I 
116TH CONGRESS 
1ST SESSION H. R. 4726 
To help end-users better utilize derivatives markets by refining the definition 
of financial entity, clarifying how affiliates can utilize the end-user excep-
tion, and harmonizing clearing and margin exemptions. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 17, 2019 
Mr. MARSHALL introduced the following bill; which was referred to the 
Committee on Agriculture 
A BILL 
To help end-users better utilize derivatives markets by refin-
ing the definition of financial entity, clarifying how affili-
ates can utilize the end-user exception, and harmonizing 
clearing and margin exemptions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Certainty for End- 
Users Act’’. 
SEC. 2. CLARIFYING THE FINANCIAL ENTITY DEFINITION. 
(a) IN GENERAL.—Section 2(h) of the Commodity 
Exchange Act (7 U.S.C. 2(h)) is amended— 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
(1) by striking paragraph (1)(A) and inserting 
the following: 
‘‘(A) STANDARD FOR CLEARING.—It shall 
be unlawful for a financial entity to engage in 
a swap with another financial entity, unless the 
swap is submitted for clearing to a derivatives 
clearing organization registered under this Act 
or a derivatives clearing organization exempt 
from registration under this Act if the swap is 
required to be cleared.’’; and 
(2) in paragraph (7)— 
(A) in the paragraph heading, by striking 
‘‘EXCEPTIONS’’ and inserting ‘‘APPLICATION OF 
CLEARING REQUIREMENT’’; 
(B) by striking subparagraphs (A) and (B) 
and redesignating subparagraph (C) as sub-
paragraph (A); 
(C) in subparagraph (A) (as so redesig-
nated)— 
(i) by striking clause (i) and inserting 
the following: 
‘‘(i) IN GENERAL.—In this subsection, 
the term ‘financial entity’ means the fol-
lowing: 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
‘‘(I) INSTITUTIONS
NOT
STATU-
TORILY EXEMPTED.— 
‘‘(aa) A financial institution. 
‘‘(bb) A swap dealer. 
‘‘(cc) A security-based swap 
dealer. 
‘‘(dd) A major swap partici-
pant. 
‘‘(ee) A major security-based 
swap participant. 
‘‘(ff) A commodity pool that 
is required to be operated by a 
commodity pool operator reg-
istered with the Commission, or a 
foreign person that would be 
such a commodity pool if the for-
eign person were organized under 
the laws of the United States or 
any State. 
‘‘(gg) An investment com-
pany (as defined in section 3 of 
the Investment Company Act of 
1940 (15 U.S.C. 80a–3)), or a 
foreign person that would be 
such an investment company if 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
the foreign person were organized 
under the laws of the United 
States or any State. 
‘‘(II) PRIVATE
FUNDS.—A pri-
vate fund as defined in section 202(a) 
of the Investment Advisers Act of 
1940 (15 U.S.C. 80–b–2(a)), or a for-
eign person that would be such a pri-
vate fund if the foreign person were 
organized under the laws of the 
United States or any State. 
‘‘(III) OTHER
PERSONS.—Such 
other persons the Commission deter-
mines by rule to be predominantly en-
gaged in activities that are financial 
in nature. In making such a deter-
mination, the Commission may con-
sider section 4(k) of the Bank Hold-
ing Company Act of 1956. The Com-
mission shall promulgate regulations 
to carry out this subclause.’’; 
(ii) in clause (iii), by striking ‘‘Such 
definition’’ and inserting ‘‘The term’’; and 
(iii) by adding at the end the fol-
lowing: 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
‘‘(iv) DE MINIMIS EXCLUSION.— 
‘‘(I) AMOUNTS.—A person de-
scribed in subclause (III), and not 
subclause (I) or (II), of clause (i) 
shall not be considered a financial en-
tity for purposes of this subsection if 
the total swaps activity of the person, 
when calculated with those of all other 
affiliated persons who are so de-
scribed, amount to less than— 
‘‘(aa) 
$1,000,000,000 
in 
gross notional swaps transactions 
calculated on the basis of a roll-
ing 12-month period; or 
‘‘(bb) an alternative de mini-
mis amount of swaps activity, ex-
posure, transactions, or other 
measurement, as determined by 
the Commission. At least every 5 
years, the Commission shall con-
sider modifying the alternative de 
minimis amount due to inflation 
or other market factors. 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
‘‘(II) CALCULATION.—The cal-
culation under subclause (I) shall not 
include— 
‘‘(aa) swaps used to hedge 
or mitigate risk associated with 
an asset owned or liability in-
curred or reasonably likely to be 
owned or incurred by an entity in 
the conduct of such entity’s busi-
ness; or 
‘‘(bb) swaps used by an in-
surance company for asset rep-
lication if they are expressly per-
mitted by State insurance regu-
lators to be entered into in con-
junction with other investments 
in order to replicate the invest-
ment characteristics of otherwise 
permissible investments. 
