462 
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 ( 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 
(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 (as deter-
mined in accordance with section 1603 of the 
Financial Stability Improvement Act of 2009), 
whether the home country of the foreign bank 
has adopted, or is making demonstrable 
progress toward adopting, an appropriate sys-
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tem of financial regulation for the financial sys-
tem of such home country to mitigate such sys-
temic risk.’’. 
(b) TERMINATION OF FOREIGN BANK OFFICES IN 
THE UNITED STATES.—Subsection 7(e)(1) of the Inter-
national Banking Act of 1978 ( 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 (as deter-
mined in accordance with section 1603 of the 
Financial Stability Improvement Act of 2009), 
the home country of the foreign bank has not 
adopted or made demonstrable progress toward 
adopting an appropriate system of financial reg-
ulation to mitigate such systemic risk.’’. 
(c) REGISTRATION
OR
SUCCESSION
TO
UNITED 
STATES BROKERAGE OR DEALER AND TERMINATION OF 
SUCH REGISTRATION.—Section 15 of the Securities Ex-
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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 (as determined in accordance with section 1603 of 
the Financial Stability Improvement Act of 2009), the 
home country of the foreign person has adopted or made 
demonstrable progress toward adopting an appropriate 
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 
has not adopted, or made demonstrable progress toward 
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465 
adopting, an appropriate system of financial regulation to 
mitigate such systemic risk.’’. 
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’’. 
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-
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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 
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, 
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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-
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-
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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 
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 paragraphs (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-
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469 
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 
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 
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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 
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. 
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471 
‘‘(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 
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 
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472 
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 
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 
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473 
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-
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-
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474 
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 
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. 
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475 
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-
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 
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(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-
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. 
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(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— 
(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— 
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(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; 
(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. 
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(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.— 
(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 
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480 
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 
Relief Program under title I of the Emer-
gency Economic Stabilization Act of 2009 
(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-
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481 
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). 
TITLE III—OVER-THE-COUNTER 
DERIVATIVES MARKETS ACT 
SEC. 3001. SHORT TITLE. 
This title may be cited as the ‘‘Over-the-Counter De-
rivatives Markets Act of 2009’’. 
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) by redesignating paragraphs (9) through 
(34) as paragraphs (10) through (35), respectively; 
(2) by adding after paragraph (8) the following: 
‘‘(9) 
DERIVATIVE.—The 
term 
‘derivative’ 
means— 
‘‘(A) a contract of sale of a commodity for 
future delivery; or 
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482 
‘‘(B) a swap.’’; 
(3) by redesignating paragraph (35) (as redes-
ignated by paragraph (1)) as paragraph (36); 
(4) by adding after paragraph (34) (as redesig-
nated by paragraph (1)) 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, one 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; 
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‘‘(iii) provides on an executory basis 
for the exchange, on a fixed or contingent 
basis, of one or more payments based on 
the value or level of one or more interest 
or other rates, currencies, commodities, se-
curities, instruments of indebtedness, indi-
ces, quantitative measures, or other finan-
cial or economic interests or property of 
any kind, or any interest therein or based 
on the value thereof, and that transfers, as 
between the parties to the transaction, in 
whole or in part, the financial risk associ-
ated with a future change in any such 
value or level without also conveying a cur-
rent or future direct or indirect ownership 
interest in an asset (including any enter-
prise or investment pool) or liability that 
incorporates the financial risk so trans-
ferred, including any agreement, contract, 
or transaction commonly known as an in-
terest rate swap, a rate floor, rate cap, 
rate collar, cross-currency rate swap, basis 
swap, currency swap, total return swap, 
equity index swap, equity swap, debt index 
swap, debt swap, credit spread, credit de-
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484 
fault swap, credit swap, weather swap, en-
ergy swap, metal swap, agricultural swap, 
emissions swap, or commodity swap; 
‘‘(iv) is an agreement, contract, or 
transaction that is, or in the future be-
comes, commonly known to the trade as a 
swap; or 
‘‘(v) is any combination or permuta-
tion of, or option on, any agreement, con-
tract, or transaction described in any of 
clauses (i) through (iv). 
‘‘(B) EXCLUSIONS.—The term ‘swap’ does 
not include: 
‘‘(i) any contract of sale of a com-
modity for future delivery or security fu-
tures product traded on or subject to the 
rules of any board of trade designated as 
a contract market under section 5 or 5f; 
‘‘(ii) any sale of a nonfinancial com-
modity for deferred shipment or delivery, 
so long as such transaction is physically 
settled; 
‘‘(iii) any put, call, straddle, option, or 
privilege on any security, certificate of de-
posit, or group or index of securities, in-
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ment, contract, or transaction predicates 
such purchase or sale on the occurrence of 
a bona fide contingency that might reason-
ably be expected to affect or be affected by 
the creditworthiness of a party other than 
a party to the agreement, contract, or 
transaction; 
‘‘(vii) any note, bond, or evidence of 
indebtedness that is a security as defined 
in section 2(a)(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 such security for the 
purposes of raising capital, unless 
such agreement, contract, or trans-
action is entered into to manage a 
risk associated with capital raising; 
‘‘(ix) any foreign exchange swap; 
‘‘(x) any foreign exchange forward; 
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487 
‘‘(xi) any agreement, contract, or 
transaction a counterparty of which is a 
Federal Reserve bank or 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, other 
than a security-based swap as described in 
paragraph (38)(C). 
‘‘(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-
ment, contract, or transaction under the master 
agreement that is a swap pursuant to subpara-
graph (A).’’; 
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488 
(5) in paragraph (13) (as redesignated by para-
graph (1))— 
(A) in subparagraph (A)— 
(i) 
in 
clause 
(vii), 
by 
striking 
‘‘$25,000,000’’ 
and 
inserting 
‘‘$50,000,000’’; and 
(ii) in clause (xi), by striking ‘‘total 
assets in an amount’’ and inserting 
‘‘amounts invested on a discretionary 
basis’’; and 
(B) in subparagraph (C), by striking ‘‘de-
termines’’ and inserting ‘‘and the Securities and 
Exchange Commission may jointly determine’’; 
(6) in paragraph (30) (as redesignated by para-
graph (1)), by— 
(A) redesignating subparagraph (E) as 
subparagraph (G); 
(B) in subparagraph (D), by striking 
‘‘and’’; and 
(C) inserting after subparagraph (D) the 
following: 
‘‘(E) a swap execution facility registered 
under section 5h; 
‘‘(F) a swap repository; and’’; 
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489 
(7) by adding after paragraph (36) (as redesig-
nated by paragraph (3)) the following: 
‘‘(37) BOARD.—The term ‘Board’ means the 
Board of Governors of the Federal Reserve Sys-
tem.’’; 
(8) by adding after paragraph (37) the fol-
lowing: 
‘‘(38) SECURITY-BASED SWAP.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘security-based 
swap’ means any agreement, contract, or trans-
action that would be a swap under paragraph 
(35) 
(without 
regard 
to 
paragraph 
(35)(B)(xii)), and that— 
‘‘(i) is based on an index that is a 
narrow-based security index, including any 
interest therein or based on the value 
thereof; 
‘‘(ii) is based on a single security or 
loan, including any interest therein or 
based on the value thereof; or 
‘‘(iii) is based on the occurrence, non- 
occurrence, or extent of the occurrence of 
an event relating to a single issuer of a se-
curity or the issuers of securities in a nar-
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490 
row-based security index, provided that 
such event must directly affect the finan-
cial statements, financial condition, or fi-
nancial obligations of the issuer. 
‘‘(B) EXCLUSION.—The term ‘security- 
based swap’ does not include any agreement, 
contract, or transaction that meets the defini-
tion of security-based swap only because it ref-
erences or is based upon a government security. 
‘‘(C) MIXED
SWAP.—The term ‘security- 
based swap’ includes any agreement, contract, 
or transaction that is as described in subpara-
graph (A) and also is based on the value of one 
or more interest or other rates, currencies, com-
modities, instruments of indebtedness, indices, 
quantitative measures, other financial or eco-
nomic interest or property of any kind (other 
than a single security or a narrow-based secu-
rity index), or the occurrence, non-occurrence, 
or the extent of the occurrence of an event or 
contingency associated with a potential finan-
cial, economic, or commercial consequence 
(other than an event described in subparagraph 
(A)(iii)). 
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491 
‘‘(D) RULE OF CONSTRUCTION REGARDING 
MASTER
AGREEMENTS.—The term ‘security- 
based swap’ shall be construed to include a 
master agreement that provides for an agree-
ment, contract, or transaction that is a secu-
rity-based swap pursuant to subparagraph (A), 
together with all supplements to any such mas-
ter agreement, without regard to whether the 
master agreement contains an agreement, con-
tract, or transaction that is not a security-based 
swap pursuant to subparagraph (A), except 
that the master agreement shall be considered 
to be a security-based swap only with respect to 
each agreement, contract, or transaction under 
the master agreement that is a security-based 
swap pursuant to subparagraph (A).’’; 
(9) by adding after paragraph (38) the fol-
lowing: 
‘‘(39) SWAP DEALER.— 
‘‘(A) IN GENERAL.—The term ‘swap deal-
er’ means any person engaged in the business 
of buying and selling swaps for such person’s 
own account, through a broker or otherwise. 
‘‘(B) EXCEPTION.—The term ‘swap dealer’ 
does not include a person that buys or sells 
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492 
swaps for such person’s own account, either in-
dividually or in a fiduciary capacity, but not as 
a part of a regular business.’’; 
(10) by adding after paragraph (39) the fol-
lowing: 
‘‘(40) MAJOR SWAP PARTICIPANT.— 
‘‘(A) IN GENERAL.—The term ‘major swap 
participant’ means any person who is not a 
swap dealer and— 
‘‘(i) who maintains a substantial net 
position in outstanding swaps, excluding 
positions held primarily for hedging, reduc-
ing, or otherwise mitigating commercial 
risk; or 
‘‘(ii) whose outstanding swaps create 
substantial net counterparty exposure (cur-
rent and potential future) that would ex-
pose counterparties to significant credit 
losses that could have a material adverse 
effect on capital of the counterparties. 
‘‘(B) DEFINITIONS.—The Commission and 
the Securities and Exchange Commission shall 
jointly define by rule or regulation the term 
‘substantial net position’ and ‘substantial net 
counterparty exposure’ at a threshold that the 
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493 
Commissions determine prudent for the effec-
tive monitoring of, management and oversight 
of the financial system. In the event the Com-
missions are unable to agree upon a level within 
60 days of the commencement of such consulta-
tions, the Secretary of the Treasury shall make 
such determination, which shall be binding on 
and adopted by such Commissions. 
‘‘(41) MAJOR SECURITY-BASED SWAP PARTICI-
PANT.— 
‘‘(A) IN GENERAL.—The term ‘major secu-
rity-based swap participant’ means any person 
who is not a swap dealer and— 
‘‘(i) who maintains a substantial net 
position 
in 
outstanding 
security-based 
swaps, excluding positions held primarily 
for hedging, reducing, or otherwise miti-
gating commercial risk; or 
‘‘(ii) whose outstanding security-based 
swaps create substantial net counterparty 
exposure (current and potential future) 
that would expose counterparties to signifi-
cant credit losses that could have a mate-
rial adverse effect on capital of the 
counterparties. 
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hsrobinson on DSK69SOYB1PROD with BILLS
494 
‘‘(B) DEFINITIONS.—The Commission and 
the Securities and Exchange Commission shall 
jointly define by rule or regulation the term 
‘substantial net position’ and ‘substantial net 
counterparty exposure’ at a threshold that the 
Commissions determine prudent for the effec-
tive monitoring of, management and oversight 
of the financial system. In the event the Com-
missions are unable to agree upon a level within 
60 days of the commencement of such consulta-
tions, the Secretary of the Treasury shall make 
such determination, which shall be binding on 
and adopted by such Commissions.’’; 
(11) by adding after paragraph (41) the fol-
lowing: 
‘‘(42) 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)).’’; 
(12) by adding after paragraph (42) the fol-
lowing: 
‘‘(43) PRUDENTIAL
REGULATOR.—The term 
‘Prudential Regulator’ means— 
‘‘(A) the Board in the case of a swap deal-
er, major swap participant, security-based swap 
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hsrobinson on DSK69SOYB1PROD with BILLS
495 
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.’’; 
(13) by adding after paragraph (43) the fol-
lowing: 
‘‘(44) SECURITY-BASED SWAP DEALER.— 
‘‘(A) IN
GENERAL.—The term ‘security- 
based swap dealer’ means any person engaged 
in the business of buying and selling security- 
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496 
based swaps for such person’s own account, 
through a broker or otherwise. 
‘‘(B) EXCEPTION.—The term ‘security- 
based swap dealer’ does not include a person 
that buys or sells security-based swaps for such 
person’s own account, either individually or in 
a fiduciary capacity, but not as a part of a reg-
ular business.’’; 
(14) by adding after paragraph (44) the fol-
lowing: 
‘‘(45) GOVERNMENT
SECURITY.—The term 
‘government security’ has the same meaning as in 
section 3(a)(42) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(42)).’’; 
(15) by adding after paragraph (45) the fol-
lowing: 
‘‘(46) 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.’’; 
(16) by adding after paragraph (46) the fol-
lowing: 
‘‘(47) FOREIGN EXCHANGE SWAP.—The term 
‘foreign exchange swap’ means a transaction that 
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497 
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.’’; 
(17) by adding after paragraph (47) the fol-
lowing: 
‘‘(48) 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’ means any partner, officer, direc-
tor, or branch manager of such security-based swap 
dealer or major security-based 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 such security-based swap dealer or major secu-
rity-based swap participant, or any employee of such 
security-based swap dealer or major security-based 
swap participant, except that any person associated 
with a security-based swap dealer or major security- 
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498 
based swap participant whose functions are solely 
clerical or ministerial shall not be included in the 
meaning of such term other than for purposes of 
section 15F(e)(2) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–10).’’; 
(18) by adding after paragraph (48) the fol-
lowing: 
‘‘(49) PERSON
ASSOCIATED
WITH
A
SWAP 
DEALER OR MAJOR SWAP PARTICIPANT.—The term 
‘person associated with a swap dealer or major swap 
participant’ or ‘associated person of a swap dealer or 
major swap participant’ means any partner, officer, 
director, or branch manager of such 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 such swap dealer 
or major swap participant, or any employee of such 
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 such term other than for purposes of section 
4s(b)(6).’’; and 
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499 
(19) by adding after paragraph (49) the fol-
lowing: 
‘‘(50) SWAP REPOSITORY.—The term ‘swap re-
pository’ means an entity that collects and maintains 
the records of the terms and conditions of swaps or 
security-based swaps entered into by third parties. 
‘‘(51) RESTRICTED
OWNER.—The term ‘re-
stricted owner’ means any swap dealer, security- 
based swap dealer, major swap participant, major 
security-based swap participant, person associated 
with a swap dealer or major swap participant, or 
person associated with a security-based swap dealer 
or major security-based swap participant.’’. 
(b) JOINT RULEMAKING ON FURTHER DEFINITION 
OF TERMS.— 
(1) IN
GENERAL.—The Commodity Futures 
Trading Commission and the Securities and Ex-
change Commission shall jointly adopt a rule further 
defining the terms ‘‘swap’’, ‘‘security-based swap’’, 
‘‘swap dealer’’, ‘‘security-based swap dealer’’, ‘‘major 
swap participant’’,‘‘major security-based swap par-
ticipant’’, and ‘‘eligible contract participant’’ no 
later than 180 days after the effective date of this 
title. 
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500 
(2) PREVENTION
OF
EVASIONS.—The Com-
modity Futures Trading Commission and the Securi-
ties and Exchange Commission may prescribe rules 
defining the term ‘‘swap’’ or ‘‘security-based swap’’ 
to include transactions that have been structured to 
evade this title. 
(c) JOINT RULEMAKING UNDER THIS TITLE.— 
(1) UNIFORM
RULES.—Rules and regulations 
prescribed jointly under this title by the Commodity 
Futures Trading Commission and the Securities and 
Exchange Commission shall be uniform. 
(2) TREASURY
DEPARTMENT.—In the event 
that the Commodity Futures Trading Commission 
and the Securities and Exchange Commission fail to 
jointly prescribe uniform rules and regulations under 
any provision of this title in a timely manner, the 
Secretary of the Treasury, in consultation with the 
Commodity Futures Trading Commission and the 
Securities and Exchange Commission, shall prescribe 
rules and regulations under such provision. A rule 
prescribed by the Secretary of the Treasury shall be 
enforced as if prescribed jointly by the Commodity 
Futures Trading Commission and the Securities and 
Exchange Commission and shall remain in effect 
until the Secretary rescinds the rule or until the ef-
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501 
fective date of a corresponding rule prescribed joint-
ly by the Commodity Futures Trading Commission 
and the Securities and Exchange Commission in ac-
cordance with this section, whichever is later. 
(3) DEADLINE.—The Secretary of the Treasury 
shall adopt rules and regulations under paragraph 
(2) within 180 days of the time that the Commodity 
Futures Trading Commission and the Securities and 
Exchange Commission failed to adopt uniform rules 
and regulations. 
(4) TREATMENT
OF
SIMILAR
PRODUCTS.—In 
adopting joint rules and regulations under this title, 
the Commodity Futures Trading Commission and 
the Securities and Exchange Commission shall pre-
scribe requirements to treat functionally or economi-
cally similar products similarly. 
(5) TREATMENT OF DISSIMILAR PRODUCTS.— 
Nothing in this title shall be construed to require 
the Commodity Futures Trading Commission and 
the Securities and Exchange Commission to adopt 
joint rules that treat functionally or economically 
different products identically. 
