In the wake of the 2008 financial crisis and the perception that the unregulated over-the-counter (OTC) derivatives market contributed to systemic risk, the Dodd-Frank Act ( P.L. 111-203 ) sought to remake the OTC market in the image of the regulated futures exchanges. Derivative contracts are an array of financial instruments with one feature in common: their value is linked to, or derives from, changes in some underlying variable, such as the price of a physical commodity, a stock index, or an interest rate. Derivatives contracts—futures contracts, options, and swaps —gain or lose value as the underlying rates or prices change, even though the holder may not actually own the underlying asset. In the Dodd-Frank Act, some of the crucial reforms included a requirement that swap contracts be cleared through a central counterparty regulated by one or more federal agencies. Clearinghouses require traders to put down cash (called initial margin) at the time they open a contract to cover potential losses, and they require subsequent deposits (called maintenance margin) to cover actual losses to the position. The intended effect of margin requirements is to eliminate the possibility that any firm can build up an uncapitalized exposure so large that default would have systemic consequences. One well-known example of such an uncapitalized exposure includes the case of AIG, which sold about $1.8 trillion worth of credit default swaps guaranteeing payment if certain mortgage-backed securities defaulted or experienced other "credit events." When derivatives are cleared, the size of a cleared position is limited by the firm's ability to post capital to cover its potential losses. That capital protects its trading partners and the system as a whole. While the clearing of derivatives helps to address systemic concerns, it also imposes the cost of posting margin on those who trade derivatives. For example, if a grain farmer uses a futures position to hedge against the possibility that grain prices might eventually fall, then for the duration of the time that his futures position is open, he may be required to post additional cash or liquid securities to cover unrealized losses in that position. This is true even if the futures position ultimately makes him a profit when it is closed out. In this case, any excess margin is returned to the grain farmer—but he still incurs temporary borrowing costs in order to come up with margin, and these costs can potentially be high. Many nonfinancial firms complained during the debate over the Dodd-Frank Act that their use of derivatives posed no systemic threat and thus they should not be subjected to the cost of clearing these OTC derivatives. This particular debate came to be known as "the end user debate," as it referred to so-called "end users" of derivatives. As a result of these concerns, the Dodd-Frank Act in Section 723 includes a broad exemption from the clearing requirement for firms that are primarily nonfinancial in nature. Nevertheless, such firms have continued to be concerned that the act could impose indirect costs on them, or that the rulemaking process by the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) could do so. Thus, some of the bills in the 112 th Congress discussed below try to address these "end user" concerns. In addition, under the Dodd-Frank Act swap dealers and major swap participants—firms with substantial derivatives positions—are subject to margin and capital requirements above and beyond what the clearinghouses mandate. Swaps that are cleared are also subject to trading on an exchange, or an exchange-like "swap execution facility" (SEF) regulated by either the CFTC or the SEC, in the case of security-based swaps. All trades must be reported to data repositories so that regulators will have complete information about all derivatives positions. Data on swap prices and trading volumes must be made public. Some bills in the 112 th Congress, discussed below, seek to expand the definition of what would constitute an SEF. In addition, concern about derivatives has been fueled by sharp rises in commodity prices—particularly oil—in 2008 and early 2011. Such steep jumps, along with unexplained price volatility in a range of commodities, have fostered apprehension that financial speculation in derivatives might be creating such volatility in commodity prices. For instance, during the course of 2008 oil prices doubled to more than $145 per barrel and then fell by 80%, before rebounding again, while there was little actual interruption of physical supplies. In early 2011, there was again a run-up of about 20%, sending gasoline prices to near 2008 highs. Such severe fluctuations tend to anger consumers and thus are relevant for Congress. Indeed, the role of speculators in oil and other commodity markets has attracted congressional interest. For example, in 2009 the staff of