§ 6s. Registration and regulation of swap dealers and major swap participants

Footnotes

1. 1 So in original. Probably should be followed by a third closing parenthesis.
2. 2 So in original. Probably should be preceded by “a”.
3. 3 So in original. Probably should be “section 1a(18)(A)”.
4. 4 So in original. Probably should be “Act”.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1922

   Wall Street Transparency and Accountability Act of 2010

   Pub. L. 111–203 title VII · 124 Stat. 1376

   Enacted · 7 U.S.C. § 6s

   Sept. 21, 1922, ch. 369, § 4s, as added and amended Pub. L. 111–203, title VII, §§ 724(c), 731, July 21, 2010, 124 Stat. 1684, 1703

   Source evidence

   Code source credit
   Sept. 21, 1922, ch. 369, § 4s, as added and amended Pub. L. 111–203, title VII, §§ 724(c), 731, July 21, 2010, 124 Stat. 1684, 1703

   Enacted provision · exact public law
   TITLE VII— WALL STREET TRANSPARENCY AND ACCOUNTABILITY SEC. 701. SHORT TITLE.   This title may be cited as the “Wall Street Transparency and Accountability Act of 2010”. Subtitle A— Regulation of Over-the-Counter Swaps Markets PART I— REGULATORY AUTHORITY SEC. 711. DEFINITIONS.   In this subtitle, the terms “prudential regulator”, “swap”, “swap dealer”, “major swap participant”, “swap data repository”, “associated person of a swap dealer or major swap participant”, “eligible contract participant”, “swap execution facility”, “security-based swap”, “security-based swap dealer”, “major security-based swap participant”, and “associated person of a security-based swap dealer or major security-based swap participant” have the meanings given the terms in section 1a of the Commodity Exchange Act (7 U.S.C. 1a), including any modification of the meanings under section 721(b) of this Act. SEC. 712. REVIEW OF REGULATORY AUTHORITY. (a) Consultation.— (1) Commodity futures trading commission.— Before commencing any rulemaking or issuing an order regarding swaps, swap dealers, major swap participants, swap data repositories, derivative clearing organizations with regard to swaps, persons associated with a swap dealer or major swap participant, eligible contract participants, or swap execution facilities pursuant to this subtitle, the Commodity Futures Trading Commission shall consult and coordinate to the extent possible with the Securities and Exchange Commission and the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible. (2) Securities and exchange commission.— Before commencing any rulemaking or issuing an order regarding security-based swaps, security-based swap dealers, major security-based swap participants, security-based swap data repositories, clearing agencies with regard to security-based swaps, persons associated with a security-based swap dealer or major security-based swap participant, eligible contract participants with regard to security-based swaps, or security-based swap execution facilities pursuant to subtitle B, the Securities and Exchange Commission shall consult and coordinate to the extent possible with the Commodity Futures Trading Commission and the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible. (3) Procedures and deadline.— Such regulations shall be prescribed in accordance with applicable requirements of title 5, United States Code, and shall be issued in final form not later than 360 days after the date of enactment of this Act. (4) Applicability.— The requirements of paragraphs (1) and (2) shall not apply to an order issued— (A) in connection with or arising from a violation or potential violation of any provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.); (B) in connection with or arising from a violation or potential violation of any provision of the securities laws; or (C) in any proceeding that is conducted on the record in accordance with sections 556 and 557 of title 5, United States Code. (5) Effect.— Nothing in this subsection authorizes any consultation or procedure for consultation that is not consistent with the requirements of subchapter II of chapter 5, and chapter 7, of title 5, United States Code (commonly known as the “Administrative Procedure Act”). (6) Rules; orders.— In developing and promulgating rules or orders pursuant to this subsection, each Commission shall consider the views of the prudential regulators. (7) Treatment of similar products and entities.— (A) In general.— In adopting rules and orders under this subsection, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall treat functionally or economically similar products or entities described in paragraphs (1) and (2) in a similar manner. (B) Effect.— Nothing in this subtitle requires the Commodity Futures Trading Commission or the Securities and Exchange Commission to adopt joint rules or orders that treat functionally or economically similar products or entities described in paragraphs (1) and (2) in an identical manner. (8) Mixed swaps.— The Commodity Futures Trading Commission and the Securities and Exchange Commission, after consultation with the Board of Governors, shall jointly prescribe such regulations regarding mixed swaps, as described in section 1a(47)(D) of the Commodity Exchange Act (7 U.S.C. 1a(47)(D)) and in section 3(a)(68)(D) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(D)), as may be necessary to carry out the purposes of this title. (b) Limitation.— (1) Commodity futures trading commission.— Nothing in this title, unless specifically provided, confers jurisdiction on the Commodity Futures Trading Commission to issue a rule, regulation, or order providing for oversight or regulation of— (A) security-based swaps; or (B) with regard to its activities or functions concerning security-based swaps— (i) security-based swap dealers; (ii) major security-based swap participants; (iii) security-based swap data repositories; (iv) associated persons of a security-based swap dealer or major security-based swap participant; (v) eligible contract participants with respect to security-based swaps; or (vi) swap execution facilities with respect to security-based swaps. (2) Securities and exchange commission.— Nothing in this title, unless specifically provided, confers jurisdiction on the Securities and Exchange Commission or State securities regulators to issue a rule, regulation, or order providing for oversight or regulation of— (A) swaps; or (B) with regard to its activities or functions concerning swaps— (i) swap dealers; (ii) major swap participants; (iii) swap data repositories; (iv) persons associated with a swap dealer or major swap participant; (v) eligible contract participants with respect to swaps; or (vi) swap execution facilities with respect to swaps. (3) Prohibition on certain futures associations and national securities associations.— (A) Futures associations.— Notwithstanding any other provision of law (including regulations), unless otherwise authorized by this title, no futures association registered under section 17 of the Commodity Exchange Act (7 U.S.C. 21) may issue a rule, regulation, or order for the oversight or regulation of, or otherwise assert jurisdiction over, for any purpose, any security-based swap, except that this subparagraph shall not limit the authority of a registered futures association to examine for compliance with, and enforce, its rules on capital adequacy. (B) National securities associations.— Notwithstanding any other provision of law (including regulations), unless otherwise authorized by this title, no national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) may issue a rule, regulation, or order for the oversight or regulation of, or otherwise assert jurisdiction over, for any purpose, any swap, except that this subparagraph shall not limit the authority of a national securities association to examine for compliance with, and enforce, its rules on capital adequacy. (c) Objection to Commission Regulation.— (1) Filing of petition for review.— (A) In general.— If either Commission referred to in this section determines that a final rule, regulation, or order of the other Commission conflicts with subsection (a)(7) or (b), then the complaining Commission may obtain review of the final rule, regulation, or order in the United States Court of Appeals for the District of Columbia Circuit by filing in the court, not later than 60 days after the date of publication of the final rule, regulation, or order, a written petition requesting that the rule, regulation, or order be set aside. (B) Expedited proceeding.— A proceeding described in subparagraph (A) shall be expedited by the United States Court of Appeals for the District of Columbia Circuit. (2) Transmittal of petition and record.— (A) In general.— A copy Deadline. of a petition described in paragraph (1) shall be transmitted not later than 1 business day after the date of filing by the complaining Commission to the Secretary of the responding Commission. (B) Duty of responding commission.— On receipt of the copy of a petition described in paragraph (1), the responding Commission shall file with the United States Court of Appeals for the District of Columbia Circuit— (i) a copy of the rule, regulation, or order under review (including any documents referred to therein); and (ii) any other materials prescribed by the United States Court of Appeals for the District of Columbia Circuit. (3) Standard of review.— The United States Court of Appeals for the District of Columbia Circuit shall— (A) give deference to the views of neither Commission; and (B) determine to affirm or set aside a rule, regulation, or order of the responding Commission under this subsection, based on the determination of the court as to whether the rule, regulation, or order is in conflict with subsection (a)(7) or (b), as applicable. (4) Judicial stay.— The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate as a stay of the rule, regulation, or order until the date on which the determination of the United States Court of Appeals for the District of Columbia Circuit is final (including any appeal of the determination). (d) Joint Rulemaking.— (1) In general.— Notwithstanding any other provision of this title and subsections (b) and (c), the Commodity Futures Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall further define the terms “swap”, “security-based swap”, “swap dealer”, “security-based swap dealer”, “major swap participant”, “major security-based swap participant”, “eligible contract participant”, and “security-based swap agreement” in section 1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v)) and section 3(a)(78) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(78)). (2) Authority of the commissions.— (A) In general.— Notwithstanding any other provision of this title, the Commodity Futures Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall jointly adopt such other rules regarding such definitions as the Commodity Futures Trading Commission and the Securities and Exchange Commission determine are necessary and appropriate, in the public interest, and for the protection of investors. (B) Trade repository recordkeeping.— Notwithstanding any other provision of this title, the Commodity Futures Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall engage in joint rulemaking to jointly adopt a rule or rules governing the books and records that are required to be kept and maintained regarding security-based swap agreements by persons that are registered as swap data repositories under the Commodity Exchange Act, including uniform rules that specify the data elements that shall be collected and maintained by each repository. (C) Books and records.— Notwithstanding any other provision of this title, the Commodity Futures Trading Commission and the Securities and Exchange Commission, in consultation with the Board of Governors, shall engage in joint rulemaking to jointly adopt a rule or rules governing books and records regarding security-based swap agreements, including daily trading records, for swap dealers, major swap participants, security-based swap dealers, and security-based swap participants. (D) Comparable rules.— Rules and regulations prescribed jointly under this title by the Commodity Futures Trading Commission and the Securities and Exchange Commission shall be comparable to the maximum extent possible, taking into consideration differences in instruments and in the applicable statutory requirements. (E) Tracking uncleared transactions.— Any rules prescribed under subparagraph (A) shall require the maintenance of records of all activities relating to security-based swap agreement transactions defined under subparagraph (A) that are not cleared. (F) Sharing of information.— The Commodity Futures Trading Commission shall make available to the Securities and Exchange Commission information relating to security-based swap agreement transactions defined in subparagraph (A) that are not cleared. (3) Financial stability oversight council.— In the event that the Commodity Futures Trading Commission and the Securities and Exchange Commission fail to jointly prescribe rules pursuant to paragraph (1) or (2) in a timely manner, at the request of either Commission, the Financial Stability Oversight Council shall resolve the dispute— (A) within a reasonable time after receiving the request; (B) after consideration of relevant information provided by each Commission; and (C) by agreeing with 1 of the Commissions regarding the entirety of the matter or by determining a compromise position. (4) Joint interpretation.— Any interpretation of, or guidance by either Commission regarding, a provision of this title, shall be effective only if issued jointly by the Commodity Futures Trading Commission and the Securities and Exchange Commission, after consultation with the Board of Governors, if this title requires the Commodity Futures Trading Commission and the Securities and Exchange Commission to issue joint regulations to implement the provision. (e) Global Rulemaking Timeframe.— Unless otherwise provided in this title, or an amendment made by this title, the Commodity Futures Trading Commission or the Securities and Exchange Commission, or both, shall individually, and not jointly, promulgate rules and regulations required of each Commission under this title or an amendment made by this title not later than 360 days after the date of enactment of this Act. (f) Rules and Registration Before Final Effective Dates.— Beginning on the date of enactment of this Act and notwithstanding the effective date of any provision of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission may, in order to prepare for the effective dates of the provisions of this Act— (1) promulgate rules, regulations, or orders permitted or required by this Act; (2) conduct studies and prepare reports and recommendations required by this Act; (3) register persons under the provisions of this Act; and (4) exempt persons, agreements, contracts, or transactions from provisions of this Act, under the terms contained in this Act, provided, however, that no action by the Commodity Futures Trading Commission or the Securities and Exchange Commission described in paragraphs (1) through (4) shall become effective prior to the effective date applicable to such action under the provisions of this Act. SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES. (a) Securities Exchange Act of 1934.— Section 15(c)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended by adding at the end the following: “(C) Notwithstanding any provision of sections 2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act and the rules and regulations thereunder, and pursuant to an exemption granted by the Commission under section 36 of this title or pursuant to a rule or regulation, cash and securities may be held by a broker or dealer registered pursuant to subsection (b)(1) and also registered as a futures commission merchant pursuant to section 4f(a)(1) of the Commodity Exchange Act, in a portfolio margining account carried as a futures account subject to section 4d of the Commodity Exchange Act and the rules and regulations thereunder, pursuant to a portfolio margining program approved by the Commodity Futures Trading Commission, and subject to subchapter IV of chapter 7 of title 11 of the United States Code and the rules and regulations thereunder. Consultation. The Commission shall consult with the Commodity Futures Trading Commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to the extent practicable for similar products.” . (b) Commodity Exchange Act.— Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended by adding at the end the following: “(h) Notwithstanding subsection (a)(2) or the rules and regulations thereunder, and pursuant to an exemption granted by the Commission under section 4(c) of this Act or pursuant to a rule or regulation, a futures commission merchant that is registered pursuant to section 4f(a)(1) of this Act and also registered as a broker or dealer pursuant to section 15(b)(1) of the Securities Exchange Act of 1934 may, pursuant to a portfolio margining program approved by the Securities and Exchange Commission pursuant to section 19(b) of the Securities Exchange Act of 1934, hold in a portfolio margining account carried as a securities account subject to section 15(c)(3) of the Securities Exchange Act of 1934 and the rules and regulations thereunder, a contract for the purchase or sale of a commodity for future delivery or an option on such a contract, and any money, securities or other property received from a customer to margin, guarantee or secure such a contract, or accruing to a customer as the result of such a contract. Consultation. The Commission shall consult with the Securities and Exchange Commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to the extent practical for similar products.” . (c) Duty of Commodity Futures Trading Commission.— Section 20 of the Commodity Exchange Act (7 U.S.C. 24) is amended by adding at the end the following: “(c) The Commission shall exercise its authority to ensure that securities held in a portfolio margining account carried as a futures account are customer property and the owners of those accounts are customers for the purposes of subchapter IV of chapter 7 of title 11 of the United States Code.” . SEC. 714. ABUSIVE SWAPS.   The Commodity Futures Trading Commission or the Securities and Exchange Commission, or both, individually may, by rule or order— (1) collect information as may be necessary concerning the markets for any types of— (A) swap (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)); or (B) security-based swap (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)); and (2) issue a report with respect to any types of swaps or security-based swaps that the Commodity Futures Trading Commission or the Securities and Exchange Commission determines to be detrimental to— (A) the stability of a financial market; or (B) participants in a financial market. SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.   Except as provided in section 4 of the Commodity Exchange Act (7 U.S.C. 6), if the Commodity Futures Trading Commission or the Securities and Exchange Commission determines that the regulation of swaps or security-based swaps markets in a foreign country undermines the stability of the United States financial system, either Commission, in consultation with the Secretary of the Treasury, may prohibit an entity domiciled in the foreign country from participating in the United States in any swap or security-based swap activities. SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES. (a) Prohibition on Federal Assistance.— Notwithstanding any other provision of law (including regulations), no Federal assistance may be provided to any swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity. (b) Definitions.— In this section: (1) Federal assistance.— The term “Federal assistance” means the use of any advances from any Federal Reserve credit facility or discount window that is not part of a program or facility with broad-based eligibility under section 13(3)(A) of the Federal Reserve Act, Federal Deposit Insurance Corporation insurance or guarantees for the purpose of— (A) making any loan to, or purchasing any stock, equity interest, or debt obligation of, any swaps entity; (B) purchasing the assets of any swaps entity; (C) guaranteeing any loan or debt issuance of any swaps entity; or (D) entering into any assistance arrangement (including tax breaks), loss sharing, or profit sharing with any swaps entity. (2) Swaps entity.— (A) In general.— The term “swaps entity” means any swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, that is registered under— (i) the Commodity Exchange Act (7 U.S.C. 1 et seq.); or (ii) the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). (B) Exclusion.— The term “swaps entity” does not include any major swap participant or major security-based swap participant that is an insured depository institution. (c) Affiliates of Insured Depository Institutions.— The prohibition on Federal assistance contained in subsection (a) does not apply to and shall not prevent an insured depository institution from having or establishing an affiliate which is a swaps entity, as long as such insured depository institution is part of a bank holding company, or savings and loan holding company, that is supervised by the Federal Reserve and such swaps entity affiliate complies with sections 23A and 23B of the Federal Reserve Act and such other requirements as the Commodity Futures Trading Commission or the Securities Exchange Commission, as appropriate, and the Board of Governors of the Federal Reserve System, may determine to be necessary and appropriate. (d) Only Bona Fide Hedging and Traditional Bank Activities Permitted.— The prohibition Applicability. in subsection (a) shall apply to any insured depository institution unless the insured depository institution limits its swap or security-based swap activities to: (1) Hedging and other similar risk mitigating activities directly related to the insured depository institution’s activities. (2) Acting as a swaps entity for swaps or security-based swaps involving rates or reference assets that are permissible for investment by a national bank under the paragraph designated as “Seventh.” of section 5136 of the Revised Statutes of the United States ( 12 U.S.C. 24), other than as described in paragraph (3). (3) Limitation on credit default swaps.— Acting as a swaps entity for credit default swaps, including swaps or security-based swaps referencing the credit risk of asset-backed securities as defined in section 3(a)(77) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(77)) (as amended by this Act) shall not be considered a bank permissible activity for purposes of subsection (d)(2) unless such swaps or security-based swaps are cleared by a derivatives clearing organization (as such term is defined in section la of the Commodity Exchange Act (7 U.S.C. la)) or a clearing agency (as such term is defined in section 3 of the Securities Exchange Act (15 U.S.C. 78c)) that is registered, or exempt from registration, as a derivatives clearing organization under the Commodity Exchange Act or as a clearing agency under the Securities Exchange Act, respectively. (e) Existing Swaps and Security-based Swaps.— The prohibition in subsection (a) shall only apply to swaps or security-based swaps entered into by an insured depository institution after the end of the transition period described in subsection (f). (f) Transition Period.— To the extent an insured depository institution qualifies as a “swaps entity” and would be subject to the Federal assistance prohibition in subsection (a), the appropriate Federal banking agency, after consulting with and considering the views of the Commodity Futures Trading Commission or the Securities Exchange Commission, as appropriate, shall permit the insured depository institution up to 24 months to divest the swaps entity or cease the activities that require registration as a swaps entity. In establishing the appropriate transition period to effect such divestiture or cessation of activities, which may include making the swaps entity an affiliate of the insured depository institution, the appropriate Federal banking agency shall take into account and make written findings regarding the potential impact of such divestiture or cessation of activities on the insured depository institution’s (1) mortgage lending, (2) small business lending, (3) job creation, and (4) capital formation versus the potential negative impact on insured depositors and the Deposit Insurance Fund of the Federal Deposit Insurance Corporation. The appropriate Federal banking agency may consider such other factors as may be appropriate. The appropriate Federal banking agency may place such conditions on the insured depository institution’s divestiture or ceasing of activities of the swaps entity as it deems necessary and appropriate. The transition period under this subsection may be extended by the appropriate Federal banking agency, after consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission, for a period of up to 1 additional year. (g) Excluded Entities.— For purposes of this section, the term “swaps entity” shall not include any insured depository institution under the Federal Deposit Insurance Act or a covered financial company under title II which is in a conservatorship, receivership, or a bridge bank operated by the Federal Deposit Insurance Corporation. (h) Effective Date.— The prohibition in subsection (a) shall be effective 2 years following the date on which this Act is effective. (i) Liquidation Required.— (1) In general.— (A) FDIC insured institutions.— All swaps entities that are FDIC insured institutions that are put into receivership or declared insolvent as a result of swap or security-based swap activity of the swaps entities shall be subject to the termination or transfer of that swap or security-based swap activity in accordance with applicable law prescribing the treatment of those contracts. No taxpayer funds shall be used to prevent the receivership of any swap entity resulting from swap or security-based swap activity of the swaps entity. (B) Institutions that pose a systemic risk and are subject to heightened prudential supervision as regulated under section 113.— All swaps entities that are institutions that pose a systemic risk and are subject to heightened prudential supervision as regulated under section 113, that are put into receivership or declared insolvent as a result of swap or security-based swap activity of the swaps entities shall be subject to the termination or transfer of that swap or security-based swap activity in accordance with applicable law prescribing the treatment of those contracts. No taxpayer funds shall be used to prevent the receivership of any swap entity resulting from swap or security-based swap activity of the swaps entity. (C) Non-FDIC insured, non-systemically significant institutions not subject to heightened prudential supervision as regulated under section 113.— No taxpayer resources shall be used for the orderly liquidation of any swaps entities that are non-FDIC insured, non-systemically significant institutions not subject to heightened prudential supervision as regulated under section 113. (2) Recovery of funds.— All funds expended on the termination or transfer of the swap or security-based swap activity of the swaps entity shall be recovered in accordance with applicable law from the disposition of assets of such swap entity or through assessments, including on the financial sector as provided under applicable law. (3) No losses to taxpayers.— Taxpayers shall bear no losses from the exercise of any authority under this title. (j) Prohibition on Unregulated Combination of Swaps Entities and Banking.— At no time following adoption of the rules in subsection (k) may a bank or bank holding company be permitted to be or become a swap entity unless it conducts its swap or security-based swap activity in compliance with such minimum standards set by its prudential regulator as are reasonably calculated to permit the swaps entity to conduct its swap or security-based swap activities in a safe and sound manner and mitigate systemic risk. (k) Rules.— In prescribing rules, the prudential regulator for a swaps entity shall consider the following factors: (1) The expertise and managerial strength of the swaps entity, including systems for effective oversight. (2) The financial strength of the swaps entity. (3) Systems for identifying, measuring and controlling risks arising from the swaps entity’s operations. (4) Systems for identifying, measuring and controlling the swaps entity’s participation in existing markets. (5) Systems for controlling the swaps entity’s participation or entry into in new markets and products. (l) Authority of the Financial Stability Oversight Council.— The Financial Stability Oversight Council may determine that, when other provisions established by this Act are insufficient to effectively mitigate systemic risk and protect taxpayers, that swaps entities may no longer access Federal assistance with respect to any swap, security-based swap, or other activity of the swaps entity. Any such determination by the Financial Stability Oversight Council of a prohibition of federal assistance shall be made on an institution-by-institution basis, and shall require the vote of not fewer than two-thirds of the members of the Financial Stability Oversight Council, which must include the vote by the Chairman of the Council, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairperson of the Federal Deposit Insurance Corporation. Notice and hearing requirements for such determinations shall be consistent with the standards provided in title I. (m) Ban on Proprietary Trading in Derivatives.— An insured depository institution shall comply with the prohibition on proprietary trading in derivatives as required by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. SEC. 717. NEW PRODUCT APPROVAL CFTC—SEC PROCESS. (a) Amendments to the Commodity Exchange Act.— Section 2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) is amended— (1) in clause (i) by striking “This” and inserting “(I) Except as provided in subclause (II), this”; and (2) by adding at the end of clause (i) the following: “(II) This Act shall apply to and the Commission shall have jurisdiction with respect to accounts, agreements, and transactions involving, and may permit the listing for trading pursuant to section 5c(c) of, a put, call, or other option on 1 or more securities (as defined in section 2(a)(1) of the Securities Act of 1933 or section 3(a)(10) of the Securities Exchange Act of 1934 on the date of enactment of the Futures Trading Act of 1982), including any group or index of such securities, or any interest therein or based on the value thereof, that is exempted by the Securities and Exchange Commission pursuant to section 36(a)(1) of the Securities Exchange Act of 1934 with the condition that the Commission exercise concurrent jurisdiction over such put, call, or other option; provided, however, that nothing in this paragraph shall be construed to affect the jurisdiction and authority of the Securities and Exchange Commission over such put, call, or other option.” . (b) Amendments to the Securities Exchange Act of 1934.— The Securities Exchange Act of 1934 is amended by adding the following section after section 3A (15 U.S.C. 78c–1): “SEC. 3B. SECURITIES-RELATED DERIVATIVES. “(a) Any agreement, contract, or transaction (or class thereof) that is exempted by the Commodity Futures Trading Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract, or transaction (or class thereof) shall be deemed a security for purposes of the securities laws. “(b) With respect to any agreement, contract, or transaction (or class thereof) that is exempted by the Commodity Futures Trading Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract, or transaction (or class thereof), references in the securities laws to the ‘purchase’ or ‘sale’ of a security shall be deemed to include the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under such agreement, contract, or transaction, as the context may require.” . (c) Amendment to Securities Exchange Act of 1934.— Section 19(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding at the end the following: “(10) Notwithstanding paragraph (2), the time period within which the Commission is required by order to approve a proposed rule change or institute proceedings to determine whether the proposed rule change should be disapproved is stayed pending a determination by the Commission upon the request of the Commodity Futures Trading Commission or its Chairman that the Commission issue a determination as to whether a product that is the subject of such proposed rule change is a security pursuant to section 718 of the Wall Street Transparency and Accountability Act of 2010.” . (d) Amendment to Commodity Exchange Act.— Section 5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(1)) is amended— (1) by striking “Subject to paragraph (2)” and inserting the following: “(A) Election.— Subject to paragraph (2)” ; and (2) by adding at the end the following: “(B) Certification.— The certification of a product pursuant to this paragraph shall be stayed pending a determination by the Commission upon the request of the Securities and Exchange Commission or its Chairman that the Commission issue a determination as to whether the product that is the subject of such certification is a contract of sale of a commodity for future delivery, an option on such a contract, or an option on a commodity pursuant to section 718 of the Wall Street Transparency and Accountability Act of 2010.” . SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS. (a) Process for Determining the Status of a Novel Derivative Product.— (1) Notice.— (A) In general.— Any person filing a proposal to list or trade a novel derivative product that may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities) may concurrently provide notice and furnish a copy of such filing with the Securities and Exchange Commission and the Commodity Futures Trading Commission. Any such notice shall state that notice has been made with both Commissions. (B) Notification.— If no concurrent notice is made pursuant to subparagraph (A), within 5 business days after determining that a proposal that seeks to list or trade a novel derivative product may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities), the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall notify the other Commission and provide a copy of such filing to the other Commission. (2) Request for determination.— (A) In general.— No later than 21 days after receipt of a notice under paragraph (1), or upon its own initiative if no such notice is received, the Commodity Futures Trading Commission may request that the Securities and Exchange Commission issue a determination as to whether a product is a security, as defined in section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)). (B) Request.— No later than 21 days after receipt of a notice under paragraph (1), or upon its own initiative if no such notice is received, the Securities and Exchange Commission may request that the Commodity Futures Trading Commission issue a determination as to whether a product is a contract of sale of a commodity for future delivery, an option on such a contract, or an option on a commodity subject to the Commodity Futures Trading Commission’s exclusive jurisdiction under section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)). (C) Requirement relating to request.— A request under subparagraph (A) or (B) shall be made by submitting such request, in writing, to the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable. (D) Effect.— Nothing in this paragraph shall be construed to prevent— (i) the Commodity Futures Trading Commission from requesting that the Securities and Exchange Commission grant an exemption pursuant to section 36(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78mm(a)(1)) with respect to a product that is the subject of a filing under paragraph (1); or (ii) the Securities and Exchange Commission from requesting that the Commodity Futures Trading Commission grant an exemption pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with respect to a product that is the subject of a filing under paragraph (1), Provided, however, that nothing in this subparagraph shall be construed to require the Commodity Futures Trading Commission or the Securities and Exchange Commission to issue an exemption requested pursuant to this subparagraph; provided further, That an order granting or denying an exemption described in this subparagraph and issued under paragraph (3)(B) shall not be subject to judicial review pursuant to subsection (b). (E) Withdrawal of request.— A request under subparagraph (A) or (B) may be withdrawn by the Commission making the request at any time prior to a determination being made pursuant to paragraph (3) for any reason by providing written notice to the head of the other Commission. (3) Determination.— Notwithstanding any other provision of law, no later than 120 days after the date of receipt of a request— (A) under subparagraph (A) or (B) of paragraph (2), unless such request has been withdrawn pursuant to paragraph (2)(E), the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall, by order, issue the determination requested in subparagraph (A) or (B) of paragraph (2), as applicable, and the reasons therefor; or (B) under paragraph (2)(D), unless such request has been withdrawn, the Securities and Exchange Commission or the Commodity Futures Trading Commission, as applicable, shall grant an exemption or provide reasons for not granting such exemption, provided that any decision by the Securities and Exchange Commission not to grant such exemption shall not be reviewable under section 25 of the Securities Exchange Act of 1934 (15 U.S.C. 78y). (b) Judicial Resolution.— (1) In general.— The Commodity Deadline. Futures Trading Commission or the Securities and Exchange Commission may petition the United States Court of Appeals for the District of Columbia Circuit for review of a final order of the other Commission issued pursuant to subsection (a)(3)(A), with respect to a novel derivative product that may have elements of both securities and contracts of sale of a commodity for future delivery (or options on such contracts or options on commodities) that it believes affects its statutory jurisdiction within 60 days after the date of entry of such order, a written petition requesting a review of the order. Any such proceeding shall be expedited by the Court of Appeals. (2) Transmittal of petition and record.— A copy Deadline. of a petition described in paragraph (1) shall be transmitted not later than 1 business day after filing by the complaining Commission to the responding Commission. On receipt of the petition, the responding Commission shall file with the court a copy of the order under review and any documents referred to therein, and any other materials prescribed by the court. (3) Standard of review.— The court, in considering a petition filed pursuant to paragraph (1), shall give no deference to, or presumption in favor of, the views of either Commission. (4) Judicial stay.— The filing of a petition by the complaining Commission pursuant to paragraph (1) shall operate as a stay of the order, until the date on which the determination of the court is final (including any appeal of the determination). SEC. 719. STUDIES. (a) Study on Effects of Position Limits on Trading on Exchanges in the United States.— (1) Study.— The Commodity Futures Trading Commission, in consultation with each entity that is a designated contract market under the Commodity Exchange Act, shall conduct a study of the effects (if any) of the position limits imposed pursuant to the other provisions of this title on excessive speculation and on the movement of transactions from exchanges in the United States to trading venues outside the United States. (2) Report to the congress.— Within 12 months after the imposition of position limits pursuant to the other provisions of this title, the Commodity Futures Trading Commission, in consultation with each entity that is a designated contract market under the Commodity Exchange Act, shall submit to the Congress a report on the matters described in paragraph (1). (3) Required hearing.— Deadline. Within 30 legislative days after the submission to the Congress of the report described in paragraph (2), the Committee on Agriculture of the House of Representatives shall hold a hearing examining the findings of the report. (4) Biennial reporting.— In addition to the study required in paragraph (1), the Chairman of the Commodity Futures Trading Commission shall prepare and submit to the Congress biennial reports on the growth or decline of the derivatives markets in the United States and abroad, which shall include assessments of the causes of any such growth or decline, the effectiveness of regulatory regimes in managing systemic risk, a comparison of the costs of compliance at the time of the report for market participants subject to regulation by the United States with the costs of compliance in December 2008 for the market participants, and the quality of the available data. In preparing the report, the Chairman shall solicit the views of, consult with, and address the concerns raised by, market participants, regulators, legislators, and other interested parties. (b) Study on Feasibility of Requiring Use of Standardized Algorithmic Descriptions for Financial Derivatives.— (1) In general.— The Securities and Exchange Commission and the Commodity Futures Trading Commission shall conduct a joint study of the feasibility of requiring the derivatives industry to adopt standardized computer-readable algorithmic descriptions which may be used to describe complex and standardized financial derivatives. (2) Goals.— The algorithmic descriptions defined in the study shall be designed to facilitate computerized analysis of individual derivative contracts and to calculate net exposures to complex derivatives. The algorithmic descriptions shall be optimized for simultaneous use by— (A) commercial users and traders of derivatives; (B) derivative clearing houses, exchanges and electronic trading platforms; (C) trade repositories and regulator investigations of market activities; and (D) systemic risk regulators. The study will also examine the extent to which the algorithmic description, together with standardized and extensible legal definitions, may serve as the binding legal definition of derivative contracts. The study will examine the logistics of possible implementations of standardized algorithmic descriptions for derivatives contracts. The study shall be limited to electronic formats for exchange of derivative contract descriptions and will not contemplate disclosure of proprietary valuation models. (3) International coordination.— In conducting the study, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall coordinate the study with international financial institutions and regulators as appropriate and practical. (4) Report.— Within 8 months after the date of the enactment of this Act, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall jointly submit to the Committees on Agriculture and on Financial Services of the House of Representatives and the Committees on Agriculture, Nutrition, and Forestry and on Banking, Housing, and Urban Affairs of the Senate a written report which contains the results of the study required by paragraphs (1) through (3). (c) International Swap Regulation.— (1) In general.