(6) JOINT INTERPRETATION.—Any interpreta-
tion of, or guidance regarding, a provision of this 
title, shall be effective only if issued jointly by the 
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502 
Commodity Futures Trading Commission and the 
Securities and Exchange Commission if this title re-
quires the Commodity Futures Trading Commission 
and the Securities and Exchange Commission to 
issue joint regulations to implement the provision. 
SEC. 3102. JURISDICTION. 
(a) EXCLUSIVE JURISDICTION.—The first sentence 
of section 2(a)(1)(A) of the Commodity Exchange Act (7 
U.S.C. 2(a)(1)(A)) is amended— 
(1) by striking ‘‘(C) and (D)’’ and inserting 
‘‘(C), (D), and (G)’’; 
(2) by striking ‘‘subsections (c) through (i)’’ 
and inserting ‘‘subsections (c) and (f)’’; and 
(3) by striking ‘‘involving contracts of sale’’ and 
inserting ‘‘involving swaps or contracts of sale’’. 
(b) NO LIMITATION.—Section 2(a)(1) of the Com-
modity Exchange Act (7 U.S.C. 2(a)(1)) is amended by 
inserting after subparagraph (F) the following: 
‘‘(G) Nothing contained in this paragraph 
shall supersede or limit the jurisdiction con-
ferred on the Securities and Exchange Commis-
sion or other regulatory authority by, or other-
wise restrict the authority of the Securities and 
Exchange Commission or other regulatory au-
thority under, the Over-the-Counter Derivatives 
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503 
Markets Act of 2009, including with respect to 
a security-based swap as described in section 
1a(38)(C) of this Act.’’. 
(c) ADDITIONS.—Section 2(c)(2)(A) of the Com-
modity Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended— 
(1) in clause (i), by striking ‘‘or’’ at the end; 
(2) by redesignating clause (ii) as clause (iii); 
and 
(3) by inserting after clause (i) the following: 
‘‘(ii) a swap; or’’. 
SEC. 3103. CLEARING. 
(a) CLEARING REQUIREMENT.— 
(1) Sections 2(d), 2(e), 2(g), and 2(h) of the 
Commodity Exchange Act (7 U.S.C. 2(d), 2(e), 2(g), 
and 2(h)) are repealed. 
(2) Section 2 of the Commodity Exchange Act 
(7 U.S.C. 2) is further amended by inserting after 
subsection (c) the following: 
‘‘(d) SWAPS.—Nothing in this Act (other than sub-
sections (a)(1)(A), (a)(1)(B), (f), and (j), sections 4a, 4b, 
4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 4u, 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 provisions of this Act as are appli-
cable by their terms to registered entities and Commission 
registrants) governs or applies to a swap. 
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504 
‘‘(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.’’. 
(3) Section 2 of the Commodity Exchange Act 
(7 U.S.C. 2) is further amended by inserting after 
subsection (i) the following: 
‘‘(j) CLEARING OF SWAPS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) PRESUMPTION
OF
CLEARING.—A 
swap shall be submitted for clearing if a deriva-
tives clearing organization that is registered 
under this Act will accept the swap for clearing. 
‘‘(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 and may be offset 
with each other within the derivatives 
clearing organization; and 
‘‘(ii) provide for non-discriminatory 
clearing of a swap executed on or through 
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the rules of an unaffiliated designated con-
tract market or swap execution facility. 
‘‘(2) COMMISSION APPROVAL.— 
‘‘(A) IN GENERAL.—A derivatives clearing 
organization shall submit to the Commission for 
prior approval each swap, or any group, cat-
egory, type, or class of swaps, that it seeks to 
accept for clearing, which submission the Com-
mission shall make available to the public. 
‘‘(B) DEADLINE.—The Commission shall 
take final action on a request submitted pursu-
ant to subparagraph (A) not later than 90 days 
after submission of the request, unless the de-
rivatives clearing organization submitting the 
request agrees to an extension of the time limi-
tation established under this subparagraph. A 
request on which the Commission fails to take 
final action within the time limitation estab-
lished under this subparagraph is deemed ap-
proved. 
‘‘(C) APPROVAL.—The Commission shall 
approve, unconditionally or subject to such 
terms and conditions as the Commission deter-
mines to be appropriate, any request submitted 
pursuant to subparagraph (A) if the Commis-
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506 
sion finds that the request is consistent with 
section 5b(c)(2). 
‘‘(D) RULES.—Not later than 180 days 
after the date of the enactment of the Over-the- 
Counter Derivatives Markets Act of 2009, the 
Commission shall adopt rules for a derivatives 
clearing organization’s submission for approval, 
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.—At 
any time after issuance of an approval pursuant to 
paragraph (2): 
‘‘(A) REVIEW PROCESS.—The Commission, 
on application of a counterparty to a swap or 
on its own initiative, may stay the clearing re-
quirement of paragraph (1) until the Commis-
sion completes a review of the terms of the 
swap (or the group, category, type, or class of 
swaps) and the clearing arrangement. 
‘‘(B) DEADLINE.—The Commission shall 
complete a review undertaken pursuant to sub-
paragraph (A) not later than 90 days after 
issuance of the stay, unless the derivatives 
clearing organization that clears the swap, or 
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507 
group, category, type or class of swaps, agrees 
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 section 5b(c)(2); 
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 180 days 
after the date of the enactment of the Over-the- 
Counter Derivatives Markets Act of 2009, the 
Commission shall adopt rules for reviewing, 
pursuant to this paragraph, a derivatives clear-
ing organization’s clearing of a swap, or a 
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group, category, type, or class of swaps, that it 
has accepted for clearing. 
‘‘(4) PREVENTION OF EVASION.—The Commis-
sion and the Securities and Exchange Commission 
shall have authority to prescribe rules under this 
subsection, or issue interpretations of such rules, as 
necessary to prevent evasions of this Act provided 
that any such rules or interpretations must be issued 
jointly to be effective. 
‘‘(5) REQUIRED REPORTING.— 
‘‘(A) IN GENERAL.—All swap transactions 
that are not accepted for clearing by any de-
rivatives clearing organization shall be reported 
to either a swap repository described in section 
21 or, if there is no repository that would ac-
cept the swap, to the Commission pursuant to 
section 4r within such time period as the Com-
mission may by rule or regulation prescribe. 
‘‘(B) AUTHORITY OF SWAP DEALER TO RE-
PORT.—Counterparties 
may 
agree 
which 
counterparty will report the swap transaction. 
In transactions where only 1 counterparty is a 
swap dealer, the swap dealer will report the 
transaction. 
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509 
‘‘(6) TRANSITION
RULES.—Rules adopted by 
the Commission under this section shall provide for 
the reporting of data, as follows: 
‘‘(A) Swaps that were entered into before 
the date of enactment of the Over-the-Counter 
Derivatives Markets Act of 2009 shall be re-
ported to a registered swap repository or the 
Commission no later than 180 days after the 
effective date of the Over-the-Counter Deriva-
tives Markets Act of 2009. 
‘‘(B) Swaps that were entered into on or 
after the date of enactment of the Over-the- 
Counter Derivatives Markets Act of 2009 shall 
be reported to a registered swap repository or 
the Commission no later than the later of— 
‘‘(i) 90 days after the effective date of 
the Over-the-Counter Derivatives Markets 
Act of 2009; or 
‘‘(ii) such other time after entering 
into the swap as the Commission may pre-
scribe by rule or regulation. 
‘‘(7) TRADE EXECUTION.— 
‘‘(A) IN GENERAL.—With respect to trans-
actions involving swaps subject to the clearing 
requirement of paragraph (1) and where both 
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counterparties are either swap dealers or major 
swap participants, such counterparties shall— 
‘‘(i) execute the transaction on a 
board of trade designated as a contract 
market under section 5; or 
‘‘(ii) execute the transaction on a 
swap execution facility registered with the 
Commission. 
‘‘(B) EXCEPTION.—The requirements of 
clauses (i) and (ii) of subparagraph (A) shall 
not apply if no board of trade or swap execution 
facility makes the swap available to trade. 
‘‘(C) REQUIRED
REPORTING.—If the ex-
ception of subparagraph (B) applies and there 
is no facility that makes the swap available to 
trade, the counterparties shall comply with any 
recordkeeping and transaction reporting re-
quirements as may be prescribed by the Com-
mission with respect to swaps subject to the re-
quirements of paragraph (1). 
‘‘(8) 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-
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actions that would be security-based swaps but for 
the trading of such contracts, agreements or trans-
actions on such a designated contract market. 
‘‘(9) EXCEPTIONS.—The requirements of para-
graph (1) shall not apply to a swap if— 
‘‘(A) no derivatives clearing organization 
registered under this Act will accept the swap 
for clearing; or 
‘‘(B) one of the counterparties to the swap 
is not a swap dealer or major swap participant. 
‘‘(10) EXCLUSION.—Paragraph (1) shall not 
apply to a swap 1 party to which is not a swap deal-
er or major swap participant, and which is entered 
into before the end of the 90-day period that begins 
with the effective date of this paragraph.’’. 
(b) DERIVATIVES CLEARING ORGANIZATIONS.— 
(1) Subsections (a) and (b) of section 5b of the 
Commodity Exchange Act (7 U.S.C. 7a-1) are 
amended to read as follows: 
‘‘(a) REGISTRATION REQUIREMENT.—It shall be un-
lawful for a derivatives clearing organization, unless reg-
istered with the Commission, directly or indirectly to make 
use of the mails or any means or instrumentality of inter-
state commerce to perform the functions of a derivatives 
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512 
clearing organization described in section 1a(10) of this 
Act with respect to— 
‘‘(1) a contract of sale of a commodity for fu-
ture delivery (or option on such a contract) or option 
on a commodity, in each case unless the contract or 
option is— 
‘‘(A) excluded from this Act by section 
2(a)(1)(C)(i), 2(c), or 2(f); or 
‘‘(B) a security futures product cleared by 
a clearing agency registered with the Securities 
and Exchange Commission under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.); 
or 
‘‘(2) a swap. 
‘‘(b) VOLUNTARY REGISTRATION.— 
‘‘(1) 
DERIVATIVES
CLEARING
ORGANIZA-
TIONS.—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) CLEARING AGENCIES.—A derivatives clear-
ing organization may clear security-based swaps that 
are required to be cleared by a person who is reg-
istered as a clearing agency under the Securities Ex-
change Act of 1934 (15 U.S.C. 78a et seq.).’’. 
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513 
(2) Section 5b of the Commodity Exchange Act 
(7 U.S.C. 7a–1) is amended by adding at the end 
the following: 
‘‘(g) REQUIRED REGISTRATION
FOR BANKS
AND 
CLEARING AGENCIES.—A person that is required to be 
registered as a derivatives clearing organization under this 
section shall register with the Commission regardless of 
whether the person is also a bank or a clearing agency 
registered with the Securities and Exchange Commission 
under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.). 
‘‘(h) HARMONIZATION OF RULES.—Not later than 
180 days after the effective date of the Over-the-Counter 
Derivatives Markets Act of 2009, the Commission and the 
Securities and Exchange Commission shall jointly adopt 
uniform rules governing persons that are registered as de-
rivatives clearing organizations for swaps under this sub-
section and persons that are registered as clearing agen-
cies for security-based swaps under the Securities Ex-
change Act of 1934 (15 U.S.C. 78a et seq.). 
‘‘(i) CONSULTATION.—The Commission and the Se-
curities and Exchange Commission shall consult with the 
appropriate Federal banking agencies prior to adopting 
rules under this section with respect to swaps. 
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514 
‘‘(j) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a derivatives clearing or-
ganization from registration under this section for the 
clearing of swaps if the Commission finds that such de-
rivatives clearing organization is subject to comparable, 
comprehensive supervision and regulation on a consoli-
dated basis by the Securities and Exchange Commission, 
a Prudential Regulator or the appropriate governmental 
authorities in the organization’s home country. 
‘‘(k) 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; 
‘‘(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 
body performing a function similar to that 
of a board, or the senior officer of the de-
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515 
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 com-
modity laws and the rules and regulations 
issued thereunder, including rules pre-
scribed by the Commission pursuant to 
this section; and 
‘‘(C) shall establish procedures for remedi-
ation of noncompliance issues found during 
compliance office reviews, lookbacks, internal or 
external audit findings, self-reported errors, or 
through validated complaints. Procedures will 
establish the handling, management response, 
remediation, retesting, 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 the commodity laws and its policies 
and procedures, including its code of ethics and con-
flict of interest policies, in accordance with rules pre-
scribed by the Commission. Such compliance report 
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516 
shall accompany the financial reports of the deriva-
tives clearing organization that are required to be 
furnished to the Commission pursuant to this sec-
tion and shall include a certification that, under pen-
alty of law, the report is accurate and complete.’’. 
(3) Section 5b(c)(2) of the Commodity Ex-
change Act (7 U.S.C. 7a–1(c)(2)) is amended to 
read as follows: 
‘‘(2) CORE
PRINCIPLES
FOR
DERIVATIVES 
CLEARING ORGANIZATIONS.—To be registered and to 
maintain registration as a derivatives clearing orga-
nization, a derivatives clearing organization shall 
comply with the core principles specified in subpara-
graphs (B) through (N) this paragraph. The Com-
mission may conform the core principles to reflect 
evolving United States and international stand-
ards.’’. 
(4) Section 5b of the Commodity Exchange Act 
(7 U.S.C. 7a–1) is further amended by adding after 
subsection (k), as added by paragraph (2), the fol-
lowing: 
‘‘(l) REPORTING.— 
‘‘(1) IN GENERAL.—A derivatives clearing orga-
nization that clears swaps shall provide to the Com-
mission and any designated swap repository all in-
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517 
formation determined by the Commission to be nec-
essary to perform its responsibilities under this Act. 
The Commission shall adopt data collection and 
maintenance requirements for swaps cleared by de-
rivatives clearing organizations that are comparable 
to the corresponding requirements for swaps accept-
ed by swap repositories and swaps traded on swap 
execution facilities. A derivatives clearing organiza-
tion that clears security-based swap agreements (as 
defined in section 3(a)(76) of the Securities Ex-
change Act of 1934) shall, upon request, make avail-
able to the Securities and Exchange Commission all 
information (including information on a real-time 
basis) relating to such security-based swap agree-
ments. Subject to section 8, the Commission shall 
share such information, upon request, with the 
Board, the Securities and Exchange Commission 
(with respect to swaps other than security-based 
swap agreements), the appropriate Federal banking 
agencies, the Financial Services Oversight Council, 
and the Department of Justice or to other persons 
the Commission deems appropriate, including for-
eign financial supervisors (including foreign futures 
authorities), foreign central banks, and foreign min-
istries. 
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‘‘(2) PUBLIC
INFORMATION.—A derivatives 
clearing organization that clears swaps shall provide 
to the Commission, or its designee, such information 
as is required by, and in a form and at a frequency 
to be determined by, the Commission, in order to 
comply with the public reporting requirements con-
tained in section 8(j).’’. 
(5) Section 8(e) of the Commodity Exchange 
Act (7 U.S.C. 12(e)) is amended in the last sentence 
by adding ‘‘central bank and ministries’’ after ‘‘de-
partment’’ each place it appears. 
(c) LEGAL CERTAINTY FOR IDENTIFIED BANKING 
PRODUCTS.— 
(1) REPEAL.—Sections 402(d), 404, 407, 
408(b), and 408(c)(2) of the Legal Certainty for 
Bank Products Act of 2000 (7 U.S.C. 27(d), 27b, 
27e, 27f(b), and 27f(c)(2)) are repealed. 
(2) LEGAL
CERTAINTY.—Section 403 of the 
Legal Certainty for Bank Products Act of 2000 (7 
U.S.C. 27a) is amended to read as follows: 
‘‘SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. 
‘‘(a) EXCLUSION.—Except as provided in subsection 
(b) or (c), no provisions of the Commodity Exchange Act 
(7 U.S.C. 1 et seq.) shall apply to, and the Commodity 
Futures Trading Commission and the Securities and Ex-
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519 
change Commission shall not exercise regulatory authority 
under the Commodity Exchange Act with respect to, an 
identified banking product. 
‘‘(b) EXCEPTION.—An appropriate Federal banking 
agency may except an identified banking product or a 
bank under its regulatory jurisdiction from the exclusion 
in subsection (a) if the agency determines, in consultation 
with the Commodity Futures Trading Commission and the 
Securities and Exchange Commission, that the product— 
‘‘(1) would meet the definition of swap in sec-
tion 1a(35) of the Commodity Exchange Act (7 
U.S.C. 1a(35)) or security-based swap in section 
1a(38) of the Commodity Exchange Act (7 U.S.C. 
1a(38)); and 
‘‘(2) has become known to the trade as a swap 
or security-based swap, or otherwise has been struc-
tured as an identified banking product for the pur-
pose of evading the provisions of the Commodity Ex-
change Act (7 U.S.C. 1 et seq.), the Securities Act 
of 1933 (15 U.S.C. 77a et seq.), or the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.). 
‘‘(c) ADDITIONAL EXCEPTION.—The exclusion in 
subsection (a) shall not apply to an identified banking 
product that— 
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‘‘(1) is a product of a bank that is not under 
the regulatory jurisdiction of an appropriate Federal 
banking agency; 
‘‘(2) meets the definition of swap in section 
1a(35) of the Commodity Exchange Act or security- 
based swap in section 3(a)(68) of the Securities and 
Exchange Act of 1934; and 
‘‘(3) has become known to the trade as a swap 
or security-based swap, or has been structured as an 
identified banking product for the purpose of evad-
ing the provisions of the Commodity Exchange Act 
(7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 
U.S.C. 77a et seq.), or the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.).’’. 
