SEC. 2. DEFINITIONS. 
As used in this Act— 
(1) the term ‘‘clearinghouse’’ means a deriva-
tives clearing organization as such term is defined in 
section 1a(9) of the Commodity Exchange Act (7 
U.S.C. 1a(9) and a clearing agency as such term is 
defined in section 3(a)(23) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(23)); 
(2) the term ‘‘derivative’’ means any financial 
instrument, traded on or off an exchange, the price 
of which, at least in part, is directly dependent upon 
the value of one or more underlying securities, eq-
uity indices, debt instruments, commodities, other 
derivative instruments, or any agreed upon pricing 
index or arrangement; 
(3) the term ‘‘derivatives trader’’ means any 
person engaged in the business of buying and selling 
any type of derivative as part of its market making 
activity but does not include a person who buys or 
sells any type of derivative primarily for purposes of 
hedging an exposure or making an investment; 
(4) the term ‘‘exchange’’ has the meaning given 
such term in section 3(a)(1) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(1)) and in-
cludes a board of trade as such term is defined in 
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section 1a(2) of the Commodity Exchange Act (7 
U.S.C. 1a(2)); 
(5) the term ‘‘major market participant’’ means 
any entity which engages in not fewer than such 
number of such kinds of transactions, or trades not 
fewer than such number of such kinds of derivatives, 
as the Commodities Future Trading Commission or 
the Securities and Exchange Commission, as appro-
priate, determines to qualify such entity as a finan-
cial institution (or other entity) of significant rel-
evance to the national financial system as a whole, 
including all subsidiaries or affiliates of such entity 
whose activities fall under the jurisdiction of the 
Commodities Future Trading Commission or the Se-
curities and Exchange Commission, as appropriate; 
(6) the term ‘‘the Office’’ means the Office of 
Derivatives Supervision established in the Depart-
ment of the Treasury under section 3; and 
(7) the term ‘‘over-the-counter derivatives trade 
depository’’ means any person who acts as a custo-
dian for the primary record of an over-the-counter 
derivative transaction or who provides facilities for 
central processing and reconciliation of transaction 
information relating to over-the-counter derivative 
transactions. 
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SEC. 3. OFFICE OF DERIVATIVES SUPERVISION IN THE 
TREASURY. 
(a) ESTABLISHMENT.—There is hereby established 
within the Department of the Treasury an office to be 
known as the Office of Derivatives Supervision. 
(b) DUTIES.— 
(1) OVERSIGHT OF REGISTRATION OF DERIVA-
TIVES TRADERS.—The Office shall oversee the reg-
istration of derivatives traders as required under 
section 4 and issue such rules or regulations as re-
quired to implement the requirements of such sec-
tion. 
(2) COORDINATION ON DERIVATIVES REGULA-
TIONS.—The Office shall provide support and co-
ordination to the Securities and Exchange Commis-
sion and the Commodity Futures Trading Commis-
sion in developing a comprehensive and standardized 
set of regulations for the sale, purchase, exchange, 
or trade of derivatives. In particular, the Office shall 
harmonize substantive futures and securities regula-
tion for economically equivalent instruments and re-
quire the development of consistent procedures for 
reviewing and approving proposals for new products 
and rulemakings by self-regulatory organizations. 
(3) INFORMATION
FACILITATION.—The Office 
shall facilitate the exchange of information related to 
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the development of derivatives regulations described 
in paragraph (1) between— 
(A) the Securities and Exchange Commis-
sion; 
(B) the Commodity Futures Trading Com-
mission; 
(C) the Office of the Comptroller of the 
Currency; 
(D) the Office of Thrift Supervision; 
(E) the Federal Reserve System; and 
(F) such other Federal agencies or depart-
ments as the Office may prescribe. 
