A bill to authorize the regulation of credit default swaps and other swap agreements, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Authorizing the Regulation of Swaps 
Act''.

SEC. 2. REPEAL OF PROHIBITION ON CERTAIN REGULATION OF SWAP AGREEMENTS.

    The following provisions of law are repealed:
            (1) Sections 206A, 206B, and 206C of the Gramm-Leach-Bliley 
        Act (15 U.S.C. 78c note).
            (2) Section 2A of the Securities Act of 1933 (15 U.S.C. 
        77b-1).
            (3) Section 17(d) of the Securities Act of 1933 (15 U.S.C. 
        77q(d)).
            (4) Section 3A of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c-1).
            (5) Section 9(i) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78i(i)).
            (6) Section 15(i) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78o(i)), as added by section 303(f) of the Commodity 
        Futures Modernization Act of 2000 (Public Law 106-554; 114 
        Stat. 2763A-455).
            (7) Section 16(g) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78p(g)).
            (8) Section 20(f) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78t(f)).
            (9) Section 21A(g) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78u-1(g)).
            (10) Sections 301(b) and 304 of the Commodity Futures 
        Modernization Act of 2000 (Public Law 106-554; 114 Stat. 2763A-
        451, 2763A-457).
            (11) Sections 403, 404, and 407 of the Legal Certainty for 
        Bank Products Act of 2000 (7 U.S.C. 27a, 27b, 27e).
            (12) Subsection (d), subsection (g), and paragraphs (1) and 
        (2) of subsection (h) of section 2 of the Commodity Exchange 
        Act (7 U.S.C. 2).
            (13) Section 5d of the Commodity Exchange Act (7 U.S.C. 7a-
        3).

SEC. 3. AUTHORIZATION OF REGULATION AND OVERSIGHT REGARDING SWAP 
              AGREEMENTS.

    (a) Authorization of Regulation and Oversight.--Notwithstanding any 
other provision of law, and subject to subsections (b) through (d), 
each Federal financial regulator may--
            (1) exercise oversight over--
                    (A) any swap agreement that is entered into, 
                purchased, or sold (or as to which the transaction, 
                purchase, or sale is effected) by any financial 
                institution, entity, or person (for its own account or 
                for the account of others) that is subject to the 
                jurisdiction of the Federal financial regulator; and
                    (B) any swap agreement that is subject to the 
                jurisdiction of the Federal financial regulator; and
            (2) promulgate, interpret, and enforce regulations, issue 
        orders of general applicability, and impose disclosure, 
        reporting, or recordkeeping requirements, procedures, or 
        standards, relating to any swap agreement--
                    (A) that is entered into, purchased, or sold (or as 
                to which the transaction, purchase, or sale is 
                effected) by any financial institution, entity, or 
                person (for its own account or for the account of 
                others) that is subject to the jurisdiction of the 
                Federal financial regulator; and
                    (B) that is subject to the jurisdiction of the 
                Federal financial regulator.
    (b) Exchanges and Trading Facilities.--In carrying out subsection 
(a)--
            (1) the Securities and Exchange Commission (and not any 
        other Federal financial regulator) shall exercise oversight and 
        carry out regulatory or oversight activity over--
                    (A) any exchange or clearing agency (as those terms 
                are defined in section 3(a) of the Securities Exchange 
                Act of 1934 (15 U.S.C. 78c(a)); and
                    (B) any swap agreement traded on or cleared through 
                such exchange or clearing agency; and
            (2) the Commodity Futures Trading Commission (and not any 
        other Federal financial regulator) shall exercise oversight and 
        carry out regulatory or oversight activity over--
                    (A) any trading facility or registered entity (as 
                those terms are defined in section 1a of the Commodity 
                Exchange Act (7 U.S.C. 1a)); and
                    (B) any swap agreement executed on, traded on, or 
                cleared through such trading facility or registered 
                entity.
    (c) Rules of Construction.--Nothing in this Act may be construed 
as--
            (1) limiting or reducing the authority of a Federal 
        financial regulator in effect on the date of enactment of this 
        Act with respect to swap agreements;
            (2) affecting the authority of the Commodity Futures 
        Trading Commission under section 2(h)(3) or 4(c) of the 
        Commodity Exchange Act (7 U.S.C. 2(h)(3), 6(c)), or affecting 
        any exemption granted under that section 4(c); or
            (3) requiring any swap agreement to be--
                    (A) conducted on or subject to the rules of a board 
                of trade which has been designated or registered by the 
                Commodity Futures Trading Commission as a contract 
                market or derivatives transaction execution facility; 
                or
                    (B) traded through an exchange or broker or dealer 
                registered or required to be registered under the 
                Securities Exchange Act of 1934 (15 U.S.C. 78a et 
                seq.).
    (d) Consistent Treatment of Swap Agreements.--Prior to taking 
action under subsection (a)(2), each Federal financial regulator shall 
consult, work, and cooperate with other Federal financial regulators to 
promote consistency in the treatment of swap agreements.