SEC. 3104. PUBLIC REPORTING OF AGGREGATE SWAP 
DATA. 
Section 8 of the Commodity Exchange Act (7 U.S.C. 
12) is amended by adding after subsection (i) the fol-
lowing: 
‘‘(j) PUBLIC
REPORTING
OF
AGGREGATE
SWAP 
DATA.— 
‘‘(1) IN GENERAL.—The Commission, or a per-
son designated by the Commission pursuant to para-
graph (2), shall make available to the public, in a 
manner that does not disclose the business trans-
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521 
actions and market positions of any person, aggre-
gate data on swap trading volumes and positions 
from the sources set forth in paragraph (3). 
‘‘(2) DESIGNEE
OF
THE
COMMISSION.—The 
Commission may designate a derivatives clearing or-
ganization or a swap repository to carry out the 
public reporting described in paragraph (1). 
‘‘(3) SOURCES OF INFORMATION.—The sources 
of the information to be publicly reported as de-
scribed in paragraph (1) are— 
‘‘(A) derivatives clearing organizations 
pursuant to section 5b(k)(2); 
‘‘(B) swap repositories pursuant to section 
21(c)(3); and 
‘‘(C) reports received by the Commission 
pursuant to section 4r.’’. 
SEC. 3105. SWAP REPOSITORIES. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 20 the following: 
‘‘SEC. 21. SWAP REPOSITORIES. 
‘‘(a) REGISTRATION REQUIREMENT.— 
‘‘(1) IN GENERAL.—It shall be unlawful for any 
person, unless registered with the Commission, di-
rectly or indirectly to make use of the mails or any 
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522 
means or instrumentality of interstate commerce to 
perform the functions of a swap repository. 
‘‘(2) INSPECTION
AND
EXAMINATION.—Reg-
istered swap repositories shall be subject to inspec-
tion and examination by any representative of the 
Commission. 
‘‘(b) STANDARD SETTING.— 
‘‘(1) DATA IDENTIFICATION.—The Commission 
shall prescribe standards that specify the data ele-
ments for each swap that shall be collected and 
maintained by each registered swap repository. 
‘‘(2) DATA COLLECTION AND MAINTENANCE.— 
The Commission shall prescribe data collection and 
data maintenance standards for swap repositories. 
‘‘(3) COMPARABILITY.—The standards pre-
scribed by the Commission under this subsection 
shall be comparable to the data standards imposed 
by the Commission on derivatives clearing organiza-
tions that clear swaps. 
‘‘(c) DUTIES.—A swap repository shall— 
‘‘(1) accept data prescribed by the Commission 
for each swap under subsection (b); 
‘‘(2) maintain such data in such form and man-
ner and for such period as may be required by the 
Commission; 
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‘‘(3) provide to the Commission, or its designee, 
such information as is required by, and in a form 
and at a frequency to be determined by, the Com-
mission, in order to comply with the public reporting 
requirements contained in section 8(j); and 
‘‘(4) make available, on a confidential basis 
pursuant to section 8, all data obtained by the swap 
repository, including individual counterparty trade 
and position data, to the Commission, the appro-
priate Federal banking agencies, the Financial Serv-
ices Oversight Council, the Securities and Exchange 
Commission, and the Department of Justice or to 
other persons the Commission deems appropriate, 
including foreign financial supervisors (including for-
eign futures authorities), foreign central banks, and 
foreign ministries. 
‘‘(d) REQUIRED
REGISTRATION
FOR
SECURITY- 
BASED SWAP REPOSITORIES.—Any person that is re-
quired to be registered as a swap repository under this 
section shall register with the Commission regardless of 
whether that person also is registered with the Securities 
and Exchange Commission as a security-based swap re-
pository. 
‘‘(e) HARMONIZATION OF RULES.—Not later than 
180 days after the effective date of the Over-the-Counter 
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524 
Derivatives Markets Act of 2009, the Commission and the 
Securities and Exchange Commission shall jointly adopt 
uniform rules governing persons that are registered under 
this section and persons that are registered as security- 
based swap repositories under the Securities Exchange 
Act of 1934 (15 U.S.C. 78a et seq.), including uniform 
rules that specify the data elements that shall be collected 
and maintained by each repository. 
‘‘(f) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a swap repository from 
the requirements of this section if the Commission finds 
that such swap repository is subject to comparable, com-
prehensive supervision and regulation on a consolidated 
basis by the Securities and Exchange Commission, a Pru-
dential Regulator or the appropriate governmental au-
thorities in the organization’s home country.’’. 
SEC. 3106. REPORTING AND RECORDKEEPING. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 4q the following: 
‘‘SEC. 4r. REPORTING AND RECORDKEEPING FOR CERTAIN 
SWAPS. 
‘‘(a) IN GENERAL.—Any person who enters into a 
swap and— 
‘‘(1) did not clear the swap in accordance with 
section 2(j)(1); and 
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525 
‘‘(2) did not have data regarding the swap ac-
cepted by a swap repository in accordance with rules 
(including time frames) adopted by the Commission 
under section 21, 
shall meet the requirements in subsection (b). 
‘‘(b) REPORTS.—Any person described in subsection 
(a) shall— 
‘‘(1) make such reports in such form and man-
ner and for such period as the Commission shall pre-
scribe by rule or regulation regarding the swaps held 
by the person; and 
‘‘(2) keep books and records pertaining to the 
swaps held by the person in such form and manner 
and for such period as may be required by the Com-
mission, which books and records shall be open to 
inspection by any representative of the Commission, 
an appropriate Federal banking agency, the Securi-
ties and Exchange Commission, the Financial Serv-
ices Oversight Council, and the Department of Jus-
tice. 
‘‘(c) IDENTICAL DATA.—In adopting rules under this 
section, the Commission shall require persons described in 
subsection (a) to report the same or a more comprehensive 
set of data than the Commission requires swap reposi-
tories to collect under section 21.’’. 
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SEC. 3107. REGISTRATION AND REGULATION OF SWAP 
DEALERS AND MAJOR SWAP PARTICIPANTS. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 4r (as added by sec-
tion 3106) the following: 
‘‘SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEAL-
ERS AND MAJOR SWAP PARTICIPANTS. 
‘‘(a) REGISTRATION.— 
‘‘(1) It shall be unlawful for any person to act 
as a swap dealer unless such person is registered as 
a swap dealer with the Commission. 
‘‘(2) It shall be unlawful for any person to act 
as a major swap participant unless such person shall 
have registered as a major swap participant with the 
Commission. 
‘‘(b) REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A person shall register as 
a swap dealer or major swap participant by filing a 
registration application with the Commission. 
‘‘(2) CONTENTS.—The application shall be 
made in such form and manner as prescribed by the 
Commission, giving any information and facts as the 
Commission may deem necessary concerning the 
business in which the applicant is or will be engaged. 
Such person, when registered as a swap dealer or 
major swap participant, shall continue to report and 
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furnish to the Commission such information per-
taining to such person’s business as the Commission 
may require. 
‘‘(3) EXPIRATION.—Each registration shall ex-
pire at such time as the Commission may by rule or 
regulation prescribe. 
‘‘(4) RULES.—Except as provided in sub-
sections (c), (d) and (e), the Commission may pre-
scribe rules applicable to swap dealers and major 
swap participants, including rules that limit the ac-
tivities of swap dealers and major swap participants. 
‘‘(5) TRANSITION.—Rules adopted under this 
section shall provide for the registration of swap 
dealers and major swap participants no later than 
one year after the effective date of the Over-the- 
Counter Derivatives Markets Act of 2009. 
‘‘(6) STATUTORY
DISQUALIFICATION.—Except 
to the extent otherwise specifically provided by rule, 
regulation, or order, it shall be unlawful for a swap 
dealer or a major swap participant to permit any 
person associated with a swap dealer or a major 
swap participant who is subject to a statutory dis-
qualification to effect or be involved in effecting 
swaps on behalf of such swap dealer or major swap 
participant, if such swap dealer or major swap par-
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ticipant knew, or in the exercise of reasonable care 
should have known, of such statutory disqualifica-
tion. 
‘‘(c) DUAL REGISTRATION.— 
‘‘(1) SWAP DEALER.—Any person that is re-
quired to be registered as a swap dealer under this 
section shall register with the Commission regardless 
of whether that person also is a bank or is registered 
with the Securities and Exchange Commission as a 
security-based swap dealer. 
‘‘(2) MAJOR SWAP PARTICIPANT.—Any person 
that is required to be registered as a major swap 
participant under this section shall register with the 
Commission regardless of whether that person also 
is a bank or is registered with the Securities and 
Exchange Commission as a major security-based 
swap participant. 
‘‘(d) JOINT RULES.— 
‘‘(1) IN GENERAL.—Not later than 180 days 
after the effective date of the Over-the-Counter De-
rivatives Markets Act of 2009, the Commission and 
the Securities and Exchange Commission shall joint-
ly adopt uniform rules for persons that are reg-
istered as swap dealers or major swap participants 
under this section and persons that are registered as 
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security-based swap dealers or major security-based 
swap participants under the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.). 
‘‘(2) EXCEPTION FOR PRUDENTIAL REQUIRE-
MENTS.—The Commission and the Securities and 
Exchange Commission shall not prescribe rules im-
posing prudential requirements (including activity 
restrictions) on swap dealers, major swap partici-
pants, security-based swap dealers, or major secu-
rity-based swap participants for which there is a 
Prudential Regulator. This provision shall not be 
construed as limiting the authority of the Commis-
sion and the Securities and Exchange Commission to 
prescribe appropriate business conduct, reporting, 
and recordkeeping requirements to protect investors. 
‘‘(e) CAPITAL AND MARGIN REQUIREMENTS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) BANK
SWAP
DEALERS
AND
MAJOR 
SWAP
PARTICIPANTS.—Each registered swap 
dealer and major swap participant for which 
there is a Prudential Regulator shall meet such 
minimum capital requirements and minimum 
margin requirements as the Prudential Regu-
lators shall by rule or regulation jointly pre-
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scribe to help ensure the safety and soundness 
of the swap dealer or major swap participant. 
‘‘(B) NONBANK
SWAP
DEALERS
AND 
MAJOR SWAP PARTICIPANTS.—Each registered 
swap dealer and major swap participant for 
which there is not a Prudential Regulator shall 
meet such minimum capital requirements and 
minimum margin requirements as the Commis-
sion and the Securities and Exchange Commis-
sion shall by rule or regulation jointly prescribe 
to help ensure the safety and soundness of the 
swap dealer or major swap participant. 
‘‘(2) JOINT RULES.— 
‘‘(A) BANK
SWAP
DEALERS
AND
MAJOR 
SWAP PARTICIPANTS.—Within 180 days of the 
enactment of the Over-the-Counter Derivatives 
Markets Act of 2009, the Prudential Regu-
lators, in consultation with the Commission and 
the Securities and Exchange Commission, shall 
jointly adopt rules imposing capital and margin 
requirements under this subsection for swap 
dealers and major swap participants. 
‘‘(B) NONBANK
SWAP
DEALERS
AND 
MAJOR SWAP PARTICIPANTS.—Within 180 days 
of the enactment of the Over-the-Counter De-
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531 
rivatives Markets Act of 2009, the Commission 
and the Securities and Exchange Commission, 
in consultation with the Prudential Regulators, 
shall jointly adopt rules imposing capital and 
margin requirements under this subsection for 
swap dealers and major swap participants for 
which there is no Prudential Regulator. 
‘‘(3) CAPITAL.— 
‘‘(A) BANK
SWAP
DEALERS
AND
MAJOR 
SWAP
PARTICIPANTS.—In setting capital re-
quirements under this subsection, the Pruden-
tial Regulators shall impose: 
‘‘(i) a capital requirement that is 
greater than zero for swaps that are 
cleared by a derivatives clearing organiza-
tion; and 
‘‘(ii) to offset the greater risk to the 
swap dealer or major swap participant and 
to the financial system arising from the 
use of swaps that are not centrally cleared, 
higher capital requirements for swaps that 
are not cleared by a registered derivatives 
clearing organization than for swaps that 
are centrally cleared. 
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‘‘(B) 
EXCLUSION.—Subparagraph 
(A) 
shall not apply to a swap 1 party to which is 
not a swap dealer or major swap participant, 
and which is entered into before the end of the 
90-day period that begins with the effective 
date of this subparagraph. 
‘‘(C) 
NONBANK
SWAP
DEALERS
AND 
MAJOR SWAP PARTICIPANTS.—Capital require-
ments set by the Commission and the Securities 
and Exchange Commission under this sub-
section shall be as strict as or stricter than the 
capital requirements set by the Prudential Reg-
ulators under this subsection. 
‘‘(D) BANK
HOLDING
COMPANIES.—Cap-
ital requirements set by the Board for swaps of 
bank holding companies on a consolidated basis 
shall be as strict as or stricter than the capital 
requirements set by the Prudential Regulators 
under this subsection. 
‘‘(E) A futures commission merchant, in-
troducing broker, broker or dealer shall main-
tain sufficient capital to comply with the strict-
er of any applicable capital requirements to 
which it is subject. 
‘‘(4) MARGIN.— 
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533 
‘‘(A) BANK
SWAP
DEALERS
AND
MAJOR 
SWAP
PARTICIPANTS.—The Prudential Regu-
lators shall impose margin requirements under 
this subsection on all swaps that are not cleared 
by a registered derivatives clearing organiza-
tion. 
‘‘(B) NON-SWAP DEALERS OR MAJOR SWAP 
PARTICIPANTS.—The 
Prudential 
Regulators 
may, but are not required to, impose margin re-
quirements with respect to swaps in which one 
of the counterparties is neither a swap dealer, 
major swap participant, security-based swap 
dealer nor a major security-based swap partici-
pant. Any such margin requirements for swaps 
shall provide for the use of non-cash collateral. 
‘‘(C) 
EXCLUSION.—Subparagraph 
(B) 
shall not apply to a swap 1 party to which is 
not a swap dealer or major swap participant, 
and which is entered into before the end of the 
90-day period that begins with the effective 
date of this subparagraph. 
‘‘(D) NONBANK
SWAP
DEALERS
AND 
MAJOR SWAP PARTICIPANTS.—Margin require-
ments for swaps set by the Commission and the 
Securities and Exchange Commission under this 
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subsection shall be as strict as or stricter than 
margin requirements for swaps set by the Pru-
dential Regulators. 
‘‘(f) REPORTING AND RECORDKEEPING.— 
‘‘(1) IN GENERAL.—Each registered swap deal-
er and major swap participant— 
‘‘(A) shall make such reports as are pre-
scribed by the Commission by rule or regulation 
regarding the transactions and positions and fi-
nancial condition of such person; 
‘‘(B) for which— 
‘‘(i) there is a Prudential Regulator 
shall keep books and records of all activi-
ties related to its business as a swap dealer 
or major swap participant in such form 
and manner and for such period as may be 
prescribed by the Commission by rule or 
regulation; 
‘‘(ii) there is no Prudential Regulator 
shall keep books and records in such form 
and manner and for such period as may be 
prescribed by the Commission by rule or 
regulation; 
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535 
‘‘(C) shall keep such books and records 
open to inspection and examination by any rep-
resentative of the Commission; and 
‘‘(D) shall keep any such books and 
records relating to transactions in swaps based 
on one or more securities open to inspection 
and examination by the Securities and Ex-
change Commission. 
‘‘(2) RULES.—Within 365 days of the enact-
ment of the Over-the-Counter Derivatives Markets 
Act of 2009, the Commission and the Securities and 
Exchange Commission, in consultation with the ap-
propriate Federal banking agencies, shall jointly 
adopt rules governing reporting and recordkeeping 
for swap dealers, major swap participants, security- 
based swap dealers, and major security-based swap 
participants. 
‘‘(g) DAILY TRADING RECORDS.— 
‘‘(1) IN GENERAL.—Each registered swap deal-
er and major swap participant shall maintain daily 
trading records of its swaps and all related records 
(including related cash or forward transactions) and 
recorded communications including but not limited 
to electronic mail, instant messages, and recordings 
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536 
of telephone calls, for such period as may be pre-
scribed by the Commission by rule or regulation. 
‘‘(2) INFORMATION REQUIREMENTS.—The daily 
trading records shall include such information as the 
Commission shall prescribe by rule or regulation. 
‘‘(3) CUSTOMER
RECORDS.—Each registered 
swap dealer and major swap participant shall main-
tain daily trading records for each customer or 
counterparty in such manner and form as to be 
identifiable with each swap transaction. 
‘‘(4) AUDIT TRAIL.—Each registered swap deal-
er and major swap participant shall maintain a com-
plete audit trail for conducting comprehensive and 
accurate trade reconstructions. 
‘‘(5) RULES.—Within 365 days of the enact-
ment of the Over-the-Counter Derivatives Markets 
Act of 2009, the Commission and the Securities and 
Exchange Commission, in consultation with the ap-
propriate Federal banking agencies, shall jointly 
adopt rules governing daily trading records for swap 
dealers, major swap participants, security-based 
swap dealers, and major security-based swap partici-
pants. 
‘‘(h) BUSINESS CONDUCT STANDARDS.— 
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537 
‘‘(1) IN GENERAL.—Each registered swap deal-
er and major swap participant shall conform with 
business conduct standards as may be prescribed by 
the Commission by rule or regulation addressing— 
‘‘(A) fraud, manipulation, and other abu-
sive practices involving swaps (including swaps 
that are offered but not entered into); 
‘‘(B) diligent supervision of its business as 
a swap dealer; 
‘‘(C) adherence to all applicable position 
limits; 
‘‘(D) the prevention of self-dealing, by lim-
iting the extent to which such a swap dealer or 
major swap participant may conduct business 
with a derivatives clearing organization, a board 
of trade, or an alternative swap execution facil-
ity that clears or trades swaps and in which 
such a swap dealer or major swap participant 
has a material debt or equity investment; and 
‘‘(D) such other matters as the Commis-
sion shall determine to be necessary or appro-
priate. 