— Study. The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly conduct a study— (A) relating to— (i) swap regulation in the United States, Asia, and Europe; and (ii) clearing house and clearing agency regulation in the United States, Asia, and Europe; and (B) that identifies areas of regulation that are similar in the United States, Asia and Europe and other areas of regulation that could be harmonized (2) Report.— Not later than 18 months after the date of enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall submit to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Agriculture and the Committee on Financial Services of the House of Representatives a report that includes a description of the results of the study under subsection (a), including— (A) identification of the major exchanges and their regulator in each geographic area for the trading of swaps and security-based swaps including a listing of the major contracts and their trading volumes and notional values as well as identification of the major swap dealers participating in such markets; (B) identification of the major clearing houses and clearing agencies and their regulator in each geographic area for the clearing of swaps and security-based swaps, including a listing of the major contracts and the clearing volumes and notional values as well as identification of the major clearing members of such clearing houses and clearing agencies in such markets; (C) a description of the comparative methods of clearing swaps in the United States, Asia, and Europe; and (D) a description of the various systems used for establishing margin on individual swaps, security-based swaps, and swap portfolios. (d) Stable Value Contracts.— (1) Determination.— (A) Status.— Not later Deadline. Study. than 15 months after the date of the enactment of this Act, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall, jointly, conduct a study to determine whether stable value contracts fall within the definition of a swap. In making the determination required under this subparagraph, the Commissions jointly shall consult with the Department of Labor, the Department of the Treasury, and the State entities that regulate the issuers of stable value contracts. (B) Regulations.— If the Commissions determine that stable value contracts fall within the definition of a swap, the Commissions jointly shall determine if an exemption for stable value contracts from the definition of swap is appropriate and in the public interest. The Commissions shall issue regulations implementing the determinations required under this paragraph. Until the effective date of such regulations, and notwithstanding any other provision of this title, the requirements of this title shall not apply to stable value contracts. (C) Legal certainty.— Stable value contracts in effect prior to the effective date of the regulations described in subparagraph (B) shall not be considered swaps. (2) Definition.— For purposes of this subsection, the term “stable value contract” means any contract, agreement, or transaction that provides a crediting interest rate and guaranty or financial assurance of liquidity at contract or book value prior to maturity offered by a bank, insurance company, or other State or federally regulated financial institution for the benefit of any individual or commingled fund available as an investment in an employee benefit plan (as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, including plans described in section 3(32) of such Act) subject to participant direction, an eligible deferred compensation plan (as defined in section 457(b) of the Internal Revenue Code of 1986) that is maintained by an eligible employer described in section 457(e)(1)(A) of such Code, an arrangement described in section 403(b) of such Code, or a qualified tuition program (as defined in section 529 of such Code). SEC. 720. MEMORANDUM. (a) (1) The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission shall, not later than 180 days after the date of the enactment of this Act, negotiate a memorandum of understanding to establish procedures for— (A) applying their respective authorities in a manner so as to ensure effective and efficient regulation in the public interest; (B) resolving conflicts concerning overlapping jurisdiction between the 2 agencies; and (C) avoiding, to the extent possible, conflicting or duplicative regulation. (2) Such memorandum and any subsequent amendments to the memorandum shall be promptly submitted to the appropriate committees of Congress. (b) Deadline. The Commodity Futures Trading Commission and the Federal Energy Regulatory Commission shall, not later than 180 days after the date of the enactment of this section, negotiate a memorandum of understanding to share information that may be requested where either Commission is conducting an investigation into potential manipulation, fraud, or market power abuse in markets subject to such Commission’s regulation or oversight. Shared information shall remain subject to the same restrictions on disclosure applicable to the Commission initially holding the information. PART II— REGULATION OF SWAP MARKETS SEC. 721. DEFINITIONS. (a) In General.— Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended— (1) by redesignating paragraphs (2), (3) and (4), (5) through (17), (18) through (23), (24) through (28), (29), (30), (31) through (33), and (34) as paragraphs (6), (8) and (9), (11) through (23), (26) through (31), (34) through (38), (40), (41), (44) through (46), and (51), respectively; (2) by inserting after paragraph (1) the following: “(2) Appropriate federal banking agency.— The term ‘appropriate Federal banking agency’— “(A) has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); “(B) means the Board in the case of a noninsured State bank; and “(C) is the Farm Credit Administration for farm credit system institutions. “(3) Associated person of a security-based swap dealer or major security-based swap participant.— The term ‘associated person of a security-based swap dealer or major security-based swap participant’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). “(4) Associated person of a swap dealer or major swap participant.— “(A) In general.— The term ‘associated person of a swap dealer or major swap participant’ means a person who is associated with a swap dealer or major swap participant as a partner, officer, employee, or agent (or any person occupying a similar status or performing similar functions), in any capacity that involves— “(i) the solicitation or acceptance of swaps; or “(ii) the supervision of any person or persons so engaged. “(B) Exclusion.— Other than for purposes of section 4s(b)(6), the term ‘associated person of a swap dealer or major swap participant’ does not include any person associated with a swap dealer or major swap participant the functions of which are solely clerical or ministerial. “(5) Board.— The term ‘Board’ means the Board of Governors of the Federal Reserve System.” ; (3) by inserting after paragraph (6) (as redesignated by paragraph (1)) the following: “(7) Cleared swap.— The term ‘cleared swap’ means any swap that is, directly or indirectly, submitted to and cleared by a derivatives clearing organization registered with the Commission.” ; (4) in paragraph (9) (as redesignated by paragraph (1)), by striking “except onions” and all that follows through the period at the end and inserting the following: “except onions (as provided by the first section of Public Law 85–839 (7 U.S.C. 13–1)) and motion picture box office receipts (or any index, measure, value, or data related to such receipts), and all services, rights, and interests (except motion picture box office receipts, or any index, measure, value or data related to such receipts) in which contracts for future delivery are presently or in the future dealt in.”; (5) by inserting after paragraph (9) (as redesignated by paragraph (1)) the following: “(10) Commodity pool.— “(A) In general.— The term ‘commodity pool’ means any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests, including any— “(i) commodity for future delivery, security futures product, or swap; “(ii) agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); “(iii) commodity option authorized under section 4c; or “(iv) leverage transaction authorized under section 19. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘commodity pool’ any investment trust, syndicate, or similar form of enterprise if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (6) by striking paragraph (11) (as redesignated by paragraph (1)) and inserting the following: “(11) Commodity pool operator.— “(A) In general.— The term ‘commodity pool operator’ means any person— “(i) engaged in a business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise, and who, in connection therewith, solicits, accepts, or receives from others, funds, securities, or property, either directly or through capital contributions, the sale of stock or other forms of securities, or otherwise, for the purpose of trading in commodity interests, including any— “(I) commodity for future delivery, security futures product, or swap; “(II) agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); “(III) commodity option authorized under section 4c; or “(IV) leverage transaction authorized under section 19; or “(ii) who is registered with the Commission as a commodity pool operator. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘commodity pool operator’ any person engaged in a business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (7) in paragraph (12) (as redesignated by paragraph (1)), in subparagraph (A)— (A) in clause (i)— (i) in subclause (I), by striking “made or to be made on or subject to the rules of a contract market or derivatives transaction execution facility” and inserting “, security futures product, or swap”; (ii) by redesignating subclauses (II) and (III) as subclauses (III) and (IV); (iii) by inserting after subclause (I) the following: “(II) any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i)” ; and (iv) in subclause (IV) (as so redesignated), by striking “or”; (B) in clause (ii), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following: “(iii) is registered with the Commission as a commodity trading advisor; or “(iv) the Commission, by rule or regulation, may include if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (8) in paragraph (17) (as redesignated by paragraph (1)), in subparagraph (A), in the matter preceding clause (i), by striking “paragraph (12)(A)” and inserting “paragraph (18)(A)”; (9) in paragraph (18) (as redesignated by paragraph (1))— (A) in subparagraph (A)— (i) in the matter following clause (vii)(III)— (I) by striking “section 1a (11)(A)” and inserting “paragraph (17)(A)”; and (II) by striking “$25,000,000” and inserting “$50,000,000”; and (ii) in clause (xi), in the matter preceding subclause (I), by striking “total assets in an amount” and inserting “amounts invested on a discretionary basis, the aggregate of which is”; (10) by striking paragraph (22) (as redesignated by paragraph (1)) and inserting the following: “(22) Floor broker.— “(A) In general.— The term ‘floor broker’ means any person— “(i) who, in or surrounding any pit, ring, post, or other place provided by a contract market for the meeting of persons similarly engaged, shall purchase or sell for any other person— “(I) any commodity for future delivery, security futures product, or swap; or “(II) any commodity option authorized under section 4c; or “(ii) who is registered with the Commission as a floor broker. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘floor broker’ any person in or surrounding any pit, ring, post, or other place provided by a contract market for the meeting of persons similarly engaged who trades for any other person if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (11) by striking paragraph (23) (as redesignated by paragraph (1)) and inserting the following: “(23) Floor trader.— “(A) In general.— The term ‘floor trader’ means any person— “(i) who, in or surrounding any pit, ring, post, or other place provided by a contract market for the meeting of persons similarly engaged, purchases, or sells solely for such person’s own account— “(I) any commodity for future delivery, security futures product, or swap; or “(II) any commodity option authorized under section 4c; or “(ii) who is registered with the Commission as a floor trader. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘floor trader’ any person in or surrounding any pit, ring, post, or other place provided by a contract market for the meeting of persons similarly engaged who trades solely for such person’s own account if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (12) by inserting after paragraph (23) (as redesignated by paragraph (1)) the following: “(24) Foreign exchange forward.— The term ‘foreign exchange forward’ means a transaction that solely involves the exchange of 2 different currencies on a specific future date at a fixed rate agreed upon on the inception of the contract covering the exchange. “(25) Foreign exchange swap.— The term ‘foreign exchange swap’ means a transaction that solely involves— “(A) an exchange of 2 different currencies on a specific date at a fixed rate that is agreed upon on the inception of the contract covering the exchange; and “(B) a reverse exchange of the 2 currencies described in subparagraph (A) at a later date and at a fixed rate that is agreed upon on the inception of the contract covering the exchange.” ; (13) by striking paragraph (28) (as redesignated by paragraph (1)) and inserting the following: “(28) Futures commission merchant.— “(A) In general.— The term ‘futures commission merchant’ means an individual, association, partnership, corporation, or trust— “(i) that— “(I) is— “(aa) engaged in soliciting or in accepting orders for— “(AA) the purchase or sale of a commodity for future delivery; “(BB) a security futures product; “(CC) a swap; “(DD) any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); “(EE) any commodity option authorized under section 4c; or “(FF) any leverage transaction authorized under section 19; or “(bb) acting as a counterparty in any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); and “(II) in or in connection with the activities described in items (aa) or (bb) of subclause (I), accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom; or “(ii) that is registered with the Commission as a futures commission merchant. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘futures commission merchant’ any person who engages in soliciting or accepting orders for, or acting as a counterparty in, any agreement, contract, or transaction subject to this Act, and who accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom, if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (14) in paragraph (30) (as redesignated by paragraph (1)), in subparagraph (B), by striking “state” and inserting “State”; (15) by striking paragraph (31) (as redesignated by paragraph (1)) and inserting the following: “(31) Introducing broker.— “(A) In general.— The term ‘introducing broker’ means any person (except an individual who elects to be and is registered as an associated person of a futures commission merchant)— “(i) who— “(I) is engaged in soliciting or in accepting orders for— “(aa) the purchase or sale of any commodity for future delivery, security futures product, or swap; “(bb) any agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); “(cc) any commodity option authorized under section 4c; or “(dd) any leverage transaction authorized under section 19; and “(II) does not accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom; or “(ii) who is registered with the Commission as an introducing broker. “(B) Further definition.— The Commission, by rule or regulation, may include within, or exclude from, the term ‘introducing broker’ any person who engages in soliciting or accepting orders for any agreement, contract, or transaction subject to this Act, and who does not accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom, if the Commission determines that the rule or regulation will effectuate the purposes of this Act.” ; (16) by inserting after paragraph (31) (as redesignated by paragraph (1)) the following: “(32) Major security-based swap participant.— The term ‘major security-based swap participant’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). “(33) Major swap participant.— “(A) In general.— The term ‘major swap participant’ means any person who is not a swap dealer, and— “(i) maintains a substantial position in swaps for any of the major swap categories as determined by the Commission, excluding— “(I) positions held for hedging or mitigating commercial risk; and “(II) positions maintained by any employee benefit plan (or any contract held by such a 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) for the primary purpose of hedging or mitigating any risk directly associated with the operation of the plan; “(ii) whose outstanding swaps create substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or “(iii) (I) is a financial entity that is highly leveraged relative to the amount of capital it holds and that is not subject to capital requirements established by an appropriate Federal banking agency; and “(II) maintains a substantial position in outstanding swaps in any major swap category as determined by the Commission. “(B) Definition of substantial position.— For purposes of subparagraph (A), the Commission shall define by rule or regulation the term ‘substantial position’ at the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can significantly impact the financial system of the United States. In setting the definition under this subparagraph, the Commission shall consider the person’s relative position in uncleared as opposed to cleared swaps and may take into consideration the value and quality of collateral held against counterparty exposures. “(C) Scope of designation.— For purposes of subparagraph (A), a person may be designated as a major swap participant for 1 or more categories of swaps without being classified as a major swap participant for all classes of swaps. “(D) Exclusions.— The definition under this paragraph shall not include an entity whose primary business is providing financing, and uses derivatives for the purpose of hedging underlying commercial risks related to interest rate and foreign currency exposures, 90 percent or more of which arise from financing that facilitates the purchase or lease of products, 90 percent or more of which are manufactured by the parent company or another subsidiary of the parent company.” ; (17) by inserting after paragraph (38) (as redesignated by paragraph (1)) the following: “(39) Prudential regulator.— The term ‘prudential regulator’ means— “(A) the Board in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is— “(i) a State-chartered bank that is a member of the Federal Reserve System; “(ii) a State-chartered branch or agency of a foreign bank; “(iii) any foreign bank which does not operate an insured branch; “(iv) any organization operating under section 25A of the Federal Reserve Act or having an agreement with the Board under section 225 of the Federal Reserve Act; “(v) any bank holding company (as defined in section 2 of the Bank Holding Company Act of 1965 (12 U.S.C. 1841)), any foreign bank (as defined in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(b)(7)) that is treated as a bank holding company under section 8(a) of the International Banking Act of 1978 (12 U.S.C. 3106(a)), and any subsidiary of such a company or foreign bank (other than a subsidiary that is described in subparagraph (A) or (B) or that is required to be registered with the Commission as a swap dealer or major swap participant under this Act or with the Securities and Exchange Commission as a security-based swap dealer or major security-based swap participant); “(vi) after the transfer date (as defined in section 311 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), any savings and loan holding company (as defined in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a)) and any subsidiary of such company (other than a subsidiary that is described in subparagraph (A) or (B) or that is required to be registered as a swap dealer or major swap participant with the Commission under this Act or with the Securities and Exchange Commission as a security-based swap dealer or major security-based swap participant); or “(vii) any organization operating under section 25A of the Federal Reserve Act (12U.S.C. 611 et seq.) or having an agreement with the Board under section 25 of the Federal Reserve Act (12 U.S.C. 601 et seq.); “(B) the Office of the Comptroller of the Currency in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is— “(i) a national bank; “(ii) a federally chartered branch or agency of a foreign bank; or “(iii) any Federal savings association; “(C) the Federal Deposit Insurance Corporation in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is— “(i) a State-chartered bank that is not a member of the Federal Reserve System; or “(ii) any State savings association; “(D) the Farm Credit Administration, in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is an institution chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); and “(E) the Federal Housing Finance Agency in the case of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant that is a regulated entity (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992).” ; (18) in paragraph (40) (as redesignated by paragraph (1))— (A) by striking subparagraph (B); (B) by redesignating subparagraphs (C), (D), and (E) as subparagraphs (B), (C), and (F), respectively; (C) in subparagraph (C) (as so redesignated), by striking “and”; and (D) by inserting after subparagraph (C) (as so redesignated) the following: “(D) a swap execution facility registered under section 5h; “(E) a swap data repository registered under section 21; and” ; (19) by inserting after paragraph (41) (as redesignated by paragraph (1)) the following: “(42) Security-based swap.— The term ‘security-based swap’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). “(43) Security-based swap dealer.— The term ‘security-based swap dealer’ has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).” ; (20) in paragraph (46) (as redesignated by paragraph (1)), by striking “subject to section 2(h)(7)” and inserting “subject to section 2(h)(5)”; (21) by inserting after paragraph (46) (as redesignated by paragraph (1)) the following: “(47) Swap.— “(A) In general.— Except as provided in subparagraph (B), the term ‘swap’ means any agreement, contract, or transaction— “(i) that is a put, call, cap, floor, collar, or similar option of any kind that is for the purchase or sale, or based on the value, of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind; “(ii) that 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 an event or contingency associated with a potential financial, economic, or commercial consequence; “(iii) that 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, instruments 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 transaction, 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 agreement, contract, or transaction commonly known as— “(I) an interest rate swap; “(II) a rate floor; “(III) a rate cap; “(IV) a rate collar; “(V) a cross-currency rate swap; “(VI) a basis swap; “(VII) a currency swap; “(VIII) a foreign exchange swap; “(IX) a total return swap; “(X) an equity index swap; “(XI) an equity swap; “(XII) a debt index swap; “(XIII) a debt swap; “(XIV) a credit spread; “(XV) a credit default swap; “(XVI) a credit swap; “(XVII) a weather swap; “(XVIII) an energy swap; “(XIX) a metal swap; “(XX) an agricultural swap; “(XXI) an emissions swap; and “(XXII) a commodity swap; “(iv) that is an agreement, contract, or transaction that is, or in the future becomes, commonly known to the trade as a swap; “(v) including any security-based swap agreement which meets the definition of ‘swap agreement’ as defined in section 206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) of which a material term is based on the price, yield, value, or volatility of any security or any group or index of securities, or any interest therein; or “(vi) that is any combination or permutation of, or option on, any agreement, contract, or transaction described in any of clauses (i) through (v). “(B) Exclusions.— The term ‘swap’ does not include— “(i) any contract of sale of a commodity for future delivery (or option on such a contract), leverage contract authorized under section 19, security futures product, or agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); “(ii) any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled; “(iii) 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, that is subject to— “(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.); and “(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); “(iv) any put, call, straddle, option, or privilege relating to a foreign currency 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)); “(v) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities on a fixed basis that is subject to— “(I) the Securities Act of 1933 (15 U.S.C. 77a et seq.); and “(II) the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); “(vi) any agreement, contract, or transaction providing for the purchase or sale of 1 or more securities on a contingent basis that is subject to the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), 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; “(vii) any note, bond, or evidence of indebtedness that is a security, as defined in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)); “(viii) 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)(11) of the Securities Act of 1933 (15 U.S.C. 77b(a)(11)) by the issuer of such security for the purposes of raising capital, unless the agreement, contract, or transaction is entered into to manage a risk associated with capital raising; “(ix) any agreement, contract, or transaction a counterparty of which is a Federal Reserve bank, the Federal Government, or a Federal agency that is expressly backed by the full faith and credit of the United States; and “(x) any security-based swap, other than a security-based swap as described in subparagraph (D). “(C) Rule of construction regarding master agreements.— “(i) In general.— Except as provided in clause (ii), the term ‘swap’ includes a master agreement that provides for an agreement, contract, or transaction that is a swap under subparagraph (A), together with each supplement to any master agreement, without regard to whether the master agreement contains an agreement, contract, or transaction that is not a swap pursuant to subparagraph (A). “(ii) Exception.— For purposes of clause (i), the master agreement shall be considered to be a swap only with respect to each agreement, contract, or transaction covered by the master agreement that is a swap pursuant to subparagraph (A). “(D) Mixed swap.— The term ‘security-based swap’ includes any agreement, contract, or transaction that is as described in section 3(a)(68)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)(A)) and also is based on the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence (other than an event described in subparagraph (A)(iii)). “(E) Treatment of foreign exchange swaps and forwards.— “(i) In general.— Foreign exchange swaps and foreign exchange forwards shall be considered swaps under this paragraph unless the Secretary makes a written determination under section 1b that either foreign exchange swaps or foreign exchange forwards or both— “(I) should be not be regulated as swaps under this Act; and “(II) are not structured to evade the Dodd-Frank Wall Street Reform and Consumer Protection Act in violation of any rule promulgated by the Commission pursuant to section 721(c) of that Act. “(ii) Congressional notice; effectiveness.— The Secretary shall submit any written determination under clause (i) to the appropriate committees of Congress, including the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives. Any such written determination by the Secretary shall not be effective until it is submitted to the appropriate committees of Congress. “(iii) Reporting.— Notwithstanding a written determination by the Secretary under clause (i), all foreign exchange swaps and foreign exchange forwards shall be reported to either a swap data repository, or, if there is no swap data repository that would accept such swaps or forwards, to the Commission pursuant to section 4r within such time period as the Commission may by rule or regulation prescribe. “(iv) Business standards.— Notwithstanding a written determination by the Secretary pursuant to clause (i), any party to a foreign exchange swap or forward that is a swap dealer or major swap participant shall conform to the business conduct standards contained in section 4s(h). “(v) Secretary.— For purposes of this subparagraph, the term ‘Secretary’ means the Secretary of the Treasury. “(F) Exception for certain foreign exchange swaps and forwards.— “(i) Registered entities.— Any foreign exchange swap and any foreign exchange forward that is listed and traded on or subject to the rules of a designated contract market or a swap execution facility, or that is cleared by a derivatives clearing organization, shall not be exempt from any provision of this Act or amendments made by the Wall Street Transparency and Accountability Act of 2010 prohibiting fraud or manipulation. “(ii) Retail transactions.— Nothing in subparagraph (E) shall affect, or be construed to affect, the applicability of this Act or the jurisdiction of the Commission with respect to agreements, contracts, or transactions in foreign currency pursuant to section 2(c)(2). “(48) Swap data repository.— The term ‘swap data repository’ means any person that collects and maintains information or records with respect to transactions or positions in, or the terms and conditions of, swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for swaps. “(49) Swap dealer.— “(A) In general.— The term ‘swap dealer’ means any person who— “(i) holds itself out as a dealer in swaps; “(ii) makes a market in swaps; “(iii) regularly enters into swaps with counterparties as an ordinary course of business for its own account; or “(iv) engages in any activity causing the person to be commonly known in the trade as a dealer or market maker in swaps, provided however, in no event shall an insured depository institution be considered to be a swap dealer to the extent it offers to enter into a swap with a customer in connection with originating a loan with that customer. “(B) Inclusion.— A person may be designated as a swap dealer for a single type or single class or category of swap or activities and considered not to be a swap dealer for other types, classes, or categories of swaps or activities. “(C) Exception.— The term ‘swap dealer’ does not include a person that enters into swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business. “(D) De minimis exception.— The Commission shall exempt from designation as a swap dealer an entity that engages in a de minimis quantity of swap dealing in connection with transactions with or on behalf of its customers. The Commission shall promulgate regulations to establish factors with respect to the making of this determination to exempt. “(50) Swap execution facility.— The term ‘swap execution facility’ means a trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by multiple participants in the facility or system, through any means of interstate commerce, including any trading facility, that— “(A) facilitates the execution of swaps between persons; and “(B) is not a designated contract market.” . (22) in paragraph (51) (as redesignated by paragraph (1)), in subparagraph (A)(i), by striking “partipants” and inserting “participants”. (b) Authority To Define Terms.— The Commodity Futures Trading Commission may adopt a rule to define— (1) the term “commercial risk”; and (2) any other term included in an amendment to the Commodity Exchange Act (7 U.S.C. 1 et seq.) made by this subtitle. (c) Modification of Definitions.— To include transactions and entities that have been structured to evade this subtitle (or an amendment made by this subtitle), the Commodity Futures Trading Commission shall adopt a rule to further define the terms “swap”, “swap dealer”, “major swap participant”, and “eligible contract participant”. (d) Exemptions.— Section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) is amended by striking “except that” and all that follows through the period at the end and inserting the following: “except that— “(A) unless the Commission is expressly authorized by any provision described in this subparagraph to grant exemptions, with respect to amendments made by subtitle A of the Wall Street Transparency and Accountability Act of 2010— “(i) with respect to— “(I) paragraphs (2), (3), (4), (5), and (7), paragraph (18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38), (39), (41), (42), (46), (47), (48), and (49) of section 1a, and sections 2(a)(13), 2(c)(1)(D), 4a(a), 4a(b), 4d(c), 4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c), 5b(i), 8e, and 21; and “(II) section 206(e) of the Gramm-Leach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note); and “(ii) in sections 721(c) and 742 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and “(B) the Commission and the Securities and Exchange Commission may by rule, regulation, or order jointly exclude any agreement, contract, or transaction from section 2(a)(1)(D)) if the Commissions determine that the exemption would be consistent with the public interest.” . (e) Conforming Amendments.— (1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended— (A) in item (cc)— (i) in subitem (AA), by striking “section 1a(20)” and inserting “section 1a”; and (ii) in subitem (BB), by striking “section 1a(20)” and inserting “section 1a”; and (B) in item (dd), by striking “section 1a(12)(A)(ii)” and inserting “section 1a(18)(A)(ii)”. (2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is amended by striking “section 1a(6)” and inserting “section 1a”. (3) Section 4q(a)(1) of the Commodity Exchange Act (7 U.S.C. 6o–1(a)(1)) is 7 USC 6q. amended by striking “section 1a(4)” and inserting “section 1a(9)”. (4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C. 7(e)(1)) is amended by striking “section 1a(4)” and inserting “section 1a(9)”. (5) Section 5a(b)(2)(F) of the Commodity Exchange Act (7 U.S.C. 7a(b)(2)(F)) is amended by striking “section 1a(4)” and inserting “section 1a(9)”. (6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C. 7a–1(a)) is amended, in the matter preceding paragraph (1), by striking “section 1a(9)” and inserting “section 1a”. (7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(2)(B)) is amended by striking “section 1a(4)” and inserting “section 1a(9)”. (8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended— (A) in subclause (I), by striking “section 1a(12)(B)(ii)” and inserting “section 1a(18)(B)(ii)”; and (B) in subclause (II), by striking “section 1a(12)” and inserting “section 1a(18)”. (9) Section 402 of the Legal Certainty for Bank Products Act of 2000 7 USC 27. (7 U.S.C. 27 et seq.) is amended— (A) in subsection (a)(7), by striking “section 1a(20)” and inserting “section 1a”; (B) in subsection (b)(2), by striking “section 1a(12)” and inserting “section 1a”; and (C) in subsection (c), by striking “section 1a(4)” and inserting “section 1a”. (10) The first section of Public Law 85–839 (7 U.S.C. 13–1) is amended in subsection (a), in the first sentence, by inserting “motion picture box office receipts (or any index, measure, value, or data related to such receipts) or” after “sale of”. (f) Effective Date.— Notwithstanding any other provision of this Act, the amendments made by subsection (a)(4) shall take effect on June 1, 2010. SEC. 722. JURISDICTION. (a) Exclusive Jurisdiction.— Section 2(a)(1) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended— (1) in subparagraph (A), in the first sentence— (A) by inserting “the Wall Street Transparency and Accountability Act of 2010 (including an amendment made by that Act) and” after “otherwise provided in”; (B) by striking “(C) and (D)” and inserting “(C), (D), and (I)”; (C) by striking “(c) through (i) of this section” and inserting “(c) and (f)”; (D) by striking “contracts of sale” and inserting “swaps or contracts of sale”; and (E) by striking “or derivatives transaction execution facility registered pursuant to section 5 or 5a” and inserting “pursuant to section 5 or a swap execution facility pursuant to section 5h”; and (2) by adding at the end the following: “(G) (i) Nothing in this paragraph shall limit the jurisdiction conferred on the Securities and Exchange Commission by the Wall Street Transparency and Accountability Act of 2010 with regard to security-based swap agreements as defined pursuant to section 3(a)(78) of the Securities Exchange Act of 1934, and security-based swaps. “(ii) In addition to the authority of the Securities and Exchange Commission described in clause (i), nothing in this subparagraph shall limit or affect any statutory authority of the Commission with respect to an agreement, contract, or transaction described in clause (i). “(H) Notwithstanding any other provision of law, the Wall Street Transparency and Accountability Act of 2010 shall not apply to, and the Commodity Futures Trading Commission shall have no jurisdiction under such Act (or any amendments to the Commodity Exchange Act made by such Act) with respect to, any security other than a security-based swap.” . (b) Regulation of Swaps Under Federal and State Law.— Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is amended by adding at the end the following: “(h) Regulation of Swaps as Insurance Under State Law.— A swap— “(1) shall not be considered to be insurance; and “(2) may not be regulated as an insurance contract under the law of any State.” . (c) Agreements, Contracts, and Transactions Traded on an Organized Exchange.— Section 2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(A)) is amended— (1) in clause (i), by striking “or” at the end; (2) by redesignating clause (ii) as clause (iii); and (3) by inserting after clause (i) the following: “(ii) a swap; or” . (d) Applicability.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2) (as amended by section 723(a)(3)) is amended by adding at the end the following: “(i) Applicability.— The provisions of this Act relating to swaps that were enacted by the Wall Street Transparency and Accountability Act of 2010 (including any rule prescribed or regulation promulgated under that Act), shall not apply to activities outside the United States unless those activities— “(1) have a direct and significant connection with activities in, or effect on, commerce of the United States; or “(2) contravene such rules or regulations as the Commission may prescribe or promulgate as are necessary or appropriate to prevent the evasion of any provision of this Act that was enacted by the Wall Street Transparency and Accountability Act of 2010.” . (e) Federal Energy Regulatory Commission.— Section 2(a)(1) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the end the following: “(I) (i) Nothing in this Act shall limit or affect any statutory authority of the Federal Energy Regulatory Commission or a State regulatory authority (as defined in section 3(21) of the Federal Power Act (16 U.S.C. 796(21)) with respect to an agreement, contract, or transaction that is entered into pursuant to a tariff or rate schedule approved by the Federal Energy Regulatory Commission or a State regulatory authority and is— “(I) not executed, traded, or cleared on a registered entity or trading facility; or “(II) executed, traded, or cleared on a registered entity or trading facility owned or operated by a regional transmission organization or independent system operator. “(ii) In addition to the authority of the Federal Energy Regulatory Commission or a State regulatory authority described in clause (i), nothing in this subparagraph shall limit or affect— “(I) any statutory authority of the Commission with respect to an agreement, contract, or transaction described in clause (i); or “(II) the jurisdiction of the Commission under subparagraph (A) with respect to an agreement, contract, or transaction that is executed, traded, or cleared on a registered entity or trading facility that is not owned or operated by a regional transmission organization or independent system operator (as defined by sections 3(27) and (28) of the Federal Power Act (16 U.S.C. 796(27), 796(28)).” . (f) Public Interest Waiver.— Section 4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is amended by adding at the end the following: “(6) If the Commission determines that the exemption would be consistent with the public interest and the purposes of this Act, the Commission shall, in accordance with paragraphs (1) and (2), exempt from the requirements of this Act an agreement, contract, or transaction that is entered into— “(A) pursuant to a tariff or rate schedule approved or permitted to take effect by the Federal Energy Regulatory Commission; “(B) pursuant to a tariff or rate schedule establishing rates or charges for, or protocols governing, the sale of electric energy approved or permitted to take effect by the regulatory authority of the State or municipality having jurisdiction to regulate rates and charges for the sale of electric energy within the State or municipality; or “(C) between entities described in section 201(f) of the Federal Power Act (16 U.S.C. 824(f)).” . (g) Authority of FERC.— Nothing in the Wall Street Transparency and Accountability Act of 2010 or the amendments to the Commodity Exchange Act made by such Act shall limit or affect any statutory enforcement authority of the Federal Energy Regulatory Commission pursuant to section 222 of the Federal Power Act and section 4A of the Natural Gas Act that existed prior to the date of enactment of the Wall Street Transparency and Accountability Act of 2010. (h) Determination.— The Commodity Exchange Act is amended by inserting after section 1a (7 U.S.C. 1a) the following: “SEC. 1b. REQUIREMENTS OF SECRETARY OF THE TREASURY REGARDING EXEMPTION OF FOREIGN EXCHANGE SWAPS AND FOREIGN EXCHANGE FORWARDS FROM DEFINITION OF THE TERM ‘SWAP’. “(a) Required Considerations.— In determining whether to exempt foreign exchange swaps and foreign exchange forwards from the definition of the term ‘swap’, the Secretary of the Treasury (referred to in this section as the ‘Secretary’) shall consider— “(1) whether the required trading and clearing of foreign exchange swaps and foreign exchange forwards would create systemic risk, lower transparency, or threaten the financial stability of the United States; “(2) whether foreign exchange swaps and foreign exchange forwards are already subject to a regulatory scheme that is materially comparable to that established by this Act for other classes of swaps; “(3) the extent to which bank regulators of participants in the foreign exchange market provide adequate supervision, including capital and margin requirements; “(4) the extent of adequate payment and settlement systems; and “(5) the use of a potential exemption of foreign exchange swaps and foreign exchange forwards to evade otherwise applicable regulatory requirements. “(b) Determination.— If the Secretary makes a determination to exempt foreign exchange swaps and foreign exchange forwards from the definition of the term ‘swap’, the Secretary shall submit to the appropriate committees of Congress a determination that contains— “(1) an explanation regarding why foreign exchange swaps and foreign exchange forwards are qualitatively different from other classes of swaps in a way that would make the foreign exchange swaps and foreign exchange forwards ill-suited for regulation as swaps; and “(2) an identification of the objective differences of foreign exchange swaps and foreign exchange forwards with respect to standard swaps that warrant an exempted status. “(c) Effect of Determination.