SEC. 4. DEFINITIONS.

    For the purposes of this Act, the following definitions shall 
apply:
            (1) Federal financial regulator.--
                    (A) In general.--The term ``Federal financial 
                regulator'' means--
                            (i) the Commodity Futures Trading 
                        Commission;
                            (ii) the Federal Deposit Insurance 
                        Corporation;
                            (iii) the Board of Governors of the Federal 
                        Reserve System;
                            (iv) the National Credit Union 
                        Administration;
                            (v) the Office of the Comptroller of the 
                        Currency;
                            (vi) the Office of Thrift Supervision;
                            (vii) the Securities and Exchange 
                        Commission; and
                            (viii) any other Federal agency that is 
                        authorized under any provision of Federal law 
                        to regulate any financial institution or type 
                        or class of financial instrument or offering 
                        thereof.
            (2) Purchase; sale.--The terms ``purchase'' and ``sale'', 
        when used with respect to a swap agreement, means the 
        execution, termination (prior to its scheduled maturity date), 
        assignment, exchange, or similar transfer or conveyance of, or 
        extinguishing of rights or obligations under a swap agreement, 
        as the context may require.
            (3) Swap agreement.--
                    (A) In general.--The term ``swap agreement'' means 
                any agreement, contract, or transaction between 
                eligible contract participants (as defined in section 
                1a(12) of the Commodity Exchange Act (7 U.S.C. 
                1a(12))), the material terms of which (other than price 
                and quantity) are subject to individual negotiation and 
                that--
                            (i) is a put, call, cap, floor, collar, or 
                        similar option of any kind for the purchase or 
                        sale of, or based on the value of, 1 or more 
                        interest or other rates, currencies, 
                        commodities, indices, quantitative measures, or 
                        other financial or economic interests or 
                        property of any kind;
                            (ii) provides for any purchase, sale, 
                        payment, or delivery (other than a dividend on 
                        an equity security) that is dependent on the 
                        occurrence, nonoccurrence, or the extent of the 
                        occurrence of any event or contingency 
                        associated with a potential financial, 
                        economic, or commercial consequence;
                            (iii) provides on an executory basis for 
                        the exchange, on a fixed or contingent basis, 
                        of 1 or more payments based on the value or 
                        level of 1 or more interest or other rates, 
                        currencies, commodities, securities, instrument 
                        of indebtedness, indices, quantitative 
                        measures, or other financial or economic 
                        interests or property of any kind, or any 
                        interest therein or based on the value thereof, 
                        and that transfers, as between the parties to 
                        the transactions, in whole or in part, the 
                        financial risk associated with a future change 
                        in any such value or level without also 
                        conveying a current or future direct or 
                        indirect ownership interest in an asset 
                        (including any enterprise or investment pool) 
                        or liability that incorporates the financial 
                        risk so transferred, including any such 
                        agreement, contract, or transaction commonly 
                        known as an ``interest rate swap'', including a 
                        rate floor, rate cap, rate collar, cross-
                        currency rate swap, basis swap, currency swap, 