‘‘(2) BUSINESS
CONDUCT
REQUIREMENTS.— 
Business conduct requirements adopted by the Com-
mission shall— 
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538 
‘‘(A) establish the standard of care for a 
swap dealer or major swap participant to verify 
that any counterparty meets the eligibility 
standards for an eligible contract participant; 
‘‘(B) require disclosure by the swap dealer 
or major swap participant to any counterparty 
to the transaction (other than a swap dealer, 
major swap participant, security-based swap 
dealer or major security-based swap partici-
pant) of— 
‘‘(i) information about the material 
risks and characteristics of the swap; 
‘‘(ii) for cleared swaps, upon the re-
quest of the counterparty, the daily mark 
from the appropriate clearinghouse and for 
non-cleared swaps, upon the request of the 
counterparty, the daily mark of the swap 
dealer or major swap participant; and 
‘‘(iii) any other material incentives or 
conflicts of interest that the swap dealer or 
major swap participant may have in con-
nection with the swap; and 
‘‘(C) establish such other standards and 
requirements as the Commission may determine 
are necessary or appropriate in the public inter-
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hsrobinson on DSK69SOYB1PROD with BILLS
539 
est, for the protection of investors, or otherwise 
in furtherance of the purposes of this Act. 
‘‘(3) RULES.—The Commission and the Securi-
ties and Exchange Commission, in consultation with 
the appropriate Federal banking agencies, shall 
jointly prescribe rules under this subsection gov-
erning business conduct standards for swap dealers, 
major swap participants, security-based swap deal-
ers, and major security-based swap participants 
within 365 days of the enactment of the Over-the- 
Counter Derivatives Markets Act of 2009. 
‘‘(i) DOCUMENTATION AND BACK OFFICE STAND-
ARDS.— 
‘‘(1) IN GENERAL.—Each registered swap deal-
er and major swap participant shall conform with 
standards, as may be prescribed by the Commission 
by rule or regulation, addressing timely and accurate 
confirmation, processing, netting, documentation, 
and valuation of all swaps. 
‘‘(2) RULES.—Within 365 days of the enact-
ment of the Over-the-Counter Derivatives Markets 
Act of 2009, the Commission and the Securities and 
Exchange Commission, in consultation with the ap-
propriate Federal banking agencies, shall adopt rules 
governing documentation and back office standards 
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540 
for swap dealers, major swap participants, security- 
based swap dealers, and major security-based swap 
participants. 
‘‘(j) DEALER RESPONSIBILITIES.—Each registered 
swap dealer and major swap participant at all times shall 
comply with the following requirements: 
‘‘(1) MONITORING
OF
TRADING.—The swap 
dealer or major swap participant shall monitor its 
trading in swaps to prevent violations of applicable 
position limits. 
‘‘(2) DISCLOSURE
OF
GENERAL
INFORMA-
TION.—The swap dealer or major swap participant 
shall disclose to the Commission and to the Pruden-
tial Regulator for such swap dealer or major swap 
participant, as applicable, information concerning— 
‘‘(A) terms and conditions of its swaps; 
‘‘(B) swap trading operations, mechanisms, 
and practices; 
‘‘(C) financial integrity protections relating 
to swaps; and 
‘‘(D) other information relevant to its trad-
ing in swaps. 
‘‘(3) ABILITY TO OBTAIN INFORMATION.—The 
swap dealer or major swap participant shall— 
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541 
‘‘(A) establish and enforce internal systems 
and procedures to obtain any necessary infor-
mation to perform any of the functions de-
scribed in this section; and 
‘‘(B) provide the information to the Com-
mission and to the Prudential Regulator for 
such swap dealer or major swap participant, as 
applicable, upon request. 
‘‘(4) CONFLICTS
OF
INTEREST.—The swap 
dealer and major swap participant shall implement 
conflict-of-interest systems and procedures that— 
‘‘(A) establish structural and institutional 
safeguards to assure that the activities of any 
person within the firm relating to research or 
analysis of the price or market for any com-
modity are separated by appropriate informa-
tional partitions within the firm from the re-
view, pressure, or oversight of those whose in-
volvement in trading or clearing activities might 
potentially bias their judgment or supervision; 
and 
‘‘(B) address such other issues as the 
Commission determines appropriate. 
‘‘(5) 
ANTITRUST
CONSIDERATIONS.—Unless 
necessary or appropriate to achieve the purposes of 
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hsrobinson on DSK69SOYB1PROD with BILLS
542 
this Act, the swap dealer or major swap participant 
shall avoid— 
‘‘(A) adopting any processes or taking any 
actions that result in any unreasonable re-
straints of trade; or 
‘‘(B) imposing any material anticompeti-
tive burden on trading. 
‘‘(k) RULES.—The Commission, the Securities and 
Exchange Commission, and the Prudential Regulators 
shall consult with each other prior to adopting any rules 
under the Over-the-Counter Derivatives Markets Act of 
2009. 
‘‘(l) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a swap dealer or major 
swap participant from the prudential requirements of the 
Over-the-Counter Derivatives Markets Act of 2009 if the 
Commission finds that such swap dealer or major swap 
participant is subject to comparable, comprehensive super-
vision and regulation on a consolidated basis by the Secu-
rities and Exchange Commission, a Prudential Regulator 
or the appropriate governmental authorities in the organi-
zation’s home country. 
‘‘(m) EXEMPTIVE AUTHORITY.— 
‘‘(1) IN GENERAL.—The Commission, by rule 
or regulation, may conditionally or unconditionally 
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543 
exempt any person, derivative, or transaction, or any 
class or classes of persons, derivatives, or trans-
actions, from any provision of this Act that was 
added by an amendment in the Over-the-Counter 
Derivatives Markets Act of 2009, to the extent that 
such exemption is necessary or appropriate in the 
public interest, and is consistent with the purposes 
of such Act. 
‘‘(2) PROCEDURES.—The Commission shall, by 
rule or regulation, determine the procedures under 
which an exemptive order under this subsection shall 
be granted and may, in its sole discretion, decline to 
entertain any application for an order of exemption 
under this subsection.’’. 
SEC. 3108. SEGREGATION OF ASSETS HELD AS COLLAT-
ERAL IN SWAP TRANSACTIONS. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is further amended by inserting after section 4s the fol-
lowing: 
‘‘SEC. 4t. SEGREGATION OF ASSETS HELD AS COLLATERAL 
IN 
OVER-THE-COUNTER 
SWAP 
TRANS-
ACTIONS. 
‘‘(a) SEGREGATION.—At the request of a swap 
counterparty who provides funds or other property to a 
swap dealer as variation or initial margin or collateral to 
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544 
secure the obligations of the counterparty under a swap 
between the counterparty and the swap dealer that is not 
submitted for clearing to a derivatives clearing organiza-
tion, the swap dealer shall segregate the funds or other 
property for the benefit of the counterparty, and maintain 
the variation or initial margin or collateral in an account 
which is carried by an independent third-party custodian 
and designated as a segregated account for the 
counterparty, in accordance with such rules and regula-
tions as the Commission or Prudential Regulator may pre-
scribe. If a swap counterparty is a swap dealer or major 
swap participant who owns more than 20 percent of, or 
has more than 50 percent representation on the board of 
directors of, a custodian, the custodian shall not be consid-
ered independent from the swap counterparties for pur-
poses of the preceding sentence. This subsection shall not 
be interpreted to preclude commercial arrangements re-
garding the investment of the segregated funds or other 
property and the related allocation of gains and losses re-
sulting from any such investment. 
‘‘(b) BACK OFFICE AUDIT REPORTING.—If a swap 
dealer does not segregate funds at the request of a swap 
counterparty in accordance with subsection (a), the swap 
dealer shall report to its counterparty on a quarterly basis 
that its back office procedures relating to margin and col-
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545 
lateral requirements are in compliance with the agreement 
of the counterparties.’’. 
SEC. 3109. CONFLICTS OF INTEREST. 
Section 4d of the Commodity Exchange Act (7 U.S.C. 
6d) is amended by— 
(1) redesignating subsection (c) as subsection 
(d); and 
(2) inserting after subsection (b) the following: 
‘‘(c) CONFLICTS
OF INTEREST.—The Commission 
shall require that futures commission merchants and in-
troducing brokers implement conflict-of-interest systems 
and procedures that— 
‘‘(1) establish structural and institutional safe-
guards to assure that the activities of any person 
within the firm relating to research or analysis of 
the price or market for any commodity are separated 
by appropriate informational partitions within the 
firm from the review, pressure, or oversight of those 
whose involvement in trading or clearing activities 
might potentially bias their judgment or supervision; 
and 
‘‘(2) address such other issues as the Commis-
sion determines appropriate.’’. 
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546 
SEC. 3110. SWAP EXECUTION FACILITIES. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 5g the following: 
‘‘SEC. 5h. SWAP EXECUTION FACILITIES. 
‘‘(a) REGISTRATION.— 
‘‘(1) IN GENERAL.— 
‘‘(A) No person may operate a swap execu-
tion facility unless the facility is registered 
under this section. 
‘‘(B) The term ‘swap execution facility’ 
means an entity that facilitates the execution of 
swaps between two persons through any means 
of interstate commerce but which is not a des-
ignated contract market. 
‘‘(2) DUAL REGISTRATION.—Any person that is 
required to be registered as a swap execution facility 
under this section shall register with the Commis-
sion regardless of whether that person also is reg-
istered with the Securities and Exchange Commis-
sion as a swap execution facility. 
‘‘(b) REQUIREMENTS FOR TRADING.—A swap execu-
tion facility that is registered under subsection (a) may 
trade any swap. 
‘‘(c) TRADING BY CONTRACT MARKETS.—A board of 
trade that operates a contract market shall, to the extent 
that the board of trade also operates a swap execution fa-
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cility and uses the same electronic trade execution system 
for trading on the contract market and the swap execution 
facility, identify whether the electronic trading is taking 
place on the contract market or the swap execution facil-
ity. 
‘‘(d) CRITERIA FOR REGISTRATION.— 
‘‘(1) IN GENERAL.—To be registered as a swap 
execution facility, the facility shall be required to 
demonstrate to the Commission that it meets the 
criteria specified herein. 
‘‘(2) DETERRENCE OF ABUSES.—The swap exe-
cution facility shall establish and enforce trading 
and participation rules that will deter abuses and 
have the capacity to detect, investigate, and enforce 
those rules, including means to— 
‘‘(A) obtain information necessary to per-
form the functions required under this section; 
or 
‘‘(B) use means to— 
‘‘(i) provide market participants with 
impartial access to the market; and 
‘‘(ii) capture information that may be 
used in establishing whether rule violations 
have occurred. 
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‘‘(3) TRADING PROCEDURES.—The swap execu-
tion facility shall establish and enforce rules or 
terms and conditions defining, or specifications de-
tailing, trading procedures to be used in entering 
and executing orders traded on or through its facili-
ties. 
‘‘(4) 
FINANCIAL
INTEGRITY
OF
TRANS-
ACTIONS.—The swap execution facility shall estab-
lish and enforce rules and procedures for ensuring 
the financial integrity of swaps entered on or 
through its facilities, including the clearance and 
settlement of the swaps pursuant to section 2(j)(1). 
‘‘(e) CORE PRINCIPLES FOR SWAP EXECUTION FA-
CILITIES.— 
‘‘(1) IN GENERAL.—To maintain its registra-
tion as a swap execution facility, the facility shall 
comply with the core principles specified in this sub-
section 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, the facility shall 
have reasonable discretion in establishing the man-
ner in which it complies with these core principles. 
‘‘(2) COMPLIANCE
WITH
RULES.—The swap 
execution facility shall monitor and enforce compli-
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ance with any of the rules of the facility, including 
the terms and conditions of the swaps traded on or 
through the facility and any limitations on access to 
the facility. 
‘‘(3) SWAPS NOT READILY SUSCEPTIBLE TO MA-
NIPULATION.—The swap execution facility shall per-
mit trading only in swaps that are not readily sus-
ceptible to manipulation. 
‘‘(4) MONITORING
OF
TRADING.—The swap 
execution facility shall monitor trading in swaps to 
prevent manipulation, price distortion, and disrup-
tions of the delivery or cash settlement process 
through surveillance, compliance, and disciplinary 
practices and procedures, including methods for con-
ducting real-time monitoring of trading and com-
prehensive and accurate trade reconstructions. 
‘‘(5) ABILITY TO OBTAIN INFORMATION.—The 
swap execution facility shall— 
‘‘(A) establish and enforce rules that will 
allow the facility to obtain any necessary infor-
mation to perform any of the functions de-
scribed in this subsection; 
‘‘(B) provide the information to the Com-
mission upon request; and 
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‘‘(C) have the capacity to carry out such 
international information-sharing agreements as 
the Commission may require. 
‘‘(6) EMERGENCY AUTHORITY.—The swap exe-
cution facility shall adopt rules to provide for the ex-
ercise of emergency authority, in consultation or co-
operation with the Commission, where necessary and 
appropriate, including the authority to liquidate or 
transfer open positions in any swap or to suspend or 
curtail trading in a swap. 
‘‘(7) TIMELY PUBLICATION OF TRADING INFOR-
MATION.—The swap execution facility shall make 
public timely information on price, trading volume, 
and other trading data on swaps to the extent pre-
scribed by the Commission. 
‘‘(8) RECORDKEEPING AND REPORTING.—The 
swap execution facility shall maintain records of all 
activities related to the business of the facility, in-
cluding a complete audit trail, in a form and manner 
acceptable to the Commission for a period of 5 
years, and report to the Commission all information 
determined by the Commission to be necessary or 
appropriate for the Commission to perform its re-
sponsibilities under this Act in a form and manner 
acceptable to the Commission. The swap execution 
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facility shall, upon request, make available to the Se-
curities and Exchange Commission all information 
(including information on a real-time basis) relating 
to transactions in security-based swap agreements 
(as defined in section 3(a)(76) of the Securities Ex-
change Act of 1934). The Commission shall adopt 
data collection and reporting requirements for swap 
execution facilities that are comparable to cor-
responding requirements for derivatives clearing or-
ganizations and swap repositories. 
‘‘(9) 
ANTITRUST
CONSIDERATIONS.—Unless 
necessary or appropriate to achieve the purposes of 
this Act, the swap execution facility shall avoid— 
‘‘(A) adopting any rules or taking any ac-
tions that result in any unreasonable restraints 
of trade; or 
‘‘(B) imposing any material anticompeti-
tive burden on trading on the swap execution 
facility. 
‘‘(10) CONFLICTS OF INTEREST.— 
‘‘(A) The swap execution facility shall es-
tablish and enforce rules to minimize conflicts 
of interest in its decision-making process, and 
establish a process for resolving any such con-
flicts of interest. 
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‘‘(B) The rules of the swap execution facil-
ity shall provide that a restricted owner shall 
not be permitted directly or indirectly to ac-
quire beneficial ownership of interests in the fa-
cility or in persons with a controlling interest in 
the facility, to the extent that such an acquisi-
tion would result in restricted owners control-
ling more than 20 percent of the votes entitled 
to be cast on any matter by the holders of the 
ownership interests. 
‘‘(C) The rules of the swap execution facil-
ity shall provide that a majority of the directors 
of the facility shall not be associated with a re-
stricted owner. 
‘‘(11) DESIGNATION
OF
COMPLIANCE
OFFI-
CER.— 
‘‘(A) IN GENERAL.—Each swap execution 
facility shall designate an individual to serve as 
a compliance officer. 
‘‘(B) DUTIES.—The compliance officer 
shall— 
‘‘(i) report directly to the board or to 
the senior officer of the facility; 
‘‘(ii) shall— 
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553 
‘‘(I) review compliance with the 
core principles in this subsection; 
‘‘(II) in consultation with the 
board of the facility, a body per-
forming a function similar to that of 
a board, or the senior officer of the 
facility, resolve any conflicts of inter-
est that may arise; 
‘‘(III) be responsible for admin-
istering the policies and procedures 
required to be established pursuant to 
this section; and 
‘‘(IV) ensure compliance with 
commodity laws and the rules and 
regulations issued thereunder, includ-
ing rules prescribed by the Commis-
sion pursuant to this section; and 
‘‘(iii) establish procedures for remedi-
ation of non-compliance issues found dur-
ing compliance office reviews, lookbacks, 
internal or external audit findings, self-re-
ported errors, or through validated com-
plaints. Procedures will establish the han-
dling, management response, remediation, 
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re-testing, and closing of non-compliant 
issues. 
‘‘(C) ANNUAL REPORTS REQUIRED.—The 
compliance officer shall annually prepare and 
sign a report on the compliance of the facility 
with the commodity laws and its policies and 
procedures, including its code of ethics and con-
flict of interest policies, in accordance with 
rules prescribed by the Commission. Such com-
pliance report shall accompany the financial re-
ports of the facility that are required to be fur-
nished to the Commission pursuant to this sec-
tion and shall include a certification that, under 
penalty of law, the report is accurate and com-
plete. 
‘‘(f) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a swap execution facility 
from registration under this section if the Commission 
finds that such facility is subject to comparable, com-
prehensive supervision and regulation on a consolidated 
basis by the Securities and Exchange Commission, a Pru-
dential Regulator or the appropriate governmental au-
thorities in the organization’s home country. 
