) RULE ENFORCEMENT.—The deriva-
tives clearing organization shall— 
‘‘(i) maintain adequate arrangements 
and resources for the effective monitoring 
and enforcement of compliance with rules 
of the organization and for resolution of 
disputes; and 
‘‘(ii) have the authority and ability to 
discipline, limit, suspend, or terminate the 
activities of a member or participant for 
violations of rules of the organization. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00617
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
618 
HR 4173 RFS
‘‘(I) SYSTEM
SAFEGUARDS.—The deriva-
tives clearing organization shall— 
‘‘(i) establish and maintain a program 
of risk analysis and oversight to identify 
and minimize sources of operational risk 
through the development of appropriate 
controls and procedures, and the develop-
ment of automated systems, that are reli-
able, secure, and have adequate scalable 
capacity; 
‘‘(ii) establish and maintain emer-
gency procedures, backup facilities, and a 
plan for disaster recovery that allows for 
the timely recovery and resumption of op-
erations and the fulfillment of the respon-
sibilities and obligations of the organiza-
tion; and 
‘‘(iii) periodically conduct tests to 
verify that backup resources are sufficient 
to ensure continued order processing and 
trade matching, price reporting, market 
surveillance, and maintenance of a com-
prehensive and accurate audit trail. 
‘‘(J) REPORTING.—The derivatives clear-
ing organization shall provide to the Commis-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00618
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
619 
HR 4173 RFS
sion all information necessary for the Commis-
sion to conduct oversight of the organization. 
‘‘(K) RECORDKEEPING.—The derivatives 
clearing organization shall maintain records of 
all activities related to the business of the orga-
nization as a derivatives clearing organization 
in a form and manner acceptable to the Com-
mission for a period of 5 years. 
‘‘(L) PUBLIC INFORMATION.— 
‘‘(i) The derivatives clearing organiza-
tion shall provide market participants with 
sufficient information to identify and 
evaluate accurately the risks and costs as-
sociated with using the services of the or-
ganization. 
‘‘(ii) The derivatives clearing organi-
zation shall make information concerning 
the rules and operating procedures gov-
erning the clearing and settlement systems 
(including default procedures) of the orga-
nization available to market participants. 
‘‘(iii) The derivatives clearing organi-
zation shall disclose publicly and to the 
Commission information concerning— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00619
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
620 
HR 4173 RFS
‘‘(I) the terms and conditions of 
contracts, agreements, and trans-
actions cleared and settled by the or-
ganization; 
‘‘(II) clearing and other fees that 
the organization charges the members 
of, and participants in, the organiza-
tion; 
‘‘(III) the margin-setting method-
ology and the size and composition of 
the financial resource package of the 
organization; 
‘‘(IV) other information relevant 
to participation in the settlement and 
clearing activities of the organization; 
and 
‘‘(V) daily settlement prices, vol-
ume, and open interest for all con-
tracts settled or cleared by the organi-
zation. 
‘‘(M) INFORMATION-SHARING.—The de-
rivatives clearing organization shall— 
‘‘(i) enter into and abide by the terms 
of all appropriate and applicable domestic 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 00620
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS