(5 U.S.C. 5315–5316), in an office terminated pursuant 
to this Act shall also terminate. 
SEC. 504. INCIDENTAL TRANSFERS. 
(a) GENERAL AUTHORITY OF OMB.—The Director 
of the Office of Management and Budget, at such time 
or times as the Director shall provide, is authorized and 
directed to make such determinations as may be necessary 
with regard to the functions, offices, or portions thereof 
transferred by this Act, and to make such additional inci-
dental dispositions of personnel, assets, liabilities, grants, 
contracts, property, records, and unexpended balances of 
appropriations, authorizations, allocations, and other 
funds held, used, arising from, available to, or to be made 
available in connection with such functions, offices, or por-
tions thereof, as may be necessary to carry out the provi-
sions of this Act. The Director shall provide for the termi-
nation of the affairs of all entities terminated by this Act 
and for such further measures and dispositions as may 
be necessary to effectuate the purposes of this Act. 
(b) SES POSITIONS.—After consultation with the Di-
rector of the Office of Personnel Management, the Direc-
tor of the Office of Management and Budget is authorized, 
at such time as the Director of the Office of Management 
and Budget provides, to make such determinations as may 
be necessary with regard to the transfer of positions with-
in the Senior Executive Service in connection with func-
tions and offices transferred by this Act. 
SEC. 505. SAVINGS PROVISIONS. 
(a) CONTINUITY OF LEGAL INSTRUMENTS.—All or-
ders, determinations, rules, regulations, permits, grants, 
contracts, certificates, licenses, and privileges—
(1) which have been issued, made, granted, or 
allowed to become effective by the President, any 
Federal department or agency or official thereof, or 
by a court of competent jurisdiction, in the perform-
ance of functions which are transferred under this 
Act to the Commission, and 
(2) which are in effect at the time this Act 
takes effect, 
shall continue in effect according to their terms until 
modified, terminated, superseded, set aside, or revoked in 
accordance with the law by the President, the Commission, 
or other authorized official, a court of competent jurisdic-
tion, or by operation of law. 
(b) CONTINUITY OF PROCEEDINGS.—
(1) IN GENERAL.—The provisions of this Act 
shall not affect any proceedings, including notices of 
proposed rulemaking, or any application for any li-
cense, permit, certificate, or financial assistance 
pending on the effective date of this Act before any
department, agency, commission, or component 
thereof, functions of which are transferred by this 
Act; but such proceedings and applications, to the 
extent that they relate to functions so transferred, 
shall be continued. Orders shall be issued in such 
proceedings, appeals shall be taken therefrom, and 
payments shall be made pursuant to such orders, as 
if this Act had not been enacted; and orders issued 
in any such proceedings shall continue in effect until 
modified, terminated, superseded, or revoked by the 
Commission, by a court of competent jurisdiction, or 
by operation of law. Nothing in this subsection shall 
be deemed to prohibit the discontinuance or modi-
fication of any such proceeding under the same 
terms and conditions and to the same extent that 
such proceeding could have been discontinued or 
modified if this Act had not been enacted. 
(2) REGULATIONS CONCERNING TRANSFERS.—
The Commission is authorized to promulgate regula-
tions providing for the orderly transfer of pro-
ceedings continued under paragraph (1) to the Com-
mission. 
(c) PENDING LITIGATION.—Except as provided in 
subsection (e)—
(1) the provisions of this Act shall not affect 
suits commenced prior to the effective date of this 
Act, and 
(2) in all such suits, proceedings shall be had, 
appeals taken, and judgments rendered in the same 
manner and effect as if this Act had not been en-
acted. 
(d) NONABATEMENT.—No suit, action, or other pro-
ceeding commenced by or against any officer in the official 
capacity of such individual as an officer of any department 
or agency, functions of which are transferred by this Act, 
shall abate by reason of the enactment of this Act. No 
cause of action by or against any department or agency, 
functions of which are transferred by this Act, or by or 
against any officer thereof in the official capacity of such 
officer shall abate by reason of the enactment of this Act. 