(4) DISAPPROVAL
POWER
OVER
DERIVATIVES 
REGULATIONS.— 
(A) IN GENERAL.—If, within 30 days of 
the prescription of a rule or regulation with re-
spect to the sale, purchase, exchange, or trade 
of derivatives prescribed by the Securities and 
Exchange Commission or the Commodity Fu-
tures Trading Commission, the Secretary of the 
Treasury, acting through the Office, determines 
that such rule or regulation does not harmonize 
substantive commodities and securities regula-
tion for economically equivalent instruments be-
tween the Securities and Exchange Commission 
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and the Commodity Futures Trading Commis-
sion, such rule or regulation shall not take ef-
fect. 
(B) EXCEPTION.—Subparagraph (A) shall 
not apply to a rule or regulation if such rule or 
regulation is expressly required to be prescribed 
by law. 
(c) REPORT.—Not later than June 30, 2010, and 
each year thereafter, the Office shall transmit a report to 
Congress that— 
(1) identifies and details the rules promulgated 
under this Act; 
(2) evaluates the number, percentage, volume or 
notional size, and economic exposure of derivative in-
struments that are— 
(A) traded on exchanges; 
(B) cleared through clearinghouses; and 
(C) traded on the over-the-counter market; 
and 
(3) assesses the effect of changes in mark-to- 
market fair value accounting rules, hedge accounting 
rules, and other related regulations on the deriva-
tives market. 
SEC. 4. REGISTRATION OF DERIVATIVES TRADERS. 
(a) UNLAWFUL CONDUCT.— 
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(1) IN GENERAL.—It shall be unlawful for any 
derivatives trader to make use of the mails or any 
means or instrumentality of interstate commerce to 
effect any transactions in, or to induce or attempt 
to induce the purchase or sale of, any type of deriva-
tive unless such derivatives trader is registered in 
accordance with subsection (b). 
(2) EXEMPTION.—The Secretary of the Treas-
ury, acting through the Office (referred to in this 
section as ‘‘the Secretary’’), by rule or order, after 
consultation with the Securities and Exchange Com-
mission and the Commodities Futures Trading Com-
mission, as applicable, may conditionally or uncondi-
tionally exempt from paragraph (1) any derivatives 
trader or class of derivatives traders specified in 
such rule or order. 
(b) REGISTRATION.— 
(1) IN GENERAL.—A derivatives trader may be 
registered by filing with the Secretary an application 
for registration in such form and containing such in-
formation and documents concerning such deriva-
tives trader and any persons associated with such 
derivatives trader as the Secretary, by rule, may pre-
scribe as necessary or appropriate in the public in-
terest or for the protection of investors. Within 45 
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days of the date of the filing of such application (or 
within such longer period as to which the applicant 
consents), the Secretary shall— 
(A) by order grant registration, or 
(B) institute proceedings to determine 
whether registration should be denied. 
(2) DETERMINATION.—The Secretary shall 
grant such registration if the Secretary finds that 
the requirements of this section are satisfied. The 
Secretary shall deny such registration if the Sec-
retary does not make such a finding or if the Sec-
retary finds that if the applicant were so registered, 
its registration would be subject to suspension or 
revocation under paragraph (4). If the Secretary in-
stitutes proceedings under paragraph (1)(B), such 
proceedings shall include notice of the grounds for 
denial under consideration and opportunity for hear-
ing and shall be concluded within 120 days of the 
date of the filing of the application for registration. 
At the conclusion of such proceedings, the Secretary, 
by order, shall grant or deny such registration. The 
Secretary may extend the time for conclusion of 
such proceedings for up to 90 days if the Secretary 
finds good cause for such extension and publishes its 
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reasons for so finding or for such longer period as 
to which the applicant consents. 
(3) APPLICATION.—An application for registra-
tion of a derivatives trader to be formed or orga-
nized may be made by a derivatives trader to which 
the derivatives trader to be formed or organized is 
to be the successor. Such application, in such form 
as the Secretary, by rule, may prescribe, shall con-
tain such information and documents concerning the 
applicant, the successor, and any persons associated 
with the applicant or the successor, as the Secretary, 
by rule, may prescribe as necessary or appropriate 
in the public interest or for the protection of inves-
tors. The grant or denial of registration to such an 
applicant shall be in accordance with the procedures 
set forth in paragraph (1). If the Secretary grants 
such registration, the registration shall terminate on 
the 45th day after the effective date thereof, unless 
prior thereto the successor shall, in accordance with 
such rules and regulations as the Secretary may pre-
scribe, adopt the application for registration as its 
own. 