                        equity index swap, equity swap, debt index 
                        swap, debt swap, credit spread, credit default 
                        swap, credit swap, weather swap, or commodity 
                        swap;
                            (iv) provides for the purchase or sale, on 
                        a fixed or contingent basis, of any commodity, 
                        currency, instrument, interest, right, service, 
                        good, articles, or property of any kind; or
                            (v) is any combination or permutation of, 
                        or option on, any agreement, contract, or 
                        transaction described in any of clauses (i) 
                        through (iv).
                    (B) Exclusions.--The term ``swap agreement'' does 
                not include--
                            (i) any put, call, straddle, option, or 
                        privilege on any security, certificate of 
                        deposit, or group or index of securities, 
                        including any interest therein or based on the 
                        value thereof;
                            (ii) any put, call, straddle, option, or 
                        privilege entered into on a national securities 
                        exchange registered pursuant to section 6(a) of 
                        the Securities Exchange Act of 1934 (15 U.S.C. 
                        78f(a)) relating to foreign currency;
                            (iii) any agreement, contract, or 
                        transaction providing for the purchase or sale 
                        of 1 or more securities on a fixed basis;
                            (iv) any agreement, contract, or 
                        transaction providing for the purchase or sale 
                        of 1 or more securities on a contingent basis, 
                        unless the agreement, contract, or transaction 
                        predicates the purchase or sale on the 
                        occurrence of a bona fide contingency that 
                        might reasonably be expected to affect or be 
                        affected by the creditworthiness of a party 
                        other than a party to the agreement, contract, 
                        or transaction;
                            (v) any note, bond, or evidence of 
                        indebtedness that is a security; or
                            (vi) any agreement, contract, or 
                        transaction that is--
                                    (I) based on a security; and
                                    (II) entered into directly or 
                                through an underwriter (as defined in 
                                section 2(a) of the Securities Act of 
                                1933 (15 U.S.C. 77b(a))) by the issuer 
                                of the security for the purpose of 
                                raising capital, unless such agreement, 
                                contract, or transaction is entered 
                                into to manage a risk associated with 
                                capital raising.
                    (C) Inclusion.--The term ``swap agreement'' 
                includes a master agreement that provides for an 
                agreement, contract, or transaction that is a swap 
                agreement pursuant to subparagraphs (A) and (B), 
                together with all supplements to any such master 
                agreement, without regard to whether the master 
                agreement contains an agreement, contract, or 
                transaction that is not a swap agreement pursuant to 
                subparagraphs (A) and (B), except that the master 
                agreement shall be considered to be a swap agreement 
                only with respect to each agreement, contract, or 
                transaction under the master agreement that is a swap 
                agreement pursuant to subparagraphs (A) and (B).
                    (D) Meaning of security.--For purposes of this 
                paragraph, the term ``security'' has the same meaning 
                as in section 2(a)(1) of the Securities Act of 1933 (15 
                U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).

SEC. 5. CONFORMING AMENDMENTS.