the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Government Affairs found that excessive speculation has had "undue" influence on wheat price movements and in the natural gas market. A 2011 report by the minority staff of the House Committee on Oversight and Government Reform argued that "addressing excessive speculation offers the single most significant opportunity to reduce the price of gas for American consumers." In the 112 th Congress, several bills, discussed below, address the impact of financial speculation and derivatives on spot commodity prices. A number of bills propose to clarify or expand the exemptions provided in Dodd-Frank for commercial end users, primarily nonfinancial firms that use swaps to hedge business risk. H.R. 1610 ( Representative Grimm) and S. 947 ( Senator Johanns) would create an exemption to the requirements that regulators impose margin and capital requirements on swap dealers, security-based swap dealers, major swap participants, and major security-based swap participants. Those requirements would not apply to contracts where one of the counterparties was not a swap dealer or major swap participant (or the security-based swap equivalents), an issuer of equity securities to more than five unaffiliated persons, a hedge fund, an entity that invests primarily in physical assets, a commodity pool, or Fannie Mae or Freddie Mac. Similar provisions are contained in S.Amdt. 814 to H.R. 2112 ( Senator Crapo) and S. 1650 ( Senator Crapo) . H.R. 2682 ( Representative Grimm) would exempt swap and security-based swap transactions in which one of the counterparties was a nonfinancial end user from the requirements that regulators impose capital and margin requirements on the uncleared swap positions of dealers and major swap participants. H.R. 2779 ( Representative Stivers) would exempt from the definition of "swap" any contract between a counterparty that controls, is controlled by, or is under common control with the other counterparty. Such contracts would be exempt from all the regulatory requirements that apply to swaps, except that they would still be required to be reported to a swap data repository or to the CFTC. The bill was marked up and referred to the full Committee on Financial Services by the Subcommittee on Capital Markets and Government Sponsored Enterprises on November 15, 2011. S. 1650 ( Senator Crapo) would exempt swaps between affiliates from the margin and capital requirements that apply to swap dealers and major swap participants. H.R. 2586 ( Representative Garrett) amends the definitions of "swap execution facility" (SEF) and "security-based swap execution facility" (SBSEF). The bill addresses several features of proposed agency rules setting out the requirements for these trading facilities that some market participants find onerous. Under the bill, SEFs and SBSEFs could not require (1) that bids and offers be made available to any minimum number of traders, (2) that bids or offers be displayed or delayed for any particular period of time, (3) that all bids and offers be available on multiple trading facilities operated by the same SEF or SBSEF, and (4) would have to permit bids and offers to be transmitted and executed by "any means of interstate commerce." For more on the SEF issue, see the CFTC's proposed rule "Core Principles and Other Requirements for Swap Execution Facilities," issued on January 7, 2011, which is available together with comments received on the CFTC's website ( http://www.cftc.gov ). H.R. 3045 ( Representative Canseco) amends the provision of Dodd-Frank that defines certain counterparties as "special entities," to whom swap dealers, security-based swap dealers, major swap participants, and major security-based swap participants owe a higher standard of care. Special entities include units of government (federal, state, and municipal), employee benefit plans, and endowments. H.R. 3045 would remove ERISA plans from the definition of special entity, and it specifies that the duty of a swap dealer to act in the best interests of a special entity shall not be construed as a fiduciary duty. A number of bills seek to reduce excessive speculation in commodities, which is thought to harm consumers by causing price fluctuations that are not justified by the fundamental forces of supply and demand. (For more on speculation, see CRS Report R41986, Speculation, Fundamentals, and Oil Prices , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]; and CRS Report R41902, Hedge Fund Speculation and Oil Prices , by [author name scrubbed] and [author name scrubbed].) H.R. 2328 ( Representative Hinchey) and S. 1200 ( Senator Sanders) include a number of measures intended to reduce speculation in crude oil, gasoline, diesel fuel, jet fuel, and heating oil. The bill directs the CFTC to impose limits on the size of speculative positions in those commodities, to apply to both swaps and futures markets.