(e) SUBSTITUTION OF PARTIES.—If, before the date 
on which this Act takes effect, any department or agency, 
or officer thereof in the official capacity of such officer, 
is a party to a suit, and under this Act any function of 
such department, agency, or officer is transferred to the 
Commission or any other official of the Commission, then 
such suit shall be continued with the Commission or other 
appropriate official of the Commission substituted or 
added as a party.
(f) JUDICIAL REVIEW AS REQUIRED BY EXISTING 
LAW.—Orders and actions of the Commission in the exer-
cise of functions transferred under this Act shall be sub-
ject to judicial review to the same extent and in the same 
manner as if such orders and actions had been by the 
agency or office, or part thereof, exercising such functions 
immediately preceding their transfer. Any statutory re-
quirements relating to notice, hearings, action upon the 
record, or administrative review that apply to any function 
transferred by this Act shall apply to the exercise of such 
function by the Commission. 
SEC. 506. SEPARABILITY. 
If any provision of this Act or the application thereof 
to any person or circumstance is held invalid, neither the 
remainder of this Act nor the application of such provision 
to other persons or circumstances shall be affected there-
by. 
SEC. 507. REFERENCE. 
With respect to any function transferred by this Act 
and exercised on or after the effective date of this Act, 
reference in any other Federal law to any department, 
commission, or agency or any officer or office the func-
tions of which are so transferred shall be deemed to refer 
to the Commission, other official, or component of the 
Commission to which this Act transfers such functions.
SEC. 508. AMENDMENTS. 
(a) EXECUTIVE SCHEDULE SALARIES.—
(1) CHAIRMAN.—Section 5314 of title 5, United 
States Code, is amended—
(A) by striking ‘‘Chairman, Securities and 
Exchange Commission.’’ and inserting ‘‘Chair-
man, Markets and Trading Commission.’’; and 
(B) by striking ‘‘Chairman, Commodity 
Futures Trading Commission.’’. 
(2) MEMBERS.—Section 5315 of title 5, United 
States Code, is amended—
(A) by striking ‘‘Members, Securities and 
Exchange Commission’’ and inserting ‘‘Mem-
bers, Markets and Trading Commission’’; and 
(B) by striking ‘‘Members, Commodity Fu-
tures Trading Commission.’’. 
(b) CONFORMING AMENDMENTS.—
(1) SECURITIES
EXCHANGE
ACT.—Sections 4 
and 35 of the Securities Exchange Act of 1934 are 
repealed. 
(2) COMMODITY EXCHANGE ACT.—Section 2(a) 
of the Commodity Exchange Act is amended by 
striking paragraphs (2), (3), and (4). 
SEC. 509. TRANSITION. 
With the consent of the appropriate department or 
agency head concerned, the Commission is authorized to
utilize the services of such officers, employees, and other 
personnel of the departments and agencies from which 
functions or offices have been transferred to the Commis-
sion, and funds appropriated to such functions or offices 
for such period of time as may reasonably be needed to 
facilitate the orderly implementation of this Act. 
TITLE VI—REGULATION OF OTC 
DERIVATIVES 
SEC. 601. REGULATION OF OVER-THE-COUNTER DERIVA-
TIVES. 
(a) IN GENERAL.—The Commission shall prescribe 
such rules and regulations governing over-the-counter de-
rivatives dealers and over-the-counter derivatives trans-
actions as may be necessary and appropriate in the public 
interest and for the protection of investors to ensure the 
safety and soundness of financial markets and the Na-
tion’s economy as a whole, including rules and regulations 
with respect to—
(1) the eligibility of persons to trade over-the-
counter derivatives; 
(2) registration requirements for over-the-
counter derivatives dealers, institutions employing 
over-the-counter derivatives dealers, and facilities on 
which over-the-counter derivatives transactions are 
executed, which shall be similar to the registration
requirements prescribed under the Securities Ex-
change Act of 1934 for securities dealers, for insti-
tutions employing securities dealers, and for securi-
ties exchanges; 
(3) adequate capital requirements for over-the-
counter derivatives dealers, that are similar to the 
net capital requirements applicable to securities 
dealers under section 15(c)(3) of the Securities Ex-
change Act of 1934; 
(4) adequate collateral or margin for over-the-
counter derivatives transactions, which rules and 
regulations shall be prescribed in consultation with 
the Board of Governors of the Federal Reserve Sys-
tem; 
(5) registration and approval of facilities for the 
execution of over-the-counter derivatives trans-
actions; 
(6) sales practices, including sales licensing and 
training; 
(7) self-regulation; 
(8) internal risk control; 
(9) disciplinary procedures; 
(10) violations and enforcement; and 
(11) standardized reporting and recordkeeping 
requirements.
