SECTION 1. TREATMENT OF AFFILIATE TRANSACTIONS. 
(a) COMMODITY EXCHANGE ACT AMENDMENTS.— 
Section 2(h)(7)(D) of the Commodity Exchange Act (7 
U.S.C. 2(h)(7)(D)) is amended— 
(1) by redesignating clause (iii) as clause (v); 
(2) by striking clauses (i) and (ii) and inserting 
the following: 
‘‘(i) IN GENERAL.—An affiliate of a 
person that qualifies for an exception 
under subparagraph (A) (including affiliate 
entities predominantly engaged in pro-
viding financing for the purchase of the 
merchandise or manufactured goods of the 
person) may qualify for the exception only 
if the affiliate— 
‘‘(I) enters into the swap to 
hedge or mitigate the commercial risk 
of the person or other affiliate of the 
person that is not a financial entity, 
and the commercial risk that the affil-
iate is hedging or mitigating has been 
transferred to the affiliate; 
‘‘(II) is directly and wholly-owned 
by another affiliate qualified for the 
exception under this subparagraph or 
an entity that is not a financial entity;
‘‘(III) is not indirectly majority- 
owned by a financial entity; 
‘‘(IV) is not ultimately owned by 
a parent company that is a financial 
entity; and 
‘‘(V) does not provide any serv-
ices, financial or otherwise, to any af-
filiate that is a nonbank financial 
company supervised by the Board of 
Governors (as defined under section 
102 of the Financial Stability Act of 
2010). 
‘‘(ii) LIMITATION ON QUALIFYING AF-
FILIATES.—The exception in clause (i) 
shall not apply if the affiliate is— 
‘‘(I) a swap dealer; 
‘‘(II) a security-based swap deal-
er; 
‘‘(III) a major swap participant; 
‘‘(IV) a major security-based 
swap participant; 
‘‘(V) a commodity pool; 
‘‘(VI) a bank holding company; 
‘‘(VII) a private fund, as defined 
in section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80– 
b–2(a)); 
‘‘(VIII) an employee benefit plan 
or government plan, as defined in 
paragraphs (3) and (32) of section 3 
of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 
1002); 
‘‘(IX) an insured depository insti-
tution; 
‘‘(X) a farm credit system insti-
tution; 
‘‘(XI) a credit union; 
‘‘(XII) a nonbank financial com-
pany supervised by the Board of Gov-
ernors (as defined under section 102 
of the Financial Stability Act of 
2010); or 
‘‘(XIII) an entity engaged in the 
business of insurance and subject to 
capital requirements established by an 
insurance governmental authority of a 
State, a territory of the United 
States, the District of Columbia, a 
country other than the United States,
or a political subdivision of a country 
other than the United States that is 
engaged in the supervision of insur-
ance companies under insurance law. 
‘‘(iii) LIMITATION ON AFFILIATES’ AF-
FILIATES.—Unless the Commission deter-
mines, by order, rule, or regulation, that it 
is in the public interest, the exception in 
clause (i) shall not apply with respect to an 
affiliate if the affiliate is itself affiliated 
with— 
‘‘(I) a major security-based swap 
participant; 
‘‘(II) a security-based swap deal-
er; 
‘‘(III) a major swap participant; 
or 
‘‘(IV) a swap dealer. 
‘‘(iv) 
CONDITIONS
ON
TRANS-
ACTIONS.—With respect to an affiliate that 
qualifies for the exception in clause (i)— 
‘‘(I) the affiliate may not enter 
into any swap other than for the pur-
pose of hedging or mitigating com-
mercial risk; and
‘‘(II) neither the affiliate nor any 
person affiliated with the affiliate that 
is not a financial entity may enter 
into a swap with or on behalf of any 
affiliate that is a financial entity or 
otherwise assume, net, combine, or 
consolidate the risk of swaps entered 
into by any such financial entity, ex-
cept one that is an affiliate that quali-
fies for the exception under clause 
(i).’’; and 
(3) by adding at the end the following: 
‘‘(vi) RISK MANAGEMENT PROGRAM.— 
Any swap entered into by an affiliate that 
qualifies for the exception in clause (i) 
shall be subject to a centralized risk man-
agement program of the affiliate, which is 
reasonably designed both to monitor and 
manage the risks associated with the swap 
and to identify each of the affiliates on 
whose behalf a swap was entered into.’’. 
(b) SECURITIES EXCHANGE ACT OF 1934 AMEND-
MENT.—Section 3C(g)(4) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c–3(g)(4)) is amended—
(1) by redesignating subparagraph (C) as sub-
paragraph (E); 
(2) by striking subparagraphs (A) and (B) and 
inserting the following: 
‘‘(A) IN GENERAL.—An affiliate of a per-
son that qualifies for an exception under this 
subsection (including affiliate entities predomi-
nantly engaged in providing financing for the 
purchase of the merchandise or manufactured 
goods of the person) may qualify for the excep-
tion only if the affiliate— 
‘‘(i) enters into the security-based 
swap to hedge or mitigate the commercial 
risk of the person or other affiliate of the 
person that is not a financial entity, and 
the commercial risk that the affiliate is 
hedging or mitigating has been transferred 
to the affiliate; 
‘‘(ii) is directly and wholly-owned by 
another affiliate qualified for the exception 
under this paragraph or an entity that is 
not a financial entity; 
‘‘(iii) is not indirectly majority-owned 
by a financial entity;
shall not apply with respect to an affiliate if 
such affiliate is itself affiliated with— 
‘‘(i) a major security-based swap par-
ticipant; 
‘‘(ii) a security-based swap dealer; 
‘‘(iii) a major swap participant; or 
‘‘(iv) a swap dealer. 
‘‘(D) CONDITIONS
ON
TRANSACTIONS.— 
With respect to an affiliate that qualifies for 
the exception in subparagraph (A)— 
‘‘(i) such affiliate may not enter into 
any security-based swap other than for the 
purpose of hedging or mitigating commer-
cial risk; and 
‘‘(ii) neither such affiliate nor any 
person affiliated with such affiliate that is 
not a financial entity may enter into a se-
curity-based swap with or on behalf of any 
affiliate that is a financial entity or other-
wise assume, net, combine, or consolidate 
the risk of security-based swaps entered 
into by any such financial entity, except 
one that is an affiliate that qualifies for 
the exception under subparagraph (A).’’; 
and
(3) by adding at the end the following: 
‘‘(F) RISK MANAGEMENT PROGRAM.—Any 
security-based swap entered into by an affiliate 
that qualifies for the exception in subparagraph 
(A) shall be subject to a centralized risk man-
agement program of the affiliate, which is rea-
sonably designed both to monitor and manage 
the risks associated with the security-based 
swap and to identify each of the affiliates on 
whose behalf a security-based swap was entered 
into.’’. 
Passed the House of Representatives November 16, 
2015. 
Attest: 
Clerk.
114TH CONGRESS 
1ST SESSION 
H. R. 1317 
AN ACT 
To amend the Commodity Exchange Act and the 
Securities Exchange Act of 1934 to specify how 
clearing requirements apply to certain affiliate 
transactions, and for other purposes.