‘‘(g) HARMONIZATION OF RULES.—Within 180 days 
of the enactment of the Over-the-Counter Derivatives 
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Markets Act of 2009, the Commission and the Securities 
and Exchange Commission shall jointly prescribe rules 
governing the regulation of swap execution facilities under 
this section and section 3B of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c–2).’’. 
SEC. 3111. DERIVATIVES TRANSACTION EXECUTION FACILI-
TIES AND EXEMPT BOARDS OF TRADE. 
Sections 5a and 5d of the Commodity Exchange Act 
(7 U.S.C. 7 and 7a-3) are repealed. 
SEC. 3112. DESIGNATED CONTRACT MARKETS. 
(a) Section 5(d) of the Commodity Exchange Act (7 
U.S.C. 7(d)) is amended by striking paragraph (9) and 
inserting the following: 
‘‘(9) EXECUTION OF TRANSACTIONS.— 
‘‘(A) The board of trade shall provide a 
competitive, open, and efficient market and 
mechanism for executing transactions that pro-
tects the price discovery process of trading in 
the board of trade’s centralized market. 
‘‘(B) The rules may authorize, for bona 
fide business purposes— 
‘‘(i) transfer trades or office trades; 
‘‘(ii) an exchange of— 
‘‘(I) futures in connection with a 
cash commodity transaction; 
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‘‘(II) futures for cash commod-
ities; or 
‘‘(III) futures for swaps; or 
‘‘(iii) a futures commission merchant, 
acting as principal or agent, to enter into 
or confirm the execution of a contract for 
the purchase or sale of a commodity for fu-
ture delivery if the contract is reported, re-
corded, or cleared in accordance with the 
rules of the contract market or a deriva-
tives clearing organization.’’. 
(b) Section 5(d) of the Commodity Exchange Act (7 
U.S.C. 7(d)) is amended by striking paragraph (15) and 
inserting the following: 
‘‘(15) CONFLICTS OF INTEREST.— 
‘‘(A) The board of trade shall establish 
and enforce rules to minimize conflicts of inter-
est in the decisionmaking process of the con-
tract market, and establish a process for resolv-
ing any such conflicts of interest. 
‘‘(B) The rules of a board of trade that 
trades swaps shall provide that a restricted 
owner shall not be permitted directly or indi-
rectly to acquire beneficial ownership of inter-
ests in the board of trade or in persons with a 
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controlling interest in the board of trade, to the 
extent that such an acquisition would result in 
restricted owners controlling more than 20 per-
cent of the votes entitled to be cast on any mat-
ter by the holders of the ownership interests. 
‘‘(C) The rules of a board of trade that 
trades swaps shall provide that a majority of 
the directors of the board of trade shall not be 
associated with a restricted owner.’’. 
(c) Section 5(d) of the Commodity Exchange Act (7 
U.S.C. 7(d)) is amended by adding after paragraph (18) 
the following: 
‘‘(19) FINANCIAL RESOURCES.—The board of 
trade shall demonstrate that it has adequate finan-
cial, operational, and managerial resources to dis-
charge the responsibilities of a contract market. For 
the board of trade’s financial resources to be consid-
ered adequate, their value shall exceed the total 
amount that would enable the contract market to 
cover its operating costs for a period of one year, 
calculated on a rolling basis. 
‘‘(20) SYSTEM
SAFEGUARDS.—The board of 
trade shall— 
‘‘(A) establish and maintain a program of 
risk analysis and oversight to identify and mini-
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mize sources of operational risk through the de-
velopment of appropriate controls and proce-
dures, and the development of automated sys-
tems, that are reliable, secure, and give ade-
quate scalable capacity; 
‘‘(B) establish and maintain emergency 
procedures, backup facilities, and a plan for dis-
aster recovery that allow for the timely recovery 
and resumption of operations and the fulfill-
ment of the board of trade’s responsibilities and 
obligations; and 
‘‘(C) periodically conduct tests to verify 
that back-up resources are sufficient to ensure 
continued order processing and trade matching, 
price reporting, market surveillance, and main-
tenance of a comprehensive and accurate audit 
trail.’’. 
SEC. 3113. POSITION LIMITS. 
(a) Section 4a(a) of the Commodity Exchange Act (7 
U.S.C. 6a(a)) is amended by— 
(1) inserting ‘‘(1)’’ after ‘‘(a)’’; 
(2) striking ‘‘on electronic trading facilities with 
respect to a significant price discovery contract’’ in 
the first sentence and inserting ‘‘swaps that perform 
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or affect a significant price discovery function with 
respect to regulated markets’’; 
(3) inserting ‘‘, including any group or class of 
traders,’’ in the second sentence after ‘‘held by any 
person’’; 
(4) striking ‘‘on an electronic trading facility 
with respect to a significant price discovery con-
tract,’’ in the second sentence and inserting ‘‘swaps 
that perform or affect a significant price discovery 
function with respect to regulated markets,’’; and 
(5) inserting at the end the following: 
‘‘(2) AGGREGATE POSITION LIMITS.—The Com-
mission may, by rule or regulation, establish limits 
(including related hedge exemption provisions) on 
the aggregate number or amount of positions in con-
tracts based upon the same underlying commodity 
(as defined by the Commission) that may be held by 
any person, including any group or class of traders, 
for each month across— 
‘‘(A) contracts listed by designated con-
tract markets; 
‘‘(B) contracts traded on a foreign board 
of trade that provides members or other partici-
pants located in the United States with direct 
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access to its electronic trading and order 
matching system; and 
‘‘(C) swap contracts that perform or affect 
a significant price discovery function with re-
spect to regulated markets. 
‘‘(3) SIGNIFICANT
PRICE
DISCOVERY
FUNC-
TION.—In making a determination whether a swap 
performs or affects a significant price discovery 
function with respect to regulated markets, the Com-
mission shall consider, as appropriate: 
‘‘(A) PRICE
LINKAGE.—The extent to 
which the swap uses or otherwise relies on a 
daily or final settlement price, or other major 
price parameter, of another contract traded on 
a regulated market based upon the same under-
lying commodity, to value a position, transfer or 
convert a position, financially settle a position, 
or close out a position. 
‘‘(B) ARBITRAGE.—The extent to which 
the price for the swap is sufficiently related to 
the price of another contract traded on a regu-
lated market based upon the same underlying 
commodity so as to permit market participants 
to effectively arbitrage between the markets by 
simultaneously maintaining positions or exe-
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cuting trades in the swaps on a frequent and 
recurring basis. 
‘‘(C) MATERIAL PRICE REFERENCE.—The 
extent to which, on a frequent and recurring 
basis, bids, offers, or transactions in a contract 
traded on a regulated market are directly based 
on, or are determined by referencing, the price 
generated by the swap. 
‘‘(D) MATERIAL
LIQUIDITY.—The extent 
to which the volume of swaps being traded in 
the commodity is sufficient to have a material 
effect on another contract traded on a regulated 
market. 
‘‘(E) OTHER
MATERIAL
FACTORS.—Such 
other material factors as the Commission speci-
fies by rule or regulation as relevant to deter-
mine whether a swap serves a significant price 
discovery function with respect to a regulated 
market. 
‘‘(4) EXEMPTIONS.—The Commission, by rule, 
regulation, or order, may exempt, conditionally or 
unconditionally, any person or class of persons, any 
swap or class of swaps, or any transaction or class 
of transactions from any requirement it may estab-
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lish under this section with respect to position lim-
its.’’. 
(b) Section 4a(b) of the Commodity Exchange Act 
(7 U.S.C. 6a(b)) is amended— 
(1) in paragraph (1), by striking ‘‘or derivatives 
transaction execution facility or facilities or elec-
tronic trading facility’’ and inserting ‘‘or swap exe-
cution facility or facilities’’; and 
(2) in paragraph (2), by striking ‘‘or derivatives 
transaction execution facility or electronic trading 
facility’’ and inserting ‘‘or swap execution facility’’. 
SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED EN-
TITIES. 
(a) Section 5(d)(1) of the Commodity Exchange Act 
(7 U.S.C. 7(d)(1)) is amended by striking ‘‘The board of 
trade shall have’’ and inserting ‘‘Except where the Com-
mission otherwise determines by rule or regulation pursu-
ant to section 8a(5), the board of trade shall have’’. 
(b) Section 5c(c) of the Commodity Exchange Act (7 
U.S.C. 7a-2(c)) is amended to read as follows: 
‘‘(c) NEW CONTRACTS, NEW RULES, AND RULE 
AMENDMENTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), a 
registered entity may elect to list for trading or ac-
cept for clearing any new contract or other instru-
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ment, or may elect to approve and implement any 
new rule or rule amendment, by providing to the 
Commission (and the Secretary of the Treasury, in 
the case of a contract of sale of a government secu-
rity for future delivery (or option on such a con-
tract) or a rule or rule amendment specifically re-
lated to such a contract) a written certification that 
the new contract or instrument or clearing of the 
new contract or instrument, new rule, or rule 
amendment complies with this Act (including regula-
tions under this Act). 
‘‘(2) PRIOR APPROVAL.— 
‘‘(A) IN
GENERAL.—A registered entity 
may request that the Commission grant prior 
approval to any new contract or other instru-
ment, new rule, or rule amendment. 
‘‘(B) PRIOR APPROVAL REQUIRED.—Not-
withstanding any other provision of this section, 
a designated contract market shall submit to 
the Commission for prior approval under sub-
paragraph (A) each rule amendment that mate-
rially changes the terms and conditions, as de-
termined by the Commission, in any contract of 
sale for future delivery of a commodity (or any 
option thereon) traded through its facilities if 
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the rule amendment applies to contracts and 
delivery months which have already been listed 
for trading and for which there is open interest. 
‘‘(C) DEADLINE.—If prior approval is re-
quested under subparagraph (A), the Commis-
sion shall take final action on the request not 
later than 90 days after submission of the re-
quest, unless the person submitting the request 
agrees to an extension of the time limitation es-
tablished under this subparagraph. 
‘‘(3) APPROVAL.—The Commission shall ap-
prove any such new contract or instrument, new 
rule, or rule amendment unless the Commission 
finds that the new contract or instrument, new rule, 
or rule amendment would violate this Act.’’. 
SEC. 3115. FOREIGN BOARDS OF TRADE. 
(a) Section 4(b) of the Commodity Exchange Act (7 
U.S.C. 6(b)) is amended by striking ‘‘No rule or regula-
tion’’ and inserting ‘‘Except as provided in paragraphs (1) 
and (2), no rule or regulation’’. 
(b) Section 4(b) of the Commodity Exchange Act (7 
U.S.C. 6(b)) is further amended by inserting before ‘‘The 
Commission’’ the following: ‘‘(1) The Commission may 
adopt rules and regulations requiring registration with the 
Commission for a foreign board of trade that provides the 
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members of the foreign board of trade or other partici-
pants located in the United States direct access to the 
electronic trading and order matching system of the for-
eign board of trade, including rules and regulations pre-
scribing procedures and requirements applicable to the 
registration of such foreign boards of trade. For purposes 
of this paragraph, ‘direct access’ refers to an explicit grant 
of authority by a foreign board of trade to an identified 
member or other participant located in the United States 
to enter trades directly into the trade matching system 
of the foreign board of trade. 
‘‘(2) It shall be unlawful for a foreign board of trade 
to provide to the members of the foreign board of trade 
or other participants located in the United States direct 
access to the electronic trading and order-matching system 
of the foreign board of trade with respect to an agreement, 
contract, or transaction that settles against any price (in-
cluding the daily or final settlement price) of 1 or more 
contracts listed for trading on a registered entity, unless 
the Commission determines that— 
‘‘(A) the foreign board of trade makes public 
daily trading information regarding the agreement, 
contract, or transaction that is comparable to the 
daily trading information published by the registered 
entity for the 1 or more contracts against which the 
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agreement, contract, or transaction traded on the 
foreign board of trade settles; and 
‘‘(B) the foreign board of trade (or the foreign 
futures authority that oversees the foreign board of 
trade)— 
‘‘(i) adopts position limits (including re-
lated hedge exemption provisions) for the agree-
ment, contract, or transaction that are com-
parable to the position limits (including related 
hedge exemption provisions) adopted by the reg-
istered entity for the 1 or more contracts 
against which the agreement, contract, or 
transaction traded on the foreign board of trade 
settles; 
‘‘(ii) has the authority to require or direct 
market participants to limit, reduce, or liq-
uidate any position the foreign board of trade 
(or the foreign futures authority that oversees 
the foreign board of trade) determines to be 
necessary to prevent or reduce the threat of 
price manipulation, excessive speculation as de-
scribed in section 4a, price distortion, or disrup-
tion of delivery or the cash settlement process; 
‘‘(iii) agrees to promptly notify the Com-
mission, with regard to the agreement, contract, 
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or transaction that settles against any price (in-
cluding the daily or final settlement price) of 1 
or more contracts listed for trading on a reg-
istered entity, of any change regarding— 
‘‘(I) the information that the foreign 
board of trade will make publicly available; 
‘‘(II) the position limits that the for-
eign board of trade or foreign futures au-
thority will adopt and enforce; 
‘‘(III) the position reductions required 
to prevent manipulation, excessive specula-
tion as described in section 4a, price dis-
tortion, or disruption of delivery or the 
cash settlement process; and 
‘‘(IV) any other area of interest ex-
pressed by the Commission to the foreign 
board of trade or foreign futures authority; 
‘‘(iv) provides information to the Commis-
sion regarding large trader positions in the 
agreement, contract, or transaction that is com-
parable to the large trader position information 
collected by the Commission for the 1 or more 
contracts against which the agreement, con-
tract, or transaction traded on the foreign 
board of trade settles; and 
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‘‘(v) provides the Commission with infor-
mation necessary to publish reports on aggre-
gate trader positions for the agreement, con-
tract, or transaction traded on the foreign 
board of trade that are comparable to such re-
ports on aggregate trader positions for the 1 or 
more contracts against which the agreement, 
contract, or transaction traded on the foreign 
board of trade settles. 
‘‘(3) Paragraphs (1) and (2) shall not be effective 
with respect to any foreign board of trade to which the 
Commission has granted direct access permission before 
the date of the enactment of this subsection until the date 
that is 180 days after such date of enactment. 
‘‘(4)’’. 
(c) LIABILITY OF REGISTERED PERSONS TRADING 
ON A FOREIGN BOARD OF TRADE.— 
(1) Section 4(a) of the Commodity Exchange 
Act (7. U.S.C. 6(a)) is amended by inserting ‘‘or by 
subsection (f)’’ after ‘‘Unless exempted by the Com-
mission pursuant to subsection (c)’’; and 
(2) Section 4 of the Commodity Exchange Act 
(7 U.S.C. 6) is further amended by adding at the 
end the following: 
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‘‘(f) A person registered with the Commission, or ex-
empt from registration by the Commission, under this Act 
may not be found to have violated subsection (a) with re-
spect to a transaction in, or in connection with, a contract 
of sale of a commodity for future delivery if the person 
has reason to believe that the transaction and the contract 
is made on or subject to the rules of a foreign board of 
trade that has complied with subsections (b)(1) and 
(b)(2).’’. 
(d) CONTRACT ENFORCEMENT FOR FOREIGN FU-
TURES CONTRACTS.—Section 22(a) of the Commodity Ex-
change Act (7 U.S.C. 25(a)) is amended by adding at the 
end the following: 
‘‘(5) CONTRACT ENFORCEMENT FOR FOREIGN 
FUTURES CONTRACTS.—A contract of sale of a com-
modity for future delivery traded or executed on or 
through the facilities of a board of trade, exchange, 
or market located outside the United States for pur-
poses of section 4(a) shall not be void, voidable, or 
unenforceable, and a party to such a contract shall 
not be entitled to rescind or recover any payment 
made with respect to the contract, based on the fail-
ure of the foreign board of trade to comply with any 
provision of this Act.’’. 
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SEC. 3116. LEGAL CERTAINTY FOR SWAPS. 
Section 22(a)(4) of the Commodity Exchange Act (7 
U.S.C. 25(a)(4)) is amended to read as follows: 
‘‘(4) CONTRACT ENFORCEMENT BETWEEN ELI-
GIBLE COUNTERPARTIES.— 
‘‘(A) No hybrid instrument sold to any in-
vestor shall be void, voidable, or unenforceable, 
and no party to such hybrid instrument shall be 
entitled to rescind, or recover any payment 
made with respect to, such a hybrid instrument 
under this section or any other provision of 
Federal or State law, based solely on the failure 
of the hybrid instrument to comply with the 
terms or conditions of section 2(f) or regula-
tions of the Commission. 
‘‘(B) No agreement, contract, or trans-
action between eligible contract participants or 
persons reasonably believed to be eligible con-
tract participants shall be void, voidable, or un-
enforceable, and no party thereto shall be enti-
tled to rescind, or recover any payment made 
with respect to, such agreement, contract, or 
transaction under this section or any other pro-
vision of Federal or State law, based solely on 
the failure of the agreement, contract, or trans-
action to meet the definition of a swap set forth 
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in section 1a or to be cleared pursuant to sec-
tion 2(j)(1).’’. 
SEC. 3117. MULTILATERAL CLEARING ORGANIZATIONS. 
(a) Section 408(2)(C) of the Federal Deposit Insur-
ance Corporation Improvement Act of 1991 (12 U.S.C. 
4421(2)(C)) is amended by striking ‘‘section 2(c), 2(d), 
2(f), or 2(g) of such Act, or exempted under section 2(h) 
or 4(c) of such Act’’ and inserting ‘‘section 2(c) or 2(f) 
of such Act’’. 
