Inter-Affiliate Swap Clarification Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Inter-Affiliate Swap Clarification 
Act''.

SEC. 2. TREATMENT OF AFFILIATE TRANSACTIONS.

    (a) Commodity Exchange Act Amendments.--
            (1) Treatment of affiliate transactions.--Section 1a(47) of 
        the Commodity Exchange Act (7 U.S.C. 1a(47)), as added by 
        section 721(a)(21) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act, is amended by adding at the end the 
        following:
                    ``(G) Treatment of affiliate transactions.--
                            ``(i) In general.--For the purposes of any 
                        clearing and execution requirements under 
                        section 2(h) and any applicable margin and 
                        capital requirements of section 4s(e) and for 
                        purposes of defining `swap dealer' or `major 
                        swap participant', and reporting requirements 
                        other than those set forth in clause (ii), the 
                        term `swap' does not include any agreement, 
                        contract, or transaction that--
                                    ``(I) would otherwise be included 
                                as a `swap' under subparagraph (A); and
                                    ``(II) is entered into by parties, 
                                neither of which is a `swap dealer' 
                                that is an insured depository 
                                institution or a `major swap 
                                participant' that is an insured 
                                depository institution, that report 
                                information or prepare financial 
                                statements on a consolidated basis, or 
                                for which a company affiliated with 
                                both parties reports information or 
                                prepares financial statements on a 
                                consolidated basis.
                            ``(ii) Reporting.--All agreements, 
                        contracts, or transactions described in clause 
                        (i) shall be reported to either a swap data 
                        repository, or, if there is no swap data 
                        repository that would accept such agreements, 
                        contracts, or transactions, to the Commission 
                        pursuant to section 4r, or to a swap data 
                        repository or to the Commission pursuant to 
                        section 2(h)(5), within such time period as the 
                        Commission may by rule or regulation prescribe. 
                        Nothing in this subparagraph shall prohibit the 
                        Commission from establishing public reporting 
                        requirements for covered transactions between 
                        affiliates as described in sections 23A and 23B 
                        of the Federal Reserve Act in a manner 
                        consistent with rules governing the treatment 
                        of such covered transactions pursuant to 
                        section 2(a)(13) of this Act.
                            ``(iii) Protection of insurance funds.--
                        Nothing in this subparagraph shall be construed 
                        to prevent the regulator of a Federal or State 
                        insurance fund or guaranty fund from exercising 
                        its other existing authority to protect the 
                        integrity of such a fund, except that such 
                        regulator shall not subject agreements, 
                        contracts, or transactions described in clause 
                        (i) to clearing and execution requirements 
                        under section 2 of this Act, to any applicable 
                        margin and capital requirements of section 
                        4s(e) of this Act, or to reporting requirements 
                        of title VII of Public Law 111-203 other than 
                        those set forth in clause (ii) of this 
                        subparagraph.
                            ``(iv) Preservation of federal reserve act 
                        authority.--Nothing in this subparagraph shall 
                        exempt a transaction described in this 
                        subparagraph from sections 23A or 23B of the 
                        Federal Reserve Act or implementing regulations 
                        thereunder.
                            ``(v) Preservation of federal and state 
                        regulatory authorities.--Nothing in this 
                        subparagraph shall affect the Federal banking 
                        agencies' safety-and-soundness authorities over 
                        banks established in law other than title VII 
                        of Public Law 111-203 or the authorities of 
                        State insurance regulators over insurers, 
                        including the authority to impose capital 
                        requirements with regard to swaps. For purposes 
                        of this clause, the term `bank' shall be 
                        defined pursuant to section 3(a)(6) of the 
                        Securities Exchange Act of 1934, `insurer' 
                        shall be defined pursuant to title V of Public 
                        Law 111-203, and `swap' shall be defined 
                        pursuant to title VII of Public Law 111-203.
                            ``(vi) Prevention of evasion.--The 
                        Commission may prescribe rules under this 
                        subparagraph (and issue interpretations of such 
                        rules) as determined by the Commission to be 
                        necessary to include in the definition of swaps 
                        under this paragraph any agreement, contract, 
                        or transaction that has been structured to 
                        evade the requirements of this Act applicable 
                        to swaps.''.
            (2) Treatment of affiliates.--Section 2(h)(7)(D)(i) of the 
        Commodity Exchange Act (7 U.S.C. 2(h)(7)(D)(i)), as added by 
        section 723(a) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act, is amended to read as follows:
                            ``(i) In general.--An affiliate of a person 
                        that qualifies for an exception under 
                        subparagraph (A) (including affiliate entities 
                        predominantly engaged in providing financing 
                        for the purchase of the merchandise or 
                        manufactured goods of the person) may qualify 
                        for the exception only if the affiliate 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.''.
    (b) Securities Exchange Act of 1934 Amendments.--
            (1) Treatment of affiliate transactions.--Section 3(a)(68) 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)), 