(b) REPORTING REQUIREMENTS.—
(1) IN GENERAL.—An over-the-counter deriva-
tives dealer shall submit to the Commission, in such 
form and manner as the Commission may pre-
scribe—
(A) a daily report on price, volume of 
transactions, open interest, implied volatility of 
options contracts, and the positions of large 
traders in the over-the-counter derivatives mar-
ket; and 
(B) a quarterly report on the over-the-
counter derivatives in the dealer’s own account, 
and for each type of over-the-counter derivative, 
the currency, maturity, and the underlying 
basis for pricing. 
(2) DATA ELEMENTS.—The Commission shall 
prescribe how each feature of an over-the-counter 
derivatives transaction is to be reported to the Com-
mission pursuant to paragraph (1). 
(3) RETROACTIVE
APPLICABILITY.—On reg-
istration of an over-the-counter derivatives dealer 
under this section, the dealer shall file with the 
Commission a report of the type described in para-
graph (1)(B) covering the calendar quarter most re-
cently ending before the registration date.
(c) DEFINITIONS.—In this section: 
(1) OVER-THE-COUNTER
DERIVATIVES
DEAL-
ER.—The term ‘‘over-the-counter derivatives dealer’’ 
means—
(A) any person engaged in the business of 
buying, selling, trading, and clearing over-the-
counter derivatives for the person’s own ac-
count, as an intermediary for others, through 
an intermediary, or otherwise; and 
(B) any counter party to the transaction 
whose exposure to over-the-counter derivatives 
exceeds such threshold as the Commission shall 
prescribe by regulation. 
(2) 
OVER-THE-COUNTER
DERIVATIVE.—The 
term ‘‘over-the-counter derivative’’ means—
(A)(i) any agreement, contract, or trans-
action that is not subject to regulation—
(I) under the Securities Exchange Act 
of 1934 as a security (as defined in section 
3(a)(10) of such Act) or a security future 
product (as defined in section 3(a)(56) of 
such Act); or 
(II) as a financial instrument traded 
on a board of trade which, before Decem-
ber 21, 2000, was designated by the Com-
mission as a contract market; or 
(ii) any condition incorporated by reference 
in any such agreement, contract, or transaction; 
and 
(B) the value of which agreement, con-
tract, transaction, or condition depends on—
(i) an interest rate, exchange rate, 
currency, security, security index, credit 
risk or measure, debt or equity instrument, 
index or measure of inflation or other mac-
roeconomic index; 
(ii) any other rate, differential, index 
or measure of economic or commercial 
risk, return, or value; 
(iii) any economic or commercial index 
based on prices, rates, value or levels that 
are beyond the control of any party to the 
relevant contract, agreement or trans-
action; or 
(iv) an occurrence, extent of an occur-
rence, or contingency that is beyond the 
control of the parties to the relevant con-
tract, agreement, or transaction. 
(d) CRIMINAL PROVISIONS.—
(1) It shall be a felony punishable by a fine of 
not more than $1,000,000 (or $500,000, in the case 
of a person who is an individual), imprisonment for 
not more than 5 years, or both, together with the 
costs of prosecution, for: 
(A) Any person registered or required to 
be registered under this section, or any em-
ployee or agent thereof, to embezzle, steal, pur-
loin, or with criminal intent convert to the per-
son’s use or to the use of another, any money, 
securities, or property having a value in excess 
of $100, which was received by the person or 
any employee or agent thereof to margin, guar-
antee, or secure the trades or contracts of any 
customer or accruing to the customer as a re-
sult of the trades or contracts or which other-
wise was received from any customer, client, or 
pool participant in connection with the business 
of the person. In this subparagraph, the term 
‘‘value’’ means face, par, or market value, or 
cost price, either wholesale or retail, whichever 
is greater. 