(b) Section 408 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C. 4421) 
is further amended by inserting at the end the following: 
‘‘(4) The term ‘over-the-counter derivative in-
strument’ does not include a swap or a security- 
based swap as defined in sections 1a(35) and 1a(38) 
of the Commodity Exchange Act (7 U.S.C. 1a(35) 
and 1a(38)).’’. 
SEC. 3118. PRIMARY ENFORCEMENT AUTHORITY. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by adding the following new section after sec-
tion 4b: 
‘‘SEC. 4b–1. PRIMARY ENFORCEMENT AUTHORITY. 
‘‘(a) CFTC.—Except as provided in subsections (b), 
(c), and (d), the Commission shall have primary authority 
to enforce the provisions of Subtitle A of the Over-the- 
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Counter Derivatives Markets Act of 2009 with respect to 
any person. 
‘‘(b) PRUDENTIAL REGULATORS.—The Prudential 
Regulators shall have exclusive authority to enforce the 
provisions of section 4s(e) and other prudential require-
ments of this Act with respect to banks, and branches or 
agencies of foreign banks that are swap dealers or major 
swap participants. 
‘‘(c) REFERRAL.—If the Prudential Regulator for a 
swap dealer or major swap participant has cause to believe 
that such swap dealer or major swap participant may have 
engaged in conduct that constitutes a violation of the non-
prudential requirements of section 4s or rules adopted by 
the Commission thereunder, that Prudential Regulator 
may recommend in writing to the Commission that the 
Commission initiate an enforcement proceeding as author-
ized under this Act. The recommendation shall be accom-
panied by a written explanation of the concerns giving rise 
to the recommendation. 
‘‘(d) BACKSTOP ENFORCEMENT AUTHORITY.—If the 
Commission does not initiate an enforcement proceeding 
before the end of the 90-day period beginning on the date 
on which the Commission receives a recommendation 
under subsection (c), the Prudential Regulator may ini-
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tiate an enforcement proceeding as permitted under Fed-
eral law.’’. 
SEC. 3119. ENFORCEMENT. 
(a) Section 4b(a)(2) of the Commodity Exchange Act 
(7 U.S.C. 6b(a)(2)) is amended by striking ‘‘or other 
agreement, contract, or transaction subject to paragraphs 
(1) and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 
(b) Section 4b(b) of the Commodity Exchange Act 
(7 U.S.C. 6b(b)) is amended by striking ‘‘or other agree-
ment, contract or transaction subject to paragraphs (1) 
and (2) of section 5a(g),’’ and inserting ‘‘or swap,’’. 
(c) Section 4c(a) of the Commodity Exchange Act (7 
U.S.C. 6c(a)) is amended by inserting ‘‘or swap’’ before 
‘‘if the transaction is used or may be used’’. 
(d) Section 9(a)(2) of the Commodity Exchange Act 
(7 U.S.C. 13(a)(2)) is amended by inserting ‘‘or of any 
swap,’’ before ‘‘or to corner’’. 
(e) Section 9(a)(4) of the Commodity Exchange Act 
(7 U.S.C. 13(a)(4)) is amended by inserting ‘‘swap reposi-
tory,’’ before ‘‘or futures association’’. 
(f) Section 9(e)(1) of the Commodity Exchange Act 
(7 U.S.C. 13(e)(1)) is amended by inserting ‘‘swap reposi-
tory,’’ before ‘‘or registered futures association’’ and by 
inserting ‘‘, or swaps,’’ before ‘‘on the basis’’. 
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(g) Section 8(b) of the Federal Deposit Insurance Act 
(12 U.S.C. 1818(b)) is amended by redesignating para-
graphs (6) through (10) as paragraphs (7) through (11), 
respectively, and by inserting after paragraph (5) the fol-
lowing: 
‘‘(6) This section shall apply to any swap deal-
er, major swap participant, security-based swap 
dealer, major security-based swap participant, de-
rivatives clearing organization, swap repository or 
swap execution facility, whether or not it is an in-
sured depository institution, for which the Board, 
the Corporation, or the Office of the Comptroller of 
the Currency is the appropriate Federal banking 
agency or Prudential Regulator for purposes of the 
Over-the-Counter 
Derivatives 
Markets 
Act 
of 
2009.’’. 
SEC. 3120. RETAIL COMMODITY TRANSACTIONS. 
Section 2(c) of the Commodity Exchange Act (7 
U.S.C. 2(c)) is amended— 
(1) in paragraph (1), by striking ‘‘(to the extent 
provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))’’ 
and inserting ‘‘, 5b, or 12(e)(2)(B))’’; 
(2) in paragraph (2), by inserting after sub-
paragraph (C) the following: 
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‘‘(D) 
RETAIL
COMMODITY
TRANS-
ACTIONS.— 
‘‘(i) This subparagraph shall apply to 
any agreement, contract, or transaction in 
any commodity that is— 
‘‘(I) entered into with, or offered 
to (even if not entered into with), a 
person that is not an eligible contract 
participant or eligible commercial en-
tity; and 
‘‘(II) entered into, or offered 
(even if not entered into), on a lever-
aged or margined basis, or financed 
by the offeror, the counterparty, or a 
person acting in concert with the of-
feror or counterparty on a similar 
basis. 
‘‘(ii) Clause (i) shall not apply to— 
‘‘(I) an agreement, contract, or 
transaction described in paragraph (1) 
or subparagraphs (A), (B), or (C), in-
cluding any agreement, contract, or 
transaction specifically excluded from 
subparagraph (A), (B), or (C); 
‘‘(II) any security; 
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‘‘(III) a contract of sale that— 
‘‘(aa) results in actual deliv-
ery within 28 days or such other 
period as the Commission may 
determine by rule or regulation 
based upon the typical commer-
cial practice in cash or spot mar-
kets for the commodity involved; 
or 
‘‘(bb) creates an enforceable 
obligation to deliver between a 
seller and a buyer that have the 
ability to deliver and accept deliv-
ery, respectively, in connection 
with their line of business; 
‘‘(IV) an agreement, contract, or 
transaction that is listed on a national 
securities exchange registered under 
section 6(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 
78f(a)); or 
‘‘(V) an identified banking prod-
uct, as defined in section 402(b) of 
the Legal Certainty for Bank Prod-
ucts Act of 2000 (7 U.S.C. 27(b)). 
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‘‘(iii) Sections 4(a), 4(b) and 4b shall 
apply to any agreement, contract or trans-
action described in clause (i), that is not 
excluded from clause (i) by clause (ii), as 
if the agreement, contract, or transaction 
were a contract of sale of a commodity for 
future delivery. 
‘‘(iv) This subparagraph shall not be 
construed to limit any jurisdiction that the 
Commission may otherwise have under any 
other provision of this Act over an agree-
ment, contract, or transaction that is a 
contract of sale of a commodity for future 
delivery. 
‘‘(v) This subparagraph shall not be 
construed to limit any jurisdiction that the 
Commission or the Securities and Ex-
change Commission may otherwise have 
under any other provisions of this Act with 
respect to security futures products and 
persons effecting transactions in security 
futures products. 
‘‘(vi) For the purposes of this sub-
paragraph, an agricultural producer, pack-
er, or handler shall be considered an eligi-
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ble commercial entity for any agreement, 
contract, or transaction for a commodity in 
connection with its line of business.’’. 
SEC. 3121. LARGE SWAP TRADER REPORTING. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by adding after section 4t (as added by section 
3108) the following: 
‘‘SEC. 4u. LARGE SWAP TRADER REPORTING. 
‘‘(a) It shall be unlawful for any person to enter into 
any swap that performs or affects a significant price dis-
covery function with respect to regulated markets if— 
‘‘(1) such person shall directly or indirectly 
enter into such swaps during any one day in an 
amount equal to or in excess of such amount as 
shall be fixed from time to time by the Commission; 
and 
‘‘(2) such person shall directly or indirectly 
have or obtain a position in such swaps equal to or 
in excess of such amount as shall be fixed from time 
to time by the Commission, 
unless such person files or causes to be filed with the prop-
erly designated officer of the Commission such reports re-
garding any transactions or positions described in para-
graphs (1) and (2) as the Commission may by rule or reg-
ulation require and unless, in accordance with the rules 
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and regulations of the Commission, such person shall keep 
books and records of all such swaps and any transactions 
and positions in any related commodity traded on or sub-
ject to the rules of any board of trade, and of cash or 
spot transactions in, inventories of, and purchase and sale 
commitments of, such a commodity. 
‘‘(b) Such books and records shall show complete de-
tails concerning all transactions and positions as the Com-
mission may by rule or regulation prescribe. 
‘‘(c) Such books and records shall be open at all times 
to inspection and examination by any representative of the 
Commission. 
‘‘(d) Any such books and records relating to trans-
actions in security-based swap agreements (as defined in 
section 3(a)(76) of the Securities Exchange Act of 1934) 
shall be open at all times to inspection and examination 
by the Securities and Exchange Commission. 
‘‘(e) For the purpose of this section, the swaps, fu-
tures and cash or spot transactions and positions of any 
person shall include such transactions and positions of any 
persons directly or indirectly controlled by such person. 
‘‘(f) In making a determination whether a swap per-
forms or affects a significant price discovery function with 
respect to regulated markets, the Commission shall con-
sider the factors set forth in section 4a(a)(3).’’. 
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SEC. 3122. AUTHORITY TO BAN 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 the such 
Act) and jointly issue a report with respect to any types 
of swaps or security-based swaps which the Commodity 
Futures 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. 3123. INTERNATIONAL HARMONIZATION. 
In order to promote effective and consistent global 
regulation of swaps, the Securities and Exchange Commis-
sion, the Commodity Futures Trading Commission, the 
Prudential Regulators (as defined in section 1a(43) of the 
Commodity Exchange Act), and the financial stability reg-
ulator, shall consult and coordinate with foreign regu-
latory authorities on the establishment of consistent inter-
national standards with respect to the regulation of swaps, 
and may agree to such information-sharing arrangements 
as may be deemed to be necessary or appropriate in the 
public interest or for the protection of investors and swap 
counterparties. 
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SEC. 3124. AUTHORITY TO BAN ACCESS TO THE UNITED 
STATES FINANCIAL SYSTEM. 
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 U.S. 
financial system, either Commission, in consultation with 
the Secretary of the Treasury, may prohibit an entity 
domiciled in that country from participating in the United 
States in any swap or security-based swap activities. 
SEC. 3125. OTHER AUTHORITY. 
Unless otherwise provided by its terms, this title does 
not divest any appropriate Federal banking agency, the 
Commission, the Securities and Exchange Commission, or 
other Federal or State agency, of any authority derived 
from any other applicable law. 
SEC. 3126. ANTITRUST. 
Nothing in the amendments made by this title shall 
be construed to modify, impair, or supersede the operation 
of any of the antitrust laws. For purposes of this subtitle, 
the term ‘‘antitrust laws’’ has the same meaning given 
such term in subsection (a) of the first section of the Clay-
ton Act, except that such term includes section 5 of the 
Federal Trade Commission Act to the extent that such 
section 5 applies to unfair methods of competition. 
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SEC. 3127. EFFECTIVE DATE. 
This subtitle is effective 270 days after the date of 
enactment. 
Subtitle B—Regulation of Security- 
Based Swap Markets 
SEC. 3201. DEFINITIONS UNDER THE SECURITIES EX-
CHANGE ACT OF 1934. 
Section 3(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)) is amended— 
(1) in paragraph (5)(A) and (B), by inserting 
‘‘(but not security-based swaps, other than security- 
based swaps with or for persons that are not eligible 
contract participants)’’ after ‘‘securities’’ in each 
place it appears; 
(2) in paragraph (10) by inserting ‘‘security- 
based swaps’’ after ‘‘security future,’’ 
(3) in paragraph (13), by adding at the end the 
following: ‘‘For security-based swaps, such terms in-
clude the execution, termination (prior to its sched-
uled maturity date), assignment, exchange, or simi-
lar transfer or conveyance of, or extinguishing of 
rights or obligations under, a security-based swap, 
as the context may require.’’; 
(4) in paragraph (14), by adding at the end the 
following: ‘‘For security-based swaps, such terms in-
clude the execution, termination (prior to its sched-
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uled maturity date), assignment, exchange, or simi-
lar transfer or conveyance of, or extinguishing of 
rights or obligations under, a security-based swap, 
as the context may require.’’; 
(5) in paragraph (39)— 
(A) by striking ‘‘or government securities 
dealer’’ and inserting ‘‘government securities 
dealer, security-based swap dealer or major se-
curity-based swap participant’’ in subparagraph 
(B)(i)(I); 
(B) by inserting ‘‘security-based swap deal-
er, major security-based swap participant,’’ 
after ‘‘government securities dealer,’’ in sub-
paragraph (B)(i)(II); 
(C) by striking ‘‘or government securities 
dealer’’ and inserting ‘‘government securities 
dealer, security-based swap dealer or major se-
curity-based swap participant’’ in subparagraph 
(C); and 
(D) by inserting ‘‘security-based swap 
dealer, major security-based swap participant,’’ 
after ‘‘government securities dealer,’’ in sub-
paragraph (D); and 
(6) by adding at the end the following: 
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586 
agreement’ means a swap agreement as defined 
in section 206A of the Gramm-Leach-Bliley Act 
(15 U.S.C. 78c note) of which a material term 
is based on the price, yield, value, or volatility 
of any security or any group or index of securi-
ties, or any interest therein. 
‘‘(B) EXCLUSIONS.—The term ‘security- 
based swap agreement’ does not include any se-
curity-based swap. 
‘‘(77) RESTRICTED
OWNER.—The term ‘re-
stricted owner’ has the same meaning as in section 
1a(51) of the Commodity Exchange Act.’’. 
SEC. 3202. REPEAL OF PROHIBITION ON REGULATION OF 
SECURITY-BASED SWAPS. 
(a) REPEAL OF LAW.—Section 206B of the Gramm- 
Leach-Bliley Act (15 U.S.C. 78c note) is repealed. 
(b) CONFORMING AMENDMENTS TO THE SECURITIES 
ACT OF 1933.— 
(1) Section 2A(b) of the Securities Act of 1933 
(15 U.S.C. 77b–1) is amended by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’ each place that such term appears. 
(2) Section 17 of the Securities Act of 1933 (15 
U.S.C. 77q) is amended— 
(A) in subsection (a)— 
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(i) by inserting ‘‘(including security- 
based swaps)’’ after ‘‘securities’’; and 
(ii) by striking ‘‘206B of the Gramm- 
Leach-Bliley Act’’ and inserting ‘‘3(a)(76) 
of the Securities Exchange Act of 1934’’; 
and 
(B) in subsection (d), by striking ‘‘206B of 
the Gramm-Leach-Bliley Act’’ and inserting 
‘‘3(a)(76) of the Securities Exchange Act of 
1934’’. 
(c) CONFORMING AMENDMENTS TO THE SECURITIES 
EXCHANGE ACT OF 1934.—The Securities Exchange Act 
of 1934 (15 U.S.C. 78a, et seq.) is amended as follows: 
(1) Section 3A (15 U.S.C. 78c–1) is amended 
by striking ‘‘(as defined in section 206B of the 
Gramm-Leach-Bliley Act)’’ each place that the term 
appears. 
(2) Section 9(a) (15 U.S.C. 78i(a)) is amended 
by striking paragraphs (2) through (5) and insert-
ing: 
‘‘(2) To effect, alone or with one or more other per-
sons, a series of transactions in any security registered 
on a national securities exchange or in connection with 
any security-based swap or security-based swap agreement 
with respect to such security creating actual or apparent 
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588 
active trading in such security, or raising or depressing 
the price of such security, for the purpose of inducing the 
purchase or sale of such security by others. 
‘‘(3) If a dealer, broker, security-based swap dealer, 
major security-based swap participant or other person sell-
ing or offering for sale or purchasing or offering to pur-
chase the security, or a security-based swap or security- 
based swap agreement with respect to such security, to 
induce the purchase or sale of any security registered on 
a national securities exchange or any security-based swap 
or security-based swap agreement with respect to such se-
curity by the circulation or dissemination in the ordinary 
course of business of information to the effect that the 
price of any such security will or is likely to rise or fall 
because of market operations of any one or more persons 
conducted for the purpose of raising or depressing the 
price of such security. 
‘‘(4) If a dealer, broker, security-based swap dealer, 
major security-based swap participant or other person sell-
ing or offering for sale or purchasing or offering to pur-
chase the security, or a security-based swap or security- 
based swap agreement with respect to such security, to 
make, regarding any security registered on a national se-
curities exchange or any security-based swap or security- 
based swap agreement with respect to such security, for 
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the purpose of inducing the purchase or sale of such secu-
rity or such security-based swap or security-based swap 
agreement, any statement which was at the time and in 
the light of the circumstances under which it was made, 
false or misleading with respect to any material fact, and 
which he knew or had reasonable ground to believe was 
so false or misleading. 
‘‘(5) For a consideration, received directly or indi-
rectly from a dealer, broker, security-based swap dealer, 
major security-based swap participant or other person sell-
ing or offering for sale or purchasing or offering to pur-
chase the security, or a security-based swap or security- 
based swap agreement with respect to such security, to 
induce the purchase of any security registered on a na-
tional securities exchange or any security-based swap or 
security-based swap agreement with respect to such secu-
rity by the circulation or dissemination of information to 
the effect that the price of any such security will or is 
likely to rise or fall because of the market operations of 
any one or more persons conducted for the purpose of rais-
ing or depressing the price of such security.’’. 