— A determination by the Secretary under subsection (b) shall not exempt any foreign exchange swaps and foreign exchange forwards traded on a designated contract market or swap execution facility from any applicable antifraud and antimanipulation provision under this title.” . SEC. 723. CLEARING. (a) Clearing Requirement.— (1) In general.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended— (A) by striking subsections (d), (e), (g), and (h); and (B) by redesignating subsection (i) as subsection (g). (2) Swaps; limitation on participation.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph (1)) is amended by inserting after subsection (c) the following: “(d) Swaps.— Nothing in this Act (other than subparagraphs (A), (B), (C), (D), (G), and (H) of subsection (a)(1), subsections (f) and (g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a, 4b, and 4b–1, subsections (a), (b), and (g) of section 4c, sections 4d, 4e, 4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e, and 5h, subsections (c) and (d) of section 6, sections 6c, 6d, 8, 8a, and 9, subsections (e)(2), (f), and (h) of section 12, subsections (a) and (b) of section 13, sections 17, 20, 21, and 22(a)(4), and any other provision of this Act that is applicable to registered entities or Commission registrants) governs or applies to a swap. “(e) Limitation on Participation.— It shall be unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on, or subject to the rules of, a board of trade designated as a contract market under section 5.” . (3) Mandatory clearing of swaps.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by inserting after subsection (g) (as redesignated by paragraph (1)(B)) the following: “(h) Clearing Requirement.— “(1) In general.— “(A) Standard for clearing.— It shall be unlawful for any person to engage in a swap unless that person submits such swap for clearing to a derivatives clearing organization that is registered under this Act or a derivatives clearing organization that is exempt from registration under this Act if the swap is required to be cleared. “(B) Open access.— The rules of a derivatives clearing organization described in subparagraph (A) shall— “(i) prescribe that all swaps (but not contracts of sale of a commodity for future delivery or options on such contracts) submitted to the derivatives clearing organization with the same terms and conditions are economically equivalent within the derivatives clearing organization and may be offset with each other within the derivatives clearing organization; and “(ii) provide for non-discriminatory clearing of a swap (but not a contract of sale of a commodity for future delivery or option on such contract) executed bilaterally or on or through the rules of an unaffiliated designated contract market or swap execution facility. “(2) Commission review.— “(A) Commission-initiated review.— “(i) The Commission on an ongoing basis shall review each swap, or any group, category, type, or class of swaps to make a determination as to whether the swap or group, category, type, or class of swaps should be required to be cleared. “(ii) The Commission shall provide at least a 30-day public comment period regarding any determination made under clause (i). “(B) Swap submissions.— “(i) A derivatives clearing organization shall submit to the Commission each swap, or any group, category, type, or class of swaps that it plans to accept for clearing, and provide notice to its members (in a manner to be determined by the Commission) of the submission. “(ii) Any swap or group, category, type, or class of swaps listed for clearing by a derivative clearing organization as of the date of enactment of this subsection shall be considered submitted to the Commission. “(iii) The Commission shall— “(I) make available to the public submissions received under clauses (i) and (ii); “(II) review each submission made under clauses (i) and (ii), and determine whether the swap, or group, category, type, or class of swaps described in the submission is required to be cleared; and “(III) provide at least a 30-day public comment period regarding its determination as to whether the clearing requirement under paragraph (1)(A) shall apply to the submission. “(C) Deadline.— The Commission shall make its determination under subparagraph (B)(iii) not later than 90 days after receiving a submission made under subparagraphs (B)(i) and (B)(ii), unless the submitting derivatives clearing organization agrees to an extension for the time limitation established under this subparagraph. “(D) Determination.— “(i) In reviewing a submission made under subparagraph (B), the Commission shall review whether the submission is consistent with section 5b(c)(2). “(ii) In reviewing a swap, group of swaps, or class of swaps pursuant to subparagraph (A) or a submission made under subparagraph (B), the Commission shall take into account the following factors: “(I) The existence of significant outstanding notional exposures, trading liquidity, and adequate pricing data. “(II) The availability of rule framework, capacity, operational expertise and resources, and credit support infrastructure to clear the contract on terms that are consistent with the material terms and trading conventions on which the contract is then traded. “(III) The effect on the mitigation of systemic risk, taking into account the size of the market for such contract and the resources of the derivatives clearing organization available to clear the contract. “(IV) The effect on competition, including appropriate fees and charges applied to clearing. “(V) The existence of reasonable legal certainty in the event of the insolvency of the relevant derivatives clearing organization or 1 or more of its clearing members with regard to the treatment of customer and swap counterparty positions, funds, and property. “(iii) In making a determination under subparagraph (A) or (B)(iii) that the clearing requirement shall apply, the Commission may require such terms and conditions to the requirement as the Commission determines to be appropriate. “(E) Rules.— Not later than 1 year after the date of the enactment of this subsection, the Commission shall adopt rules for a derivatives clearing organization’s submission for review, pursuant to this paragraph, of a swap, or a group, category, type, or class of swaps, that it seeks to accept for clearing. Nothing in this subparagraph limits the Commission from making a determination under subparagraph (B)(iii) for swaps described in subparagraph (B)(ii). “(3) Stay of clearing requirement.— “(A) In general.— After making a determination pursuant to paragraph (2)(B), the Commission, on application of a counterparty to a swap or on its own initiative, may stay the clearing requirement of paragraph (1) until the Commission completes a review of the terms of the swap (or the group, category, type, or class of swaps) and the clearing arrangement. “(B) Deadline.— The Commission shall complete a review undertaken pursuant to subparagraph (A) not later than 90 days after issuance of the stay, unless the derivatives clearing organization that clears the swap, or group, category, type, or class of swaps agrees to an extension of the time limitation established under this subparagraph. “(C) Determination.— Upon completion of the review undertaken pursuant to subparagraph (A), the Commission may— “(i) determine, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, that the swap, or group, category, type, or class of swaps must be cleared pursuant to this subsection if it finds that such clearing is consistent with paragraph (2)(D); or “(ii) determine that the clearing requirement of paragraph (1) shall not apply to the swap, or group, category, type, or class of swaps. “(D) Rules.— Not later than 1 year after the date of the enactment of the Wall Street Transparency and Accountability Act of 2010, the Commission shall adopt rules for reviewing, pursuant to this paragraph, a derivatives clearing organization’s clearing of a swap, or a group, category, type, or class of swaps, that it has accepted for clearing. “(4) Prevention of evasion.— “(A) In general.— The Commission shall prescribe rules under this subsection (and issue interpretations of rules prescribed under this subsection) as determined by the Commission to be necessary to prevent evasions of the mandatory clearing requirements under this Act. “(B) Duty of commission to investigate and take certain actions.— To the extent the Commission finds that a particular swap, group, category, type, or class of swaps would otherwise be subject to mandatory clearing but no derivatives clearing organization has listed the swap, group, category, type, or class of swaps for clearing, the Commission shall— “(i) investigate the relevant facts and circumstances; “(ii) within 30 days issue a public report containing the results of the investigation; and “(iii) take such actions as the Commission determines to be necessary and in the public interest, which may include requiring the retaining of adequate margin or capital by parties to the swap, group, category, type, or class of swaps. “(C) Effect on authority.— Nothing in this paragraph— “(i) authorizes the Commission to adopt rules requiring a derivatives clearing organization to list for clearing a swap, group, category, type, or class of swaps if the clearing of the swap, group, category, type, or class of swaps would threaten the financial integrity of the derivatives clearing organization; and “(ii) affects the authority of the Commission to enforce the open access provisions of paragraph (1)(B) with respect to a swap, group, category, type, or class of swaps that is listed for clearing by a derivatives clearing organization. “(5) Reporting transition rules.— Rules adopted by the Commission under this section shall provide for the reporting of data, as follows: “(A) Swaps entered into before the date of the enactment of this subsection shall be reported to a registered swap data repository or the Commission no later than 180 days after the effective date of this subsection. “(B) Swaps entered into on or after such date of enactment shall be reported to a registered swap data repository or the Commission no later than the later of— “(i) 90 days after such effective date; or “(ii) such other time after entering into the swap as the Commission may prescribe by rule or regulation. “(6) Clearing transition rules.— “(A) Swaps entered into before the date of the enactment of this subsection are exempt from the clearing requirements of this subsection if reported pursuant to paragraph (5)(A). “(B) Swaps entered into before application of the clearing requirement pursuant to this subsection are exempt from the clearing requirements of this subsection if reported pursuant to paragraph (5)(B). “(7) Exceptions.— “(A) In general.— The requirements of paragraph (1)(A) shall not apply to a swap if 1 of the counterparties to the swap— “(i) is not a financial entity; “(ii) is using swaps to hedge or mitigate commercial risk; and “(iii) notifies the Commission, in a manner set forth by the Commission, how it generally meets its financial obligations associated with entering into non-cleared swaps. “(B) Option to clear.— The application of the clearing exception in subparagraph (A) is solely at the discretion of the counterparty to the swap that meets the conditions of clauses (i) through (iii) of subparagraph (A). “(C) Financial entity definition.— “(i) In general.— For the purposes of this paragraph, the term ‘financial entity’ means— “(I) a swap dealer; “(II) a security-based swap dealer; “(III) a major swap participant; “(IV) a major security-based swap participant; “(V) a commodity pool; “(VI) a private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); “(VII) an employee benefit 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); “(VIII) a person predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956. “(ii) Exclusion.— The Commission shall consider whether to exempt small banks, savings associations, farm credit system institutions, and credit unions, including— “(I) depository institutions with total assets of $10,000,000,000 or less; “(II) farm credit system institutions with total assets of $10,000,000,000 or less; or “(III) credit unions with total assets of $10,000,000,000 or less. “(iii) Limitation.— Such definition shall not include an entity whose primary business is providing financing, and uses derivatives for the purpose of hedging underlying commercial risks related to interest rate and foreign currency exposures, 90 percent or more of which arise from financing that facilitates the purchase or lease of products, 90 percent or more of which are manufactured by the parent company or another subsidiary of the parent company. “(D) Treatment of affiliates.— “(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, acting on behalf of the person and as an agent, uses the swap to hedge or mitigate the commercial risk of the person or other affiliate of the person that is not a financial entity. “(ii) Prohibition relating to certain affiliates.— The exception in clause (i) shall not apply if the affiliate is— “(I) a swap dealer; “(II) a security-based swap dealer; “(III) a major swap participant; “(IV) a major security-based swap participant; “(V) an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for paragraph (1) or (7) of subsection (c) of that Act (15 U.S.C. 80a–3(c)); “(VI) a commodity pool; or “(VII) a bank holding company with over $50,000,000,000 in consolidated assets. “(iii) Transition rule for affiliates.— An Exemption. Time period. affiliate, subsidiary, or a wholly owned entity of a person that qualifies for an exception under subparagraph (A) and is predominantly engaged in providing financing for the purchase or lease of merchandise or manufactured goods of the person shall be exempt from the margin requirement described in section 4s(e) and the clearing requirement described in paragraph (1) with regard to swaps entered into to mitigate the risk of the financing activities for not less than a 2-year period beginning on the date of enactment of this clause. “(E) Election of counterparty.— “(i) Swaps required to be cleared.— With respect to any swap that is subject to the mandatory clearing requirement under this subsection and entered into by a swap dealer or a major swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty shall have the sole right to select the derivatives clearing organization at which the swap will be cleared. “(ii) Swaps not required to be cleared.— With respect to any swap that is not subject to the mandatory clearing requirement under this subsection and entered into by a swap dealer or a major swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty— “(I) may elect to require clearing of the swap; and “(II) shall have the sole right to select the derivatives clearing organization at which the swap will be cleared. “(F) Abuse of exception.— The Commission may prescribe such rules or issue interpretations of the rules as the Commission determines to be necessary to prevent abuse of the exceptions described in this paragraph. The Commission may also request information from those persons claiming the clearing exception as necessary to prevent abuse of the exceptions described in this paragraph. “(8) Trade execution.— “(A) In general.— With respect to transactions involving swaps subject to the clearing requirement of paragraph (1), counterparties shall— “(i) execute the transaction on a board of trade designated as a contract market under section 5; or “(ii) execute the transaction on a swap execution facility registered under 5h or a swap execution facility that is exempt from registration under section 5h(f) of this Act. “(B) Exception.— The requirements of clauses (i) and (ii) of subparagraph (A) shall not apply if no board of trade or swap execution facility makes the swap available to trade or for swap transactions subject to the clearing exception under paragraph (7).” . (b) Commodity Exchange Act.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following: “(j) Committee Approval by Board.— Exemptions from the requirements of subsection (h)(1) to clear a swap and subsection (h)(8) to execute a swap through a board of trade or swap execution facility shall be available to a counterparty that is an issuer of securities that are registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l) or that is required to file reports pursuant to section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o) only if an appropriate committee of the issuer’s board or governing body has reviewed and approved its decision to enter into swaps that are subject to such exemptions.” . (c) Grandfather Provisions.— (1) Legal certainty for certain transactions in exempt commodities.— Not Deadline. later than 60 days after the date of enactment of this Act, a person may submit to the Commodity Futures Trading Commission a petition to remain subject to section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) (as in effect on the day before the date of enactment of this Act). (2) Consideration; authority of commodity futures trading commission.— The Commodity Futures Trading Commission— (A) shall consider any petition submitted under subparagraph (A) in a prompt manner; and (B) may allow a person to continue operating subject to section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) (as in effect on the day before the date of enactment of this Act) for not longer than a 1-year period. (3) Agricultural swaps.— (A) In general.— Except as provided in subparagraph (B), no person shall offer to enter into, enter into, or confirm the execution of, any swap in an agricultural commodity (as defined by the Commodity Futures Trading Commission). (B) Exception.— Notwithstanding subparagraph (A), a person may offer to enter into, enter into, or confirm the execution of, any swap in an agricultural commodity pursuant to section 4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) or any rule, regulation, or order issued thereunder (including any rule, regulation, or order in effect as of the date of enactment of this Act) by the Commodity Futures Trading Commission to allow swaps under such terms and conditions as the Commission shall prescribe. (4) Required reporting.— If Compliance. Records. the exception described in section 2(h)(8)(B) of the Commodity Exchange Act applies, the counterparties shall comply with any recordkeeping and transaction reporting requirements that may be prescribed by the Commission with respect to swaps subject to section 2(h)(8)(B) of the Commodity Exchange Act. SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT. (a) Segregation Requirements for Cleared Swaps.— Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by section 732) is amended by adding at the end the following: “(f) Swaps.— “(1) Registration requirement.— It shall be unlawful for any person to accept any money, securities, or property (or to extend any credit in lieu of money, securities, or property) from, for, or on behalf of a swaps customer to margin, guarantee, or secure a swap cleared by or through a derivatives clearing organization (including money, securities, or property accruing to the customer as the result of such a swap), unless the person shall have registered under this Act with the Commission as a futures commission merchant, and the registration shall not have expired nor been suspended nor revoked. “(2) Cleared swaps.— “(A) Segregation required.— A futures commission merchant shall treat and deal with all money, securities, and property of any swaps customer received to margin, guarantee, or secure a swap cleared by or though a derivatives clearing organization (including money, securities, or property accruing to the swaps customer as the result of such a swap) as belonging to the swaps customer. “(B) Commingling prohibited.— Money, securities, and property of a swaps customer described in subparagraph (A) shall be separately accounted for and shall not be commingled with the funds of the futures commission merchant or be used to margin, secure, or guarantee any trades or contracts of any swaps customer or person other than the person for whom the same are held. “(3) Exceptions.— “(A) Use of funds.— “(i) In general.— Notwithstanding paragraph (2), money, securities, and property of swap customers of a futures commission merchant described in paragraph (2) may, for convenience, be commingled and deposited in the same account or accounts with any bank or trust company or with a derivatives clearing organization. “(ii) Withdrawal.— Notwithstanding paragraph (2), such share of the money, securities, and property described in clause (i) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a cleared swap with a derivatives clearing organization, or with any member of the derivatives clearing organization, may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the cleared swap. “(B) Commission action.— Notwithstanding paragraph (2), in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, securities, or property of the swaps customers of a futures commission merchant described in paragraph (2) may be commingled and deposited in customer accounts with any other money, securities, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the swaps customer of the futures commission merchant. “(4) Permitted investments.— Money described in paragraph (2) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe. “(5) Commodity contract.— A swap cleared by or through a derivatives clearing organization shall be considered to be a commodity contract as such term is defined in section 761 of title 11, United States Code, with regard to all money, securities, and property of any swaps customer received by a futures commission merchant or a derivatives clearing organization to margin, guarantee, or secure the swap (including money, securities, or property accruing to the customer as the result of the swap). “(6) Prohibition.— It shall be unlawful for any person, including any derivatives clearing organization and any depository institution, that has received any money, securities, or property for deposit in a separate account or accounts as provided in paragraph (2) to hold, dispose of, or use any such money, securities, or property as belonging to the depositing futures commission merchant or any person other than the swaps customer of the futures commission merchant.” . (b) Bankruptcy Treatment of Cleared Swaps.— Section 761 of title 11, United States Code, is amended— (1) in paragraph (4), by striking subparagraph (F) and inserting the following: “(F) (i) any other contract, option, agreement, or transaction that is similar to a contract, option, agreement, or transaction referred to in this paragraph; and “(ii) with respect to a futures commission merchant or a clearing organization, any other contract, option, agreement, or transaction, in each case, that is cleared by a clearing organization;” ; and (2) in paragraph (9)(A)(i), by striking “the commodity futures account” and inserting “a commodity contract account”. (c) Segregation Requirements for Uncleared Swaps.— Section 4s of the Commodity Exchange Act 7 USC 6s. (as added by section 731) is amended by adding at the end the following: “(l) Segregation Requirements.— “(1) Segregation of assets held as collateral in uncleared swap transactions.— “(A) Notification.— A swap dealer or major swap participant shall be required to notify the counterparty of the swap dealer or major swap participant at the beginning of a swap transaction that the counterparty has the right to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty. “(B) Segregation and maintenance of funds.— At the request of a counterparty to a swap that provides funds or other property to a swap dealer or major swap participant to margin, guarantee, or secure the obligations of the counterparty, the swap dealer or major swap participant shall— “(i) segregate the funds or other property for the benefit of the counterparty; and “(ii) in accordance with such rules and regulations as the Commission may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the swap dealer or major swap participant. “(2) Applicability.— The requirements described in paragraph (1) shall— “(A) apply only to a swap between a counterparty and a swap dealer or major swap participant that is not submitted for clearing to a derivatives clearing organization; and “(B) (i) not apply to variation margin payments; or “(ii) not preclude any commercial arrangement regarding— “(I) the investment of segregated funds or other property that may only be invested in such investments as the Commission may permit by rule or regulation; and “(II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property. “(3) Use of independent third-party custodians.— The segregated account described in paragraph (1) shall be— “(A) carried by an independent third-party custodian; and “(B) designated as a segregated account for and on behalf of the counterparty. “(4) Reporting requirement.— If the counterparty does not choose to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the swap dealer or major swap participant shall report to the counterparty of the swap dealer or major swap participant on a quarterly basis that the back office procedures of the swap dealer or major swap participant relating to margin and collateral requirements are in compliance with the agreement of the counterparties.” . SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS. (a) Registration Requirement.— Section 5b of the Commodity Exchange Act (7 U.S.C. 7a–1) is amended by striking subsections (a) and (b) and inserting the following: “(a) Registration Requirement.— “(1) In general.— Except as provided in paragraph (2), it shall be unlawful for a derivatives clearing organization, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a derivatives clearing organization with respect to— “(A) a contract of sale of a commodity for future delivery (or an option on the contract of sale) or option on a commodity, in each case, unless the contract or option is— “(i) excluded from this Act by subsection (a)(1)(C)(i), (c), or (f) of section 2; or “(ii) a security futures product cleared by a clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); or “(B) a swap. “(2) Exception.— Paragraph (1) shall not apply to a derivatives clearing organization that is registered with the Commission. “(b) Voluntary Registration.— A person that clears 1 or more agreements, contracts, or transactions that are not required to be cleared under this Act may register with the Commission as a derivatives clearing organization.” . (b) Registration for Depository Institutions and Clearing Agencies; Exemptions; Compliance Officer; Annual Reports.— Section 5b of the Commodity Exchange Act (7 U.S.C. 7a–1) is amended by adding at the end the following: “(g) Existing Depository Institutions and Clearing Agencies.— “(1) In general.— A depository institution or clearing agency registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) that is required to be registered as a derivatives clearing organization under this section is deemed to be registered under this section to the extent that, before the date of enactment of this subsection— “(A) the depository institution cleared swaps as a multilateral clearing organization; or “(B) the clearing agency cleared swaps. “(2) Conversion of depository institutions.— A depository institution to which this subsection applies may, by the vote of the shareholders owning not less than 51 percent of the voting interests of the depository institution, be converted into a State corporation, partnership, limited liability company, or similar legal form pursuant to a plan of conversion, if the conversion is not in contravention of applicable State law. “(3) Sharing of information.— The Securities and Exchange Commission shall make available to the Commission, upon request, all information determined to be relevant by the Securities and Exchange Commission regarding a clearing agency deemed to be registered with the Commission under paragraph (1). “(h) Exemptions.— The Commission may exempt, conditionally or unconditionally, a derivatives clearing organization from registration under this section for the clearing of swaps if the Commission determines that the derivatives clearing organization is subject to comparable, comprehensive supervision and regulation by the Securities and Exchange Commission or the appropriate government authorities in the home country of the organization. Such conditions may include, but are not limited to, requiring that the derivatives clearing organization be available for inspection by the Commission and make available all information requested by the Commission. “(i) Designation of Chief Compliance Officer.— “(1) In general.— Each derivatives clearing organization shall designate an individual to serve as a chief compliance officer. “(2) Duties.— The chief compliance officer shall— “(A) report directly to the board or to the senior officer of the derivatives clearing organization; “(B) review the compliance of the derivatives clearing organization with respect to the core principles described in subsection (c)(2); “(C) in consultation with the board of the derivatives clearing organization, a body performing a function similar to the board of the derivatives clearing organization, or the senior officer of the derivatives clearing organization, resolve any conflicts of interest that may arise; “(D) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; “(F) establish procedures for the remediation of noncompliance issues identified by the compliance officer through any— “(i) compliance office review; “(ii) look-back; “(iii) internal or external audit finding; “(iv) self-reported error; or “(v) validated complaint; and “(G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(3) Annual reports.— “(A) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(i) the compliance of the derivatives clearing organization of the compliance officer with respect to this Act (including regulations); and “(ii) each policy and procedure of the derivatives clearing organization of the compliance officer (including the code of ethics and conflict of interest policies of the derivatives clearing organization). “(B) Requirements.— A compliance report under subparagraph (A) shall— “(i) accompany each appropriate financial report of the derivatives clearing organization that is required to be furnished to the Commission pursuant to this section; and “(ii) include a certification that, under penalty of law, the compliance report is accurate and complete.” . (c) Core Principles for Derivatives Clearing Organizations.— Section 5b(c) of the Commodity Exchange Act (7 U.S.C. 7a–1(c)) is amended by striking paragraph (2) and inserting the following: “(2) Core principles for derivatives clearing organizations.— “(A) Compliance.— “(i) In general.— To be registered and to maintain registration as a derivatives clearing organization, a derivatives clearing organization shall comply with each core principle described in this paragraph and any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5). “(ii) Discretion of derivatives clearing organization.— Subject to any rule or regulation prescribed by the Commission, a derivatives clearing organization shall have reasonable discretion in establishing the manner by which the derivatives clearing organization complies with each core principle described in this paragraph. “(B) Financial resources.— “(i) In general.— Each derivatives clearing organization shall have adequate financial, operational, and managerial resources, as determined by the Commission, to discharge each responsibility of the derivatives clearing organization. “(ii) Minimum amount of financial resources.— Each derivatives clearing organization shall possess financial resources that, at a minimum, exceed the total amount that would— “(I) enable the organization to meet its financial obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and “(II) enable the derivatives clearing organization to cover the operating costs of the derivatives clearing organization for a period of 1 year (as calculated on a rolling basis). “(C) Participant and product eligibility.— “(i) In general.— Each derivatives clearing organization shall establish— “(I) appropriate admission and continuing eligibility standards (including sufficient financial resources and operational capacity to meet obligations arising from participation in the derivatives clearing organization) for members of, and participants in, the derivatives clearing organization; and “(II) appropriate standards for determining the eligibility of agreements, contracts, or transactions submitted to the derivatives clearing organization for clearing. “(ii) Required procedures.— Each derivatives clearing organization shall establish and implement procedures to verify, on an ongoing basis, the compliance of each participation and membership requirement of the derivatives clearing organization. “(iii) Requirements.— The participation and membership requirements of each derivatives clearing organization shall— “(I) be objective; “(II) be publicly disclosed; and “(III) permit fair and open access. “(D) Risk management.— “(i) In general.— Each derivatives clearing organization shall ensure that the derivatives clearing organization possesses the ability to manage the risks associated with discharging the responsibilities of the derivatives clearing organization through the use of appropriate tools and procedures. “(ii) Measurement of credit exposure.— Each derivatives clearing organization shall— “(I) not less than once during each business day of the derivatives clearing organization, measure the credit exposures of the derivatives clearing organization to each member and participant of the derivatives clearing organization; and “(II) monitor each exposure described in subclause (I) periodically during the business day of the derivatives clearing organization. “(iii) Limitation of exposure to potential losses from defaults.— Each derivatives clearing organization, through margin requirements and other risk control mechanisms, shall limit the exposure of the derivatives clearing organization to potential losses from defaults by members and participants of the derivatives clearing organization to ensure that— “(I) the operations of the derivatives clearing organization would not be disrupted; and “(II) nondefaulting members or participants would not be exposed to losses that nondefaulting members or participants cannot anticipate or control. “(iv) Margin requirements.— The margin required from each member and participant of a derivatives clearing organization shall be sufficient to cover potential exposures in normal market conditions. “(v) Requirements regarding models and parameters.— Each model and parameter used in setting margin requirements under clause (iv) shall be— “(I) risk-based; and “(II) reviewed on a regular basis. “(E) Settlement procedures.— Each derivatives clearing organization shall— “(i) complete money settlements on a timely basis (but not less frequently than once each business day); “(ii) employ money settlement arrangements to eliminate or strictly limit the exposure of the derivatives clearing organization to settlement bank risks (including credit and liquidity risks from the use of banks to effect money settlements); “(iii) ensure that money settlements are final when effected; “(iv) maintain an accurate record of the flow of funds associated with each money settlement; “(v) possess the ability to comply with each term and condition of any permitted netting or offset arrangement with any other clearing organization; “(vi) regarding physical settlements, establish rules that clearly state each obligation of the derivatives clearing organization with respect to physical deliveries; and “(vii) ensure that each risk arising from an obligation described in clause (vi) is identified and managed. “(F) Treatment of funds.— “(i) Required standards and procedures.— Each derivatives clearing organization shall establish standards and procedures that are designed to protect and ensure the safety of member and participant funds and assets. “(ii) Holding of funds and assets.— Each derivatives clearing organization shall hold member and participant funds and assets in a manner by which to minimize the risk of loss or of delay in the access by the derivatives clearing organization to the assets and funds. “(iii) Permissible investments.— Funds and assets invested by a derivatives clearing organization shall be held in instruments with minimal credit, market, and liquidity risks. “(G) Default rules and procedures.— “(i) In general.— Each derivatives clearing organization shall have rules and procedures designed to allow for the efficient, fair, and safe management of events during which members or participants— “(I) become insolvent; or “(II) otherwise default on the obligations of the members or participants to the derivatives clearing organization. “(ii) Default procedures.— Each derivatives clearing organization shall— “(I) clearly state the default procedures of the derivatives clearing organization; “(II) make publicly available the default rules of the derivatives clearing organization; and “(III) ensure that the derivatives clearing organization may take timely action— “(aa) to contain losses and liquidity pressures; and “(bb) to continue meeting each obligation of the derivatives clearing organization. “(H) Rule enforcement.— Each derivatives clearing organization shall— “(i) maintain adequate arrangements and resources for— “(I) the effective monitoring and enforcement of compliance with the rules of the derivatives clearing organization; and “(II) the resolution of disputes; “(ii) have the authority and ability to discipline, limit, suspend, or terminate the activities of a member or participant due to a violation by the member or participant of any rule of the derivatives clearing organization; and “(iii) report to the Commission regarding rule enforcement activities and sanctions imposed against members and participants as provided in clause (ii). “(I) System safeguards.— Each derivatives clearing organization shall— “(i) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk through the development of appropriate controls and procedures, and automated systems, that are reliable, secure, and have adequate scalable capacity; “(ii) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allows for— “(I) the timely recovery and resumption of operations of the derivatives clearing organization; and “(II) the fulfillment of each obligation and responsibility of the derivatives clearing organization; and “(iii) periodically conduct tests to verify that the backup resources of the derivatives clearing organization are sufficient to ensure daily processing, clearing, and settlement. “(J) Reporting.— Each derivatives clearing organization shall provide to the Commission all information that the Commission determines to be necessary to conduct oversight of the derivatives clearing organization. “(K) Recordkeeping.— Each derivatives clearing organization shall maintain records of all activities related to the business of the derivatives clearing organization as a derivatives clearing organization— “(i) in a form and manner that is acceptable to the Commission; and “(ii) for a period of not less than 5 years. “(L) Public information.— “(i) In general.— Each derivatives clearing organization shall provide to market participants sufficient information to enable the market participants to identify and evaluate accurately the risks and costs associated with using the services of the derivatives clearing organization. “(ii) Availability of information.— Each derivatives clearing organization shall make information concerning the rules and operating and default procedures governing the clearing and settlement systems of the derivatives clearing organization available to market participants. “(iii) Public disclosure.— Each derivatives clearing organization shall disclose publicly and to the Commission information concerning— “(I) the terms and conditions of each contract, agreement, and transaction cleared and settled by the derivatives clearing organization; “(II) each clearing and other fee that the derivatives clearing organization charges the members and participants of the derivatives clearing organization; “(III) the margin-setting methodology, and the size and composition, of the financial resource package of the derivatives clearing organization; “(IV) daily settlement prices, volume, and open interest for each contract settled or cleared by the derivatives clearing organization; and “(V) any other matter relevant to participation in the settlement and clearing activities of the derivatives clearing organization. “(M) Information-sharing.— Each derivatives clearing organization shall— “(i) enter into, and abide by the terms of, each appropriate and applicable domestic and international information-sharing agreement; and “(ii) use relevant information obtained from each agreement described in clause (i) in carrying out the risk management program of the derivatives clearing organization. “(N) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this Act, a derivatives clearing organization shall not— “(i) adopt any rule or take any action that results in any unreasonable restraint of trade; or “(ii) impose any material anticompetitive burden. “(O) Governance fitness standards.— “(i) Governance arrangements.— Each derivatives clearing organization shall establish governance arrangements that are transparent— “(I) to fulfill public interest requirements; and “(II) to permit the consideration of the views of owners and participants. “(ii) Fitness standards.— Each derivatives clearing organization shall establish and enforce appropriate fitness standards for— “(I) directors; “(II) members of any disciplinary committee; “(III) members of the derivatives clearing organization; “(IV) any other individual or entity with direct access to the settlement or clearing activities of the derivatives clearing organization; and “(V) any party affiliated with any individual or entity described in this clause. “(P) Conflicts of interest.— Each derivatives clearing organization shall— “(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the derivatives clearing organization; and “(ii) establish a process for resolving conflicts of interest described in clause (i). “(Q) Composition of governing boards.— Each derivatives clearing organization shall ensure that the composition of the governing board or committee of the derivatives clearing organization includes market participants. “(R) Legal risk.— Each derivatives clearing organization shall have a well-founded, transparent, and enforceable legal framework for each aspect of the activities of the derivatives clearing organization.” . (d) Conflicts of Interest.— The Commodity Futures Trading Commission shall adopt rules mitigating conflicts of interest in connection with the conduct of business by a swap dealer or a major swap participant with a derivatives clearing organization, board of trade, or a swap execution facility that clears or trades swaps in which the swap dealer or major swap participant has a material debt or material equity investment. (e) Reporting Requirements.— Section 5b of the Commodity Exchange Act (7 U.S.C. 7a–1) (as amended by subsection (b)) is amended by adding at the end the following: “(k) Reporting Requirements.— “(1) Duty of derivatives clearing organizations.— Each derivatives clearing organization that clears swaps shall provide to the Commission all information that is determined by the Commission to be necessary to perform each responsibility of the Commission under this Act. “(2) Data collection and maintenance requirements.— The Commission shall adopt data collection and maintenance requirements for swaps cleared by derivatives clearing organizations that are comparable to the corresponding requirements for— “(A) swaps data reported to swap data repositories; and “(B) swaps traded on swap execution facilities. “(3) Reports on security-based swap agreements to be shared with the securities and exchange commission.— “(A) In general.— A derivatives clearing organization that clears security-based swap agreements (as defined in section 1a(47)(A)(v)) shall, upon request, open to inspection and examination to the Securities and Exchange Commission all books and records relating to such security-based swap agreements, consistent with the confidentiality and disclosure requirements of section 8. “(B) Jurisdiction.— Nothing in this paragraph shall affect the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for a derivatives clearing organization that is registered with the Commission. “(4) Information sharing.— Subject to section 8, and upon request, the Commission shall share information collected under paragraph (2) with— “(A) the Board; “(B) the Securities and Exchange Commission; “(C) each appropriate prudential regulator; “(D) the Financial Stability Oversight Council; “(E) the Department of Justice; and “(F) any other person that the Commission determines to be appropriate, including— “(i) foreign financial supervisors (including foreign futures authorities); “(ii) foreign central banks; and “(iii) foreign ministries. “(5) Confidentiality and indemnification agreement.— Before the Commission may share information with any entity described in paragraph (4)— “(A) the Commission shall receive a written agreement from each entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the information on swap transactions that is provided; and “(B) each entity shall agree to indemnify the Commission for any expenses arising from litigation relating to the information provided under section 8. “(6) Public information.— Each derivatives clearing organization that clears swaps shall provide to the Commission (including any designee of the Commission) information under paragraph (2) in such form and at such frequency as is required by the Commission to comply with the public reporting requirements contained in section 2(a)(13).” . (f) Public Disclosure.— Section 8(e) of the Commodity Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence— (1) by inserting “, central bank and ministries,” after “department” each place it appears; and (2) by striking “. is a party.” and inserting “, is a party.”. (g) Legal Certainty for Identified Banking Products.— (1) Repeals.— The Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27 et seq.) is amended— (A) by striking sections 404 and 407 (7 U.S.C. 27b, 27e); (B) in section 402 (7 U.S.C. 27), by striking subsection (d); and (C) in section 408 (7 U.S.C. 27f)— (i) in subsection (c)— (I) by striking “in the case” and all that follows through “a hybrid” and inserting “in the case of a hybrid”; (II) by striking “; or” and inserting a period; and (III) by striking paragraph (2); (ii) by striking subsection (b); and (iii) by redesignating subsection (c) as subsection (b). (2) Legal certainty for bank products act of 2000.— Section 403 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27a) is amended to read as follows: “SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT. “(a) Exclusion.— Except as provided in subsection (b) or (c)— “(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall not apply to, and the Commodity Futures Trading Commission shall not exercise regulatory authority under the Commodity Exchange Act (7 U.S.C. 1 et seq.) with respect to, an identified banking product; and “(2) the definitions of ‘security-based swap’ in section 3(a)(68) of the Securities Exchange Act of 1934 and ‘security-based swap agreement’ in section 1a(47)(A)(v) of the Commodity Exchange Act and section 3(a)(78) of the Securities Exchange Act of 1934 do not include any identified bank product. “(b) Exception.— An appropriate Federal banking agency may except an identified banking product of a bank under its regulatory jurisdiction from the exclusion in subsection (a) if the agency determines, in consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission, that the product— “(1) would meet the definition of a ‘swap’ under section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a) or a ‘security-based swap’ under that section 3(a)(68) of the Securities Exchange Act of 1934; and “(2) has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). “(c) Exception.— The exclusions in subsection (a) shall not apply to an identified bank product that— “(1) is a product of a bank that is not under the regulatory jurisdiction of an appropriate Federal banking agency; “(2) meets the definition of swap in section 1a(47) of the Commodity Exchange Act or security-based swap in section 3(a)(68) of the Securities Exchange Act of 1934; and “(3) has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).” . (h) Reducing Clearing Systemic Risk.— Section 5b(f)(1) of the Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by adding at the end the following: “In order to minimize systemic risk, under no circumstances shall a derivatives clearing organization be compelled to accept the counterparty credit risk of another clearing organization.”. SEC. 726. RULEMAKING ON CONFLICT OF INTEREST. (a) In General.— In Deadline. order to mitigate conflicts of interest, not later than 180 days after the date of enactment of the Wall Street Transparency and Accountability Act of 2010, the Commodity Futures Trading Commission shall adopt rules which may include numerical limits on the control of, or the voting rights with respect to, any derivatives clearing organization that clears swaps, or swap execution facility or board of trade designated as a contract market that posts swaps or makes swaps available for trading, by a bank holding company (as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)) with total consolidated assets of $50,000,000,000 or more, a nonbank financial company (as defined in section 102) supervised by the Board, an affiliate of such a bank holding company or nonbank financial company, a swap dealer, major swap participant, or associated person of a swap dealer or major swap participant. (b) Purposes.— The Commission shall adopt rules if it determines, after the review described in subsection (a), that such rules are necessary or appropriate to improve the governance of, or to mitigate systemic risk, promote competition, or mitigate conflicts of interest in connection with a swap dealer or major swap participant’s conduct of business with, a derivatives clearing organization, contract market, or swap execution facility that clears or posts swaps or makes swaps available for trading and in which such swap dealer or major swap participant has a material debt or equity investment. (c) Considerations.— In adopting rules pursuant to this section, the Commodity Futures Trading Commission shall consider any conflicts of interest arising from the amount of equity owned by a single investor, the ability to vote, cause the vote of, or withhold votes entitled to be cast on any matters by the holders of the ownership interest, and the governance arrangements of any derivatives clearing organization that clears swaps, or swap execution facility or board of trade designated as a contract market that posts swaps or makes swaps available for trading. SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.   Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) is amended by adding at the end the following: “(13) Public availability of swap transaction data.— “(A) Definition of real-time public reporting.— In this paragraph, the term ‘real-time public reporting’ means to report data relating to a swap transaction, including price and volume, as soon as technologically practicable after the time at which the swap transaction has been executed. “(B) Purpose.— The purpose of this section is to authorize the Commission to make swap transaction and pricing data available to the public in such form and at such times as the Commission determines appropriate to enhance price discovery. “(C) General rule.— The Commission is authorized and required to provide by rule for the public availability of swap transaction and pricing data as follows: “(i) With respect to those swaps that are subject to the mandatory clearing requirement described in subsection (h)(1) (including those swaps that are excepted from the requirement pursuant to subsection (h)(7)), the Commission shall require real-time public reporting for such transactions. “(ii) With respect to those swaps that are not subject to the mandatory clearing requirement described in subsection (h)(1), but are cleared at a registered derivatives clearing organization, the Commission shall require real-time public reporting for such transactions. “(iii) With respect to swaps that are not cleared at a registered derivatives clearing organization and which are reported to a swap data repository or the Commission under subsection (h)(6), the Commission shall require real-time public reporting for such transactions, in a manner that does not disclose the business transactions and market positions of any person. “(iv) With respect to swaps that are determined to be required to be cleared under subsection (h)(2) but are not cleared, the Commission shall require real-time public reporting for such transactions. “(D) Registered entities and public reporting.— The Commission may require registered entities to publicly disseminate the swap transaction and pricing data required to be reported under this paragraph. “(E) Rulemaking required.— With respect to the rule providing for the public availability of transaction and pricing data for swaps described in clauses (i) and (ii) of subparagraph (C), the rule promulgated by the Commission shall contain provisions— “(i) to ensure such information does not identify the participants; “(ii) Criteria. to specify the criteria for determining what constitutes a large notional swap transaction (block trade) for particular markets and contracts; “(iii) to specify the appropriate time delay for reporting large notional swap transactions (block trades) to the public; and “(iv) that take into account whether the public disclosure will materially reduce market liquidity. “(F) Timeliness of reporting.— Parties to a swap (including agents of the parties to a swap) shall be responsible for reporting swap transaction information to the appropriate registered entity in a timely manner as may be prescribed by the Commission. “(G) Reporting of swaps to registered swap data repositories.— Each swap (whether cleared or uncleared) shall be reported to a registered swap data repository. “(14) Semiannual and annual public reporting of aggregate swap data.— “(A) In general.— In accordance with subparagraph (B), the Commission shall issue a written report on a semiannual and annual basis to make available to the public information relating to— “(i) the trading and clearing in the major swap categories; and “(ii) the market participants and developments in new products. “(B) Use; consultation.— In preparing a report under subparagraph (A), the Commission shall— “(i) use information from swap data repositories and derivatives clearing organizations; and “(ii) consult with the Office of the Comptroller of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be necessary. “(C) Authority of the commission.— The Commission may, by rule, regulation, or order, delegate the public reporting responsibilities of the Commission under this paragraph in accordance with such terms and conditions as the Commission determines to be appropriate and in the public interest.” . SEC. 728. SWAP DATA REPOSITORIES.   The Commodity Exchange Act is amended by inserting after section 20 (7 U.S.C. 24) the following: “SEC. 21. SWAP DATA REPOSITORIES. “(a) Registration Requirement.— “(1) Requirement; authority of derivatives clearing organization.— “(A) In general.— It shall be unlawful for any person, unless registered with the Commission, directly or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a swap data repository. “(B) Registration of derivatives clearing organizations.— A derivatives clearing organization may register as a swap data repository. “(2) Inspection and examination.— Each registered swap data repository shall be subject to inspection and examination by any representative of the Commission. “(3) Compliance with core principles.— “(A) In general.— To be registered, and maintain registration, as a swap data repository, the swap data repository shall comply with— “(i) the requirements and core principles described in this section; and “(ii) any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5). “(B) Reasonable discretion of swap data repository.— Unless otherwise determined by the Commission by rule or regulation, a swap data repository described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the swap data repository complies with the core principles described in this section. “(b) Standard Setting.— “(1) Data identification.— “(A) In general.— In accordance with subparagraph (B), the Commission shall prescribe standards that specify the data elements for each swap that shall be collected and maintained by each registered swap data repository. “(B) Requirement.— In carrying out subparagraph (A), the Commission shall prescribe consistent data element standards applicable to registered entities and reporting counterparties. “(2) Data collection and maintenance.— The Commission shall prescribe data collection and data maintenance standards for swap data repositories. “(3) Comparability.— The standards prescribed by the Commission under this subsection shall be comparable to the data standards imposed by the Commission on derivatives clearing organizations in connection with their clearing of swaps. “(c) Duties.— A swap data repository shall— “(1) accept data prescribed by the Commission for each swap under subsection (b); “(2) confirm with both counterparties to the swap the accuracy of the data that was submitted; “(3) maintain the data described in paragraph (1) in such form, in such manner, and for such period as may be required by the Commission; “(4) (A) provide direct electronic access to the Commission (or any designee of the Commission, including another registered entity); and “(B) provide the information described in paragraph (1) in such form and at such frequency as the Commission may require to comply with the public reporting requirements contained in section 2(a)(13); “(5) at the direction of the Commission, establish automated systems for monitoring, screening, and analyzing swap data, including compliance and frequency of end user clearing exemption claims by individual and affiliated entities; “(6) maintain the privacy of any and all swap transaction information that the swap data repository receives from a swap dealer, counterparty, or any other registered entity; and “(7) on a confidential basis pursuant to section 8, upon request, and after notifying the Commission of the request, make available all data obtained by the swap data repository, including individual counterparty trade and position data, to— “(A) each appropriate prudential regulator; “(B) the Financial Stability Oversight Council; “(C) the Securities and Exchange Commission; “(D) the Department of Justice; and “(E) any other person that the Commission determines to be appropriate, including— “(i) foreign financial supervisors (including foreign futures authorities); “(ii) foreign central banks; and “(iii) foreign ministries; and “(8) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allows for the timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the organization. “(d) Confidentiality and Indemnification Agreement.— Before the swap data repository may share information with any entity described in subsection (c)(7)— “(1) the swap data repository shall receive a written agreement from each entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the information on swap transactions that is provided; and “(2) each entity shall agree to indemnify the swap data repository and the Commission for any expenses arising from litigation relating to the information provided under section 8. “(e) Designation of Chief Compliance Officer.— “(1) In general.— Each swap data repository shall designate an individual to serve as a chief compliance officer. “(2) Duties.— The chief compliance officer shall— “(A) report directly to the board or to the senior officer of the swap data repository; “(B) review the compliance of the swap data repository with respect to the requirements and core principles described in this section; “(C) in consultation with the board of the swap data repository, a body performing a function similar to the board of the swap data repository, or the senior officer of the swap data repository, resolve any conflicts of interest that may arise; “(D) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(E) ensure compliance with this Act (including regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; “(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any— “(i) compliance office review; “(ii) look-back; “(iii) internal or external audit finding; “(iv) self-reported error; or “(v) validated complaint; and “(G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(3) Annual reports.— “(A) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(i) the compliance of the swap data repository of the chief compliance officer with respect to this Act (including regulations); and “(ii) each policy and procedure of the swap data repository of the chief compliance officer (including the code of ethics and conflict of interest policies of the swap data repository). “(B) Requirements.— A compliance report under subparagraph (A) shall— “(i) accompany each appropriate financial report of the swap data repository that is required to be furnished to the Commission pursuant to this section; and “(ii) include a certification that, under penalty of law, the compliance report is accurate and complete. “(f) Core Principles Applicable To Swap Data Repositories.— “(1) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this Act, a swap data repository shall not— “(A) adopt any rule or take any action that results in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on the trading, clearing, or reporting of transactions. “(2) Governance arrangements.— Each swap data repository shall establish governance arrangements that are transparent— “(A) to fulfill public interest requirements; and “(B) to support the objectives of the Federal Government, owners, and participants. “(3) Conflicts of interest.— Each swap data repository shall— “(A) establish and enforce rules to minimize conflicts of interest in the decision-making process of the swap data repository; and “(B) establish a process for resolving conflicts of interest described in subparagraph (A). “(4) Additional duties developed by commission.— “(A) In general.— The Commission may develop 1 or more additional duties applicable to swap data repositories. “(B) Consideration of evolving standards.— In developing additional duties under subparagraph (A), the Commission may take into consideration any evolving standard of the United States or the international community. “(C) Additional duties for commission designees.— The Commission shall establish additional duties for any registrant described in section 1a(48) in order to minimize conflicts of interest, protect data, ensure compliance, and guarantee the safety and security of the swap data repository. “(g) Required Registration for Swap Data Repositories.— Any person that is required to be registered as a swap data repository under this section shall register with the Commission regardless of whether that person is also licensed as a bank or registered with the Securities and Exchange Commission as a swap data repository. “(h) Rules.— The Commission shall adopt rules governing persons that are registered under this section.” . SEC. 729. REPORTING AND RECORDKEEPING.   The Commodity Exchange Act is amended by inserting after section 4q 7 USC 6q. (7 U.S.C. 6o–1) the following: “SEC. 4r. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS. “(a) Required Reporting of Swaps Not Accepted by Any Derivatives Clearing Organization.— “(1) In general.— Each swap that is not accepted for clearing by any derivatives clearing organization shall be reported to— “(A) a swap data repository described in section 21; or “(B) in the case in which there is no swap data repository that would accept the swap, to the Commission pursuant to this section within such time period as the Commission may by rule or regulation prescribe. “(2) Transition rule for preenactment swaps.— “(A) Swaps entered into before the date of enactment of the wall street transparency and accountability act of 2010.— Each swap entered into before the date of enactment of the Wall Street Transparency and Accountability Act of 2010, the terms of which have not expired as of the date of enactment of that Act, shall be reported to a registered swap data repository or the Commission by a date that is not later than— “(i) 30 days after issuance of the interim final rule; or “(ii) such other period as the Commission determines to be appropriate. “(B) Commission rulemaking.— The Commission shall promulgate an interim final rule within 90 days of the date of enactment of this section providing for the reporting of each swap entered into before the date of enactment as referenced in subparagraph (A). “(C) Effective date.— The reporting provisions described in this section shall be effective upon the enactment of this section. “(3) Reporting obligations.— “(A) Swaps in which only 1 counterparty is a swap dealer or major swap participant.— With respect to a swap in which only 1 counterparty is a swap dealer or major swap participant, the swap dealer or major swap participant shall report the swap as required under paragraphs (1) and (2). “(B) Swaps in which 1 counterparty is a swap dealer and the other a major swap participant.— With respect to a swap in which 1 counterparty is a swap dealer and the other a major swap participant, the swap dealer shall report the swap as required under paragraphs (1) and (2). “(C) Other swaps.— With respect to any other swap not described in subparagraph (A) or (B), the counterparties to the swap shall select a counterparty to report the swap as required under paragraphs (1) and (2). “(b) Duties of Certain Individuals.— Any individual or entity that enters into a swap shall meet each requirement described in subsection (c) if the individual or entity did not— “(1) clear the swap in accordance with section 2(h)(1); or “(2) have the data regarding the swap accepted by a swap data repository in accordance with rules (including timeframes) adopted by the Commission under section 21. “(c) Requirements.— An individual or entity described in subsection (b) shall— “(1) upon written request from the Commission, provide reports regarding the swaps held by the individual or entity to the Commission in such form and in such manner as the Commission may request; and “(2) maintain books and records pertaining to the swaps held by the individual or entity in such form, in such manner, and for such period as the Commission may require, which shall be open to inspection by— “(A) any representative of the Commission; “(B) an appropriate prudential regulator; “(C) the Securities and Exchange Commission; “(D) the Financial Stability Oversight Council; and “(E) the Department of Justice. “(d) Identical Data.— In prescribing rules under this section, the Commission shall require individuals and entities described in subsection (b) to submit to the Commission a report that contains data that is not less comprehensive than the data required to be collected by swap data repositories under section 21.” . SEC. 730. LARGE SWAP TRADER REPORTING.   The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding after section 4s (as added by section 731) the following: “SEC. 4t. LARGE SWAP TRADER REPORTING. “(a) Prohibition.— “(1) In general.— Except as provided in paragraph (2), it shall be unlawful for any person to enter into any swap that the Commission determines to perform a significant price discovery function with respect to registered entities if— “(A) the person directly or indirectly enters into the swap during any 1 day in an amount equal to or in excess of such amount as shall be established periodically by the Commission; and “(B) the person directly or indirectly has or obtains a position in the swap equal to or in excess of such amount as shall be established periodically by the Commission. “(2) Exception.— Paragraph (1) shall not apply if— “(A) the person files or causes to be filed with the properly designated officer of the Commission such reports regarding any transactions or positions described in subparagraphs (A) and (B) of paragraph (1) as the Commission may require by rule or regulation; and “(B) in accordance with the rules and regulations of the Commission, the person keeps books and records of all such swaps and any transactions and positions in any related commodity traded on or subject to the rules of any designated contract market or swap execution facility, and of cash or spot transactions in, inventories of, and purchase and sale commitments of, such a commodity. “(b) Requirements.— “(1) In general.— Books and records described in subsection (a)(2)(B) shall— “(A) show such complete details concerning all transactions and positions as the Commission may prescribe by rule or regulation; “(B) be open at all times to inspection and examination by any representative of the Commission; and “(C) be open at all times to inspection and examination by the Securities and Exchange Commission, to the extent such books and records relate to transactions in swaps (as that term is defined in section 1a(47)(A)(v)), and consistent with the confidentiality and disclosure requirements of section 8. “(2) Jurisdiction.— Nothing in paragraph (1) shall affect the exclusive jurisdiction of the Commission to prescribe recordkeeping and reporting requirements for large swap traders under this section. “(c) Applicability.— For purposes of this section, the swaps, futures, and cash or spot transactions and positions of any person shall include the swaps, futures, and cash or spot transactions and positions of any persons directly or indirectly controlled by the person. “(d) Significant Price Discovery Function.— In making a determination as to whether a swap performs or affects a significant price discovery function with respect to registered entities, the Commission shall consider the factors described in section 4a(a)(3).” . SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS.   The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by inserting after section 4r (as added by section 729) the following: “SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP PARTICIPANTS. “(a) Registration.— “(1) Swap dealers.— It shall be unlawful for any person to act as a swap dealer unless the person is registered as a swap dealer with the Commission. “(2) Major swap participants.— It shall be unlawful for any person to act as a major swap participant unless the person is registered as a major swap participant with the Commission. “(b) Requirements.— “(1) In general.— A person shall register as a swap dealer or major swap participant by filing a registration application with the Commission. “(2) Contents.— “(A) In general.— The application shall be made in such form and manner as prescribed by the Commission, and shall contain such information, as the Commission considers necessary concerning the business in which the applicant is or will be engaged. “(B) Continual reporting.— A person that is registered as a swap dealer or major swap participant shall continue to submit to the Commission reports that contain such information pertaining to the business of the person as the Commission may require. “(3) Expiration.— Each registration under this section shall expire at such time as the Commission may prescribe by rule or regulation. “(4) Rules.— Except as provided in subsections (d) and (e), the Commission may prescribe rules applicable to swap dealers and major swap participants, including rules that limit the activities of swap dealers and major swap participants. “(5) Transition.— Rules Regulations. Deadline. under this section shall provide for the registration of swap dealers and major swap participants not later than 1 year after the date of enactment of the Wall Street Transparency and Accountability Act of 2010. “(6) Statutory disqualification.— Except to the extent otherwise specifically provided by rule, regulation, or order, it shall be unlawful for a swap dealer or a major swap participant to permit any person associated with a swap dealer or a major swap participant who is subject to a statutory disqualification to effect or be involved in effecting swaps on behalf of the swap dealer or major swap participant, if the swap dealer or major swap participant knew, or in the exercise of reasonable care should have known, of the statutory disqualification. “(c) Dual Registration.— “(1) Swap dealer.— Any person that is required to be registered as a swap dealer under this section shall register with the Commission regardless of whether the person also is a depository institution or is registered with the Securities and Exchange Commission as a security-based swap dealer. “(2) Major swap participant.— Any person that is required to be registered as a major swap participant under this section shall register with the Commission regardless of whether the person also is a depository institution or is registered with the Securities and Exchange Commission as a major security-based swap participant. “(d) Rulemakings.— “(1) In general.— The Commission shall adopt rules for persons that are registered as swap dealers or major swap participants under this section. “(2) Exception for prudential requirements.— “(A) In general.— The Commission may not prescribe rules imposing prudential requirements on swap dealers or major swap participants for which there is a prudential regulator. “(B) Applicability.— Subparagraph (A) does not limit the authority of the Commission to prescribe rules as directed under this section. “(e) Capital and Margin Requirements.— “(1) In general.— “(A) Swap dealers and major swap participants that are banks.— Each registered swap dealer and major swap participant for which there is a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the prudential regulator shall by rule or regulation prescribe under paragraph (2)(A). “(B) Swap dealers and major swap participants that are not banks.— Each registered swap dealer and major swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation prescribe under paragraph (2)(B). “(2) Rules.— “(A) Swap dealers and major swap participants that are banks.— The prudential regulators, in consultation with the Commission and the Securities and Exchange Commission, shall jointly adopt rules for swap dealers and major swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is a prudential regulator imposing— “(i) capital requirements; and “(ii) both initial and variation margin requirements on all swaps that are not cleared by a registered derivatives clearing organization. “(B) Swap dealers and major swap participants that are not banks.— The Commission shall adopt rules for swap dealers and major swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is not a prudential regulator imposing— “(i) capital requirements; and “(ii) both initial and variation margin requirements on all swaps that are not cleared by a registered derivatives clearing organization. “(C) Capital.— In setting capital requirements for a person that is designated as a swap dealer or a major swap participant for a single type or single class or category of swap or activities, the prudential regulator and the Commission shall take into account the risks associated with other types of swaps or classes of swaps or categories of swaps engaged in and the other activities conducted by that person that are not otherwise subject to regulation applicable to that person by virtue of the status of the person as a swap dealer or a major swap participant. “(3) Standards for capital and margin.— “(A) In general.— To offset the greater risk to the swap dealer or major swap participant and the financial system arising from the use of swaps that are not cleared, the requirements imposed under paragraph (2) shall— “(i) help ensure the safety and soundness of the swap dealer or major swap participant; and “(ii) be appropriate for the risk associated with the non-cleared swaps held as a swap dealer or major swap participant. “(B) Rule of construction.— “(i) In general.— Nothing in this section shall limit, or be construed to limit, the authority— “(I) of the Commission to set financial responsibility rules for a futures commission merchant or introducing broker registered pursuant to section 4f(a) (except for section 4f(a)(3)) in accordance with section 4f(b); or “(II) of the Securities and Exchange Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) (except for section 15(b)(11) of that Act (15 U.S.C. 78o(b)(11)) in accordance with section 15(c)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)). “(ii) Futures commission merchants and other dealers.— A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this Act or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). “(C) Margin requirements.— In prescribing margin requirements under this subsection, the prudential regulator with respect to swap dealers and major swap participants for which it is the prudential regulator and the Commission with respect to swap dealers and major swap participants for which there is no prudential regulator shall permit the use of noncash collateral, as the regulator or the Commission determines to be consistent with— “(i) preserving the financial integrity of markets trading swaps; and “(ii) preserving the stability of the United States financial system. “(D) Comparability of capital and margin requirements.— “(i) In general.— The Consultation. prudential regulators, the Commission, and the Securities and Exchange Commission shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin requirements. “(ii) Comparability.— The entities described in clause (i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation margin requirements, including the use of non cash collateral, for— “(I) swap dealers; and “(II) major swap participants. “(f) Reporting and Recordkeeping.— “(1) In general.— Each registered swap dealer and major swap participant— “(A) shall make such reports as are required by the Commission by rule or regulation regarding the transactions and positions and financial condition of the registered swap dealer or major swap participant; “(B) (i) for which there is a prudential regulator, shall keep books and records of all activities related to the business as a swap dealer or major swap participant in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and “(ii) for which there is no prudential regulator, shall keep books and records in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; “(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission; and “(D) shall keep any such books and records relating to swaps defined in section 1a(47)(A)(v) open to inspection and examination by the Securities and Exchange Commission. “(2) Rules.— The Commission shall adopt rules governing reporting and recordkeeping for swap dealers and major swap participants. “(g) Daily Trading Records.— “(1) In general.— Each registered swap dealer and major swap participant shall maintain daily trading records of the swaps of the registered swap dealer and major swap participant and all related records (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls, for such period as may be required by the Commission by rule or regulation. “(2) Information requirements.— The daily trading records shall include such information as the Commission shall require by rule or regulation. “(3) Counterparty records.— Each registered swap dealer and major swap participant shall maintain daily trading records for each counterparty in a manner and form that is identifiable with each swap transaction. “(4) Audit trail.— Each registered swap dealer and major swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions. “(5) Rules.— The Commission shall adopt rules governing daily trading records for swap dealers and major swap participants. “(h) Business Conduct Standards.— “(1) In general.— Each registered swap dealer and major swap participant shall conform with such business conduct standards as prescribed in paragraph (3) and as may be prescribed by the Commission by rule or regulation that relate to— “(A) fraud, manipulation, and other abusive practices involving swaps (including swaps that are offered but not entered into); “(B) diligent supervision of the business of the registered swap dealer and major swap participant; “(C) adherence to all applicable position limits; and “(D) such other matters as the Commission determines to be appropriate. “(2) Responsibilities with respect to special entities.— “(A) Advising special entities.— A swap dealer or major swap participant that acts as an advisor to a special entity regarding a swap shall comply with the requirements of subparagraph (4) with respect to such Special Entity. “(B) Entering of swaps with respect to special entities.— A Compliance. swap dealer that enters into or offers to enter into swap with a Special Entity shall comply with the requirements of subparagraph (5) with respect to such Special Entity. “(C) Special entity defined.— For purposes of this subsection, the term ‘special entity’ means— “(i) a Federal agency; “(ii) a State, State agency, city, county, municipality, or other political subdivision of a State; “(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002); “(iv) any governmental plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002); or “(v) any endowment, including an endowment that is an organization described in section 501(c)(3) of the Internal Revenue Code of 1986. “(3) Business conduct requirements.— Business conduct requirements adopted by the Commission shall— “(A) establish a duty for a swap dealer or major swap participant to verify that any counterparty meets the eligibility standards for an eligible contract participant; “(B) require disclosure by the swap dealer or major swap participant to any counterparty to the transaction (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) of— “(i) information about the material risks and characteristics of the swap; “(ii) any material incentives or conflicts of interest that the swap dealer or major swap participant may have in connection with the swap; and “(iii) (I) for cleared swaps, upon the request of the counterparty, receipt of the daily mark of the transaction from the appropriate derivatives clearing organization; and “(II) for uncleared swaps, receipt of the daily mark of the transaction from the swap dealer or the major swap participant; “(C) establish a duty for a swap dealer or major swap participant to communicate in a fair and balanced manner based on principles of fair dealing and good faith; and “(D) establish such other standards and requirements as the Commission may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this Act. “(4) Special requirements for swap dealers acting as advisors.— “(A) In general.— It shall be unlawful for a swap dealer or major swap participant— “(i) to employ any device, scheme, or artifice to defraud any Special Entity or prospective customer who is a Special Entity; “(ii) to engage in any transaction, practice, or course of business that operates as a fraud or deceit on any Special Entity or prospective customer who is a Special Entity; or “(iii) to engage in any act, practice, or course of business that is fraudulent, deceptive or manipulative. “(B) Duty.— Any swap dealer that acts as an advisor to a Special Entity shall have a duty to act in the best interests of the Special Entity. “(C) Reasonable efforts.— Any swap dealer that acts as an advisor to a Special Entity shall make reasonable efforts to obtain such information as is necessary to make a reasonable determination that any swap recommended by the swap dealer is in the best interests of the Special Entity, including information relating to— “(i) the financial status of the Special Entity; “(ii) the tax status of the Special Entity; “(iii) the investment or financing objectives of the Special Entity; and “(iv) any other information that the Commission may prescribe by rule or regulation. “(5) Special requirements for swap dealers as counterparties to special entities.— “(A) Any swap dealer or major swap participant that offers to enter or enters into a swap with a Special Entity shall— “(i) comply with any duty established by the Commission for a swap dealer or major swap participant, with respect to a counterparty that is an eligible contract participant within the meaning of subclause (I) or (II) of clause (vii) of section 1a(18) of this Act, that requires the swap dealer or major swap participant to have a reasonable basis to believe that the counterparty that is a Special Entity has an independent representative that— “(I) has sufficient knowledge to evaluate the transaction and risks; “(II) is not subject to a statutory disqualification; “(III) is independent of the swap dealer or major swap participant; “(IV) undertakes a duty to act in the best interests of the counterparty it represents; “(V) makes appropriate disclosures; “(VI) will provide written representations to the Special Entity regarding fair pricing and the appropriateness of the transaction; and “(VII) in the case of employee benefit plans subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section 3 of that Act (29 U.S.C. 1002); and “(ii) before the initiation of the transaction, disclose to the Special Entity in writing the capacity in which the swap dealer is acting; and “(B) the Commission may establish such other standards and requirements as the Commission may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this Act. “(6) Rules.— The Commission shall prescribe rules under this subsection governing business conduct standards for swap dealers and major swap participants. “(7) Applicability.— This section shall not apply with respect to a transaction that is— “(A) initiated by a Special Entity on an exchange or swap execution facility; and “(B) one in which the swap dealer or major swap participant does not know the identity of the counterparty to the transaction. “(i) Documentation Standards.— “(1) In general.— Each registered swap dealer and major swap participant shall conform with such standards as may be prescribed by the Commission by rule or regulation that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all swaps. “(2) Rules.— The Commission shall adopt rules governing documentation standards for swap dealers and major swap participants. “(j) Duties.— Each registered swap dealer and major swap participant at all times shall comply with the following requirements: “(1) Monitoring of trading.— The swap dealer or major swap participant shall monitor its trading in swaps to prevent violations of applicable position limits. “(2) Risk management procedures.— The swap dealer or major swap participant shall establish robust and professional risk management systems adequate for managing the day-to-day business of the swap dealer or major swap participant. “(3) Disclosure of general information.— The swap dealer or major swap participant shall disclose to the Commission and to the prudential regulator for the swap dealer or major swap participant, as applicable, information concerning— “(A) terms and conditions of its swaps; “(B) swap trading operations, mechanisms, and practices; “(C) financial integrity protections relating to swaps; and “(D) other information relevant to its trading in swaps. “(4) Ability to obtain information.— The swap dealer or major swap participant shall— “(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and “(B) provide the information to the Commission and to the prudential regulator for the swap dealer or major swap participant, as applicable, on request. “(5) Conflicts of interest.— The swap dealer and major swap participant shall implement conflict-of-interest systems and procedures that— “(A) establish structural and institutional safeguards to ensure that the activities of any person within the firm relating to research or analysis of the price or market for any commodity or swap or acting in a role of providing clearing activities or making determinations as to accepting clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of persons whose involvement in pricing, trading, or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this Act; and “(B) address such other issues as the Commission determines to be appropriate. “(6) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this Act, a swap dealer or major swap participant shall not— “(A) adopt any process or take any action that results in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on trading or clearing. “(7) Rules.— The Commission shall prescribe rules under this subsection governing duties of swap dealers and major swap participants. “(k) Designation of Chief Compliance Officer.— “(1) In general.— Each swap dealer and major swap participant shall designate an individual to serve as a chief compliance officer. “(2) Duties.— The chief compliance officer shall— “(A) report directly to the board or to the senior officer of the swap dealer or major swap participant; “(B) review the compliance of the swap dealer or major swap participant with respect to the swap dealer and major swap participant requirements described in this section; “(C) in consultation with the board of directors, a body performing a function similar to the board, or the senior officer of the organization, resolve any conflicts of interest that may arise; “(D) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(E) ensure compliance with this Act (including regulations) relating to swaps, including each rule prescribed by the Commission under this section; “(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any— “(i) compliance office review; “(ii) look-back; “(iii) internal or external audit finding; “(iv) self-reported error; or “(v) validated complaint; and “(G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(3) Annual reports.— “(A) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(i) the compliance of the swap dealer or major swap participant with respect to this Act (including regulations); and “(ii) each policy and procedure of the swap dealer or major swap participant of the chief compliance officer (including the code of ethics and conflict of interest policies). “(B) Requirements.— A compliance report under subparagraph (A) shall— “(i) accompany each appropriate financial report of the swap dealer or major swap participant that is required to be furnished to the Commission pursuant to this section; and “(ii) include a certification that, under penalty of law, the compliance report is accurate and complete.” . SEC. 732. CONFLICTS OF INTEREST.   Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended— (1) by redesignating subsection (c) as subsection (e); and (2) by inserting after subsection (b) the following: “(c) Conflicts of Interest.— The Commission shall require that futures commission merchants and introducing brokers implement conflict-of-interest systems and procedures that— “(1) establish structural and institutional safeguards to ensure that the activities of any person within the firm relating to research or analysis of the price or market for any commodity are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of persons whose involvement in trading or clearing activities might potentially bias the judgment or supervision of the persons; and “(2) address such other issues as the Commission determines to be appropriate. “(d) Designation of Chief Compliance Officer.— Each futures commission merchant shall designate an individual to serve as its Chief Compliance Officer and perform such duties and responsibilities as shall be set forth in regulations to be adopted by the Commission or rules to be adopted by a futures association registered under section 17.” . SEC. 733. SWAP EXECUTION FACILITIES.   The Commodity Exchange Act is amended by inserting after section 5g (7 U.S.C. 7b–2) the following: “SEC. 5h. SWAP EXECUTION FACILITIES. “(a) Registration.— “(1) In general.— No person may operate a facility for the trading or processing of swaps unless the facility is registered as a swap execution facility or as a designated contract market under this section. “(2) Dual registration.— Any person that is registered as a swap execution facility under this section shall register with the Commission regardless of whether the person also is registered with the Securities and Exchange Commission as a swap execution facility. “(b) Trading and Trade Processing.— “(1) In general.— Except as specified in paragraph (2), a swap execution facility that is registered under subsection (a) may— “(A) make available for trading any swap; and “(B) facilitate trade processing of any swap. “(2) Agricultural swaps.— A swap execution facility may not list for trading or confirm the execution of any swap in an agricultural commodity (as defined by the Commission) except pursuant to a rule or regulation of the Commission allowing the swap under such terms and conditions as the Commission shall prescribe. “(c) Identification of Facility Used To Trade Swaps by Contract Markets.— A board of trade that operates a contract market shall, to the extent that the board of trade also operates a swap execution facility and uses the same electronic trade execution system for listing and executing trades of swaps on or through the contract market and the swap execution facility, identify whether the electronic trading of such swaps is taking place on or through the contract market or the swap execution facility. “(d) Rule-writing.— “(1) The Securities and Exchange Commission and Commodity Futures Trading Commission may promulgate rules defining the universe of swaps that can be executed on a swap execution facility. These rules shall take into account the price and nonprice requirements of the counterparties to a swap and the goal of this section as set forth in subsection (e). “(2) For all swaps that are not required to be executed through a swap execution facility as defined in paragraph (1), such trades may be executed through any other available means of interstate commerce. “(3) The Securities and Exchange Commission and Commodity Futures Trading Commission shall update these rules as necessary to account for technological and other innovation. “(e) Rule of Construction.— The goal of this section is to promote the trading of swaps on swap execution facilities and to promote pre-trade price transparency in the swaps market. “(f) Core Principles for Swap Execution Facilities.— “(1) Compliance with core principles.— “(A) In general.— To be registered, and maintain registration, as a swap execution facility, the swap execution facility shall comply with— “(i) the core principles described in this subsection; and “(ii) any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5). “(B) Reasonable discretion of swap execution facility.— Unless otherwise determined by the Commission by rule or regulation, a swap execution facility described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the swap execution facility complies with the core principles described in this subsection. “(2) Compliance with rules.— A swap execution facility shall— “(A) establish and enforce compliance with any rule of the swap execution facility, including— “(i) the terms and conditions of the swaps traded or processed on or through the swap execution facility; and “(ii) any limitation on access to the swap execution facility; “(B) establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means— “(i) to provide market participants with impartial access to the market; and “(ii) to capture information that may be used in establishing whether rule violations have occurred; “(C) establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility, including block trades; and “(D) provide by its rules that when a swap dealer or major swap participant enters into or facilitates a swap that is subject to the mandatory clearing requirement of section 2(h), the swap dealer or major swap participant shall be responsible for compliance with the mandatory trading requirement under section 2(h)(8). “(3) Swaps not readily susceptible to manipulation.— The swap execution facility shall permit trading only in swaps that are not readily susceptible to manipulation. “(4) Monitoring of trading and trade processing.— The swap execution facility shall— “(A) establish and enforce rules or terms and conditions defining, or specifications detailing— “(i) trading procedures to be used in entering and executing orders traded on or through the facilities of the swap execution facility; and “(ii) procedures for trade processing of swaps on or through the facilities of the swap execution facility; and “(B) monitor trading in swaps to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions. “(5) Ability to obtain information.— The swap execution facility shall— “(A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section; “(B) provide the information to the Commission on request; and “(C) have the capacity to carry out such international information-sharing agreements as the Commission may require. “(6) Position limits or accountability.— “(A) In general.— To reduce the potential threat of market manipulation or congestion, especially during trading in the delivery month, a swap execution facility that is a trading facility shall adopt for each of the contracts of the facility, as is necessary and appropriate, position limitations or position accountability for speculators. “(B) Position limits.— For any contract that is subject to a position limitation established by the Commission pursuant to section 4a(a), the swap execution facility shall— “(i) set its position limitation at a level no higher than the Commission limitation; and “(ii) monitor positions established on or through the swap execution facility for compliance with the limit set by the Commission and the limit, if any, set by the swap execution facility. “(7) Financial integrity of transactions.— The swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of swaps entered on or through the facilities of the swap execution facility, including the clearance and settlement of the swaps pursuant to section 2(h)(1). “(8) Emergency authority.— The swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, as is necessary and appropriate, including the authority to liquidate or transfer open positions in any swap or to suspend or curtail trading in a swap. “(9) Timely publication of trading information.— “(A) In general.— The swap execution facility shall make public timely information on price, trading volume, and other trading data on swaps to the extent prescribed by the Commission. “(B) Capacity of swap execution facility.— The swap execution facility shall be required to have the capacity to electronically capture and transmit trade information with respect to transactions executed on the facility. “(10) Recordkeeping and reporting.— “(A) In general.— A swap execution facility shall— “(i) maintain records of all activities relating to the business of the facility, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years; “(ii) report to the Commission, in a form and manner acceptable to the Commission, such information as the Commission determines to be necessary or appropriate for the Commission to perform the duties of the Commission under this Act; and “(iii) shall keep any such records relating to swaps defined in section 1a(47)(A)(v) open to inspection and examination by the Securities and Exchange Commission.” “(B) Requirements.— The Commission shall adopt data collection and reporting requirements for swap execution facilities that are comparable to corresponding requirements for derivatives clearing organizations and swap data repositories. “(11) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this Act, the swap execution facility shall not— “(A) adopt any rules or taking any actions that result in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on trading or clearing. “(12) Conflicts of interest.— The swap execution facility shall— “(A) establish and enforce rules to minimize conflicts of interest in its decision-making process; and “(B) establish a process for resolving the conflicts of interest. “(13) Financial resources.— “(A) In general.— The swap execution facility shall have adequate financial, operational, and managerial resources to discharge each responsibility of the swap execution facility.   “(B Time period. Determination of resource adequacy.—The financial resources of a swap execution facility shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the swap execution facility to cover the operating costs of the swap execution facility for a 1-year period, as calculated on a rolling basis. “(14) System safeguards.— The swap execution facility shall— “(A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that— “(i) are reliable and secure; and “(ii) have adequate scalable capacity; “(B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for— “(i) the timely recovery and resumption of operations; and “(ii) the fulfillment of the responsibilities and obligations of the swap execution facility; and “(C) periodically conduct tests to verify that the backup resources of the swap execution facility are sufficient to ensure continued— “(i) order processing and trade matching; “(ii) price reporting; “(iii) market surveillance and “(iv) maintenance of a comprehensive and accurate audit trail. “(15) Designation of chief compliance officer.— “(A) In general.— Each swap execution facility shall designate an individual to serve as a chief compliance officer. “(B) Duties.— The chief compliance officer shall— “(i) report directly to the board or to the senior officer of the facility; “(ii) review compliance with the core principles in this subsection; “(iii) in consultation with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, resolve any conflicts of interest that may arise; “(iv) be responsible for establishing and administering the policies and procedures required to be established pursuant to this section; “(v) ensure compliance with this Act and the rules and regulations issued under this Act, including rules prescribed by the Commission pursuant to this section; and “(vi) establish procedures for the remediation of noncompliance issues found during compliance office reviews, look backs, internal or external audit findings, self-reported errors, or through validated complaints. “(C) Requirements for procedures.— In establishing procedures under subparagraph (B)(vi), the chief compliance officer shall design the procedures to establish the handling, management response, remediation, retesting, and closing of noncompliance issues. “(D) Annual reports.— “(i) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(I) the compliance of the swap execution facility with this Act; and “(II) the policies and procedures, including the code of ethics and conflict of interest policies, of the swap execution facility. “(ii) Requirements.— The chief compliance officer shall— “(I) submit each report described in clause (i) with the appropriate financial report of the swap execution facility that is required to be submitted to the Commission pursuant to this section; and “(II) include in the report a certification that, under penalty of law, the report is accurate and complete. “(g) Exemptions.— The Commission may exempt, conditionally or unconditionally, a swap execution facility from registration under this section if the Commission finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Securities and Exchange Commission, a prudential regulator, or the appropriate governmental authorities in the home country of the facility. “(h) Rules.— The Commission shall prescribe rules governing the regulation of alternative swap execution facilities under this section.” . SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT BOARDS OF TRADE. (a) In General.— Sections 5a and 5d of the Commodity Exchange Act (7 U.S.C. 7a, 7a–3) are repealed. (b) Conforming Amendments.— (1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended— (A) in subsection (a)(1)(A), in the first sentence, by striking “or 5a”; and (B) in paragraph (2) of subsection (g) (as redesignated by section 723(a)(1)(B)), by striking “section 5a of this Act” and all that follows through “5d of this Act” and inserting “section 5b of this Act”. (2) Section 6(g)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(g)(1)(A)) is amended— (A) by striking “that—” and all that follows through “(i) has been designated” and inserting “that has been designated”; (B) by striking “; or” and inserting “; and” and (C) by striking clause (ii). (c) Ability to Petition Commission.— (1) In general.— Prior to the final effective dates in this title, a person may petition the Commodity Futures Trading Commission to remain subject to the provisions of section 5d of the Commodity Exchange Act, as such provisions existed prior to the effective date of this subtitle. (2) Consideration of petition.— The Commodity Futures Trading Commission shall consider any petition submitted under paragraph (1) in a prompt manner and may allow a person to continue operating subject to the provisions of section 5d of the Commodity Exchange Act for up to 1 year after the effective date of this subtitle. SEC. 735. DESIGNATED CONTRACT MARKETS. (a) Criteria for Designation.— Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is amended by striking subsection (b). (b) Core Principles for Contract Markets.— Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is amended by striking subsection (d) and inserting the following: “(d) Core Principles for Contract Markets.— “(1) Designation as contract market.— “(A) In general.— To be designated, and maintain a designation, as a contract market, a board of trade shall comply with— “(i) any core principle described in this subsection; and “(ii) any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5). “(B) Reasonable discretion of contract market.— Unless otherwise determined by the Commission by rule or regulation, a board of trade described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the board of trade complies with the core principles described in this subsection. “(2) Compliance with rules.— “(A) In general.— The board of trade shall establish, monitor, and enforce compliance with the rules of the contract market, including— “(i) access requirements; “(ii) the terms and conditions of any contracts to be traded on the contract market; and “(iii) rules prohibiting abusive trade practices on the contract market. “(B) Capacity of contract market.— The board of trade shall have the capacity to detect, investigate, and apply appropriate sanctions to any person that violates any rule of the contract market. “(C) Requirement of rules.— The rules of the contract market shall provide the board of trade with the ability and authority to obtain any necessary information to perform any function described in this subsection, including the capacity to carry out such international information-sharing agreements as the Commission may require. “(3) Contracts not readily subject to manipulation.— The board of trade shall list on the contract market only contracts that are not readily susceptible to manipulation. “(4) Prevention of market disruption.— The board of trade shall have the capacity and responsibility to prevent manipulation, price distortion, and disruptions of the delivery or cash-settlement process through market surveillance, compliance, and enforcement practices and procedures, including— “(A) methods for conducting real-time monitoring of trading; and “(B) comprehensive and accurate trade reconstructions. “(5) Position limitations or accountability.— “(A) In general.— To reduce the potential threat of market manipulation or congestion (especially during trading in the delivery month), the board of trade shall adopt for each contract of the board of trade, as is necessary and appropriate, position limitations or position accountability for speculators. “(B) Maximum allowable position limitation.— For any contract that is subject to a position limitation established by the Commission pursuant to section 4a(a), the board of trade shall set the position limitation of the board of trade at a level not higher than the position limitation established by the Commission. “(6) Emergency authority.— The board of trade, in consultation or cooperation with the Commission, shall adopt rules to provide for the exercise of emergency authority, as is necessary and appropriate, including the authority— “(A) to liquidate or transfer open positions in any contract; “(B) to suspend or curtail trading in any contract; and “(C) to require market participants in any contract to meet special margin requirements. “(7) Availability of general information.— The board of trade shall make available to market authorities, market participants, and the public accurate information concerning— “(A) the terms and conditions of the contracts of the contract market; and “(B) (i) the rules, regulations, and mechanisms for executing transactions on or through the facilities of the contract market; and “(ii) the rules and specifications describing the operation of the contract market’s— “(I) electronic matching platform; or “(II) trade execution facility. “(8) Daily publication of trading information.— The board of trade shall make public daily information on settlement prices, volume, open interest, and opening and closing ranges for actively traded contracts on the contract market. “(9) Execution of transactions.— “(A) In general.— The board of trade shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading in the centralized market of the board of trade. “(B) Rules.— The rules of the board of trade may authorize, for bona fide business purposes— “(i) transfer trades or office trades; “(ii) an exchange of— “(I) futures in connection with a cash commodity transaction; “(II) futures for cash commodities; or “(III) futures for swaps; or “(iii) a futures commission merchant, acting as principal or agent, to enter into or confirm the execution of a contract for the purchase or sale of a commodity for future delivery if the contract is reported, recorded, or cleared in accordance with the rules of the contract market or a derivatives clearing organization. “(10) Trade information.— The board of trade shall maintain rules and procedures to provide for the recording and safe storage of all identifying trade information in a manner that enables the contract market to use the information— “(A) to assist in the prevention of customer and market abuses; and “(B) to provide evidence of any violations of the rules of the contract market. “(11) Financial integrity of transactions.— The board of trade shall establish and enforce— “(A) rules and procedures for ensuring the financial integrity of transactions entered into on or through the facilities of the contract market (including the clearance and settlement of the transactions with a derivatives clearing organization); and “(B) rules to ensure— “(i) the financial integrity of any— “(I) futures commission merchant; and “(II) introducing broker; and “(ii) the protection of customer funds. “(12) Protection of markets and market participants.— The board of trade shall establish and enforce rules— “(A) to protect markets and market participants from abusive practices committed by any party, including abusive practices committed by a party acting as an agent for a participant; and “(B) to promote fair and equitable trading on the contract market. “(13) Disciplinary procedures.— The board of trade shall establish and enforce disciplinary procedures that authorize the board of trade to discipline, suspend, or expel members or market participants that violate the rules of the board of trade, or similar methods for performing the same functions, including delegation of the functions to third parties. “(14) Dispute resolution.— The board of trade shall establish and enforce rules regarding, and provide facilities for alternative dispute resolution as appropriate for, market participants and any market intermediaries. “(15) Governance fitness standards.— The board of trade shall establish and enforce appropriate fitness standards for directors, members of any disciplinary committee, members of the contract market, and any other person with direct access to the facility (including any party affiliated with any person described in this paragraph). “(16) Conflicts of interest.— The board of trade shall establish and enforce rules— “(A) to minimize conflicts of interest in the decision-making process of the contract market; and “(B) to establish a process for resolving conflicts of interest described in subparagraph (A). “(17) Composition of governing boards of contract markets.— The governance arrangements of the board of trade shall be designed to permit consideration of the views of market participants. “(18) Recordkeeping.— The board of trade shall maintain records of all activities relating to the business of the contract market— “(A) in a form and manner that is acceptable to the Commission; and “(B) for a period of at least 5 years. “(19) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this Act, the board of trade shall not— “(A) adopt any rule or taking any action that results in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on trading on the contract market. “(20) System safeguards.— The board of trade shall— “(A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated systems, that are reliable, secure, and have adequate scalable capacity; “(B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for the timely recovery and resumption of operations and the fulfillment of the responsibilities and obligations of the board of trade; and “(C) periodically conduct tests to verify that backup resources are sufficient to ensure continued order processing and trade matching, price reporting, market surveillance, and maintenance of a comprehensive and accurate audit trail. “(21) Financial resources.— “(A) In general.— The board of trade shall have adequate financial, operational, and managerial resources to discharge each responsibility of the board of trade. “(B) Determination of adequacy.— The financial resources of the board of trade shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the contract market to cover the operating costs of the contract market for a 1-year period, as calculated on a rolling basis. “(22) Diversity of board of directors.— The board of trade, if a publicly traded company, shall endeavor to recruit individuals to serve on the board of directors and the other decision-making bodies (as determined by the Commission) of the board of trade from among, and to have the composition of the bodies reflect, a broad and culturally diverse pool of qualified candidates. “(23) Securities and exchange commission.— The board of trade shall keep any such records relating to swaps defined in section 1a(47)(A)(v) open to inspection and examination by the Securities and Exchange Commission.” . SEC. 736. MARGIN.   Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 12a(7)) is amended— (1) in subparagraph (C), by striking “, excepting the setting of levels of margin”; (2) by redesignating subparagraphs (D) through (F) as subparagraphs (E) through (G), respectively; and (3) by inserting after subparagraph (C) the following: “(D) margin requirements, provided that the rules, regulations, or orders shall— “(i) be limited to protecting the financial integrity of the derivatives clearing organization; “(ii) be designed for risk management purposes to protect the financial integrity of transactions; and “(iii) not set specific margin amounts;” . SEC. 737. POSITION LIMITS. (a) Aggregate Position Limits.— Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 6a(a)) is amended— (1) by inserting after “(a)” the following: “(1) In general.— ” ; (2) in the first sentence, by striking “on electronic trading facilities with respect to a significant price discovery contract” and inserting “swaps that perform or affect a significant price discovery function with respect to registered entities”; (3) in the second sentence— (A) by inserting “, including any group or class of traders,” after “held by any person”; and (B) by striking “on an electronic trading facility with respect to a significant price discovery contract,” and inserting “swaps traded on or subject to the rules of a designated contract market or a swap execution facility, or swaps not traded on or subject to the rules of a designated contract market or a swap execution facility that performs a significant price discovery function with respect to a registered entity,”; and (4) by adding at the end the following: “(2) Establishment of limitations.— “(A) In general.— In accordance with the standards set forth in paragraph (1) of this subsection and consistent with the good faith exception cited in subsection (b)(2), with respect to physical commodities other than excluded commodities as defined by the Commission, the Commission shall by rule, regulation, or order establish limits on the amount of positions, as appropriate, other than bona fide hedge positions, that may be held by any person with respect to contracts of sale for future delivery or with respect to options on the contracts or commodities traded on or subject to the rules of a designated contract market. “(B) Timing.— “(i) Exempt commodities.— For exempt commodities, the limits required under subparagraph (A) shall be established within 180 days after the date of the enactment of this paragraph. “(ii) Agricultural commodities.— For agricultural commodities, the limits required under subparagraph (A) shall be established within 270 days after the date of the enactment of this paragraph. “(C) Goal.— In establishing the limits required under subparagraph (A), the Commission shall strive to ensure that trading on foreign boards of trade in the same commodity will be subject to comparable limits and that any limits to be imposed by the Commission will not cause price discovery in the commodity to shift to trading on the foreign boards of trade. “(3) Specific limitations.— In establishing the limits required in paragraph (2), the Commission, as appropriate, shall set limits— “(A) on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months; and “(B) to the maximum extent practicable, in its discretion— “(i) to diminish, eliminate, or prevent excessive speculation as described under this section; “(ii) to deter and prevent market manipulation, squeezes, and corners; “(iii) to ensure sufficient market liquidity for bona fide hedgers; and “(iv) to ensure that the price discovery function of the underlying market is not disrupted. “(4) Significant price discovery function.— In making a determination whether a swap performs or affects a significant price discovery function with respect to regulated markets, the Commission shall consider, as appropriate: “(A) Price linkage.— The extent to which the swap uses or otherwise relies on a daily or final settlement price, or other major price parameter, of another contract traded on a regulated market based upon the same underlying commodity, to value a position, transfer or convert a position, financially settle a position, or close out a position. “(B) Arbitrage.— The extent to which the price for the swap is sufficiently related to the price of another contract traded on a regulated market based upon the same underlying commodity so as to permit market participants to effectively arbitrage between the markets by simultaneously maintaining positions or executing trades in the swaps on a frequent and recurring basis. “(C) Material price reference.— The extent to which, on a frequent and recurring basis, bids, offers, or transactions in a contract traded on a regulated market are directly based on, or are determined by referencing, the price generated by the swap. “(D) Material liquidity.— The extent to which the volume of swaps being traded in the commodity is sufficient to have a material effect on another contract traded on a regulated market. “(E) Other material factors.— Such other material factors as the Commission specifies by rule or regulation as relevant to determine whether a swap serves a significant price discovery function with respect to a regulated market. “(5) Economically equivalent contracts.— “(A) Notwithstanding any other provision of this section, the Commission shall establish limits on the amount of positions, including aggregate position limits, as appropriate, other than bona fide hedge positions, that may be held by any person with respect to swaps that are economically equivalent to contracts of sale for future delivery or to options on the contracts or commodities traded on or subject to the rules of a designated contract market subject to paragraph (2). “(B) In establishing limits pursuant to subparagraph (A), the Commission shall— “(i) develop the limits concurrently with limits established under paragraph (2), and the limits shall have similar requirements as under paragraph (3)(B); and “(ii) establish the limits simultaneously with limits established under paragraph (2). “(6) Aggregate position limits.— The Commission shall, by rule or regulation, establish limits (including related hedge exemption provisions) on the aggregate number or amount of positions in contracts based upon the same underlying commodity (as defined by the Commission) that may be held by any person, including any group or class of traders, for each month across— “(A) contracts listed by designated contract markets; “(B) with respect to an agreement contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, contracts traded on a foreign board of trade that provides members or other participants located in the United States with direct access to its electronic trading and order matching system; and “(C) swap contracts that perform or affect a significant price discovery function with respect to regulated entities. “(7) Exemptions.— The Commission, by rule, regulation, or order, may exempt, conditionally or unconditionally, any person or class of persons, any swap or class of swaps, any contract of sale of a commodity for future delivery or class of such contracts, any option or class of options, or any transaction or class of transactions from any requirement it may establish under this section with respect to position limits.” . (b) Conforming Amendments.— Section 4a(b) of the Commodity Exchange Act (7 U.S.C. 6a(b)) is amended— (1) in paragraph (1), by striking “or derivatives transaction execution facility or facilities or electronic trading facility” and inserting “or swap execution facility or facilities”; and (2) in paragraph (2), by striking “or derivatives transaction execution facility or facilities or electronic trading facility” and inserting “or swap execution facility”. (c) Bona Fide Hedging Transaction.— Section 4a(c) of the Commodity Exchange Act is amended— (1) by inserting “(1)” after “(c)”; and (2) by adding at the end the following: “(2) For the purposes of implementation of subsection (a)(2) for contracts of sale for future delivery or options on the contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as a transaction or position that— “(A) (i) represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel; “(ii) is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and “(iii) arises from the potential change in the value of— “(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising; “(II) liabilities that a person owns or anticipates incurring; or “(III) services that a person provides, purchases, or anticipates providing or purchasing; or “(B) reduces risks attendant to a position resulting from a swap that— “(i) was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to subparagraph (A); or “(ii) meets the requirements of subparagraph (A).” . (d) Effective Date.— This section and the amendments made by this section shall become effective on the date of the enactment of this section. SEC. 738. FOREIGN BOARDS OF TRADE. (a) In General.— Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is amended— (1) in the first sentence, by striking “The Commission” and inserting the following: “(2) Persons located in the united states.— “(A) In general.— The Commission” ; (2) in the second sentence, by striking “Such rules and regulations” and inserting the following: “(B) Different requirements.— Rules and regulations described in subparagraph (A)” ; (3) in the third sentence— (A) by striking “No rule or regulation” and inserting the following: “(C) Prohibition.— Except as provided in paragraphs (1) and (2), no rule or regulation” ; (B) by striking “that (1) requires” and inserting the following: “that— “(i) requires” ; and (C) by striking “market, or (2) governs” and inserting the following: “market; or “(ii) governs” ; and (4) by inserting before paragraph (2) (as designated by paragraph (1)) the following: “(1) Foreign boards of trade.— “(A) Registration.— The Commission may adopt rules and regulations requiring registration with the Commission for a foreign board of trade that provides the members of the foreign board of trade or other participants located in the United States with direct access to the electronic trading and order matching system of the foreign board of trade, including rules and regulations prescribing procedures and requirements applicable to the registration of such foreign boards of trade. For purposes of this paragraph, ‘direct access’ refers to an explicit grant of authority by a foreign board of trade to an identified member or other participant located in the United States to enter trades directly into the trade matching system of the foreign board of trade. In adopting such rules and regulations, the commission shall consider— “(i) whether any such foreign board of trade is subject to comparable, comprehensive supervision and regulation by the appropriate governmental authorities in the foreign board of trade’s home country; and “(ii) any previous commission findings that the foreign board of trade is subject to comparable comprehensive supervision and regulation by the appropriate government authorities in the foreign board of trade’s home country. “(B) Linked contracts.— The Commission may not permit a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States direct access to the electronic trading and order-matching system of the foreign board of trade with respect to an agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, unless the Commission determines that— “(i) the foreign board of trade makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and “(ii) the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)— “(I) adopts position limits (including related hedge exemption provisions) for the agreement, contract, or transaction that are comparable to the position limits (including related hedge exemption provisions) adopted by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; “(II) has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process; “(III) agrees to promptly notify the Commission, with regard to the agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, of any change regarding— “(aa) the information that the foreign board of trade will make publicly available; “(bb) the position limits that the foreign board of trade or foreign futures authority will adopt and enforce; “(cc) the position reductions required to prevent manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process; and “(dd) any other area of interest expressed by the Commission to the foreign board of trade or foreign futures authority; “(IV) provides information to the Commission regarding large trader positions in the agreement, contract, or transaction that is comparable to the large trader position information collected by the Commission for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and “(V) provides the Commission such information as is necessary to publish reports on aggregate trader positions for the agreement, contract, or transaction traded on the foreign board of trade that are comparable to such reports on aggregate trader positions for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles. “(C) Existing foreign boards of trade.— Subparagraphs (A) and (B) shall not be effective with respect to any foreign board of trade to which, prior to the date of enactment of this paragraph, the Commission granted direct access permission until the date that is 180 days after that date of enactment.” . (b) Liability of Registered Persons Trading on a Foreign Board of Trade.— Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended— (1) in subsection (a), in the matter preceding paragraph (1), by inserting “or by subsection (e)” after “Unless exempted by the Commission pursuant to subsection (c)”; and (2) by adding at the end the following: “(e) Liability of Registered Persons Trading on a Foreign Board of Trade.— “(1) In general.— A person registered with the Commission, or exempt from registration by the Commission, under this Act may not be found to have violated subsection (a) with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person— “(A) has reason to believe that the transaction and the contract is made on or subject to the rules of a foreign board of trade that is— “(i) legally organized under the laws of a foreign country; “(ii) authorized to act as a board of trade by a foreign futures authority; and “(iii) subject to regulation by the foreign futures authority; and “(B) has not been determined by the Commission to be operating in violation of subsection (a). “(2) Rule of construction.— Nothing in this subsection shall be construed as implying or creating any presumption that a board of trade, exchange, or market is located outside the United States, or its territories or possessions, for purposes of subsection (a).” . (c) Contract Enforcement for Foreign Futures Contracts.— Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) (as amended by section 739) is amended by adding at the end the following: “(6) Contract Enforcement for Foreign Futures Contracts.— A contract of sale of a commodity for future delivery traded or executed on or through the facilities of a board of trade, exchange, or market located outside the United States for purposes of section 4(a) shall not be void, voidable, or unenforceable, and a party to such a contract shall not be entitled to rescind or recover any payment made with respect to the contract, based on the failure of the foreign board of trade to comply with any provision of this Act.” . SEC. 739. LEGAL CERTAINTY FOR SWAPS.   Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is amended by striking paragraph (4) and inserting the following: “(4) Contract Enforcement Between Eligible Counterparties.— “(A) In general.— No hybrid instrument sold to any investor shall be void, voidable, or unenforceable, and no party to a hybrid instrument shall be entitled to rescind, or recover any payment made with respect to, the hybrid instrument under this section or any other provision of Federal or State law, based solely on the failure of the hybrid instrument to comply with the terms or conditions of section 2(f) or regulations of the Commission. “(B) Swaps.— No agreement, contract, or transaction between eligible contract participants or persons reasonably believed to be eligible contract participants shall be void, voidable, or unenforceable, and no party to such agreement, contract, or transaction shall be entitled to rescind, or recover any payment made with respect to, the agreement, contract, or transaction under this section or any other provision of Federal or State law, based solely on the failure of the agreement, contract, or transaction— “(i) to meet the definition of a swap under section 1a; or “(ii) to be cleared in accordance with section 2(h)(1). “(5) Legal Certainty for Long-term Swaps Entered Into Before the Date of Enactment of the Wall Street Transparency and Accountability Act of 2010.— “(A) Effect on swaps.— Unless specifically reserved in the applicable swap, neither the enactment of the Wall Street Transparency and Accountability Act of 2010, nor any requirement under that Act or an amendment made by that Act, shall constitute a termination event, force majeure, illegality, increased costs, regulatory change, or similar event under a swap (including any related credit support arrangement) that would permit a party to terminate, renegotiate, modify, amend, or supplement 1 or more transactions under the swap. “(B) Position limits.— Any position limit established under the Wall Street Transparency and Accountability Act of 2010 shall not apply to a position acquired in good faith prior to the effective date of any rule, regulation, or order under the Act that establishes the position limit; provided, however, that such positions shall be attributed to the trader if the trader’s position is increased after the effective date of such position limit rule, regulation, or order.” . SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.   Sections Repeal. 408 and 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422) are repealed. SEC. 741. ENFORCEMENT. (a) Enforcement Authority.— The Commodity Exchange Act is amended by inserting after section 4b (7 U.S.C. 6b) the following: “SEC. 4b–1. ENFORCEMENT AUTHORITY. “(a) Commodity Futures Trading Commission.— Except as provided in subsections (b), (c), and (d), the Commission shall have exclusive authority to enforce the provisions of subtitle A of the Wall Street Transparency and Accountability Act of 2010 with respect to any person. “(b) Prudential Regulators.— The prudential regulators shall have exclusive authority to enforce the provisions of section 4s(e) with respect to swap dealers or major swap participants for which they are the prudential regulator. “(c) Referrals.— “(1) Prudential regulators.— If the prudential regulator for a swap dealer or major swap participant has cause to believe that the swap dealer or major swap participant, or any affiliate or division of the swap dealer or major swap participant, may have engaged in conduct that constitutes a violation of the nonprudential requirements of this Act (including section 4s or rules adopted by the Commission under that section), the prudential regulator may promptly notify the Commission in a written report that includes— “(A) a request that the Commission initiate an enforcement proceeding under this Act; and “(B) an explanation of the facts and circumstances that led to the preparation of the written report. “(2) Commission.— If the Commission has cause to believe that a swap dealer or major swap participant that has a prudential regulator may have engaged in conduct that constitutes a violation of any prudential requirement of section 4s or rules adopted by the Commission under that section, the Commission may notify the prudential regulator of the conduct in a written report that includes— “(A) a request that the prudential regulator initiate an enforcement proceeding under this Act or any other Federal law (including regulations); and “(B) an explanation of the concerns of the Commission, and a description of the facts and circumstances, that led to the preparation of the written report. “(d) Backstop Enforcement Authority.— “(1) Initiation of enforcement proceeding by prudential regulator.— If the Commission does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the Commission receives a written report under subsection (c)(1), the prudential regulator may initiate an enforcement proceeding. “(2) Initiation of enforcement proceeding by commission.— If the prudential regulator does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the prudential regulator receives a written report under subsection (c)(2), the Commission may initiate an enforcement proceeding.” . (b) Conforming Amendments.— (1) Section 4b of the Commodity Exchange Act (7 U.S.C. 6b) is amended— (A) in subsection (a)(2), by striking “or other agreement, contract, or transaction subject to paragraphs (1) and (2) of section 5a(g),” and inserting “or swap,”; (B) in subsection (b), by striking “or other agreement, contract or transaction subject to paragraphs (1) and (2) of section 5a(g),” and inserting “or swap,”; and (C) by adding at the end the following: “(e) It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any registered entity, in or in connection with any order to make, or the making of, any contract of sale of any commodity for future delivery (or option on such a contract), or any swap, on a group or index of securities (or any interest therein or based on the value thereof)— “(1) to employ any device, scheme, or artifice to defraud; “(2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or “(3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.” . (2) Section 4c(a)(1) of the Commodity Exchange Act (7 U.S.C. 6c(a)(1)) is amended by inserting “or swap” before “if the transaction is used or may be used”. (3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9) is amended in the first sentence by inserting “or of any swap,” before “or has willfully made”. (4) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 13b) is amended in the first sentence, in the matter preceding the proviso, by inserting “or of any swap,” before “or otherwise is violating”. (5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C. 13a–1(a)) is amended in the matter preceding the proviso by inserting “or any swap” after “commodity for future delivery”. (6) Section 9 of the Commodity Exchange Act (7 U.S.C. 13) is amended— (A) in subsection (a)— (i) in paragraph (2), by inserting “or of any swap,” before “or to corner”; and (ii) in paragraph (4), by inserting “swap data repository,” before “or futures association” and (B) in subsection (e)(1)— (i) by inserting “swap data repository,” before “or registered futures association”; and (ii) by inserting “, or swaps,” before “on the basis”. (7) Section 9(a) of the Commodity Exchange Act (7 U.S.C. 13(a)) is amended by adding at the end the following: “(6) Any person to abuse the end user clearing exemption under section 2(h)(4), as determined by the Commission.” . (8) Section 2(c)(2)(B) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)) is amended— (A) by striking “(dd),” each place it appears; (B) in clause (iii), by inserting “, and accounts or pooled investment vehicles described in clause (vi),” before “shall be subject to”; and (C) by adding at the end the following: “(vi) This Act applies to, and the Commission shall have jurisdiction over, an account or pooled investment vehicle that is offered for the purpose of trading, or that trades, any agreement, contract, or transaction in foreign currency described in clause (i).” . (9) Section 2(c)(2)(C) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(C)) is amended— (A) by striking “(dd),” each place it appears; (B) in clause (ii)(I), by inserting “, and accounts or pooled investment vehicles described in clause (vii),” before “shall be subject to”; and (C) by adding at the end the following: “(vii) This Act applies to, and the Commission shall have jurisdiction over, an account or pooled investment vehicle that is offered for the purpose of trading, or that trades, any agreement, contract, or transaction in foreign currency described in clause (i).” . (10) Section 1a(19)(A)(iv)(II) of the Commodity Exchange Act (7 U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section 721(a)(1)) is amended by inserting before the semicolon at the end the following: “provided, however, that for purposes of section 2(c)(2)(B)(vi) and section 2(c)(2)(C)(vii), the term ‘eligible contract participant’ shall not include a commodity pool in which any participant is not otherwise an eligible contract participant”. (11) Section 6(e) of the Commodity Exchange Act (7 U.S.C. 9a) is amended by adding at the end the following: “(4) Any designated clearing organization that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 2(h) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 2(h). “(5) Any swap dealer or major swap participant that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 2(h) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 2(h).” . (c) Savings Clause.— Notwithstanding any other provision of this title, nothing in this subtitle shall be construed as divesting any appropriate Federal banking agency of any authority it may have to establish or enforce, with respect to a person for which such agency is the appropriate Federal banking agency, prudential or other standards pursuant to authority granted by Federal law other than this title. SEC. 742. RETAIL COMMODITY TRANSACTIONS. (a) In General.— Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is amended— (1) in paragraph (1), by striking “5a (to the extent provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))” and inserting “, 5b, or 12(e)(2)(B))”; and (2) in paragraph (2), by adding at the end the following: “(D) Retail commodity transactions.— “(i) Applicability.— Except as provided in clause (ii), this subparagraph shall apply to any agreement, contract, or transaction in any commodity that is— “(I) entered into with, or offered to (even if not entered into with), a person that is not an eligible contract participant or eligible commercial entity; and “(II) entered into, or offered (even if not entered into), on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis. “(ii) Exceptions.— This subparagraph shall not apply to— “(I) an agreement, contract, or transaction described in paragraph (1) or subparagraphs (A), (B), or (C), including any agreement, contract, or transaction specifically excluded from subparagraph (A), (B), or (C); “(II) any security; “(III) a contract of sale that— “(aa) results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved; or “(bb) creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver and accept delivery, respectively, in connection with the line of business of the seller and buyer; or “(IV) an agreement, contract, or transaction that is listed on a national securities exchange registered under section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or “(V) an identified banking product, as defined in section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C.27(b)). “(iii) Enforcement.— Sections 4(a), 4(b), and 4b apply to any agreement, contract, or transaction described in clause (i), as if the agreement, contract, or transaction was a contract of sale of a commodity for future delivery. “(iv) Eligible commercial entity.— For purposes of this subparagraph, an agricultural producer, packer, or handler shall be considered to be an eligible commercial entity for any agreement, contract, or transaction for a commodity in connection with the line of business of the agricultural producer, packer, or handler.” . (b) Gramm-Leach-Bliley Act.— Section 206(a) of the Gramm-Leach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) is amended, in the matter preceding paragraph (1), by striking “For purposes of” and inserting “Except as provided in subsection (e), for purposes of”. (c) Conforming Amendments Relating to Retail Foreign Exchange Transactions.— (1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)) is amended— (A) in item (aa), by inserting “United States” before “financial institution”; (B) by striking items (dd) and (ff); (C) by redesignating items (ee) and (gg) as items (dd) and (ff), respectively; and (D) in item (dd) (as so redesignated), by striking the semicolon and inserting “; or”. (2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) (as amended by subsection (a)(2)) is amended by adding at the end the following: “(E) Prohibition.— “(i) Definition of federal regulatory agency.— In this subparagraph, the term ‘Federal regulatory agency’ means— “(I) the Commission; “(II) the Securities and Exchange Commission; “(III) an appropriate Federal banking agency; “(IV) the National Credit Union Association; and “(V) the Farm Credit Administration. “(ii) Prohibition.— “(I) In general.— Except as provided in subclause (II), a person described in subparagraph (B)(i)(II) for which there is a Federal regulatory agency shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency described in subparagraph (B)(i)(I) except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe. “(II) Effective date.— With regard to persons described in subparagraph (B)(i)(II) for which a Federal regulatory agency has issued a proposed rule concerning agreements, contracts, or transactions in foreign currency described in subparagraph (B)(i)(I) prior to the date of enactment of this subclause, subclause (I) shall take effect 90 days after the date of enactment of this subclause. “(iii) Requirements of rules and regulations.— “(I) In general.— The rules and regulations described in clause (ii) shall prescribe appropriate requirements with respect to— “(aa) disclosure; “(bb) recordkeeping; “(cc) capital and margin; “(dd) reporting; “(ee) business conduct; “(ff) documentation; and “(gg) such other standards or requirements as the Federal regulatory agency shall determine to be necessary. “(II) Treatment.— The rules or regulations described in clause (ii) shall treat all agreements, contracts, and transactions in foreign currency described in subparagraph (B)(i)(I), and all agreements, contracts, and transactions in foreign currency that are functionally or economically similar to agreements, contracts, or transactions described in subparagraph (B)(i)(I), similarly.” . SEC. 743. OTHER AUTHORITY.   Unless otherwise provided by the amendments made by this subtitle, the amendments made by this subtitle do not divest any appropriate Federal banking agency, the Commodity Futures Trading Commission, the Securities and Exchange Commission, or other Federal or State agency of any authority derived from any other applicable law. SEC. 744. RESTITUTION REMEDIES.   Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a–1(d)) is amended by adding at the end the following: “(3) Equitable remedies.— In any action brought under this section, the Commission may seek, and the court may impose, on a proper showing, on any person found in the action to have committed any violation, equitable remedies including— “(A) restitution to persons who have sustained losses proximately caused by such violation (in the amount of such losses); and “(B) disgorgement of gains received in connection with such violation.” . SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES. (a) Effect of Interpretation.— Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 7a–2(a)) is amended by striking paragraph (2) and inserting the following: “(2) Effect of interpretation.— An interpretation issued under paragraph (1) may provide the exclusive means for complying with each section described in paragraph (1).” . (b) New Contracts, New Rules, and Rule Amendments.— Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended by striking subsection (c) and inserting the following: “(c) New Contracts, New Rules, and Rule Amendments.— “(1) In general.— A registered entity may elect to list for trading or accept for clearing any new contract, or other instrument, or may elect to approve and implement any new rule or rule amendment, by providing to the Commission (and the Secretary of the Treasury, in the case of a contract of sale of a government security for future delivery (or option on such a contract) or a rule or rule amendment specifically related to such a contract) a written certification that the new contract or instrument or clearing of the new contract or instrument, new rule, or rule amendment complies with this Act (including regulations under this Act). “(2) Rule review.— The new rule or rule amendment described in paragraph (1) Effective date. Notification. Determination. shall become effective, pursuant to the certification of the registered entity and notice of such certification to its members (in a manner to be determined by the Commission), on the date that is 10 business days after the date on which the Commission receives the certification (or such shorter period as determined by the Commission by rule or regulation) unless the Commission notifies the registered entity within such time that it is staying the certification because there exist novel or complex issues that require additional time to analyze, an inadequate explanation by the submitting registered entity, or a potential inconsistency with this Act (including regulations under this Act). “(3) Stay of certification for rules.— “(A) A notification by the Commission pursuant to paragraph (2) shall stay the certification of the new rule or rule amendment for up to an additional 90 days from the date of the notification. “(B) A rule or rule amendment subject to a stay pursuant to subparagraph (A) shall become effective, pursuant to the certification of the registered entity, at the expiration of the period described in subparagraph (A) unless the Commission— “(i) withdraws the stay prior to that time; or “(ii) notifies the registered entity during such period that it objects to the proposed certification on the grounds that it is inconsistent with this Act (including regulations under this Act). “(C) The Commission shall provide a not less than 30-day public comment period, within the 90-day period in which the stay is in effect as described in subparagraph (A), whenever the Commission reviews a rule or rule amendment pursuant to a notification by the Commission under this paragraph. “(4) Prior approval.— “(A) In general.— A registered entity may request that the Commission grant prior approval to any new contract or other instrument, new rule, or rule amendment. “(B) Prior approval required.— Notwithstanding any other provision of this section, a designated contract market shall submit to the Commission for prior approval each rule amendment that materially changes the terms and conditions, as determined by the Commission, in any contract of sale for future delivery of a commodity specifically enumerated in section 1a(10) (or any option thereon) traded through its facilities if the rule amendment applies to contracts and delivery months which have already been listed for trading and have open interest. “(C) Deadline.— If prior approval is requested under subparagraph (A), the Commission shall take final action on the request not later than 90 days after submission of the request, unless the person submitting the request agrees to an extension of the time limitation established under this subparagraph. “(5) Approval.— “(A) Rules.— The Commission shall approve a new rule, or rule amendment, of a registered entity unless the Commission finds that the new rule, or rule amendment, is inconsistent with this subtitle (including regulations). “(B) Contracts and instruments.— The Commission shall approve a new contract or other instrument unless the Commission finds that the new contract or other instrument would violate this Act (including regulations). “(C) Special rule for review and approval of event contracts and swaps contracts.— “(i) Event contracts.— In connection with the listing of agreements, contracts, transactions, or swaps in excluded commodities that are based upon the occurrence, extent of an occurrence, or contingency (other than a change in the price, rate, value, or levels of a commodity described in section 1a(2)(i)), by a designated contract market or swap execution facility, the Commission may determine that such agreements, contracts, or transactions are contrary to the public interest if the agreements, contracts, or transactions involve— “(I) activity that is unlawful under any Federal or State law; “(II) terrorism; “(III) assassination; “(IV) war; “(V) gaming; or “(VI) other similar activity determined by the Commission, by rule or regulation, to be contrary to the public interest. “(ii) Prohibition.— No agreement, contract, or transaction determined by the Commission to be contrary to the public interest under clause (i) may be listed or made available for clearing or trading on or through a registered entity. “(iii) Swaps contracts.— “(I) In general.— In Determination. connection with the listing of a swap for clearing by a derivatives clearing organization, the Commission shall determine, upon request or on its own motion, the initial eligibility, or the continuing qualification, of a derivatives clearing organization to clear such a swap under those criteria, conditions, or rules that the Commission, in its discretion, determines. “(II) Requirements.— Any such criteria, conditions, or rules shall consider— “(aa) the financial integrity of the derivatives clearing organization; and “(bb) any other factors which the Commission determines may be appropriate. “(iv) Deadline.— The Commission shall take final action under clauses (i) and (ii) in not later than 90 days from the commencement of its review unless the party seeking to offer the contract or swap agrees to an extension of this time limitation.” . (c) Violation of Core Principles.— Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended by striking subsection (d). SEC. 746. INSIDER TRADING.   Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is amended by adding at the end the following: “(3) Contract of sale.— It shall be unlawful for any employee or agent of any department or agency of the Federal Government who, by virtue of the employment or position of the employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to use the information in his personal capacity and for personal gain to enter into, or offer to enter into— “(A) a contract of sale of a commodity for future delivery (or option on such a contract); “(B) an option (other than an option executed or traded on a national securities exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or “(C) a swap. “(4) Nonpublic information.— “(A) Imparting of nonpublic information.— It shall be unlawful for any employee or agent of any department or agency of the Federal Government who, by virtue of the employment or position of the employee or agent, acquires information that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, and which information has not been disseminated by the department or agency of the Federal Government holding or creating the information in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, to impart the information in his personal capacity and for personal gain with intent to assist another person, directly or indirectly, to use the information to enter into, or offer to enter into— “(i) a contract of sale of a commodity for future delivery (or option on such a contract); “(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or “(iii) a swap. “(B) Knowing use.— It shall be unlawful for any person who receives information imparted by any employee or agent of any department or agency of the Federal Government as described in subparagraph (A) to knowingly use such information to enter into, or offer to enter into— “(i) a contract of sale of a commodity for future delivery (or option on such a contract); “(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or “(iii) a swap. “(C) Theft of nonpublic information.— It shall be unlawful for any person to steal, convert, or misappropriate, by any means whatsoever, information held or created by any department or agency of the Federal Government that may affect or tend to affect the price of any commodity in interstate commerce, or for future delivery, or any swap, where such person knows, or acts in reckless disregard of the fact, that such information has not been disseminated by the department or agency of the Federal Government holding or creating the information in a manner which makes it generally available to the trading public, or disclosed in a criminal, civil, or administrative hearing, or in a congressional, administrative, or Government Accountability Office report, hearing, audit, or investigation, and to use such information, or to impart such information with the intent to assist another person, directly or indirectly, to use such information to enter into, or offer to enter into— “(i) a contract of sale of a commodity for future delivery (or option on such a contract); “(ii) an option (other than an option executed or traded on a national securities exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or “(iii) a swap, provided, however, that nothing in this subparagraph shall preclude a person that has provided information concerning, or generated by, the person, its operations or activities, to any employee or agent of any department or agency of the Federal Government, voluntarily or as required by law, from using such information to enter into, or offer to enter into, a contract of sale, option, or swap described in clauses (i), (ii), or (iii).” . SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.   Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) (as amended by section 746) is amended by adding at the end the following: “(5) Disruptive practices.— It shall be unlawful for any person to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that— “(A) violates bids or offers; “(B) demonstrates intentional or reckless disregard for the orderly execution of transactions during the closing period; or “(C) is, is of the character of, or is commonly known to the trade as, ‘spoofing’ (bidding or offering with the intent to cancel the bid or offer before execution). “(6) Rulemaking authority.— The Commission may make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to prohibit the trading practices described in paragraph (5) and any other trading practice that is disruptive of fair and equitable trading. “(7) Use of swaps to defraud.— It shall be unlawful for any person to enter into a swap knowing, or acting in reckless disregard of the fact, that its counterparty will use the swap as part of a device, scheme, or artifice to defraud any third party.” . SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.   The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding at the end the following: “SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION. “(a) Definitions.— In this section: “(1) Covered judicial or administrative action.— The term ‘covered judicial or administrative action’ means any judicial or administrative action brought by the Commission under this Act that results in monetary sanctions exceeding $1,000,000. “(2) Fund.— The term ‘Fund’ means the Commodity Futures Trading Commission Customer Protection Fund established under subsection (g). “(3) Monetary sanctions.— The term ‘monetary sanctions’, when used with respect to any judicial or administrative action means— “(A) any monies, including penalties, disgorgement, restitution, and interest ordered to be paid; and “(B) any monies deposited into a disgorgement fund or other fund pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such action or any settlement of such action. “(4) Original information.— The term ‘original information’ means information that— “(A) is derived from the independent knowledge or analysis of a whistleblower; “(B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and “(C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information. “(5) Related action.— The term ‘related action’, when used with respect to any judicial or administrative action brought by the Commission under this Act, means any judicial or administrative action brought by an entity described in subclauses (I) through (VI) of subsection (h)(2)(C) that is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful enforcement of the Commission action. “(6) Successful resolution.— The term ‘successful resolution’, when used with respect to any judicial or administrative action brought by the Commission under this Act, includes any settlement of such action. “(7) Whistleblower.— The term ‘whistleblower’ means any individual, or 2 or more individuals acting jointly, who provides information relating to a violation of this Act to the Commission, in a manner established by rule or regulation by the Commission. “(b) Awards.— “(1) In general.— In any covered judicial or administrative action, or related action, the Commission, under regulations prescribed by the Commission and subject to subsection (c), shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action, or related action, in an aggregate amount equal to— “(A) not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions; and “(B) not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions. “(2) Payment of awards.— Any amount paid under paragraph (1) shall be paid from the Fund. “(c) Determination of Amount of Award; Denial of Award.— “(1) Determination of amount of award.— “(A) Discretion.— The determination of the amount of an award made under subsection (b) shall be in the discretion of the Commission. “(B) Criteria.— In determining the amount of an award made under subsection (b), the Commission— “(i) shall take into consideration— “(I) the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action; “(II) the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a covered judicial or administrative action; “(III) the programmatic interest of the Commission in deterring violations of the Act (including regulations under the Act) by making awards to whistleblowers who provide information that leads to the successful enforcement of such laws; and “(IV) such additional relevant factors as the Commission may establish by rule or regulation; and “(ii) shall not take into consideration the balance of the Fund. “(2) Denial of award.— No award under subsection (b) shall be made— “(A) to any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Commission, a member, officer, or employee of— “(i) a appropriate regulatory agency; “(ii) the Department of Justice; “(iii) a registered entity; “(iv) a registered futures association; “(v) a self-regulatory organization as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)); or “(vi) a law enforcement organization; “(B) to any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award under this section; “(C) to any whistleblower who submits information to the Commission that is based on the facts underlying the covered action submitted previously by another whistleblower; “(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule or regulation, require. “(d) Representation.— “(1) Permitted representation.— Any whistleblower who makes a claim for an award under subsection (b) may be represented by counsel. “(2) Required representation.— “(A) In general.— Any whistleblower who anonymously makes a claim for an award under subsection (b) shall be represented by counsel if the whistleblower submits the information upon which the claim is based. “(B) Disclosure of identity.— Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide such other information as the Commission may require, directly or through counsel for the whistleblower. “(e) No Contract Necessary.— No contract with the Commission is necessary for any whistleblower to receive an award under subsection (b), unless otherwise required by the Commission, by rule or regulation. “(f) Appeals.— “(1) In general.— Any determination made under this section, including whether, to whom, or in what amount to make awards, shall be in the discretion of the Commission. “(2) Appeals.— Any Deadline. determination described in paragraph (1) may be appealed to the appropriate court of appeals of the United States not more than 30 days after the determination is issued by the Commission. “(3) Review.— The court shall review the determination made by the Commission in accordance with section 7064 of title 5, United States Code. “(g) Commodity Futures Trading Commission Customer Protection Fund.— “(1) Establishment.— There is established in the Treasury of the United States a revolving fund to be known as the ‘Commodity Futures Trading Commission Customer Protection Fund’. “(2) Use of fund.— The Fund shall be available to the Commission, without further appropriation or fiscal year limitation, for— “(A) the payment of awards to whistleblowers as provided in subsection (a); and “(B) the funding of customer education initiatives designed to help customers protect themselves against fraud or other violations of this Act, or the rules and regulations thereunder. “(3) Deposits and credits.— There shall be deposited into or credited to the Fund: “(A) Monetary sanctions.— Any monetary sanctions collected by the Commission in any covered judicial or administrative action that is not otherwise distributed to victims of a violation of this Act or the rules and regulations thereunder underlying such action, unless the balance of the Fund at the time the monetary judgment is collected exceeds $100,000,000. “(B) Additional amounts.— If the amounts deposited into or credited to the Fund under subparagraph (A) are not sufficient to satisfy an award made under subsection (b), there shall be deposited into or credited to the Fund an amount equal to the unsatisfied portion of the award from any monetary sanction collected by the Commission in any judicial or administrative action brought by the Commission under this Act that is based on information provided by a whistleblower. “(C) Investment income.— All income from investments made under paragraph (4). “(4) Investments.— “(A) Amounts in fund may be invested.— The Commission may request the Secretary of the Treasury to invest the portion of the Fund that is not, in the Commission’s judgment, required to meet the current needs of the Fund. “(B) Eligible investments.— Investments shall be made by the Secretary of the Treasury in obligations of the United States or obligations that are guaranteed as to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined by the Commission. “(C) Interest and proceeds credited.— The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to, and form a part of, the Fund. “(5) Reports to congress.— Not later than October 30 of each year, the Commission shall transmit to the Committee on Agriculture, Nutrition, and Forestry of the Senate, and the Committee on Agriculture of the House of Representatives a report on— “(A) the Commission’s whistleblower award program under this section, including a description of the number of awards granted and the types of cases in which awards were granted during the preceding fiscal year; “(B) customer education initiatives described in paragraph (2)(B) that were funded by the Fund during the preceding fiscal year; “(C) the balance of the Fund at the beginning of the preceding fiscal year; “(D) the amounts deposited into or credited to the Fund during the preceding fiscal year; “(E) the amount of earnings on investments of amounts in the Fund during the preceding fiscal year; “(F) the amount paid from the Fund during the preceding fiscal year to whistleblowers pursuant to subsection (b); “(G) the amount paid from the Fund during the preceding fiscal year for customer education initiatives described in paragraph (2)(B); “(H) the balance of the Fund at the end of the preceding fiscal year; and “(I) a complete set of audited financial statements, including a balance sheet, income statement, and cash flow analysis. “(h) Protection of Whistleblowers.— “(1) Prohibition against retaliation.— “(A) In general.— No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower— “(i) in providing information to the Commission in accordance with subsection (b); or “(ii) in assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information. “(B) Enforcement.— “(i) Cause of action.— An individual who alleges discharge or other discrimination in violation of subparagraph (A) may bring an action under this subsection in the appropriate district court of the United States for the relief provided in subparagraph (C), unless the individual who is alleging discharge or other discrimination in violation of subparagraph (A) is an employee of the Federal Government, in which case the individual shall only bring an action under section 1221 of title 5, United States Code. “(ii) Subpoenas.— A subpoena requiring the attendance of a witness at a trial or hearing conducted under this subsection may be served at any place in the United States. “(iii) Statute of limitations.— An action under this subsection may not be brought more than 2 years after the date on which the violation reported in subparagraph (A) is committed. “(C) Relief.— Relief for an individual prevailing in an action brought under subparagraph (B) shall include— “(i) reinstatement with the same seniority status that the individual would have had, but for the discrimination; “(ii) the amount of back pay otherwise owed to the individual, with interest; and “(iii) compensation for any special damages sustained as a result of the discharge or discrimination, including litigation costs, expert witness fees, and reasonable attorney’s fees. “(2) Confidentiality.— “(A) In general.— Except as provided in subparagraphs (B) and (C), the Commission, and any officer or employee of the Commission, shall not disclose any information, including information provided by a whistleblower to the Commission, which could reasonably be expected to reveal the identity of a whistleblower, except in accordance with the provisions of section 552a of title 5, United States Code, unless and until required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission or any entity described in subparagraph (C). For purposes of section 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section 552. “(B) Effect.— Nothing in this paragraph is intended to limit the ability of the Attorney General to present such evidence to a grand jury or to share such evidence with potential witnesses or defendants in the course of an ongoing criminal investigation. “(C) Availability to government agencies.— “(i) In general.— Without the loss of its status as confidential in the hands of the Commission, all information referred to in subparagraph (A) may, in the discretion of the Commission, when determined by the Commission to be necessary or appropriate to accomplish the purposes of this Act and protect customers and in accordance with clause (ii), be made available to— “(I) the Department of Justice; “(II) an appropriate department or agency of the Federal Government, acting within the scope of its jurisdiction; “(III) a registered entity, registered futures association, or self-regulatory organization as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)); “(IV) a State attorney general in connection with any criminal investigation; “(V) an appropriate department or agency of any State, acting within the scope of its jurisdiction; and “(VI) a foreign futures authority. “(ii) Maintenance of information.— Each of the entities, agencies, or persons described in clause (i) shall maintain information described in that clause as confidential, in accordance with the requirements in subparagraph (A). “(iii) Study on impact of foia exemption on commodity futures trading commission.— “(I) Study.— The Inspector General of the Commission shall conduct a study— “(aa) on whether the exemption under section 552(b)(3) of title 5, United States Code (known as the Freedom of Information Act) established in paragraph (2)(A) aids whistleblowers in disclosing information to the Commission; “(bb) on what impact the exemption has had on the public’s ability to access information about the Commission’s regulation of commodity futures and option markets; and “(cc) to make any recommendations on whether the Commission should continue to use the exemption. “(II) Report.— Not later than 30 months after the date of enactment of this clause, the Inspector General shall— “(aa) submit a report on the findings of the study required under this clause to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives; and “(bb) make the report available to the public through publication of a report on the website of the Commission. “(3) Rights retained.— Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any whistleblower under any Federal or State law, or under any collective bargaining agreement. “(i) Rulemaking Authority.— The Commission shall have the authority to issue such rules and regulations as may be necessary or appropriate to implement the provisions of this section consistent with the purposes of this section. “(j) Implementing Rules.— The Commission shall issue final rules or regulations implementing the provisions of this section not later than 270 days after the date of enactment of the Wall Street Transparency and Accountability Act of 2010. “(k) Original Information.— Information submitted to the Commission by a whistleblower in accordance with rules or regulations implementing this section shall not lose its status as original information solely because the whistleblower submitted such information prior to the effective date of such rules or regulations, provided such information was submitted after the date of enactment of the Wall Street Transparency and Accountability Act of 2010. “(l) Awards.— A whistleblower may receive an award pursuant to this section regardless of whether any violation of a provision of this Act, or a rule or regulation thereunder, underlying the judicial or administrative action upon which the award is based occurred prior to the date of enactment of the Wall Street Transparency and Accountability Act of 2010. “(m) Provision of False Information.— A whistleblower who knowingly and willfully makes any false, fictitious, or fraudulent statement or representation, or who makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall not be entitled to an award under this section and shall be subject to prosecution under section 1001 of title 18, United States Code. “(n) Nonenforceability of Certain Provisions Waiving Rights and Remedies or Requiring Arbitration of Disputes.— “(1) Waiver of rights and remedies.— The rights and remedies provided for in this section may not be waived by any agreement, policy form, or condition of employment including by a predispute arbitration agreement. “(2) Predispute arbitration agreements.