(B) Any person to manipulate or attempt 
to manipulate the price of any over-the-counter 
derivative in interstate commerce, or for future
prescribe, unless the Commission determines that 
the imposition of the suspension, denial of registra-
tion or reregistration, or market bar is not required 
to protect the public interest. The Commission may 
upon petition later review the disqualification and 
market bar and for good cause shown reduce the pe-
riod of the disqualification. 
(3) It shall be a felony punishable by a fine of 
not more than $500,000, imprisonment for not more 
than 5 years, or both, together with the costs of 
prosecution, for any Commissioner of the Commis-
sion or any employee or agent of the Commission, to 
participate, directly or indirectly, in any over-the-
counter derivatives transaction, or any transaction 
for the delivery of any over-the-counter derivative 
under a standardized contract commonly known to 
the trade as a margin account, margin contract, le-
verage account, or leverage contract, or under any 
contract, account, arrangement, scheme, or device 
that the Commission determines serves the same 
function or functions as such a standardized con-
tract, or is marketed or managed in substantially 
the same manner as such a standardized contract, 
or for any such person to participate, directly or in-
directly, in any investment transaction in an over-
the-counter derivative if nonpublic information is 
used in the investment transaction, if the investment 
transaction is prohibited by rule or regulation of the 
Commission, or if the investment transaction is ef-
fected by means of any instrument regulated by the 
Commission. The foregoing prohibitions shall not 
apply to any transaction or class of transactions that 
the Commission, by rule or regulation, has deter-
mined would not be contrary to the public interest 
or otherwise inconsistent with the purposes of this 
paragraph. 
(4) It shall be a felony punishable by a fine of 
not more than $500,000, imprisonment for not more 
than 5 years, or both, together with the costs of 
prosecution for: 
(A) Any Commissioner of the Commission 
or any employee or agent of the Commission 
who, by virtue of his employment or position, 
acquires information which may affect or tend 
to affect the price of any over-the-counter de-
rivatives transaction and which information has 
not been made public to impart such informa-
tion with intent to assist another person, di-
rectly or indirectly, to participate in any over-
the-counter derivatives transaction or in any
transaction for the delivery of any over-the-
counter derivative under a standardized con-
tract commonly known to the trade as a margin 
account, margin contract, leverage account, or 
leverage contract, or under any contract, ac-
count, arrangement, scheme, or device that the 
Commission determines serves the same func-
tion or functions as such a standardized con-
tract, or is marketed or managed in substan-
tially the same manner as such a standardized 
contract. 
(B) Any person to acquire such informa-
tion from any Commissioner of the Commission 
or any employee or agent of the Commission 
and to use such information in any over-the-
counter derivatives transaction or in any trans-
action for the delivery of any over-the-counter 
derivative under a standardized contract com-
monly known to the trade as a margin account, 
margin contract, leverage account, or leverage 
contract, or under any contract, account, ar-
rangement, scheme, or device that the Commis-
sion determines serves the same function or 
functions as such a standardized contract, or is
marketed or managed in substantially the same 
manner as such a standardized contract. 
(5)(A) It shall be a felony for any person—
(i) who is an employee, member of the gov-
erning board, or member of any entity reg-
istered under this section, in violation of a regu-
lation issued by the Commission, willfully and 
knowingly to trade for the person’s own ac-
count, or for or on behalf of any other account, 
in over-the-counter derivatives transactions on 
the basis of, or willfully and knowingly to dis-
close for any purpose inconsistent with the per-
formance of such person’s official duties as an 
employee or member, any material nonpublic in-
formation obtained through special access re-
lated to the performance of such duties; or 
(ii) willfully and knowingly to trade for the 
person’s own account, or for or on behalf of any 
other account, in over-the-counter derivatives 
transactions on the basis of any material non-
public information that the person knows was 
obtained in violation of clause (i) from an em-
ployee, member of the governing board, or 
member of any committee of an entity reg-
istered under this section.
(B) The felony shall be punishable by a fine of 
not more than $500,000, plus the amount of any 
profits realized from the trading or disclosure made 
in violation of this paragraph, or imprisonment for 
not more than 5 years, or both, together with the 
costs of prosecution. 