‘‘(III) REQUIREMENTS OF ENTI-
TIES
RELYING
ON
THE
DE
MINIMIS 
EXCLUSION.—An entity that relies on 
the de minimis exception in this 
clause to avoid clearing swaps trans-
actions that the Commission requires 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
a financial entity to clear pursuant to 
paragraph (1)(A) and Commission 
regulations shall, with respect to the 
swaps, report or cause to be reported, 
to a registered swap data repository 
the reliance of the entity on the de 
minimis exclusion.’’; and 
(D) by inserting after subparagraph (A) 
(as amended by the preceding provisions of this 
paragraph) the following: 
‘‘(B) ADDITIONAL DEFINITIONS.—In this 
subsection: 
‘‘(i) AFFILIATE
STATUS.—2 entities 
are affiliated if— 
‘‘(I) 1 of the entities, directly or 
indirectly, holds a majority ownership 
interest in the other entity; or 
‘‘(II) a third party, directly or in-
directly, holds a majority ownership 
interest in both entities. 
‘‘(ii) NON-FINANCIAL
ENTITY.—The 
term ‘non-financial entity’ means— 
‘‘(I) a person not described in 
subparagraph (A)(i); or 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
‘‘(II) a person described in clause 
(ii), (iii), or (iv) of subparagraph (A). 
‘‘(C) REQUIREMENTS
OF
NON-FINANCIAL 
ENTITIES.—A non-financial entity that engages 
in swaps transactions that the Commission re-
quires a financial entity to clear pursuant to 
paragraph (1)(A) and Commission regulations 
shall, with respect to the swaps, report or cause 
to be reported, to a registered swap data reposi-
tory their status as a non-financial entity.’’. 
SEC. 3. SIMPLIFYING THE END-USER AFFILIATE PROCESS. 
Section 2(h)(7) of the Commodity Exchange Act (7 
U.S.C. 2(h)(7)), as amended by section 2 of this Act, is 
amended— 
(1) by striking subparagraph (D) and inserting 
the following: 
‘‘(D) RISK
MANAGEMENT
THROUGH
AF-
FILIATES.— 
‘‘(i) EXCEPTION.—The requirements 
of paragraph (1)(A) shall not apply to a 
swap entered into by a risk management 
entity if the swap is— 
‘‘(I) used to hedge or mitigate el-
igible risk originating from one or 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
more affiliated non-financial entities; 
and 
‘‘(II) not netted, combined, or 
consolidated with any other swap to 
which the requirements of paragraph 
(1)(A) apply. 
‘‘(ii) RISK MANAGEMENT ENTITY DE-
FINED.—In this subparagraph, the term 
‘risk management entity’ means— 
‘‘(I) an entity described in sub-
clause (II), and not subclause (I), of 
subparagraph (A)(i), that enters only 
into transactions related to the man-
agement of eligible risk; 
‘‘(II) an entity described in only 
subclause 
(III) 
of 
subparagraph 
(A)(i); or 
‘‘(III) a non-financial entity. 
‘‘(iii) ELIGIBLE
RISK
DEFINED.—In 
this subparagraph, the term ‘eligible risk’ 
means risk that— 
‘‘(I) originates from a non-finan-
cial entity; 
‘‘(II) is associated with an asset 
owned or liability incurred or reason-
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
ably likely to be owned or incurred by 
the non-financial entity in the conduct 
of the business of the non-financial 
entity; 
‘‘(III) is not netted, combined, or 
consolidated 
with 
risk 
originating 
from any affiliated financial entity; 
and 
‘‘(IV) if transferred, is trans-
ferred only to or through one or more 
affiliated risk management entities. 