— No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.” . SEC. 749. CONFORMING AMENDMENTS. (a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) (as amended by section 724) is amended— (1) in subsection (a)— (A) in the matter preceding paragraph (1)— (i) by striking “engage as” and inserting “be a”; and (ii) by striking “or introducing broker” and all that follows through “or derivatives transaction execution facility”; (B) in paragraph (1), by striking “or introducing broker”; and (C) in paragraph (2), by striking “if a futures commission merchant,”; and (2) by adding at the end the following: “(g) It shall be unlawful for any person to be an introducing broker unless such person shall have registered under this Act with the Commission as an introducing broker and such registration shall not have expired nor been suspended nor revoked.” . (b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is amended— (1) by striking “(3) Subsection (1) of this section” and inserting the following: “(3) Exception.— “(A) In general.— Paragraph (1)” ; and (2) by striking “to any investment trust” and all that follows through the period at the end and inserting the following: “to any commodity pool that is engaged primarily in trading commodity interests. “(B) Engaged primarily.— For purposes of subparagraph (A), a commodity trading advisor or a commodity pool shall be considered to be ‘engaged primarily’ in the business of being a commodity trading advisor or commodity pool if it is or holds itself out to the public as being engaged primarily, or proposes to engage primarily, in the business of advising on commodity interests or investing, reinvesting, owning, holding, or trading in commodity interests, respectively. “(C) Commodity interests.— For purposes of this paragraph, commodity interests shall include contracts of sale of a commodity for future delivery, options on such contracts, security futures, swaps, leverage contracts, foreign exchange, spot and forward contracts on physical commodities, and any monies held in an account used for trading commodity interests.” . (c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended— (1) in subsection (a)(1)— (A) by striking “, 5a(d),”; and (B) by striking “and section (2)(h)(7) with respect to significant price discovery contracts,”; and (2) in subsection (f)(1), by striking “section 4d(c) of this Act” and inserting “section 4d(e)”. (d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) is amended by striking “or revocation of the right of an electronic trading facility to rely on the exemption set forth in section 2(h)(3) with respect to a significant price discovery contract,”. (e) Section 6(b) of the Commodity Exchange Act (7 U.S.C. 8(b)) is amended in the first sentence by striking “, or to revoke the right of an electronic trading facility to rely on the exemption set forth in section 2(h)(3) with respect to a significant price discovery contract,”. (f) Section 12(e)(2)(B) of the Commodity Exchange Act (7 U.S.C. 16(e)(2)(B)) is amended— (1) by striking “section 2(c), 2(d), 2(f), or 2(g) of this Act” and inserting “section 2(c) or 2(f) of this Act”; and (2) by striking “2(h) or”. (g) Section 17(r)(1) of the Commodity Exchange Act (7 U.S.C. 21(r)(1)) is amended by striking “section 4d(c) of this Act” and inserting “section 4d(e)”. (h) Section 22 of the Commodity Exchange Act 7 USC 25. is amended— (1) in subsection (a)(1)(B), by— (A) inserting “or any swap” after “commodity)”; and (B) inserting “or any swap” after “such contract”; (2) in subsection (a)(1)(C), by adding at the end the following: “(iv) a swap; or” ; and (3) in subsection (b)(1)(A), by striking “section 2(h)(7) or sections 5 through 5c” and inserting “section 5, 5b, 5c, 5h, or 21”. (i) Section 408(2)(C) of the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended— (1) by striking “section 2(c), 2(d), 2(f), or (2)(g) of such Act” and inserting “section 2(c), 2(f), or 2(i) of that Act”; and (2) by striking “2(h) or”. SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS. (a) Interagency Working Group.— There is established to carry out this section an interagency working group (referred to in this section as the “interagency group”) composed of the following members or designees: (1) The Chairman of the Commodity Futures Trading Commission (referred to in this section as the “Commission”), who shall serve as Chairman of the interagency group. (2) The Secretary of Agriculture. (3) The Secretary of the Treasury. (4) The Chairman of the Securities and Exchange Commission. (5) The Administrator of the Environmental Protection Agency. (6) The Chairman of the Federal Energy Regulatory Commission. (7) The Commissioner of the Federal Trade Commission. (8) The Administrator of the Energy Information Administration. (b) Administrative Support.— The Commission shall provide the interagency group such administrative support services as are necessary to enable the interagency group to carry out the functions of the interagency group under this section. (c) Consultation.— In carrying out this section, the interagency group shall consult with representatives of exchanges, clearinghouses, self-regulatory bodies, major carbon market participants, consumers, and the general public, as the interagency group determines to be appropriate. (d) Study.— The interagency group shall conduct a study on the oversight of existing and prospective carbon markets to ensure an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets. (e) Report.— Not later than 180 days after the date of enactment of this Act, the interagency group shall submit to Congress a report on the results of the study conducted under subsection (b), including recommendations for the oversight of existing and prospective carbon markets to ensure an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets. SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.   Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) (as amended by section 727) is amended by adding at the end the following: “(15) Energy and environmental markets advisory committee.— “(A) Establishment.— “(i) In general.— An Energy and Environmental Markets Advisory Committee is hereby established. “(ii) Membership.— The Committee shall have 9 members. “(iii) Activities.— The Committee’s objectives and scope of activities shall be— “(I) to conduct public meetings; “(II) to submit reports and recommendations to the Commission (including dissenting or minority views, if any); and “(III) otherwise to serve as a vehicle for discussion and communication on matters of concern to exchanges, firms, end users, and regulators regarding energy and environmental markets and their regulation by the Commission. “(B) Requirements.— “(i) In general.— The Public meetings. Committee shall hold public meetings at such intervals as are necessary to carry out the functions of the Committee, but not less frequently than 2 times per year. “(ii) Members.— Members shall be appointed to 3-year terms, but may be removed for cause by vote of the Commission. “(C) Appointment.— The Commission shall appoint members with a wide diversity of opinion and who represent a broad spectrum of interests, including hedgers and consumers. “(D) Reimbursement.— Members shall be entitled to per diem and travel expense reimbursement by the Commission. “(E) FACA.— The Committee shall not be subject to the Federal Advisory Committee Act (5 U.S.C. App.).” . SEC. 752. INTERNATIONAL HARMONIZATION. (a) In order to promote effective and consistent global regulation of swaps and security-based swaps, the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the prudential regulators (as that term is defined in section 1a(39) of the Commodity Exchange Act), as appropriate, shall consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation (including fees) of swaps, security-based swaps, swap entities, and security-based swap entities and may agree to such information-sharing arrangements as may be deemed to be necessary or appropriate in the public interest or for the protection of investors, swap counterparties, and security-based swap counterparties. (b) In order to promote effective and consistent global regulation of contracts of sale of a commodity for future delivery and options on such contracts, the Commodity Futures Trading Commission shall consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of contracts of sale of a commodity for future delivery and options on such contracts, and may agree to such information-sharing arrangements as may be deemed necessary or appropriate in the public interest for the protection of users of contracts of sale of a commodity for future delivery. SEC. 753. ANTI-MANIPULATION AUTHORITY. (a) Prohibition Regarding Manipulation and False Information.— Subsection (c) of section 6 of the Commodity Exchange Act (7 U.S.C. 9, 15) is amended to read as follows: “(c) Prohibition Regarding Manipulation and False Information.— “(1) Prohibition against manipulation.— It shall be unlawful for any person, directly or indirectly, to use or employ, or attempt to use or employ, in connection with any swap, or a contract of sale of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity, any manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, provided no rule or regulation promulgated by the Commission shall require any person to disclose to another person nonpublic information that may be material to the market price, rate, or level of the commodity transaction, except as necessary to make any statement made to the other person in or in connection with the transaction not misleading in any material respect. “(A) Special provision for manipulation by false reporting.— Unlawful manipulation for purposes of this paragraph shall include, but not be limited to, delivering, or causing to be delivered for transmission through the mails or interstate commerce, by any means of communication whatsoever, a false or misleading or inaccurate report concerning crop or market information or conditions that affect or tend to affect the price of any commodity in interstate commerce, knowing, or acting in reckless disregard of the fact that such report is false, misleading or inaccurate. “(B) Effect on other law.— Nothing in this paragraph shall affect, or be construed to affect, the applicability of section 9(a)(2). “(C) Good faith mistakes.— Mistakenly transmitting, in good faith, false or misleading or inaccurate information to a price reporting service would not be sufficient to violate subsection (c)(1)(A). “(2) Prohibition regarding false information.— It shall be unlawful for any person to make any false or misleading statement of a material fact to the Commission, including in any registration application or any report filed with the Commission under this Act, or any other information relating to a swap, or a contract of sale of a commodity, in interstate commerce, or for future delivery on or subject to the rules of any registered entity, or to omit to state in any such statement any material fact that is necessary to make any statement of a material fact made not misleading in any material respect, if the person knew, or reasonably should have known, the statement to be false or misleading. “(3) Other manipulation.— In addition to the prohibition in paragraph (1), it shall be unlawful for any person, directly or indirectly, to manipulate or attempt to manipulate the price of any swap, or of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity. “(4) Enforcement.— “(A) Authority of commission.— If the Commission has reason to believe that any person (other than a registered entity) is violating or has violated this subsection, or any other provision of this Act (including any rule, regulation, or order of the Commission promulgated in accordance with this subsection or any other provision of this Act), the Commission may serve upon the person a complaint. “(B) Contents of complaint.— A complaint under subparagraph (A) shall— “(i) contain a description of the charges against the person that is the subject of the complaint; and “(ii) have attached or contain a notice of hearing that specifies the date and location of the hearing regarding the complaint. “(C) Hearing.— A hearing described in subparagraph (B)(ii)— “(i) shall be held not later than 3 days after service of the complaint described in subparagraph (A); “(ii) shall require the person to show cause regarding why— “(I) an order should not be made— “(aa) to prohibit the person from trading on, or subject to the rules of, any registered entity; and “(bb) to direct all registered entities to refuse all privileges to the person until further notice of the Commission; and “(II) the registration of the person, if registered with the Commission in any capacity, should not be suspended or revoked; and “(iii) may be held before— “(I) the Commission; or “(II) an administrative law judge designated by the Commission, under which the administrative law judge shall ensure that all evidence is recorded in written form and submitted to the Commission. “(5) Subpoena.— For the purpose of securing effective enforcement of the provisions of this Act, for the purpose of any investigation or proceeding under this Act, and for the purpose of any action taken under section 12(f), any member of the Commission or any Administrative Law Judge or other officer designated by the Commission (except as provided in paragraph (7)) may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records that the Commission deems relevant or material to the inquiry. “(6) Witnesses.— The attendance of witnesses and the production of any such records may be required from any place in the United States, any State, or any foreign country or jurisdiction at any designated place of hearing. “(7) Service.— A subpoena issued under this section may be served upon any person who is not to be found within the territorial jurisdiction of any court of the United States in such manner as the Federal Rules of Civil Procedure prescribe for service of process in a foreign country, except that a subpoena to be served on a person who is not to be found within the territorial jurisdiction of any court of the United States may be issued only on the prior approval of the Commission. “(8) Refusal to obey.— In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction in which the investigation or proceeding is conducted, or where such person resides or transacts business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoranda, and other records. Such court may issue an order requiring such person to appear before the Commission or member or Administrative Law Judge or other officer designated by the Commission, there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question. “(9) Failure to obey.— Any failure to obey such order of the court may be punished by the court as a contempt thereof. All process in any such case may be served in the judicial district wherein such person is an inhabitant or transacts business or wherever such person may be found. “(10) Evidence.— On the receipt of evidence under paragraph (4)(C)(iii), the Commission may— “(A) prohibit the person that is the subject of the hearing from trading on, or subject to the rules of, any registered entity and require all registered entities to refuse the person all privileges on the registered entities for such period as the Commission may require in the order; “(B) if the person is registered with the Commission in any capacity, suspend, for a period not to exceed 180 days, or revoke, the registration of the person; “(C) assess such person— “(i) a civil penalty of not more than an amount equal to the greater of— “(I) $140,000; or “(II) triple the monetary gain to such person for each such violation; or “(ii) in any case of manipulation or attempted manipulation in violation of this subsection or section 9(a)(2), a civil penalty of not more than an amount equal to the greater of— “(I) $1,000,000; or “(II) triple the monetary gain to the person for each such violation; and “(D) require restitution to customers of damages proximately caused by violations of the person. “(11) Orders.— “(A) Notice.— The Commission shall provide to a person described in paragraph (10) and the appropriate governing board of the registered entity notice of the order described in paragraph (10) by— “(i) registered mail; “(ii) certified mail; or “(iii) personal delivery. “(B) Review.— “(i) In general.— A person described in paragraph (10) may obtain a review of the order or such other equitable relief as determined to be appropriate by a court described in clause (ii). “(ii) Petition.— To obtain a review or other relief under clause (i), a person may, not later than 15 days after notice is given to the person under clause (i), file a written petition to set aside the order with the United States Court of Appeals— “(I) for the circuit in which the petitioner carries out the business of the petitioner; or “(II) in the case of an order denying registration, the circuit in which the principal place of business of the petitioner is located, as listed on the application for registration of the petitioner. “(C) Procedure.— “(i) Duty of clerk of appropriate court.— The clerk of the appropriate court under subparagraph (B)(ii) shall transmit to the Commission a copy of a petition filed under subparagraph (B)(ii). “(ii) Duty of commission.— In accordance with section 2112 of title 28, United States Code, the Commission shall file in the appropriate court described in subparagraph (B)(ii) the record theretofore made. “(iii) Jurisdiction of appropriate court.— Upon the filing of a petition under subparagraph (B)(ii), the appropriate court described in subparagraph (B)(ii) may affirm, set aside, or modify the order of the Commission.” . (b) Cease and Desist Orders, Fines.— Section 6(d) of the Commodity Exchange Act (7 U.S.C. 13b) is amended to read as follows: “(d) If any person (other than a registered entity), is violating or has violated subsection (c) or any other provisions of this Act or of the rules, regulations, or orders of the Commission thereunder, the Commission may, upon notice and hearing, and subject to appeal as in other cases provided for in subsection (c), make and enter an order directing that such person shall cease and desist therefrom and, if such person thereafter and after the lapse of the period allowed for appeal of such order or after the affirmance of such order, shall knowingly fail or refuse to obey or comply with such order, such person, upon conviction thereof, shall be fined not more than the higher of $140,000 or triple the monetary gain to such person, or imprisoned for not more than 1 year, or both, except that if such knowing failure or refusal to obey or comply with such order involves any offense within subsection (a) or (b) of section 9, such person, upon conviction thereof, shall be subject to the penalties of said subsection (a) or (b): Provided, That any such cease and desist order under this subsection against any respondent in any case of manipulation shall be issued only in conjunction with an order issued against such respondent under subsection (c).” . (c) Manipulations; Private Rights of Action.— Section 22(a)(1) of the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is amended by striking subparagraph (D) and inserting the following: “(D) who purchased or sold a contract referred to in subparagraph (B) hereof or swap if the violation constitutes— “(i) the use or employment of, or an attempt to use or employ, in connection with a swap, or a contract of sale of a commodity, in interstate commerce, or for future delivery on or subject to the rules of any registered entity, any manipulative device or contrivance in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act; or “(ii) a manipulation of the price of any such contract or swap or the price of the commodity underlying such contract or swap.” . (d) Effective Date.— (1) The amendments made by this section shall take effect on the date on which the final rule promulgated by the Commodity Futures Trading Commission pursuant to this Act takes effect. (2) Paragraph (1) shall not preclude the Commission from undertaking prior to the effective date any rulemaking necessary to implement the amendments contained in this section. SEC. 754. EFFECTIVE DATE.   Unless otherwise provided in this title, the provisions of this subtitle shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of this subtitle. Subtitle B— Regulation of Security-Based Swap Markets SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934. (a) Definitions.— Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended— (1) in subparagraphs (A) and (B) of paragraph (5), by inserting “(not including security-based swaps, other than security-based swaps with or for persons that are not eligible contract participants)” after “securities” each place that term appears; (2) in paragraph (10), by inserting “security-based swap,” after “security future,”; (3) in paragraph (13), by adding at the end the following: “For security-based swaps, such terms include 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 security-based swap, as the context may require.”; (4) in paragraph (14), by adding at the end the following: “For security-based swaps, such terms include 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 security-based swap, as the context may require.”; (5) in paragraph (39)— (A) in subparagraph (B)(i)— (i) in subclause (I), by striking “or government securities dealer” and inserting “government securities dealer, security-based swap dealer, or major security-based swap participant”; and (ii) in subclause (II), by inserting “security-based swap dealer, major security-based swap participant,” after “government securities dealer,”; (B) in subparagraph (C), by striking “or government securities dealer” and inserting “government securities dealer, security-based swap dealer, or major security-based swap participant”; and (C) in subparagraph (D), by inserting “security-based swap dealer, major security-based swap participant,” after “government securities dealer,”; and (6) by adding at the end the following: “(65) Eligible contract participant.— The term ‘eligible contract participant’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(66) Major swap participant.— The term ‘major swap participant’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(67) Major security-based swap participant.— “(A) In general.— The term ‘major security-based swap participant’ means any person— “(i) who is not a security-based swap dealer; and “(ii) (I) who maintains a substantial position in security-based swaps for any of the major security-based swap categories, as such categories are determined by the Commission, excluding both positions held for hedging or mitigating commercial risk and positions maintained by any employee benefit plan (or any contract held by such a 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) for the primary purpose of hedging or mitigating any risk directly associated with the operation of the plan; “(II) whose outstanding security-based swaps create substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or “(III) that is a financial entity that— “(aa) is highly leveraged relative to the amount of capital such entity holds and that is not subject to capital requirements established by an appropriate Federal banking agency; and “(bb) maintains a substantial position in outstanding security-based swaps in any major security-based swap category, as such categories are determined by the Commission. “(B) Definition of substantial position.— For purposes of subparagraph (A), the Commission shall define, by rule or regulation, the term ‘substantial position’ at the threshold that the Commission determines to be prudent for the effective monitoring, management, and oversight of entities that are systemically important or can significantly impact the financial system of the United States. In setting the definition under this subparagraph, the Commission shall consider the person’s relative position in uncleared as opposed to cleared security-based swaps and may take into consideration the value and quality of collateral held against counterparty exposures. “(C) Scope of designation.— For purposes of subparagraph (A), a person may be designated as a major security-based swap participant for 1 or more categories of security-based swaps without being classified as a major security-based swap participant for all classes of security-based swaps. “(68) Security-based swap.— “(A) In general.— Except as provided in subparagraph (B), the term ‘security-based swap’ means any agreement, contract, or transaction that— “(i) is a swap, as that term is defined under section 1a of the Commodity Exchange Act (without regard to paragraph (47)(B)(x) of such section); and “(ii) is based on— “(I) an index that is a narrow-based security index, including any interest therein or on the value thereof; “(II) a single security or loan, including any interest therein or on the value thereof; or “(III) the occurrence, nonoccurrence, or extent of the occurrence of an event relating to a single issuer of a security or the issuers of securities in a narrow-based security index, provided that such event directly affects the financial statements, financial condition, or financial obligations of the issuer. “(B) Rule of construction regarding master agreements.— The term ‘security-based swap’ shall be construed to include a master agreement that provides for an agreement, contract, or transaction that is a security-based swap pursuant to subparagraph (A), 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 security-based swap pursuant to subparagraph (A), except that the master agreement shall be considered to be a security-based swap only with respect to each agreement, contract, or transaction under the master agreement that is a security-based swap pursuant to subparagraph (A). “(C) Exclusions.— The term ‘security-based swap’ does not include any agreement, contract, or transaction that meets the definition of a security-based swap only because such agreement, contract, or transaction references, is based upon, or settles through the transfer, delivery, or receipt of an exempted security under paragraph (12), as in effect on the date of enactment of the Futures Trading Act of 1982 (other than any municipal security as defined in paragraph (29) as in effect on the date of enactment of the Futures Trading Act of 1982), unless such agreement, contract, or transaction is of the character of, or is commonly known in the trade as, a put, call, or other option. “(D) Mixed swap.— The term ‘security-based swap’ includes any agreement, contract, or transaction that is as described in subparagraph (A) and also is based on the value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or property of any kind (other than a single security or a narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence (other than an event described in subparagraph (A)(ii)(III)). “(E) Rule of construction regarding use of the term index.— The term ‘index’ means an index or group of securities, including any interest therein or based on the value thereof. “(69) Swap.— The term ‘swap’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(70) Person associated with a security-based swap dealer or major security-based swap participant.— “(A) In general.— The term ‘person associated with a security-based swap dealer or major security-based swap participant’ or ‘associated person of a security-based swap dealer or major security-based swap participant’ means— “(i) any partner, officer, director, or branch manager of such security-based swap dealer or major security-based swap participant (or any person occupying a similar status or performing similar functions); “(ii) any person directly or indirectly controlling, controlled by, or under common control with such security-based swap dealer or major security-based swap participant; or “(iii) any employee of such security-based swap dealer or major security-based swap participant. “(B) Exclusion.— Other than for purposes of section 15F(l)(2), the term ‘person associated with a security-based swap dealer or major security-based swap participant’ or ‘associated person of a security-based swap dealer or major security-based swap participant’ does not include any person associated with a security-based swap dealer or major security-based swap participant whose functions are solely clerical or ministerial. “(71) Security-based swap dealer.— “(A) In general.— The term ‘security-based swap dealer’ means any person who— “(i) holds themself out as a dealer in security-based swaps; “(ii) makes a market in security-based swaps; “(iii) regularly enters into security-based swaps with counterparties as an ordinary course of business for its own account; or “(iv) engages in any activity causing it to be commonly known in the trade as a dealer or market maker in security-based swaps. “(B) Designation by type or class.— A person may be designated as a security-based swap dealer for a single type or single class or category of security-based swap or activities and considered not to be a security-based swap dealer for other types, classes, or categories of security-based swaps or activities. “(C) Exception.— The term ‘security-based swap dealer’ does not include a person that enters into security-based swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of regular business. “(D) De minimis exception.— The Commission shall exempt from designation as a security-based swap dealer an entity that engages in a de minimis quantity of security-based swap dealing in connection with transactions with or on behalf of its customers. The Commission shall promulgate regulations to establish factors with respect to the making of any determination to exempt. “(72) Appropriate federal banking agency.— The term ‘appropriate Federal banking agency’ has the same meaning as in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)). “(73) Board.— The term ‘Board’ means the Board of Governors of the Federal Reserve System. “(74) Prudential regulator.— The term ‘prudential regulator’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(75) Security-based swap data repository.— The term ‘security-based swap data repository’ means any person that collects and maintains information or records with respect to transactions or positions in, or the terms and conditions of, security-based swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for security-based swaps. “(76) Swap dealer.— The term ‘swap dealer’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(77) Security-based swap execution facility.— The term ‘security-based swap execution facility’ means a trading system or platform in which multiple participants have the ability to execute or trade security-based swaps by accepting bids and offers made by multiple participants in the facility or system, through any means of interstate commerce, including any trading facility, that— “(A) facilitates the execution of security-based swaps between persons; and “(B) is not a national securities exchange. “(78) Security-based swap agreement.— “(A) In general.— For purposes of sections 9, 10, 16, 20, and 21A of this Act, and section 17 of the Securities Act of 1933 (15 U.S.C. 77q), the term ‘security-based swap agreement’ means a swap agreement as defined in section 206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) of which a material term is based on the price, yield, value, or volatility of any security or any group or index of securities, or any interest therein. “(B) Exclusions.— The term ‘security-based swap agreement’ does not include any security-based swap.” . (b) Authority To Further Define Terms.— The Securities and Exchange Commission may, by rule, further define— (1) the term “commercial risk”; (2) any other term included in an amendment to the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) made by this subtitle; and (3) the terms “security-based swap”, “security-based swap dealer”, “major security-based swap participant”, and “eligible contract participant”, with regard to security-based swaps (as such terms are defined in the amendments made by subsection (a)) for the purpose of including transactions and entities that have been structured to evade this subtitle or the amendments made by this subtitle. SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAP AGREEMENTS. (a) Repeal.— Sections 206B and 206C of the Gramm-Leach-Bliley Act (Public Law 106–102; 15 U.S.C. 78c note) are repealed. (b) Conforming Amendments to Gramm-Leach-Bliley.— Section 206A(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended in the material preceding paragraph (1), by striking “Except as” and all that follows through “that—” and inserting the following: “Except as provided in subsection (b), as used in this section, the term ‘swap agreement’ means any agreement, contract, or transaction that—”. (c) Conforming Amendments to the Securities Act of 1933.— (1) Section 2A of the Securities Act of 1933 (15 U.S.C. 77b–1) is amended— (A) by striking subsection (a) and reserving that subsection; and (B) by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)” each place that such term appears and inserting “(as defined in section 3(a)(78) of the Securities Exchange Act of 1934)”. (2) Section 17 of the Securities Act of 1933 (15 U.S.C. 77q) is amended— (A) in subsection (a)— (i) by inserting “(including security-based swaps)” after “securities”; and (ii) by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)” and inserting “(as defined in section 3(a)(78) of the Securities Exchange Act)”; and (B) in subsection (d), by striking “206B of the Gramm-Leach-Bliley Act” and inserting “3(a)(78) of the Securities Exchange Act of 1934”. (d) Conforming Amendments to the Securities Exchange Act of 1934.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended— (1) in section 3A (15 U.S.C. 78c–1)— (A) by striking subsection (a) and reserving that subsection; and (B) by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)” each place that the term appears; (2) in section 9 (15 U.S.C. 78i)— (A) in subsection (a), by striking paragraphs (2) through (5) and inserting the following: “(2) To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others. “(3) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or a security-based swap agreement with respect to such security, to induce the purchase or sale of any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security by the circulation or dissemination in the ordinary course of business of information to the effect that the price of any such security will or is likely to rise or fall because of market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security. “(4) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect to such security, to make, regarding any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security, for the purpose of inducing the purchase or sale of such security, such security-based swap, or such security-based swap agreement any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which that person knew or had reasonable ground to believe was so false or misleading. “(5) For a consideration, received directly or indirectly from a broker, dealer, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect to such security, to induce the purchase of any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security by the circulation or dissemination of information to the effect that the price of any such security will or is likely to rise or fall because of the market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security.” ; and (B) in subsection (i), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; (3) in section 10 (15 U.S.C. 78j)— (A) in subsection (b), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act),” each place that term appears; and (B) in the matter following subsection (b), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act), in each place that such terms appear”; (4) in section 15 (15 U.S.C. 78o)— (A) in subsection (c)(1)(A), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act),”; (B) in subparagraphs (B) and (C) of subsection (c)(1), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)” each place that term appears; (C) by redesignating subsection (i), as added by section 303(f) of the Commodity Futures Modernization Act of 2000 (Public Law 106–554; 114 Stat. 2763A–455)), as subsection (j); and (D) in subsection (j), as redesignated by subparagraph (C), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; (5) in section 16 (15 U.S.C. 78p)— (A) in subsection (a)(2)(C), by striking “(as defined in section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note))”; (B) in subsection (a)(3)(B), by inserting “or security-based swaps” after “security-based swap agreement”; (C) in the first sentence of subsection (b), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; (D) in the third sentence of subsection (b), by striking “(as defined in section 206B of the Gramm-Leach Bliley Act)” and inserting “or a security-based swap”; and (E) in subsection (g), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; (6) in section 20 (15 U.S.C. 78t), (A) in subsection (d), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; and (B) in subsection (f), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; and (7) in section 21A (15 U.S.C. 78u–1)— (A) in subsection (a)(1), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”; and (B) in subsection (g), by striking “(as defined in section 206B of the Gramm-Leach-Bliley Act)”. SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934. (a) Clearing for Security-based Swaps.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 3B (as added by section 717 of this Act): “SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS. “(a) In General.— “(1) Standard for clearing.— It shall be unlawful for any person to engage in a security-based swap unless that person submits such security-based swap for clearing to a clearing agency that is registered under this Act or a clearing agency that is exempt from registration under this Act if the security-based swap is required to be cleared. “(2) Open access.— The rules of a clearing agency described in paragraph (1) shall— “(A) prescribe that all security-based swaps submitted to the clearing agency with the same terms and conditions are economically equivalent within the clearing agency and may be offset with each other within the clearing agency; and “(B) provide for non-discriminatory clearing of a security-based swap executed bilaterally or on or through the rules of an unaffiliated national securities exchange or security-based swap execution facility. “(b) Commission Review.— “(1) Commission-initiated review.— “(A) The Commission on an ongoing basis shall review each security-based swap, or any group, category, type, or class of security-based swaps to make a determination that such security-based swap, or group, category, type, or class of security-based swaps should be required to be cleared. “(B) The Commission shall provide at least a 30-day public comment period regarding any determination under subparagraph (A). “(2) Swap submissions.— “(A) A clearing agency shall submit to the Commission each security-based swap, or any group, category, type, or class of security-based swaps that it plans to accept for clearing and provide notice to its members (in a manner to be determined by the Commission) of such submission. “(B) Any security-based swap or group, category, type, or class of security-based swaps listed for clearing by a clearing agency as of the date of enactment of this subsection shall be considered submitted to the Commission. “(C) The Commission shall— “(i) make available to the public any submission received under subparagraphs (A) and (B); “(ii) review each submission made under subparagraphs (A) and (B), and determine whether the security-based swap, or group, category, type, or class of security-based swaps, described in the submission is required to be cleared; and “(iii) provide at least a 30-day public comment period regarding its determination whether the clearing requirement under subsection (a)(1) shall apply to the submission. “(3) Deadline.— The Commission shall make its determination under paragraph (2)(C) not later than 90 days after receiving a submission made under paragraphs (2)(A) and (2)(B), unless the submitting clearing agency agrees to an extension for the time limitation established under this paragraph. “(4) Determination.— “(A) In reviewing a submission made under paragraph (2), the Commission shall review whether the submission is consistent with section 17A. “(B) In reviewing a security-based swap, group of security-based swaps or class of security-based swaps pursuant to paragraph (1) or a submission made under paragraph (2), the Commission shall take into account the following factors: “(i) The existence of significant outstanding notional exposures, trading liquidity and adequate pricing data. “(ii) The availability of rule framework, capacity, operational expertise and resources, and credit support infrastructure to clear the contract on terms that are consistent with the material terms and trading conventions on which the contract is then traded. “(iii) The effect on the mitigation of systemic risk, taking into account the size of the market for such contract and the resources of the clearing agency available to clear the contract. “(iv) The effect on competition, including appropriate fees and charges applied to clearing. “(v) The existence of reasonable legal certainty in the event of the insolvency of the relevant clearing agency or 1 or more of its clearing members with regard to the treatment of customer and security-based swap counterparty positions, funds, and property. “(C) In making a determination under subsection (b)(1) or paragraph (2)(C) that the clearing requirement shall apply, the Commission may require such terms and conditions to the requirement as the Commission determines to be appropriate. “(5) Rules.— Not Deadline. later than 1 year after the date of the enactment of this section, the Commission shall adopt rules for a clearing agency’s submission for review, pursuant to this subsection, of a security-based swap, or a group, category, type, or class of security-based swaps, that it seeks to accept for clearing. Nothing in this paragraph limits the Commission from making a determination under paragraph (2)(C) for security-based swaps described in paragraph (2)(B). “(c) Stay of Clearing Requirement.— “(1) In general.— After making a determination pursuant to subsection (b)(2), the Commission, on application of a counterparty to a security-based swap or on its own initiative, may stay the clearing requirement of subsection (a)(1) until the Commission completes a review of the terms of the security-based swap (or the group, category, type, or class of security-based swaps) and the clearing arrangement. “(2) Deadline.— The Commission shall complete a review undertaken pursuant to paragraph (1) not later than 90 days after issuance of the stay, unless the clearing agency that clears the security-based swap, or group, category, type, or class of security-based swaps, agrees to an extension of the time limitation established under this paragraph. “(3) Determination.— Upon completion of the review undertaken pursuant to paragraph (1), the Commission may— “(A) determine, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, that the security-based swap, or group, category, type, or class of security-based swaps, must be cleared pursuant to this subsection if it finds that such clearing is consistent with subsection (b)(4); or “(B) determine that the clearing requirement of subsection (a)(1) shall not apply to the security-based swap, or group, category, type, or class of security-based swaps. “(4) Rules.