(3) Section 9(i) (15 U.S.C. 78i(i)) is amended 
by striking ‘‘(as defined in section 206B of the 
Gramm-Leach-Bliley Act)’’; 
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(4) Section 10 (15 U.S.C. 78j) is amended by 
striking ‘‘(as defined in section 206B of the Gramm- 
Leach-Bliley Act)’’ each place that the term appears. 
(5) Section 15(c)(1) is amended— 
(A) in subparagraph (A), by striking ‘‘, or 
any security-based swap agreement (as defined 
in section 206B of the Gramm-Leach-Bliley 
Act),’’; and 
(B) in subparagraphs (B) and (C), by 
striking ‘‘agreement (as defined in section 206B 
of the Gramm-Leach-Bliley Act)’’ in each place 
that the term appears. 
(6) Section 15(i) (15 U.S.C. 78o(i), as added 
by section 303(f) of the Commodity Futures Mod-
ernization Act of 2000 (Public Law 106–554; 114 
Stat. 2763A–455) is amended by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bliley 
Act)’’. 
(7) Section 16 (15 U.S.C. 78p) is amended— 
(A) in subsection (a)(2)(C), by striking 
‘‘(as defined in section 206(b) of the Gramm- 
Leach-Bliley Act (15 U.S.C. 78c note))’’; 
(B) in subsection (b), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bli-
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ley Act)’’ in each place that the term appears; 
and 
(C) in subsection (g), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bli-
ley Act)’’; 
(8) Section 20 (15 U.S.C. 78t) is amended— 
(A) in subsection (d), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bli-
ley Act)’’; and 
(B) in subsection (f), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bli-
ley Act)’’; and 
(9) Section 21A (15 U.S.C. 78u–1) is amend-
ed— 
(A) in subsection (a)(1), by striking ‘‘(as 
defined in section 206B of the Gramm-Leach- 
Bliley Act)’’; and 
(B) in subsection (g), by striking ‘‘(as de-
fined in section 206B of the Gramm-Leach-Bli-
ley Act)’’. 
SEC. 3203. AMENDMENTS TO THE SECURITIES EXCHANGE 
ACT OF 1934. 
(a) CLEARING FOR SECURITY-BASED SWAPS.—The 
Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.) 
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is amended by adding the following section after section 
3A: 
‘‘SEC. 3B. CLEARING OF SECURITY-BASED SWAPS. 
‘‘(a) CLEARING REQUIREMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) PRESUMPTION OF CLEARING.—A se-
curity-based swap shall be submitted for clear-
ing if a clearing agency that is registered under 
this Act will accept the security-based swap for 
clearing; 
‘‘(B) OPEN ACCESS.—The rules of a clear-
ing agency described in subparagraph (A) 
shall— 
‘‘(i) prescribe that all security-based 
swaps submitted to the clearing agency 
with the same terms and conditions are 
fungible and may be offset with each other; 
and 
‘‘(ii) provide for non-discriminatory 
clearing of a security-based swap executed 
on or through the rules of an unaffiliated 
exchange or alternative swap execution fa-
cility. 
‘‘(2) COMMISSION APPROVAL.— 
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‘‘(A) IN
GENERAL.—A clearing agency 
shall submit to the Commission for prior ap-
proval each security-based swap, or any group, 
category, type or class of security-based swaps, 
that it seeks to accept for clearing, which sub-
mission the Commission shall make available to 
the public. 
‘‘(B) DEADLINE.—The Commission shall 
take final action on a request submitted pursu-
ant to subparagraph (A) not later than 90 days 
after submission of the request, unless the 
clearing agency submitting the request agrees 
to an extension of the time limitation estab-
lished under this subparagraph. A request on 
which the Commission fails to take final action 
within the time limitation established under this 
subparagraph shall be deemed approved. 
‘‘(C) APPROVAL.—The Commission shall 
approve, unconditionally or subject to such 
terms and conditions as the Commission deter-
mines to be appropriate, any request submitted 
pursuant to subparagraph (A) if it finds that 
the request is consistent with the core principles 
specified under subsection (l). 
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‘‘(D) RULES.—Not later than 180 days 
after the date of enactment of the Over-the- 
Counter Derivatives Markets Act of 2009, the 
Commission shall adopt rules for a clearing 
agency’s submission for approval, pursuant to 
this paragraph, of a security-based swap, or a 
group, category, type or class of security-based 
swaps, that it seeks to accept for clearing. 
‘‘(3) STAY
OF
CLEARING
REQUIREMENT.—At 
any time after issuance of an approval pursuant to 
paragraph (2)— 
‘‘(A) REVIEW PROCESS.—The Commission, 
on application of a counterparty to a security- 
based swap or on its own initiative, may stay 
the clearing requirement of paragraph (1) until 
the Commission completes a review of the terms 
of the security-based swap (or the group, cat-
egory, type or class of security-based swaps) 
and the clearing arrangement. 
‘‘(B) DEADLINE.—The Commission shall 
complete a review undertaken pursuant to sub-
paragraph (A) not later than 90 days after 
issuance of the stay, unless the clearing agency 
that clears the security-based swap, or group, 
category, type or class of security-based swaps, 
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agrees to an extension of the time limitation es-
tablished 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 security-based swap, or group, 
category, type or class of security-based 
swaps, must be cleared pursuant to this 
subsection if it finds that such clearing is 
consistent with the securities laws; or 
‘‘(ii) determine that the clearing re-
quirement of paragraph (1) shall not apply 
to the security-based swap, or group, cat-
egory, type or class of security-based 
swaps. 
‘‘(D) RULES.—Not later than 180 days 
after the date of enactment of the Over-the- 
Counter Derivatives Markets Act of 2009, the 
Commission shall adopt rules for reviewing, 
pursuant to this paragraph, a clearing agency’s 
clearing of a security-based swap, or a group, 
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category, type or class of security-based swaps, 
that it has accepted for clearing. 
‘‘(4) PREVENTION OF EVASION.—The Commis-
sion and the Commodities Futures Trading Commis-
sion shall have authority to prescribe rules under 
this section, or issue interpretations of such rules, as 
necessary to prevent evasions of this Act. Any such 
rules or interpretations of rules shall be prescribed 
and issued jointly by both Commissions. 
‘‘(5) REQUIRED REPORTING.— 
‘‘(A) IN
GENERAL.—Any security-based 
swap that is not accepted for clearing by any 
clearing agency shall be reported to either a se-
curity-based swap repository described in sec-
tion 13(n) or, if there is no repository that 
would accept the security-based swap, to the 
Commission pursuant to section 13A within 
such time period as the Commission may by 
rule prescribe. 
‘‘(B) REPORTING
BY
SECURITY-BASED 
SWAP
DEALERS
AND
MAJOR
SECURITY-BASED 
SWAP
PARTICIPANTS.—In transactions where 
only 1 counterparty is a security-based swap 
dealer or major security-based swap participant, 
the security-based swap dealer or major secu-
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rity-based swap participant shall report the 
transaction. In transactions where neither 
counterparty is a security-based swap dealer or 
major security-based swap participant, only 1 
counterparty shall be required to report the 
transaction and the counterparties shall deter-
mine the reporting party by contract or other-
wise. 
‘‘(6) TRANSITION
RULES.—Rules adopted by 
the Commission under this section shall provide for 
the reporting of data, as follows: 
‘‘(A) Security-based swaps that were en-
tered into before the date of enactment of the 
Over-the-Counter Derivatives Markets Act of 
2009 shall be reported to a registered security- 
based swap repository or the Commission no 
later than 180 days after the effective date of 
such Act. 
‘‘(B) Security-based swaps that were en-
tered into on or after the date of enactment of 
the Over-the-Counter Derivatives Markets Act 
of 2009 shall be reported to a registered secu-
rity-based swap repository or the Commission 
no later than the later of— 
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‘‘(i) 90 days after the effective date of 
such Act; or 
‘‘(ii) such other time after entering 
into the swap as the Commission may pre-
scribe by rule or regulation. 
‘‘(7) EXCEPTION.—The requirements of para-
graph (1) shall not apply to a security-based swap 
if— 
‘‘(A) no clearing agency registered under 
this Act will accept the security-based swap for 
clearing; or 
‘‘(B) one of the counterparties to the secu-
rity-based swap is not a security-based swap 
dealer or major security-based swap participant. 
‘‘(8) EXCLUSION.—Paragraph (1) shall not 
apply to a security-based swap one party to which is 
not a security-based swap dealer or major security- 
based swap participant, and which is entered into 
before the end of the 180-day period that begins 
with the effective date of this paragraph. 
‘‘(b) CONSULTATION.—The Commission and the 
Commodity Futures Trading Commission shall consult 
with the appropriate Federal banking agencies and each 
other prior to adopting rules under this section.’’. 
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(b) CLEARING AGENCY REQUIREMENTS.—Section 
17A of the Securities Exchange Act of 1934 (15 U.S.C. 
78q) is amended by adding at the end the following new 
subsections: 
‘‘(g) REGISTRATION REQUIREMENT.—It shall be un-
lawful for a clearing agency, unless registered with the 
Commission, directly or indirectly to make use of the mails 
or any means or instrumentality of interstate commerce 
to perform the functions of a clearing agency with respect 
to a swap. 
‘‘(h) VOLUNTARY REGISTRATION.— 
‘‘(1) CLEARING
AGENCIES.—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 clearing agency. 
‘‘(2) 
DERIVATIVES
CLEARING
ORGANIZA-
TIONS.—A clearing agency may clear swaps that are 
required to be cleared by a person who is registered 
as a derivatives clearing organization under the 
Commodity Exchange Act (7 U.S.C. 1, et seq.). 
‘‘(i) REQUIRED REGISTRATION
FOR BANKS
AND 
CLEARING AGENCIES.—A person that is required to be 
registered as a clearing agency under this section shall 
register with the Commission regardless of whether the 
person is also a bank or a derivatives clearing organization 
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registered with the Commodity Futures Trading Commis-
sion under the Commodity Exchange Act (7 U.S.C. 1, et 
seq.). 
‘‘(j) REPORTING.— 
‘‘(1) IN
GENERAL.—A clearing agency that 
clears security-based swaps shall provide to the 
Commission and any designated swap repository all 
information determined by the Commission to be 
necessary to perform its responsibilities under this 
Act. The Commission shall adopt data collection and 
maintenance requirements for security-based swaps 
cleared by clearing agencies that are comparable to 
the corresponding requirements for security-based 
swaps accepted by security-based swap repositories 
and security-based swaps traded on swap execution 
facilities. The Commission shall share such informa-
tion, upon request, with the Board, the Commodity 
Futures Trading Commission, the appropriate Fed-
eral banking agencies, the Financial Services Over-
sight Council, and the Department of Justice or to 
other persons the Commission deems appropriate, 
including foreign financial supervisors (including for-
eign futures authorities), foreign central banks, and 
foreign ministries. 
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‘‘(2) PUBLIC INFORMATION.—A clearing agency 
that clears security-based swaps shall provide to the 
Commission, or its designee, such information as is 
required by, and in a form and at a frequency to be 
determined by, the Commission, in order to comply 
with the public reporting requirements contained in 
section 13. 
‘‘(k) DESIGNATION OF COMPLIANCE OFFICER.— 
‘‘(1) IN GENERAL.—Each clearing agency that 
clears security-based swaps shall designate an indi-
vidual to serve as a compliance officer. 
‘‘(2) DUTIES.—The compliance officer shall— 
‘‘(A) report directly to the board or to the 
senior officer of the clearing agency; 
‘‘(B) in consultation with the board of the 
clearing agency, a body performing a function 
similar to that of a board, or the senior officer 
of the clearing agency, resolve any conflicts of 
interest that may arise; 
‘‘(C) be responsible for administering the 
policies and procedures required to be estab-
lished pursuant to this section; 
‘‘(D) ensure compliance with securities 
laws and the rules and regulations issued there-
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602 
under, including rules prescribed by the Com-
mission pursuant to this section; and 
‘‘(E) establish procedures for remediation 
of noncompliance issues found during compli-
ance office reviews, lookbacks, internal or exter-
nal audit findings, self-reported errors, or 
through validated complaints which will estab-
lish the handling, management response, reme-
diation, retesting, and closing of noncompliance 
issues. 
‘‘(3) ANNUAL REPORTS REQUIRED.—The com-
pliance officer shall annually prepare and sign a re-
port on the compliance of the clearing agency with 
the securities laws and its policies and procedures, 
including its code of ethics and conflict of interest 
policies, in accordance with rules prescribed by the 
Commission. Such compliance report shall accom-
pany the financial reports of the clearing agency 
that are required to be furnished to the Commission 
pursuant to this section and shall include a certifi-
cation that, under penalty of law, the report is accu-
rate and complete. 
‘‘(l) STANDARDS FOR CLEARING AGENCIES CLEAR-
ING SWAP TRANSACTIONS.—To be registered and to main-
tain registration as a clearing agency that clears swap 
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603 
transactions, a clearing agency shall comply with such 
standards as the Commission may establish by rule. In 
establishing any such standards, and in the exercise of its 
oversight of such a clearing agency pursuant to this title, 
the Commission may conform such standards or oversight 
to reflect evolving United States and international stand-
ards. Except where the Commission determines otherwise 
by rule or regulation, a clearing agency shall have reason-
able discretion in establishing the manner in which it com-
plies with any such standards. 
‘‘(m) CONSULTATION.—The Commission and the 
Commodity Futures Trading Commission shall consult 
with the appropriate Federal banking agencies and each 
other prior to adopting rules under this section. 
‘‘(n) HARMONIZATION OF RULES.—Not later than 
180 days after the effective date of the Over-the-Counter 
Derivatives Markets Act of 2009, the Commission and the 
Commodity Futures Trading Commission shall jointly 
adopt uniform rules governing persons that are registered 
as derivatives clearing organizations for swaps under the 
Commodity Exchange Act (7 U.S.C. 1, et seq.) and per-
sons that are registered as clearing agencies for security- 
based swaps under the Securities Exchange Act of 1934 
(15 U.S.C. 78a, et seq.).’’. 
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(c) EXECUTION OF SECURITY-BASED SWAPS.—The 
Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.) 
is amended by inserting after section 5 the following: 
‘‘SEC. 5A. EXECUTION OF SECURITY-BASED SWAPS. 
‘‘(a) TRADE EXECUTION.— 
‘‘(1) IN
GENERAL.—With respect to trans-
actions involving security-based swaps subject to the 
clearing requirement of section 3B and where both 
counterparties are either security-based swap dealers 
or major security-based swap participants, such 
counterparties shall— 
‘‘(A) execute the transaction on a national 
securities exchange registered pursuant to sec-
tion 6(a) (in which event such transaction shall 
be subject to regulation under this title as a 
transaction in a security); or 
‘‘(B) execute the transaction on a swap 
execution facility registered with the Commis-
sion. 
‘‘(2) EXCEPTION.—The requirements of sub-
paragraphs (A) or (B) of paragraph (1) shall not 
apply if no board of trade or swap execution facility 
makes the swap available to trade. 
‘‘(3) REQUIRED REPORTING.—If the exception 
of paragraph (2) applies and there is no facility that 
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makes the swap available to trade, the counterpar-
ties shall comply with any recordkeeping and trans-
action reporting requirements as may be prescribed 
by the Commission with respect to security-based 
swaps subject to the requirements of section 3B and 
where both counterparties are either security-based 
swap dealers or major security-based swap partici-
pants. 
‘‘(b) EXCHANGE TRADING.—In adopting rules and 
regulations, the Commission shall endeavor to eliminate 
unnecessary impediments to the trading on national secu-
rities exchanges or swap execution facilities, agreements 
or transactions that would be commodity swaps but for 
the trading of such contracts, agreements or transactions 
on such a designated contract market.’’. 
(d) SWAP EXECUTION FACILITIES.—The Securities 
Exchange Act of 1934 (15 U.S.C. 78a, et seq.) is further 
amended by adding after section 3B (as added by sub-
section (a)) the following: 
‘‘SEC. 3C. SWAP EXECUTION FACILITIES. 
‘‘(a) REGISTRATION.— 
‘‘(1) IN GENERAL.— 
‘‘(A) No person may operate a swap execu-
tion facility unless such facility is registered 
under this section. 
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‘‘(B) For purposes of this section, the term 
‘swap execution facility’ means an entity that 
facilitates the execution of swaps between 2 
persons through any means of interstate com-
merce but which is not a designated contract 
market. 
‘‘(2) DUAL REGISTRATION.—Any person that is 
required to be registered as a swap execution facility 
under this section shall register with the Commis-
sion regardless of whether that person also is reg-
istered with the Commodity Futures Trading Com-
mission as a swap execution facility. 
‘‘(b) REQUIREMENTS FOR TRADING.—A swap execu-
tion facility that is registered under subsection (a) may 
trade any security-based swap. 
‘‘(c) TRADING BY EXCHANGES.—An exchange shall, 
to the extent that the exchange also operates a swap exe-
cution facility and uses the same electronic trade execution 
system for trading on the exchange and the swap execu-
tion facility, identify whether the electronic trading is tak-
ing place on the exchange or the swap execution facility. 
‘‘(d) CRITERIA FOR REGISTRATION.— 
‘‘(1) IN GENERAL.—To be registered as a swap 
execution facility, the facility shall be required to 
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demonstrate to the Commission that it meets the 
criteria specified herein. 
‘‘(2) DETERRENCE OF ABUSES.—The swap exe-
cution facility shall establish and enforce trading 
and participation rules that will deter abuses and 
have the capacity to detect, investigate, and enforce 
those rules, including means to— 
‘‘(A) obtain information necessary to per-
form the functions required under this section; 
or 
‘‘(B) use means to— 
‘‘(i) provide market participants with 
impartial access to the market; and 
‘‘(ii) capture information that may be 
used in establishing whether rule violations 
have occurred. 