    (a) Securities Act of 1933.--Section 17(a) of the Securities Act of 
1933 (15 U.S.C. 77q(a)) is amended by striking ``security-based swap 
agreement (as defined in section 206B of the Gramm-Leach-Bliley Act)'' 
and inserting ``swap agreement''.
    (b) Securities Exchange Act of 1934.--The Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.) is amended--
            (1) by striking ``security-based swap agreement (as defined 
        in section 206B of the Gramm-Leach-Bliley Act)'' each place 
        that term appears and inserting ``swap agreement'';
            (2) by striking ``security-based swap agreements (as 
        defined in section 206B of the Gramm-Leach-Bliley Act)'' each 
        place that term appears and inserting ``swap agreements'';
            (3) in each of sections 9 and 16 (15 U.S.C. 78i, 78p)--
                    (A) by striking ``security-based swap agreement'' 
                each place that term appears and inserting ``swap 
                agreement''; and
                    (B) by striking ``security-based swap agreements'' 
                each place that term appears and inserting ``swap 
                agreements'';
            (4) in section 10(b) (15 U.S.C. 78j(b)), by striking 
        ``securities-based swap agreement (as defined in section 206B 
        of the Gramm-Leach-Bliley Act)'' and inserting ``swap 
        agreement'';
            (5) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by 
        striking ``security-based swap agreement (as defined in section 
        206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note))'' 
        and inserting ``swap agreement''; and
            (6) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by 
        striking ``2(c), 2(d), 2(f), or 2(g)'' and inserting ``2(c) or 
        2(f)''.
    (c) Commodity Exchange Act.--
            (1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) 
        is amended--
                    (A) in paragraph (12)(A)(x), by striking ``or an 
                exempt board of trade''; and
                    (B) in paragraph (31), in the second sentence, by 
                striking ``2(c), 2(d), 2(f), or 2(g) of this Act'' and 
                inserting ``2(c) or 2(f)''.
            (2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is 
        amended--
                    (A) in subsection (c)(1), by striking ``5d,'';
                    (B) in subsection (e)--
                            (i) in paragraph (1), by striking 
                        ``2(d)(2), 2(g), or''; and
                            (ii) in paragraph (2), by striking ``, or 
                        operating as an exempt board of trade'';
                    (C) in subsection (h)(4)(A), by striking ``5d,''; 
                and
                    (D) in subsection (i)--
                            (i) in paragraph (1)(A), by striking 
                        ``2(d), 2(e), 2(f), or 2(g)'' and inserting 
                        ``2(e), or 2(f)''; and
                            (ii) in paragraph (2), by striking ``Act), 
                        5b of this Act, or 5d of this Act'' and 
                        inserting ``Act) or 5b of this Act''.
            (3) Section 5a(g)(1) of the Commodity Exchange Act (7 
        U.S.C. 7a(g)(1)) is amended by striking ``2(c), 2(d), or 2(g)'' 
        and inserting ``2(c)''.
            (4) Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-
        1) is amended--
                    (A) in subsection (a)(1), by striking ``2(d), 2(f), 
                or 2(g)'' and inserting ``or 2(f)''; and
                    (B) in subsection (b), by striking ``2(c), 2(d), 
                2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.
            (5) Section 12(e) of the Commodity Exchange Act (7 U.S.C. 
        16(e)) is amended--
                    (A) in paragraph (1)(B)(i), by striking ``or exempt 
                board of trade''; and
                    (B) in paragraph (2)(B), by striking ``2(c), 2(d), 
                2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.
    (d) Federal Deposit Insurance Corporation Improvement Act.--Section 
408(2)(C) of the Federal Deposit Insurance Corporation Improvement Act 
of 1991 (12 U.S.C. 4421(2)(C)) is amended by striking ``2(c), 2(d), 
2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.

Summary: Authorizing the Regulation of Swaps Act - Amends the Gramm-Leach-Bliley Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Commodity Futures Modernization Act of 2000, the Legal Certainty for Bank Products Act of 2000, and the Commodity Exchange Act to repeal prohibitions against regulation of credit default swaps and other swap agreements, whether traded on an exchange or over-the-counter, including commodity, equity, foreign currency, and interest rate swaps.

Authorizes the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and specified other federal financial regulators to: (1) exercise oversight over any swap agreement entered into, purchased, or sold by any financial institution, entity, or person (for its own account or for the account of others), and any swap agreement, that is subject to the regulator's jurisdiction; and (2) promulgate, interpret, and enforce regulations, issue orders of general applicability, and impose disclosure, reporting, or recordkeeping requirements relating to any such swap agreement.

Grants the SEC sole oversight authority over: (1) any exchange or clearing agency; and (2) any swap agreement traded on or cleared through such exchange or clearing agency.

Grants the CFTC sole oversight authority over: (1) any trading facility or registered entity; and (2) any swap agreement executed on, traded on, or cleared through such trading facility or registered entity.