‘‘(iv) REQUIREMENTS OF RISK MAN-
AGEMENT ENTITIES.—A risk management 
entity that engages in swaps which utilize 
the exception in this subparagraph shall— 
‘‘(I) notify the Commission, in a 
manner prescribed by the Commis-
sion, how the risk management entity 
generally meets the financial obliga-
tions of the risk management entity 
associated with entering into non- 
cleared swaps; 
‘‘(II) identify those swaps used to 
hedge or mitigate eligible risk origi-
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
nating from one or more affiliated 
non-financial entities; and 
‘‘(III) 
maintain 
books 
and 
records of the swaps which utilize the 
exception in this subparagraph and 
the related eligible risk in such form 
and manner and for such period as 
may be required by the Commission. 
‘‘(v) NO EFFECT ON NON-FINANCIAL 
ENTITIES.—Nothing in this subparagraph 
shall be interpreted to limit the ability of 
any non-financial entity to engage in a 
swap to which the requirements of para-
graph (1)(A) do not apply.’’; and 
(2) by striking subparagraph (F) and inserting 
the following: 
‘‘(F) ABUSE OF EXCEPTION.—The Com-
mission may prescribe such rules or issue such 
interpretations of the rules as the Commission 
determines to be necessary to prevent abuse of 
the exceptions described in this paragraph. The 
Commission may request information from a 
person claiming to be a non-financial entity as 
necessary to prevent evasion of the rules or 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
abuse of the exceptions described in this para-
graph.’’. 
SEC. 4. ALIGNMENT OF MARGIN REQUIREMENTS. 
Section 4s(e)(4) of the Commodity Exchange Act (7 
U.S.C. 6s(e)(4)) is amended to read as follows: 
‘‘(4) 
EXCEPTIONS
TO
MARGIN
REQUIRE-
MENTS.— 
‘‘(A) IN GENERAL.—Paragraphs (2)(A)(ii) 
and (2)(B)(ii), including the initial and vari-
ation margin requirements imposed under such 
paragraphs, shall not apply to a swap— 
‘‘(i) in which a counterparty is a non- 
financial entity (as defined in section 
2(h)(7)(B)(ii)), regardless of whether the 
swap is required to be cleared; 
‘‘(ii) that qualifies for the exception 
provided in subparagraph (D) of section 
2(h)(7), or that would so qualify if the 
swap were required to be cleared; or 
‘‘(iii) that qualifies for an exception or 
exemption from the requirements of section 
2(h)(1)(A) pursuant to any Commission 
rule, regulation, or order. 
‘‘(B) PRESERVATION OF VARIATION MAR-
GIN EXCHANGE REQUIREMENT APPLICABLE TO 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS
CERTAIN
INSURANCE
COMPANIES.—Notwith-
standing subparagraph (A) of this paragraph, if 
an insurance company would be a financial en-
tity for purposes of section 2(h) if the swaps 
described in section 2(h)(7)(A)(iv)(II)(bb) of 
the insurance company were not excluded from 
the de minimis calculation under section 
2(h)(7)(A)(iv), then all swaps of the insurance 
company shall be subject to the variation mar-
gin requirements of paragraphs (2)(A)(ii) and 
(2)(B)(ii) of this subsection.’’. 
SEC. 5. MODIFICATION OF DEFINITION OF MAJOR SWAP 
PARTICIPANT. 
Section 1a(33)(A)(iii)(I) of the Commodity Exchange 
Act (7 U.S.C. 1a(33)(A)(iii)(I)) is amended by inserting 
‘‘, or a non-financial entity that would be considered to 
be a financial entity for purposes of section 2(h) but for 
the application of the de minimis exclusion provided for 
in section 2(h)(7)(A)(iv),’’ before ‘‘that is highly’’. 
Æ 
VerDate Sep 11 2014 
21:41 Oct 27, 2019
Jkt 099200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6301
E:\BILLS\H4726.IH
H4726
pamtmann on DSKBC07HB2PROD with BILLS