‘‘(3) TRADING PROCEDURES.—The swap execu-
tion facility shall establish and enforce rules or 
terms and conditions defining, or specifications de-
tailing, trading procedures to be used in entering 
and executing orders traded on or through its facili-
ties. 
‘‘(4) 
FINANCIAL
INTEGRITY
OF
TRANS-
ACTIONS.—The swap execution facility shall estab-
lish and enforce rules and procedures for ensuring 
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the financial integrity of security-based swaps en-
tered on or through its facilities, including the clear-
ance and settlement of the security-based swaps. 
‘‘(e) CORE PRINCIPLES FOR SWAP EXECUTION FA-
CILITIES.— 
‘‘(1) IN GENERAL.—To maintain its registra-
tion as a swap execution facility, the facility shall 
comply with the core principles specified in this sub-
section and any requirement that the Commission 
may impose by rule or regulation. Except where the 
Commission determines otherwise by rule or regula-
tion, the facility shall have reasonable discretion in 
establishing the manner in which it complies with 
these core principles. 
‘‘(2) COMPLIANCE
WITH
RULES.—The swap 
execution facility shall monitor and enforce compli-
ance with any of the rules of the facility, including 
the terms and conditions of the security-based swaps 
traded on or through the facility and any limitations 
on access to the facility. 
‘‘(3) SECURITY-BASED
SWAPS
NOT
READILY 
SUSCEPTIBLE TO MANIPULATION.—The swap execu-
tion facility shall permit trading only in security- 
based swaps that are not readily susceptible to ma-
nipulation. 
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‘‘(4) MONITORING
OF
TRADING.—The swap 
execution facility shall monitor trading in security- 
based swaps to prevent manipulation and price dis-
tortion through surveillance, compliance, and dis-
ciplinary practices and procedures, including meth-
ods for conducting real-time monitoring of trading 
and comprehensive and accurate trade reconstruc-
tions. 
‘‘(5) ABILITY TO OBTAIN INFORMATION.—The 
swap execution facility shall— 
‘‘(A) establish and enforce rules that will 
allow the facility to obtain any necessary infor-
mation to perform any of the functions de-
scribed in this subsection; 
‘‘(B) provide the information to the Com-
mission upon request; and 
‘‘(C) have the capacity to carry out such 
international information-sharing agreements as 
the Commission may require. 
‘‘(6) EMERGENCY AUTHORITY.—The swap exe-
cution facility shall adopt rules to provide for the ex-
ercise of emergency authority, in consultation or co-
operation with the Commission, where necessary and 
appropriate, including the authority to suspend or 
curtail trading in a security-based swap. 
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‘‘(7) TIMELY PUBLICATION OF TRADING INFOR-
MATION.—The swap execution facility shall make 
public timely information on price, trading volume, 
and other trading data to the extent prescribed by 
the Commission. 
‘‘(8) RECORDKEEPING AND REPORTING.—The 
swap execution facility shall maintain records of all 
activities related to the business of the facility, in-
cluding a complete audit trail, in a form and manner 
acceptable to the Commission for a period of 5 
years, and report to the Commission all information 
determined by the Commission to be necessary or 
appropriate for the Commission to perform its re-
sponsibilities under this Act in a form and manner 
acceptable to the Commission. The Commission shall 
adopt data collection and reporting requirements for 
swap execution facilities that are comparable to cor-
responding requirements for clearing agencies and 
security-based swap repositories. 
‘‘(9) 
ANTITRUST
CONSIDERATIONS.—Unless 
necessary or appropriate to achieve the purposes of 
this Act, the swap execution facility shall avoid— 
‘‘(A) adopting any rules or taking any ac-
tions that result in any unreasonable restraints 
of trade; or 
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‘‘(B) imposing any material anticompeti-
tive burden on trading on the swap execution 
facility. 
‘‘(10) CONFLICTS OF INTEREST.— 
‘‘(A) IN
GENERAL.—The swap execution 
facility shall establish and enforce rules to mini-
mize conflicts of interest in its decision-making 
process and establish a process for resolving 
such conflicts of interest. 
‘‘(B) BENEFICIAL OWNERSHIP BY A RE-
STRICTED OWNER.—The rules of the swap exe-
cution facility shall provide that a restricted 
owner shall not be permitted directly or indi-
rectly to acquire beneficial ownership of inter-
ests in the facility or in persons with a control-
ling interest in the facility, to the extent that 
such an acquisition would result in restricted 
owners controlling more than 20 percent of the 
votes entitled to be cast on any matter by the 
holders of the ownership interests. 
‘‘(C) ASSOCIATION
WITH
A
RESTRICTED 
OWNER.—The rules of the swap execution facil-
ity shall provide that a majority of the directors 
of the facility shall not be associated with a re-
stricted owner. 
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‘‘(11) DESIGNATION
OF
COMPLIANCE
OFFI-
CER.— 
‘‘(A) IN GENERAL.—Each swap execution 
facility shall designate an individual to serve as 
a compliance officer. 
‘‘(B) DUTIES.—The compliance officer— 
‘‘(i) shall report directly to the board 
or to the senior officer of the facility; 
‘‘(ii) shall— 
‘‘(I) review compliance with the 
core principles in section 3B(e); 
‘‘(II) in consultation with the 
board of the facility, a body per-
forming a function similar to that of 
a board, or the senior officer of the 
facility, resolve any conflicts of inter-
est that may arise; 
‘‘(III) be responsible for admin-
istering the policies and procedures 
required to be established pursuant to 
this section; and 
‘‘(IV) ensure compliance with se-
curities laws and the rules and regula-
tions issued thereunder, including 
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rules prescribed by the Commission 
pursuant to this section; and 
‘‘(iii) shall establish procedures for re-
mediation of non-compliance issues found 
during 
compliance 
office 
reviews, 
lookbacks, internal or external audit find-
ings, self-reported errors, or through vali-
dated complaints. Procedures will establish 
the handling, management response, reme-
diation, retesting, and closing of non-
compliant issues. 
‘‘(C) ANNUAL REPORTS REQUIRED.—The 
compliance officer shall annually prepare and 
sign a report on the compliance of the facility 
with the securities laws and its policies and pro-
cedures, including its code of ethics and conflict 
of interest policies, in accordance with rules 
prescribed by the Commission. Such compliance 
report shall accompany the financial reports of 
the facility that are required to be furnished to 
the Commission pursuant to this section and 
shall include a certification that, under penalty 
of law, the report is accurate and complete. 
‘‘(f) EXEMPTIONS.—The Commission may exempt, 
conditionally or unconditionally, a swap execution facility 
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from registration under this section if the Commission 
finds that such organization is subject to comparable, 
comprehensive supervision and regulation on a consoli-
dated basis by the Commodity Futures Trading Commis-
sion, a Prudential Regulator or the appropriate govern-
mental authorities in the organization’s home country. 
‘‘(g) HARMONIZATION OF RULES.—Not later than 
180 days after the date of enactment of the Over-the- 
Counter Derivatives Markets Act of 2009, the Commission 
and the Commodity Futures Trading Commission shall 
jointly prescribe rules governing the regulation of swap 
execution facilities under this section and section 5h of 
the Commodity Exchange Act (7 U.S.C. 7b–3).’’. 
(e) SEGREGATION OF ASSETS HELD AS COLLATERAL 
IN SWAP TRANSACTIONS.—The Securities Exchange Act 
of 1934 (15 U.S.C. 78a, et seq.) is further amended by 
adding after section 3C (as added by subsection (b)) the 
following: 
‘‘SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL 
IN 
OVER-THE-COUNTER 
SWAP 
TRANS-
ACTIONS. 
‘‘(a) 
SEGREGATION.—At 
the 
request 
of 
a 
counterparty to a security-based swap who provides funds 
or other property to a swap dealer as variation or initial 
margin or collateral to secure the obligations of the 
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counterparty under a security-based swap between the 
counterparty and the swap dealer that is not submitted 
for clearing to a derivatives clearing agency, the swap 
dealer shall segregate the variation or initial margin or 
collateral for the benefit of the counterparty, and maintain 
the variation or initial margin or collateral in an account 
which is carried by an independent third-party custodian 
and designated as a segregated account for the 
counterparty, in accordance with such rules and regula-
tions as the Commission or Prudential Regulator may pre-
scribe. If a securities-based swap counterparty is a swap 
dealer or major securities-based swap participant who 
owns more than 20 percent of, or has more than 50 per-
cent representation on the board of directors of, a custo-
dian, the custodian shall not be considered independent 
from the securities-based swap counterparties for purposes 
of the preceding sentence. This subsection shall not be in-
terpreted to preclude commercial arrangements regarding 
the investment of the segregated funds or other property 
and the related allocation of gains and losses resulting 
from any such investment. 
‘‘(b) BACK OFFICE AUDIT REPORTING.—If a secu-
rity-based swap dealer does not segregate funds at the re-
quest of a security-based swap counterparty in accordance 
with subsection (a), the security-based swap dealer shall 
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report to its counterparty on a quarterly basis that its 
back office procedures relating to margin and collateral 
requirements are in compliance with the agreement of the 
counterparties.’’. 
(f) TRADING
IN SECURITY-BASED SWAP AGREE-
MENTS.—Section 6 of the Securities Exchange Act of 
1934 (15 U.S.C. 78f) is amended by adding at the end 
the following: 
‘‘(l) It shall be unlawful for any person to effect a 
transaction in a security-based swap with or for a person 
that is not an eligible contract participant unless such 
transaction is effected on a national securities exchange 
registered pursuant to subsection (b).’’. 
(g) ADDITIONS OF SECURITY-BASED SWAPS TO CER-
TAIN
ENFORCEMENT
PROVISIONS.—Paragraphs 
(1) 
through (3) of section 9(b) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78i(b)(1)–(3)) are amended to read 
as follows: 
‘‘(1) any transaction in connection with any se-
curity whereby any party to such transaction ac-
quires (A) any put, call, straddle, or other option or 
privilege of buying the security from or selling the 
security to another without being bound to do so; 
(B) any security futures product on the security; or 
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(C) any security-based swap involving the security or 
the issuer of the security; 
‘‘(2) any transaction in connection with any se-
curity with relation to which he has, directly or indi-
rectly, any interest in any (A) such put, call, strad-
dle, option, or privilege; (B) such security futures 
product; or (C) such security-based swap; or 
‘‘(3) any transaction in any security for the ac-
count of any person who he has reason to believe 
has, and who actually has, directly or indirectly, any 
interest in (A) any such put, call, straddle, option, 
or privilege; (B) such security futures product with 
relation to such security; or (C) any security-based 
swap involving such security or the issuer of such se-
curity.’’. 
(h) RULEMAKING AUTHORITY TO PREVENT FRAUD, 
MANIPULATION, AND DECEPTIVE CONDUCT IN SECURITY- 
BASED
SWAPS
AND
SECURITY-BASED
SWAP
AGREE-
MENTS.—Section 9 of the Securities Exchange Act of 
1934 (15 U.S.C. 78i) is amended by adding at the end 
the following: 
‘‘(j) It shall be unlawful for any person, directly or 
indirectly, by the use of any means or instrumentality of 
interstate commerce or of the mails, or of any facility of 
any national securities exchange, to effect any transaction 
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in, or to induce or attempt to induce the purchase or sale 
of, any security-based swap or any security-based swap 
agreement, in connection with which such person engages 
in any fraudulent, deceptive, or manipulative act or prac-
tice, makes any fictitious quotation, or engages in any 
transaction, practice, or course of business which operates 
as a fraud or deceit upon any person. The Commission 
shall, for the purposes of this subsection, by rules and reg-
ulations define, and prescribe means reasonably designed 
to prevent, such transactions, acts, practices, and courses 
of business as are fraudulent, deceptive, or manipulative, 
and such quotations as are fictitious.’’. 
(i) POSITION
LIMITS
AND
POSITION
ACCOUNT-
ABILITY FOR SECURITY-BASED SWAPS.—The Securities 
Exchange Act of 1934 is further amended by inserting 
after section 10B (15 U.S.C. 78j–1) (as added by section 
2003(a)) the following new section: 
‘‘SEC. 10C. POSITION LIMITS AND POSITION ACCOUNT-
ABILITY FOR SECURITY-BASED SWAPS AND 
LARGE TRADER REPORTING. 
‘‘(a) POSITION LIMITS.—As a means reasonably de-
signed to prevent fraud and manipulation, the Commission 
may, by rule or regulation, as necessary or appropriate 
in the public interest or for the protection of investors, 
establish limits (including related hedge exemption provi-
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sions) on the size of positions in any security-based swap 
or security-based swap agreement that may be held by any 
person. In establishing such limits, the Commission may 
require any person to aggregate positions in— 
‘‘(1) any security-based swap and any security 
or loan or group or index of securities or loans on 
which such security-based swap is based, which such 
security-based swap references, or to which such se-
curity-based swap is related as described in section 
3(a)(68), and any security-based swap agreement 
and any other instrument relating to such security 
or loan or group or index of securities or loans; or 
‘‘(2) any security-based swap and (A) any secu-
rity or group or index of securities, the price, yield, 
value, or volatility of which, or of which any interest 
therein, is the basis for a material term of such se-
curity-based swap as described in section 3(a)(76) 
and (B) any security-based swap and any other in-
strument relating to the same security or group or 
index of securities. 
‘‘(b) EXEMPTIONS.—The Commission, by rule, regu-
lation, or order, may conditionally or unconditionally ex-
empt any person or class of persons, any security-based 
swap or class of security-based swaps, or any transaction 
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or class of transactions from any requirement it may es-
tablish under this section with respect to position limits. 
‘‘(c) SRO RULES.— 
‘‘(1) IN GENERAL.—As a means reasonably de-
signed to prevent fraud or manipulation, the Com-
mission, by rule, regulation, or order, as necessary 
or appropriate in the public interest, for the protec-
tion of investors, or otherwise in furtherance of the 
purposes of this title, may direct a self-regulatory 
organization— 
‘‘(A) to adopt rules regarding the size of 
positions in any security-based swap that may 
be held by— 
‘‘(i) any member of such self-regu-
latory organization; or 
‘‘(ii) any person for whom a member 
of such self-regulatory organization effects 
transactions in such security-based swap or 
other security-based swap agreement; and 
‘‘(B) to adopt rules reasonably designed to 
ensure compliance with requirements prescribed 
by the Commission under subparagraph (A). 
‘‘(2) REQUIREMENT
TO
AGGREGATE
POSI-
TIONS.—In establishing such limits, the self-regu-
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latory organization may require such member or per-
son to aggregate positions in— 
‘‘(A) any security-based swap and any se-
curity or loan or group or index of securities or 
loans on which such security-based swap is 
based, which such security-based swap ref-
erences, or to which such security-based swap is 
related as described in section 3(a)(68), and 
any security-based swap agreement and any 
other instrument relating to such security or 
loan or group or index of securities or loans; or 
‘‘(B)(i) any security-based swap; 
‘‘(ii) any security or group or index of se-
curities, the price, yield, value, or volatility of 
which, or of which any interest therein, is the 
basis for a material term of such security-based 
swap as described in section 3(a)(76); and 
‘‘(iii) any security-based swap and any 
other instrument relating to the same security 
or group or index of securities. 
‘‘(d) LARGE TRADER REPORTING.—The Commis-
sion, by rule or regulation, may require any person that 
effects transactions for such person’s own account or the 
account of others in any securities-based swap or security- 
based swap agreement and any security or loan or group 
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or index of securities or loans as set forth in paragraphs 
(1) and (2) of subsection (a) to report such information 
as the Commission may prescribe regarding any position 
or positions in any security-based swap or security-based 
swap agreement and any security or loan or group or index 
of securities or loans and any other instrument relating 
to such security or loan or group or index of securities 
or loans as set forth in paragraphs (1) and (2) of sub-
section (a).’’. 
(j) PUBLIC REPORTING AND REPOSITORIES FOR SE-
CURITY-BASED SWAP AGREEMENTS.—Section 13 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78m) is 
amended by adding at the end the following: 
‘‘(m) PUBLIC REPORTING OF AGGREGATE SECURITY- 
BASED SWAP DATA.— 
‘‘(1) IN GENERAL.—The Commission, or a per-
son designated by the Commission pursuant to para-
graph (2), shall make available to the public, in a 
manner that does not disclose the business trans-
actions and market positions of any person, aggre-
gate data on security-based swap trading volumes 
and positions from the sources set forth in para-
graph (3). 
‘‘(2) DESIGNEE
OF
THE
COMMISSION.—The 
Commission may designate a clearing agency or a 
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security-based swap repository to carry out the pub-
lic reporting described in paragraph (1). 
‘‘(3) SOURCES OF INFORMATION.—The sources 
of the information to be publicly reported as de-
scribed in paragraph (1) are— 
‘‘(A) clearing agencies pursuant to section 
3A; 
‘‘(B) security-based swap repositories pur-
suant to subsection (n); and 
‘‘(C) reports received by the Commission 
pursuant to section 13A. 
‘‘(n) SECURITY-BASED SWAP REPOSITORIES.— 
‘‘(1) REGISTRATION REQUIREMENT.— 
‘‘(A) IN GENERAL.—It shall be unlawful 
for a security-based swap repository, unless reg-
istered with the Commission, directly or indi-
rectly to make use of the mails or any means 
or instrumentality of interstate commerce to 
perform the functions of a security-based swap 
repository. 
‘‘(B) INSPECTION
AND
EXAMINATION.— 
Registered security-based swap repositories 
shall be subject to inspection and examination 
by any representatives of the Commission. 
‘‘(2) STANDARD SETTING.— 
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