        as added by section 761(a)(6) of the Dodd-Frank Wall Street 
        Reform and Consumer Protection Act, is amended by adding at the 
        end the following:
                    ``(F) Treatment of affiliate transactions.--
                            ``(i) In general.--For the purposes of any 
                        clearing and execution requirements under 
                        section 3C and any applicable margin and 
                        capital requirements of section 15F(e), and for 
                        purposes of defining `security-based swap 
                        dealer' or a `major security-based swap 
                        participant', and reporting requirements other 
                        than those set forth in clause (ii), the term 
                        `security-based swap' does not include any 
                        agreement, contract, or transaction that--
                                    ``(I) would otherwise be included 
                                as a `security-based swap' under 
                                subparagraph (A); and
                                    ``(II) is entered into by parties, 
                                neither of which is a `security-based 
                                swap dealer' that is an insured 
                                depository institution or a `major 
                                security-based swap participant' that 
                                is an insured depository institution, 
                                that report information or prepare 
                                financial statements on a consolidated 
                                basis, or for which a company 
                                affiliated with both parties reports 
                                information or prepares financial 
                                statements on a consolidated basis.
                            ``(ii) Reporting.--All agreements, 
                        contracts, or transactions described in clause 
                        (i) shall be reported to either a security-
                        based swap data repository, or, if there is no 
                        security-based swap data repository that would 
                        accept such agreements, contracts, or 
                        transactions, to the Commission pursuant to 
                        section 13A, within such time period as the 
                        Commission may by rule or regulation prescribe.
                            ``(iii) Preservation of federal reserve act 
                        authority.--Nothing in this subparagraph shall 
                        exempt a transaction described in this 
                        subparagraph from sections 23A or 23B of the 
                        Federal Reserve Act or implementing regulations 
                        thereunder.
                            ``(iv) Protection of insurance funds.--
                        Nothing in this subparagraph shall be construed 
                        to prevent the regulator of a Federal or State 
                        insurance fund or guaranty fund from exercising 
                        its other existing authority to protect the 
                        integrity of such a fund, except that such 
                        regulator shall not subject security-based swap 
                        transactions between affiliated companies to 
                        clearing and execution requirements under 
                        section 3C, to any applicable margin and 
                        capital requirements of section 15F(e), or to 
                        reporting requirements of title VII of Public 
                        Law 111-203 other than those set forth in 
                        clause (ii).
                            ``(v) Preservation of federal and state 
                        regulatory authorities.--Nothing in this 
                        subparagraph shall affect the Federal banking 
                        agencies' safety-and-soundness authorities over 
                        banks established in law other than title VII 
                        of Public Law 111-203 or the authorities of 
                        State insurance regulators over insurers, 
                        including the authority to impose capital 
                        requirements with regard to security-based 
                        swaps. For purposes of this clause, the term 
                        `bank' shall be defined pursuant to section 
                        3(a)(6) of the Securities Exchange Act of 1934, 
                        `insurer' shall be defined pursuant to title V 
                        of Public Law 111-203, and `security-based 
                        swap' shall be defined pursuant to title VII of 
                        Public Law 111-203.
                            ``(vi) Prevention of evasion.--The 
                        Commission may prescribe rules under this 
                        subparagraph (and issue interpretations of such 
                        rules) as determined by the Commission to be 
                        necessary to include in the definition of 
                        security-based swap under this paragraph any 
                        agreement, contract, or transaction that has 
                        been structured to evade the requirements of 
                        this Act applicable to security-based swaps.''.
            (2) Treatment of affiliates.--Section 3C(g)(4)(A) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)(A)), as 
        added by section 763(a) of the Dodd-Frank Wall Street Reform 
        and Consumer Protection Act, is amended to read as follows:
                            ``(i) In general.--An affiliate of a person 
                        that qualifies for an exception under this 
                        subsection (including affiliate entities 
                        predominantly engaged in providing financing 
                        for the purchase of the merchandise or 
                        manufactured goods of the person) may qualify 
                        for the exception only if the affiliate 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.''.

Summary: Inter-Affiliate Swap Clarification Act - Amends the Commodity Exchange Act and the Securities Exchange Act of 1934, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, to exempt from certain regulatory requirements any swaps and security-based swaps entered into by parties neither of which is a swap dealer or a major swap participant: (1) that is also an insured depository institution, (2) that reports information or prepares financial statements on a consolidated basis, or (3) for which a company affiliated with both parties reports information or prepares financial statements on a consolidated basis. Requires that such exempted agreements, contracts, or transactions be reported to an appropriate data repository, or, if there is no such repository that would accept them, to: (1) the Commodity Futures Trading Commission (CFTC) in the case of exempted swaps, or (2) the Securities and Exchange Commission (SEC) in the case of exempted security-based swaps.