(4) CENSURE, SUSPENSION, REVOCATION.—The 
Secretary, by order, shall censure, place limitations 
on the activities, functions, or operations of, suspend 
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for a period not exceeding 12 months, or revoke the 
registration of any derivatives trader if the Secretary 
finds, on the record after notice and opportunity for 
hearing, that such censure, placing of limitations, 
suspension, or revocation is in the public interest 
and that such derivatives trader, whether prior or 
subsequent to becoming such, or any person associ-
ated with such derivatives trader, whether prior or 
subsequent to becoming so associated— 
(A) has willfully made or caused to be 
made in any application for registration or re-
port required to be filed with the Secretary 
under this Act, or in any proceeding before the 
Secretary with respect to registration, 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, or has omitted any material fact 
which is required to be stated therein; 
(B) has been convicted within 10 years 
preceding the filing of any application for reg-
istration or at any time thereafter of any felony 
or misdemeanor or of a substantially equivalent 
crime by a foreign court of competent jurisdic-
tion which the Secretary finds— 
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(i) involves the purchase or sale of 
any security or derivative, the taking of a 
false oath, the making of a false report, 
bribery, perjury, burglary, any substan-
tially equivalent activity however denomi-
nated by the laws of the relevant foreign 
government, or conspiracy to commit any 
such offense; 
(ii) arises out of the conduct of the 
business of a derivatives trader, broker, 
dealer, municipal securities dealer, govern-
ment securities broker, government securi-
ties dealer, investment adviser, bank, in-
surance company, fiduciary, transfer agent, 
nationally recognized statistical rating or-
ganization, foreign person performing a 
function substantially equivalent to any of 
the above, or entity or person required to 
be registered under the Commodity Ex-
change Act (7 U.S.C. 1 et seq.) or any 
substantially equivalent foreign statute or 
regulation; 
(iii) involves the larceny, theft, rob-
bery, extortion, forgery, counterfeiting, 
fraudulent 
concealment, 
embezzlement, 
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fraudulent conversion, or misappropriation 
of funds, or securities or derivatives, or 
substantially equivalent activity however 
denominated by the laws of the relevant 
foreign government; or 
(iv) involves the violation of section 
152, 1341, 1342, or 1343 or chapter 25 or 
47 of title 18, United States Code, or a 
violation of a substantially equivalent for-
eign statute; 
(C) is permanently or temporarily enjoined 
by order, judgment, or decree of any court of 
competent jurisdiction from acting as a deriva-
tives trader, investment adviser, underwriter, 
broker, dealer, municipal securities dealer, gov-
ernment securities broker, government securi-
ties dealer, transfer agent, nationally recognized 
statistical rating organization, foreign person 
performing a function substantially equivalent 
to any of the above, or entity or person required 
to be registered under the Commodity Ex-
change Act or any substantially equivalent for-
eign statute or regulation, or as an affiliated 
person or employee of any investment company, 
bank, insurance company, foreign entity sub-
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stantially equivalent to any of the above, or en-
tity or person required to be registered under 
the Commodity Exchange Act or any substan-
tially equivalent foreign statute or regulation or 
from engaging in or continuing any conduct or 
practice in connection with any such activity, or 
in connection with the purchase or sale of any 
security or derivative; 
(D) has willfully violated any provision of 
the securities laws (as such term is defined in 
section 3(a)(47) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(a)(47)), the Commodity 
Exchange Act (7 U.S.C. 1a et seq.), any rule or 
regulation issued under this Act or under any 
of such Acts, or is unable to comply with any 
such provision; 
(E) has willfully aided, abetted, counseled, 
commanded, induced, or procured the violation 
by any other person of any provision of the se-
curities laws (as such term is defined in section 
3(a)(47) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(47)), the Commodity 
Exchange Act (7 U.S.C. 1a et seq.), any rule or 
regulation issued under this Act or under any 
of such Acts, the rules or regulations under this 
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