(e) PRIVATE RIGHTS OF ACTION.—
(1)(A) Any person (other than an entity reg-
istered under this section) who violates this section 
or a regulation prescribed under this section or who 
willfully aids, abets, counsels, induces, or procures 
the commission of a violation of this section or of 
such a regulation shall be liable for actual damages 
caused by the violation to any other person—
(i) who received trading advice from such 
person for a fee; 
(ii) who purchased or sold an over-the-
counter derivative if the violation constitutes a 
manipulation of the price of any such derivative 
or of a rate, currency, index, measure, value, or 
level on which such a derivative is based; 
(iii) who made through the person any con-
tract of sale of any over-the-counter derivative 
for future delivery (or option on such a contract 
or derivative), or who deposited with or paid to
the person money, securities, or property (or in-
curred debt in lieu thereof) in connection with 
any order to make such a contract; or 
(iv) who purchased or sold a contract re-
ferred to in clause (iii) if the violation con-
stitutes a manipulation of the price of any such 
contract or the price of any derivative under-
lying the contract. 
(B) Except as provided in paragraph (2), the 
rights of action authorized by this paragraph shall 
be the exclusive remedies under this section available 
to any person who sustains loss as a result of any 
alleged violation of this section. This paragraph shall 
not be construed to limit or abridge the rights of the 
parties to agree in advance of a dispute on any 
forum for resolving claims under this subsection, in-
cluding arbitration. 
(C) In an action arising from a violation in the 
execution of an order on the floor of an entity reg-
istered under this section, the person referred to in 
subparagraph (A) shall be liable for—
(i) actual damages proximately caused by 
the violation; and 
(ii) if the violation is willful and inten-
tional, punitive or exemplary damages equal to
(3) The United States district courts shall have 
exclusive jurisdiction of actions brought under this 
subsection. Any such action shall be brought not 
later than 2 years after the date the cause of action 
arises. Any action brought under paragraph (1) may 
be brought in any judicial district in which the de-
fendant is found, resides, or transacts business, or 
in the judicial district in which any act or trans-
action constituting the violation occurs. Process in 
such action may be served in any judicial district of 
which the defendant is an inhabitant or wherever the 
defendant may be found. 
(f) SUPERIORITY TO COMMODITY EXCHANGE ACT 
AND THE COMMODITY FUTURES MODERNIZATION ACT OF 
2000.—In the event of any conflict between any provision 
of, or regulation prescribed under, this section and any 
provision of, or regulation prescribed under, the Com-
modity Exchange Act or the Commodity Futures Mod-
ernization Act of 2000, the provison of, or regulation pre-
scribed under, this section shall control. 
(g) CONFORMING AMENDMENTS.—The Commodity 
Exchange Act is amended—
(1) in section 1a (7 U.S.C. 1a)—
(A) by striking paragraph (13); and
(B) in paragraph (14), by striking ‘‘an ex-
cluded commodity or’’; and 
(2) in section 2 (7 U.S.C. 2)—
(A) in subsection (c)(1)—
(i) by adding ‘‘or’’ at the end of sub-
paragraph (E); and 
(ii) by striking subparagraph (F) and 
redesignating subparagraph (G) as sub-
paragraph (F); and 
(B) in subsection (i)(1)(A), by striking 
‘‘2(d),’’. 
TITLE VII—EFFECTIVE DATE 
SEC. 701. EFFECTIVE DATE. 
(a) IN GENERAL.—The provisions of this Act shall 
take effect 180 days after the first Commissioner takes 
office, or on any later date on or before October 1, 2004, 
as the President may prescribe and publish in the Federal 
Register, except that at any time on or after the date of 
enactment of this Act—
(1) any of the officers provided for in title II 
of this Act may be nominated and appointed, as pro-
vided in such title; and 
(2) the Commission may promulgate regulations 
pursuant to section 505(b)(2) of this Act.
(b) TRANSITION EXPENSES.—Funds available to any 
department or agency (or any official department or agen-
cy or any official or component thereof), the functions or 
offices of which are transferred to the Commission by this 
Act, may, with the approval of the Director of the Office 
of Management and Budget, be used to pay the compensa-
tion and expenses of any officer appointed pursuant to this 
title and other transitional and planning expenses associ-
ated with the establishment of the Commission or transfer 
of functions or offices thereto until such time as funds 
for such purposes are otherwise available.
Æ