I 
108TH CONGRESS 
1ST SESSION H. R. 1109
To establish a Financial Markets Oversight Commission in order to combine 
the functions of the Commodity Futures Trading Commission and the 
Securities and Exchange Commission in a single independent regulatory 
commission, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2003
Mr. DEFAZIO introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on Agri-
culture, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To establish a Financial Markets Oversight Commission in 
order to combine the functions of the Commodity Fu-
tures Trading Commission and the Securities and Ex-
change Commission in a single independent regulatory 
commission, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Market Oversight Consolidation and OTC Derivatives 
Regulation Act’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents. 
Sec. 2. Purposes. 
Sec. 3. Definitions. 
Sec. 4. Effect on congressional jurisdiction. 
TITLE I—ESTABLISHMENT OF COMMISSION 
Sec. 101. Establishment. 
Sec. 102. Members: appointment; terms. 
Sec. 103. Organization of commission. 
Sec. 104. General Counsel. 
TITLE II—TRANSFERS OF FUNCTIONS 
Sec. 201. Commodity Futures Trading Commission functions. 
Sec. 202. Securities and Exchange Commission. 
Sec. 203. Jurisdiction of margin authority. 
TITLE III—FEDERAL FINANCIAL MARKETS COORDINATING 
COUNCIL 
Sec. 301. Establishment; membership. 
Sec. 302. Functions of the Council. 
Sec. 303. Staff; administrative support; expenses. 
TITLE IV—ADMINISTRATIVE PROVISIONS 
PART A—PERSONNEL PROVISIONS 
Sec. 401. Officers and employees. 
Sec. 402. Experts and consultants. 
PART B—GENERAL ADMINISTRATIVE PROVISIONS 
Sec. 411. General authority. 
Sec. 412. Delegation. 
Sec. 413. Reorganization. 
Sec. 414. Rules. 
Sec. 415. Contracts. 
Sec. 416. Regional and field offices. 
Sec. 417. Use of facilities. 
Sec. 418. Working capital fund. 
Sec. 419. Funds transfer. 
Sec. 420. Seal of Commission. 
Sec. 421. Annual report. 
TITLE V—TRANSITIONAL, SAVINGS, AND CONFORMING 
PROVISIONS 
Sec. 501. Transfer and allocation of appropriations and personnel. 
Sec. 502. Effect on personnel. 
Sec. 503. Agency terminations. 
Sec. 504. Incidental transfers. 
Sec. 505. Savings provisions. 
Sec. 506. Separability. 
Sec. 507. Reference.
Sec. 508. Amendments. 
Sec. 509. Transition. 
TITLE VI—REGULATION OF OTC DERIVATIVES 
Sec. 601. Regulation of over-the-counter derivatives. 
TITLE VII—EFFECTIVE DATE 
Sec. 701. Effective date.
SEC. 2. PURPOSES. 
The purposes of this Act are—
(1) to establish a single Federal regulatory body 
with jurisdiction over securities and derivatives, in-
cluding options, futures, swaps, and related markets 
and instruments and including over-the-counter de-
rivatives; 
(2) to consolidate and revise the authority for 
setting margin requirements on all such instru-
ments; 
(3) to coordinate the regulation of all financial 
markets; 
(4) to strengthen investor confidence in United 
States financial markets; and 
(5) to ensure the competitiveness of those mar-
kets. 
SEC. 3. DEFINITIONS. 
As used in this Act—
(1) the term ‘‘Commission’’ means the Finan-
cial Markets Oversight Commission established by 
section 101 of this Act; and
(2) the term ‘‘function’’ includes any duty, obli-
gation, power, authority, responsibility, right, privi-
lege, activity, or program. 
SEC. 4. EFFECT ON CONGRESSIONAL JURISDICTION. 
It is the sense of Congress that this Act shall not 
be construed to affect the jurisdiction of any committee 
or subcommittee of the Congress with respect to any func-
tion transferred to the Commission by this Act. 
TITLE I—ESTABLISHMENT OF 
COMMISSION 
SEC. 101. ESTABLISHMENT. 
There is established an independent regulatory com-
mission to be known as the Financial Markets Oversight 
Commission. 
SEC. 102. MEMBERS: APPOINTMENT; TERMS. 
(a) COMPOSITION OF COMMISSION.—The Commis-
sion shall be composed of five commissioners appointed by 
the President, by and with the advice and consent of the 
Senate. One of the commissioners shall be designated by 
the President as chairman. Not more than three of such 
members shall be members of the same political party. 
Each Commissioner shall be selected solely on the basis 
of integrity and demonstrated knowledge of the operations 
of the markets subject to the jurisdiction of the Commis-
sion.
(b) TERMS.—Each commissioner shall be appointed 
for a term of 5 years, except that—
(1) a commissioner may continue to serve after 
the expiration of such term until a successor is ap-
pointed and has qualified, but may not continue to 
so serve beyond the expiration of the next session of 
Congress beginning after the expiration of such 
term; 
(2) the terms of office of the commissioners 
first taking office after the enactment of this Act 
shall expire, as designated by the President at the 
time of their appointment—
(A) 1 at the end of 1 year; 
(B) 2 at the end of 3 years; and 
(C) 2 at the end of 5 years; and 
(3) any member appointed to fill a vacancy oc-
curring prior to the expiration of the term for which 
the predecessor was appointed shall be appointed for 
the remainder of such term. 
(c) CONFLICTS OF INTEREST.—
(1) IN GENERAL.—No commissioner shall en-
gage in any other business, vocation, or employment 
than that of serving as commissioner, nor shall any 
commissioner participate, directly or indirectly, in 
any market operations or transactions of a character
subject to regulation by the Commission pursuant to 
this title. 
(2) REIMBURSEMENT FOR TRAVEL.—Notwith-
standing any other provision of law, in accordance 
with regulations which the Commission shall pre-
scribe to prevent conflicts of interest, the Commis-
sion may accept payment and reimbursement, in 
cash or in kind, from non-Federal agencies, organi-
zations, and individuals for travel, subsistence, and 
other necessary expenses incurred by Commission 
members and employees in attending meetings and 
conferences concerning the functions or activities of 
the Commission. Any payment or reimbursement ac-
cepted shall be credited to the appropriated funds of 
the Commission. The amount of travel, subsistence, 
and other necessary expenses for members and em-
ployees paid or reimbursed under this subsection 
may exceed per diem amounts established in official 
travel regulations, but the Commission may include 
in its regulations under this subsection a limitation 
on such amounts. 
(3) 
PROFESSIONAL
FELLOWS.—Notwith-
standing any other provision of law, former employ-
ers of participants in the Commission’s professional 
fellows programs may pay such participants their ac-
tual expenses for relocation to Washington, District 
of Columbia, to facilitate their participation in such 
programs, and program participants may accept 
such payments. 
(d) FEES.—Notwithstanding any other provision of 
law, whenever any fee is required to be paid to the Com-
mission pursuant to any provision of the securities laws 
or any other law, the Commission may provide by rule that 
such fee shall be paid in a manner other than in cash. 
SEC. 103. ORGANIZATION OF COMMISSION. 
The Commission shall establish the principal divi-
sions and subdivisions of the Commission, except that the 
Commission shall establish a separate division with re-
sponsibility for functions relating to markets in physical 
commodities. 
SEC. 104. GENERAL COUNSEL. 
There shall be in the Commission an Office of Gen-
eral Counsel, headed by a General Counsel appointed by 
the President, by and with the advice and consent of the 
Senate.
TITLE II—TRANSFERS OF 
FUNCTIONS 
SEC. 201. COMMODITY FUTURES TRADING COMMISSION 
FUNCTIONS. 
There are transferred to the Commission all functions 
of the Commodity Futures Trading Commission and of 
any officer or component of the Commodity Futures Trad-
ing Commission. 
SEC. 202. SECURITIES AND EXCHANGE COMMISSION. 
There are transferred to the Commission all functions 
of the Security and Exchange Commission and of any offi-
cer or component of the Securities and Exchange Commis-
sion. 
SEC. 203. JURISDICTION OF MARGIN AUTHORITY. 
(a) MARGIN AUTHORITY WITH RESPECT TO SECURI-
TIES.—There is transferred to the Commission the func-
tions of the Board of Governors of the Federal Reserve 
System under section 7 of the Securities Exchange Act 
of 1934. 
(b) MARGIN AUTHORITY WITH RESPECT TO FU-
TURES.—Notwithstanding section 5a(12) of the Com-
modity Exchange Act, the Commission may—
(1) by order, direct contract markets to adjust 
the level of margin required on any contract; or
(2) by regulation, prescribe limits on the level 
of margin that a contract market may require on 
any class or category of contract; 
as necessary to ensure the financial integrity of such mar-
ket. 
TITLE III—FEDERAL FINANCIAL 
MARKETS 
COORDINATING 
COUNCIL 
SEC. 301. ESTABLISHMENT; MEMBERSHIP. 
(a) ESTABLISHMENT.—There is established in the ex-
ecutive branch a council to be known as the Federal Fi-
nancial Markets Coordinating Council. 
(b) MEMBERSHIP.—The Council shall be composed of 
the heads of the following agencies or their designees for 
this purpose: 
(1) The Board of Governors of the Federal Re-
serve System. 
(2) The Comptroller of the Currency. 
(3) The Department of the Treasury. 
(4) The Financial Markets Oversight Commis-
sion. 
(5) The National Credit Union Administration. 
(6) The Office of Thrift Supervision. 
(7) The Federal Deposit Insurance Corporation.
section on, or subject to the rules of, the entity, to 
the extent of the person’s actual losses that resulted 
from the transaction and were caused by the failure 
or violation. 
(C) A person seeking to enforce liability under 
this subsection must establish that the entity, offi-
cer, director, governor, committee member, or em-
ployee acted in bad faith in failing to take action or 
in taking the action as was taken, and that the fail-
ure or action caused the loss. 
(D) The rights of action authorized by this 
paragraph shall be the exclusive remedy under this 
section available to any person who sustains a loss 
as a result of—
(i) the alleged failure by an entity reg-
istered under this section or by any officer, di-
rector, governor, committee member, or em-
ployee to enforce any bylaw, rule, regulation, or 
resolution referred to in subparagraph (A) of 
this paragraph, or 
(ii) the taking of action in enforcing any 
bylaw, rule, regulation, or resolution referred to 
in this paragraph that is alleged to have vio-
lated this section, or any Commission rule, reg-
ulation, or order issued under this section.