— Not Deadline. later than 1 year after the date of the enactment of this section, the Commission shall adopt rules for reviewing, pursuant to this subsection, a clearing agency’s clearing of a security-based swap, or a group, category, type, or class of security-based swaps, that it has accepted for clearing. “(d) Prevention of Evasion.— “(1) In general.— The Regulations. Commission shall prescribe rules under this section (and issue interpretations of rules prescribed under this section), as determined by the Commission to be necessary to prevent evasions of the mandatory clearing requirements under this Act. “(2) Duty of commission to investigate and take certain actions.— To the extent the Commission finds that a particular security-based swap or any group, category, type, or class of security-based swaps that would otherwise be subject to mandatory clearing but no clearing agency has listed the security-based swap or the group, category, type, or class of security-based swaps for clearing, the Commission shall— “(A) investigate the relevant facts and circumstances; “(B) within 30 days issue a public report containing the results of the investigation; and “(C) take such actions as the Commission determines to be necessary and in the public interest, which may include requiring the retaining of adequate margin or capital by parties to the security-based swap or the group, category, type, or class of security-based swaps. “(3) Effect on authority.— Nothing in this subsection— “(A) authorizes the Commission to adopt rules requiring a clearing agency to list for clearing a security-based swap or any group, category, type, or class of security-based swaps if the clearing of the security-based swap or the group, category, type, or class of security-based swaps would threaten the financial integrity of the clearing agency; and “(B) affects the authority of the Commission to enforce the open access provisions of subsection (a)(2) with respect to a security-based swap or the group, category, type, or class of security-based swaps that is listed for clearing by a clearing agency. “(e) Reporting Transition Rules.— Rules adopted by the Commission under this section shall provide for the reporting of data, as follows: “(1) Security-based swaps entered into before the date of the enactment of this section shall be reported to a registered security-based swap data repository or the Commission no later than 180 days after the effective date of this section. “(2) Security-based swaps entered into on or after such date of enactment shall be reported to a registered security-based swap data repository or the Commission no later than the later of— “(A) 90 days after such effective date; or “(B) such other time after entering into the security-based swap as the Commission may prescribe by rule or regulation. “(f) Clearing Transition Rules.— “(1) Security-based swaps entered into before the date of the enactment of this section are exempt from the clearing requirements of this subsection if reported pursuant to subsection (e)(1). “(2) Security-based swaps entered into before application of the clearing requirement pursuant to this section are exempt from the clearing requirements of this section if reported pursuant to subsection (e)(2). “(g) Exceptions.— “(1) In general.— The requirements of subsection (a)(1) shall not apply to a security-based swap if 1 of the counterparties to the security-based swap— “(A) is not a financial entity; “(B) is using security-based swaps to hedge or mitigate commercial risk; and “(C) notifies the Commission, in a manner set forth by the Commission, how it generally meets its financial obligations associated with entering into non-cleared security-based swaps. “(2) Option to clear.— The application of the clearing exception in paragraph (1) is solely at the discretion of the counterparty to the security-based swap that meets the conditions of subparagraphs (A) through (C) of paragraph (1). “(3) Financial entity definition.— “(A) In general.— For the purposes of this subsection, the term ‘financial entity’ means— “(i) a swap dealer; “(ii) a security-based swap dealer; “(iii) a major swap participant; “(iv) a major security-based swap participant; “(v) a commodity pool as defined in section 1a(10) of the Commodity Exchange Act; “(vi) a private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80–b–2(a)); “(vii) an employee benefit 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); “(viii) a person predominantly engaged in activities that are in the business of banking or financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956. “(B) Exclusion.— The Commission shall consider whether to exempt small banks, savings associations, farm credit system institutions, and credit unions, including— “(i) depository institutions with total assets of $10,000,000,000 or less; “(ii) farm credit system institutions with total assets of $10,000,000,000 or less; or “(iii) credit unions with total assets of $10,000,000,000 or less. “(4) Treatment of affiliates.— “(A) 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, acting on behalf of the person and as an agent, uses 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. “(B) Prohibition relating to certain affiliates.— The exception in subparagraph (A) shall not apply if the affiliate is— “(i) a swap dealer; “(ii) a security-based swap dealer; “(iii) a major swap participant; “(iv) a major security-based swap participant; “(v) an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for paragraph (1) or (7) of subsection (c) of that Act (15 U.S.C. 80a–3(c)); “(vi) a commodity pool; or “(vii) a bank holding company with over $50,000,000,000 in consolidated assets. “(C) Transition rule for affiliates.— An affiliate, subsidiary, or a wholly owned entity of a person that qualifies for an exception under subparagraph (A) and is predominantly engaged in providing financing for the purchase or lease of merchandise or manufactured goods of the person shall be exempt from the margin requirement described in section 15F(e) and the clearing requirement described in subsection (a) with regard to security-based swaps entered into to mitigate the risk of the financing activities for not less than a 2-year period beginning on the date of enactment of this subparagraph. “(5) Election of counterparty.— “(A) Security-based swaps required to be cleared.— With respect to any security-based swap that is subject to the mandatory clearing requirement under subsection (a) and entered into by a security-based swap dealer or a major security-based swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty shall have the sole right to select the clearing agency at which the security-based swap will be cleared. “(B) Security-based swaps not required to be cleared.— With respect to any security-based swap that is not subject to the mandatory clearing requirement under subsection (a) and entered into by a security-based swap dealer or a major security-based swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty— “(i) may elect to require clearing of the security-based swap; and “(ii) shall have the sole right to select the clearing agency at which the security-based swap will be cleared. “(6) Abuse of exception.— The Commission may prescribe such rules or issue interpretations of the rules as the Commission determines to be necessary to prevent abuse of the exceptions described in this subsection. The Commission may also request information from those persons claiming the clearing exception as necessary to prevent abuse of the exceptions described in this subsection. “(h) Trade Execution.— “(1) In general.— With respect to transactions involving security-based swaps subject to the clearing requirement of subsection (a)(1), counterparties shall— “(A) execute the transaction on an exchange; or “(B) execute the transaction on a security-based swap execution facility registered under section 3D or a security-based swap execution facility that is exempt from registration under section 3D(e). “(2) Exception.— The requirements of subparagraphs (A) and (B) of paragraph (1) shall not apply if no exchange or security-based swap execution facility makes the security-based swap available to trade or for security-based swap transactions subject to the clearing exception under subsection (g). “(i) Board Approval.— Exemptions from the requirements of this section to clear a security-based swap or execute a security-based swap through a national securities exchange or security-based swap execution facility shall be available to a counterparty that is an issuer of securities that are registered under section 12 or that is required to file reports pursuant to section 15(d), only if an appropriate committee of the issuer’s board or governing body has reviewed and approved the issuer’s decision to enter into security-based swaps that are subject to such exemptions. “(j) Designation of Chief Compliance Officer.— “(1) In general.— Each registered clearing agency shall designate an individual to serve as a chief compliance officer. “(2) Duties.— The chief compliance officer shall— “(A) report directly to the board or to the senior officer of the clearing agency; “(B) in consultation with its board, a body performing a function similar thereto, or the senior officer of the registered clearing agency, resolve any conflicts of interest that may arise; “(C) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(D) ensure compliance with this title (including regulations issued under this title) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; “(E) establish procedures for the remediation of noncompliance issues identified by the compliance officer through any— “(i) compliance office review; “(ii) look-back; “(iii) internal or external audit finding; “(iv) self-reported error; or “(v) validated complaint; and “(F) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(3) Annual reports.— “(A) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(i) the compliance of the registered clearing agency or security-based swap execution facility of the compliance officer with respect to this title (including regulations under this title); and “(ii) each policy and procedure of the registered clearing agency of the compliance officer (including the code of ethics and conflict of interest policies of the registered clearing agency). “(B) Requirements.— A compliance report under subparagraph (A) shall— “(i) accompany each appropriate financial report of the registered clearing agency that is required to be furnished to the Commission pursuant to this section; and “(ii) include a certification that, under penalty of law, the compliance report is accurate and complete.” . (b) Clearing Agency Requirements.— Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q–1) is amended by adding at the end the following: “(g) Registration Requirement.— It shall be unlawful for a clearing agency, unless registered with the Commission, directly or indirectly to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a clearing agency with respect to a security-based swap. “(h) Voluntary Registration.— A person that clears agreements, contracts, or transactions that are not required to be cleared under this title may register with the Commission as a clearing agency. “(i) Standards for Clearing Agencies Clearing Security-based Swap Transactions.— To be registered and to maintain registration as a clearing agency that clears security-based swap transactions, a clearing agency shall comply with such standards as the Commission may establish by rule. In establishing any such standards, and in the exercise of its oversight of such a clearing agency pursuant to this title, the Commission may conform such standards or oversight to reflect evolving United States and international standards. Except where the Commission determines otherwise by rule or regulation, a clearing agency shall have reasonable discretion in establishing the manner in which it complies with any such standards. “(j) Rules.— The Commission shall adopt rules governing persons that are registered as clearing agencies for security-based swaps under this title. “(k) Exemptions.— The Commission may exempt, conditionally or unconditionally, a clearing agency from registration under this section for the clearing of security-based swaps if the Commission determines that the clearing agency is subject to comparable, comprehensive supervision and regulation by the Commodity Futures Trading Commission or the appropriate government authorities in the home country of the agency. Such conditions may include, but are not limited to, requiring that the clearing agency be available for inspection by the Commission and make available all information requested by the Commission. “(l) Existing Depository Institutions and Derivative Clearing Organizations.— “(1) In general.— A depository institution or derivative clearing organization registered with the Commodity Futures Trading Commission under the Commodity Exchange Act that is required to be registered as a clearing agency under this section is deemed to be registered under this section solely for the purpose of clearing security-based swaps to the extent that, before the date of enactment of this subsection— “(A) the depository institution cleared swaps as a multilateral clearing organization; or “(B) the derivative clearing organization cleared swaps pursuant to an exemption from registration as a clearing agency. “(2) Conversion of depository institutions.— A depository institution to which this subsection applies may, by the vote of the shareholders owning not less than 51 percent of the voting interests of the depository institution, be converted into a State corporation, partnership, limited liability company, or similar legal form pursuant to a plan of conversion, if the conversion is not in contravention of applicable State law. “(3) Sharing of information.— The Commodity Futures Trading Commission shall make available to the Commission, upon request, all information determined to be relevant by the Commodity Futures Trading Commission regarding a derivatives clearing organization deemed to be registered with the Commission under paragraph (1). “(m) Modification of Core Principles.— The Commission may conform the core principles established in this section to reflect evolving United States and international standards.” . (c) Security-based Swap Execution Facilities.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 3C (as added by subsection (a) of this section) the following: “SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES. “(a) Registration.— “(1) In general.— No person may operate a facility for the trading or processing of security-based swaps, unless the facility is registered as a security-based swap execution facility or as a national securities exchange under this section. “(2) Dual registration.— Any person that is registered as a security-based swap execution facility under this section shall register with the Commission regardless of whether the person also is registered with the Commodity Futures Trading Commission as a swap execution facility. “(b) Trading and Trade Processing.— A security-based swap execution facility that is registered under subsection (a) may— “(1) make available for trading any security-based swap; and “(2) facilitate trade processing of any security-based swap. “(c) Identification of Facility Used To Trade Security-based Swaps by National Securities Exchanges.— A national securities exchange shall, to the extent that the exchange also operates a security-based swap execution facility and uses the same electronic trade execution system for listing and executing trades of security-based swaps on or through the exchange and the facility, identify whether electronic trading of such security-based swaps is taking place on or through the national securities exchange or the security-based swap execution facility. “(d) Core Principles for Security-based Swap Execution Facilities.— “(1) Compliance with core principles.— “(A) In general.— To be registered, and maintain registration, as a security-based swap execution facility, the security-based swap execution facility shall comply with— “(i) the core principles described in this subsection; and “(ii) any requirement that the Commission may impose by rule or regulation. “(B) Reasonable discretion of security-based swap execution facility.— Unless otherwise determined by the Commission, by rule or regulation, a security-based swap execution facility described in subparagraph (A) shall have reasonable discretion in establishing the manner in which it complies with the core principles described in this subsection. “(2) Compliance with rules.— A security-based swap execution facility shall— “(A) establish and enforce compliance with any rule established by such security-based swap execution facility, including— “(i) the terms and conditions of the security-based swaps traded or processed on or through the facility; and “(ii) any limitation on access to the facility; “(B) establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means— “(i) to provide market participants with impartial access to the market; and “(ii) to capture information that may be used in establishing whether rule violations have occurred; and “(C) establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility, including block trades. “(3) Security-based swaps not readily susceptible to manipulation.— The security-based swap execution facility shall permit trading only in security-based swaps that are not readily susceptible to manipulation. “(4) Monitoring of trading and trade processing.— The security-based swap execution facility shall— “(A) establish and enforce rules or terms and conditions defining, or specifications detailing— “(i) trading procedures to be used in entering and executing orders traded on or through the facilities of the security-based swap execution facility; and “(ii) procedures for trade processing of security-based swaps on or through the facilities of the security-based swap execution facility; and “(B) monitor trading in security-based swaps to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions. “(5) Ability to obtain information.— The security-based swap execution facility shall— “(A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this subsection; “(B) provide the information to the Commission on request; and “(C) have the capacity to carry out such international information-sharing agreements as the Commission may require. “(6) Financial integrity of transactions.— The Regulations. Procedures. security-based swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of security-based swaps entered on or through the facilities of the security-based swap execution facility, including the clearance and settlement of security-based swaps pursuant to section 3C(a)(1). “(7) Emergency authority.— The Regulations. security-based swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, as is necessary and appropriate, including the authority to liquidate or transfer open positions in any security-based swap or to suspend or curtail trading in a security-based swap. “(8) Timely publication of trading information.— “(A) In general.— The security-based swap execution facility shall make public timely information on price, trading volume, and other trading data on security-based swaps to the extent prescribed by the Commission. “(B) Capacity of security-based swap execution facility.— The security-based swap execution facility shall be required to have the capacity to electronically capture and transmit and disseminate trade information with respect to transactions executed on or through the facility. “(9) Recordkeeping and reporting.— “(A) In general.— A security-based swap execution facility shall— “(i) maintain records of all activities relating to the business of the facility, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years; and “(ii) report to the Commission, in a form and manner acceptable to the Commission, such information as the Commission determines to be necessary or appropriate for the Commission to perform the duties of the Commission under this title. “(B) Requirements.— The Commission shall adopt data collection and reporting requirements for security-based swap execution facilities that are comparable to corresponding requirements for clearing agencies and security-based swap data repositories. “(10) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this title, the security-based swap execution facility shall not— “(A) adopt any rules or taking any actions that result in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on trading or clearing. “(11) Conflicts of interest.— The security-based swap execution facility shall— “(A) establish and enforce rules to minimize conflicts of interest in its decision-making process; and “(B) establish a process for resolving the conflicts of interest. “(12) Financial resources.— “(A) In general.— The security-based swap execution facility shall have adequate financial, operational, and managerial resources to discharge each responsibility of the security-based swap execution facility, as determined by the Commission. “(B) Determination of resource adequacy.— The financial resources of a security-based swap execution facility shall be considered to be adequate if the value of the financial resources— “(i) enables the organization to meet its financial obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and “(ii) exceeds the total amount that would enable the security-based swap execution facility to cover the operating costs of the security-based swap execution facility for a 1-year period, as calculated on a rolling basis. “(13) System safeguards.— The security-based swap execution facility shall— “(A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that— “(i) are reliable and secure; and “(ii) have adequate scalable capacity; “(B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for— “(i) the timely recovery and resumption of operations; and “(ii) the fulfillment of the responsibilities and obligations of the security-based swap execution facility; and “(C) periodically conduct tests to verify that the backup resources of the security-based swap execution facility are sufficient to ensure continued— “(i) order processing and trade matching; “(ii) price reporting; “(iii) market surveillance; and “(iv) maintenance of a comprehensive and accurate audit trail. “(14) Designation of chief compliance officer.— “(A) In general.— Each security-based swap execution facility shall designate an individual to serve as a chief compliance officer. “(B) Duties.— The chief compliance officer shall— “(i) report directly to the board or to the senior officer of the facility; “(ii) review compliance with the core principles in this subsection; “(iii) in consultation with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, resolve any conflicts of interest that may arise; “(iv) be responsible for establishing and administering the policies and procedures required to be established pursuant to this section; “(v) ensure compliance with this title and the rules and regulations issued under this title, including rules prescribed by the Commission pursuant to this section; “(vi) establish procedures for the remediation of noncompliance issues found during— “(I) compliance office reviews; “(II) look backs; “(III) internal or external audit findings; “(IV) self-reported errors; or “(V) through validated complaints; and “(vii) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(C) Annual reports.— “(i) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(I) the compliance of the security-based swap execution facility with this title; and “(II) the policies and procedures, including the code of ethics and conflict of interest policies, of the security-based security-based swap execution facility. “(ii) Requirements.— The chief compliance officer shall— “(I) submit each report described in clause (i) with the appropriate financial report of the security-based swap execution facility that is required to be submitted to the Commission pursuant to this section; and “(II) include in the report a certification that, under penalty of law, the report is accurate and complete. “(e) Exemptions.— The Commission may exempt, conditionally or unconditionally, a security-based swap execution facility from registration under this section if the Commission finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Commodity Futures Trading Commission. “(f) Rules.— The Commission shall prescribe rules governing the regulation of security-based swap execution facilities under this section.” . (d) Segregation of Assets Held as Collateral in Security-based Swap Transactions.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 3D (as added by subsection (b)) the following: “SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED SWAP TRANSACTIONS. “(a) Registration Requirement.— It shall be unlawful for any person to accept any money, securities, or property (or to extend any credit in lieu of money, securities, or property) from, for, or on behalf of a security-based swaps customer to margin, guarantee, or secure a security-based swap cleared by or through a clearing agency (including money, securities, or property accruing to the customer as the result of such a security-based swap), unless the person shall have registered under this title with the Commission as a broker, dealer, or security-based swap dealer, and the registration shall not have expired nor been suspended nor revoked. “(b) Cleared Security-based Swaps.— “(1) Segregation required.— A broker, dealer, or security-based swap dealer shall treat and deal with all money, securities, and property of any security-based swaps customer received to margin, guarantee, or secure a security-based swap cleared by or though a clearing agency (including money, securities, or property accruing to the security-based swaps customer as the result of such a security-based swap) as belonging to the security-based swaps customer. “(2) Commingling prohibited.— Money, securities, and property of a security-based swaps customer described in paragraph (1) shall be separately accounted for and shall not be commingled with the funds of the broker, dealer, or security-based swap dealer or be used to margin, secure, or guarantee any trades or contracts of any security-based swaps customer or person other than the person for whom the same are held. “(c) Exceptions.— “(1) Use of funds.— “(A) In general.— Notwithstanding subsection (b), money, securities, and property of a security-based swaps customer of a broker, dealer, or security-based swap dealer described in subsection (b) may, for convenience, be commingled and deposited in the same 1 or more accounts with any bank or trust company or with a clearing agency. “(B) Withdrawal.— Notwithstanding subsection (b), such share of the money, securities, and property described in subparagraph (A) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a cleared security-based swap with a clearing agency, or with any member of the clearing agency, may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the cleared security-based swap. “(2) Commission action.— Notwithstanding subsection (b), in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, securities, or property of the security-based swaps customer of a broker, dealer, or security-based swap dealer described in subsection (b) may be commingled and deposited as provided in this section with any other money, securities, or property received by the broker, dealer, or security-based swap dealer and required by the Commission to be separately accounted for and treated and dealt with as belonging to the security-based swaps customer of the broker, dealer, or security-based swap dealer. “(d) Permitted Investments.— Money described in subsection (b) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe. “(e) Prohibition.— It shall be unlawful for any person, including any clearing agency and any depository institution, that has received any money, securities, or property for deposit in a separate account or accounts as provided in subsection (b) to hold, dispose of, or use any such money, securities, or property as belonging to the depositing broker, dealer, or security-based swap dealer or any person other than the swaps customer of the broker, dealer, or security-based swap dealer. “(f) Segregation Requirements for Uncleared Security-based Swaps.— “(1) Segregation of assets held as collateral in uncleared security-based swap transactions.— “(A) Notification.— A security-based swap dealer or major security-based swap participant shall be required to notify the counterparty of the security-based swap dealer or major security-based swap participant at the beginning of a security-based swap transaction that the counterparty has the right to require segregation of the funds of other property supplied to margin, guarantee, or secure the obligations of the counterparty. “(B) Segregation and maintenance of funds.— At the request of a counterparty to a security-based swap that provides funds or other property to a security-based swap dealer or major security-based swap participant to margin, guarantee, or secure the obligations of the counterparty, the security-based swap dealer or major security-based swap participant shall— “(i) segregate the funds or other property for the benefit of the counterparty; and “(ii) in accordance with such rules and regulations as the Commission may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the security-based swap dealer or major security-based swap participant. “(2) Applicability.— The requirements described in paragraph (1) shall— “(A) apply only to a security-based swap between a counterparty and a security-based swap dealer or major security-based swap participant that is not submitted for clearing to a clearing agency; and “(B) (i) not apply to variation margin payments; or “(ii) not preclude any commercial arrangement regarding— “(I) the investment of segregated funds or other property that may only be invested in such investments as the Commission may permit by rule or regulation; and “(II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property. “(3) Use of independent third-party custodians.— The segregated account described in paragraph (1) shall be— “(A) carried by an independent third-party custodian; and “(B) designated as a segregated account for and on behalf of the counterparty. “(4) Reporting requirement.— If the counterparty does not choose to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the security-based swap dealer or major security-based swap participant shall report to the counterparty of the security-based swap dealer or major security-based swap participant on a quarterly basis that the back office procedures of the security-based swap dealer or major security-based swap participant relating to margin and collateral requirements are in compliance with the agreement of the counterparties. “(g) Bankruptcy.— A security-based swap, as defined in section 3(a)(68) shall be considered to be a security as such term is used in section 101(53A)(B) and subchapter III of title 11, United States Code. An account that holds a security-based swap, other than a portfolio margining account referred to in section 15(c)(3)(C) shall be considered to be a securities account, as that term is defined in section 741 of title 11, United States Code. Applicability. The definitions of the terms ‘purchase’ and ‘sale’ in section 3(a)(13) and (14) shall be applied to the terms ‘purchase’ and ‘sale’, as used in section 741 of title 11, United States Code. The term ‘customer’, as defined in section 741 of title 11, United States Code, excludes any person, to the extent that such person has a claim based on any open repurchase agreement, open reverse repurchase agreement, stock borrowed agreement, non-cleared option, or non-cleared security-based swap except to the extent of any margin delivered to or by the customer with respect to which there is a customer protection requirement under section 15(c)(3) or a segregation requirement.” . (e) Trading in Security-based Swaps.— Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end the following: “(l) Security-based Swaps.— It shall be unlawful for any person to effect a transaction in a security-based swap with or for a person that is not an eligible contract participant, unless such transaction is effected on a national securities exchange registered pursuant to subsection (b).” . (f) Additions of Security-based Swaps to Certain Enforcement Provisions.— Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78i(b)) is amended by striking paragraphs (1) through (3) and inserting the following: “(1) any transaction in connection with any security whereby any party to such transaction acquires— “(A) any put, call, straddle, or other option or privilege of buying the security from or selling the security to another without being bound to do so; “(B) any security futures product on the security; or “(C) any security-based swap involving the security or the issuer of the security; “(2) any transaction in connection with any security with relation to which such person has, directly or indirectly, any interest in any— “(A) such put, call, straddle, option, or privilege; “(B) such security futures product; or “(C) such security-based swap; or “(3) any transaction in any security for the account of any person who such person has reason to believe has, and who actually has, directly or indirectly, any interest in any— “(A) such put, call, straddle, option, or privilege; “(B) such security futures product with relation to such security; or “(C) any security-based swap involving such security or the issuer of such security.” . (g) Rulemaking Authority To Prevent Fraud, Manipulation and Deceptive Conduct in Security-based Swaps.— Section 9 of the Securities Exchange Act of 1934 (15 U.S.C. 78i) is amended by adding at the end the following: “(j) It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange, to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security-based swap, in connection with which such person engages in any fraudulent, deceptive, or manipulative act or practice, makes any fictitious quotation, or engages in any transaction, practice, or course of business which operates as a fraud or deceit upon any person. Regulations. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such transactions, acts, practices, and courses of business as are fraudulent, deceptive, or manipulative, and such quotations as are fictitious.” . (h) Position Limits and Position Accountability for Security-based Swaps.— The Securities Exchange Act of 1934 is amended by inserting after section 10A (15 U.S.C. 78j–1) the following: “SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-BASED SWAPS AND LARGE TRADER REPORTING. “(a) Position Limits.— Fraud. Regulations. As a means reasonably designed to prevent fraud and manipulation, the Commission shall, by rule or regulation, as necessary or appropriate in the public interest or for the protection of investors, establish limits (including related hedge exemption provisions) on the size of positions in any security-based swap that may be held by any person. In establishing such limits, the Commission may require any person to aggregate positions in— “(1) any security-based swap and any security or loan or group of securities or loans on which such security-based swap is based, which such security-based swap references, or to which such security-based swap is related as described in paragraph (68) of section 3(a), and any other instrument relating to such security or loan or group or index of securities or loans; or “(2) any security-based swap and— “(A) any security or group or index of securities, the price, yield, value, or volatility of which, or of which any interest therein, is the basis for a material term of such security-based swap as described in paragraph (68) of section 3(a); and “(B) any other instrument relating to the same security or group or index of securities described under subparagraph (A). “(b) Exemptions.— The Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person or class of persons, any security-based swap or class of security-based swaps, or any transaction or class of transactions from any requirement the Commission may establish under this section with respect to position limits. “(c) SRO Rules.— “(1) In general.— As a means reasonably designed to prevent fraud or manipulation, the Commission, by rule, regulation, or order, as necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title, may direct a self-regulatory organization— “(A) to adopt rules regarding the size of positions in any security-based swap that may be held by— “(i) any member of such self-regulatory organization; or “(ii) any person for whom a member of such self-regulatory organization effects transactions in such security-based swap; and “(B) to adopt rules reasonably designed to ensure compliance with requirements prescribed by the Commission under this subsection. “(2) Requirement to aggregate positions.— In establishing the limits under paragraph (1), the self-regulatory organization may require such member or person to aggregate positions in— “(A) any security-based swap and any security or loan or group or narrow-based security index of securities or loans on which such security-based swap is based, which such security-based swap references, or to which such security-based swap is related as described in section 3(a)(68), and any other instrument relating to such security or loan or group or narrow-based security index of securities or loans; or “(B) (i) any security-based swap; and “(ii) any security-based swap and any other instrument relating to the same security or group or narrow-based security index of securities. “(d) Large Trader Reporting.— The Commission, by rule or regulation, may require any person that effects transactions for such person’s own account or the account of others in any securities-based swap or uncleared security-based swap and any security or loan or group or narrow-based security index of securities or loans as set forth in paragraphs (1) and (2) of subsection (a) under this section to report such information as the Commission may prescribe regarding any position or positions in any security-based swap or uncleared security-based swap and any security or loan or group or narrow-based security index of securities or loans and any other instrument relating to such security or loan or group or narrow-based security index of securities or loans as set forth in paragraphs (1) and (2) of subsection (a) under this section.” . (i) Public Reporting and Repositories for Security-based Swaps.— Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following: “(m) Public Availability of Security-based Swap Transaction Data.— “(1) In general.— “(A) Definition of real-time public reporting.— In this paragraph, the term ‘real-time public reporting’ means to report data relating to a security-based swap transaction, including price and volume, as soon as technologically practicable after the time at which the security-based swap transaction has been executed. “(B) Purpose.— The purpose of this subsection is to authorize the Commission to make security-based swap transaction and pricing data available to the public in such form and at such times as the Commission determines appropriate to enhance price discovery. “(C) General rule.— The Commission is authorized to provide by rule for the public availability of security-based swap transaction, volume, and pricing data as follows: “(i) With respect to those security-based swaps that are subject to the mandatory clearing requirement described in section 3C(a)(1) (including those security-based swaps that are excepted from the requirement pursuant to section 3C(g)), the Commission shall require real-time public reporting for such transactions. “(ii) With respect to those security-based swaps that are not subject to the mandatory clearing requirement described in section 3C(a)(1), but are cleared at a registered clearing agency, the Commission shall require real-time public reporting for such transactions. “(iii) With respect to security-based swaps that are not cleared at a registered clearing agency and which are reported to a security-based swap data repository or the Commission under section 3C(a)(6), the Commission shall require real-time public reporting for such transactions, in a manner that does not disclose the business transactions and market positions of any person. “(iv) With respect to security-based swaps that are determined to be required to be cleared under section 3C(b) but are not cleared, the Commission shall require real-time public reporting for such transactions. “(D) Registered entities and public reporting.— The Commission may require registered entities to publicly disseminate the security-based swap transaction and pricing data required to be reported under this paragraph. “(E) Rulemaking required.— With respect to the rule providing for the public availability of transaction and pricing data for security-based swaps described in clauses (i) and (ii) of subparagraph (C), the rule promulgated by the Commission shall contain provisions— “(i) to ensure such information does not identify the participants; “(ii) Criteria. to specify the criteria for determining what constitutes a large notional security-based swap transaction (block trade) for particular markets and contracts; “(iii) to specify the appropriate time delay for reporting large notional security-based swap transactions (block trades) to the public; and “(iv) that take into account whether the public disclosure will materially reduce market liquidity. “(F) Timeliness of reporting.— Parties to a security-based swap (including agents of the parties to a security-based swap) shall be responsible for reporting security-based swap transaction information to the appropriate registered entity in a timely manner as may be prescribed by the Commission. “(G) Reporting of swaps to registered security-based swap data repositories.— Each security-based swap (whether cleared or uncleared) shall be reported to a registered security-based swap data repository. “(H) Registration of clearing agencies.— A clearing agency may register as a security-based swap data repository. “(2) Semiannual and annual public reporting of aggregate security-based swap data.— “(A) In general.— In accordance with subparagraph (B), the Commission shall issue a written report on a semiannual and annual basis to make available to the public information relating to— “(i) the trading and clearing in the major security-based swap categories; and “(ii) the market participants and developments in new products. “(B) Use; consultation.— In preparing a report under subparagraph (A), the Commission shall— “(i) use information from security-based swap data repositories and clearing agencies; and “(ii) consult with the Office of the Comptroller of the Currency, the Bank for International Settlements, and such other regulatory bodies as may be necessary. “(C) Authority of commission.— The Commission may, by rule, regulation, or order, delegate the public reporting responsibilities of the Commission under this paragraph in accordance with such terms and conditions as the Commission determines to be appropriate and in the public interest. “(n) Security-based Swap Data Repositories.— “(1) Registration requirement.— It shall be unlawful for any person, unless registered with the Commission, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a security-based swap data repository. “(2) Inspection and examination.— Each registered security-based swap data repository shall be subject to inspection and examination by any representative of the Commission. “(3) Compliance with core principles.— “(A) In general.— To be registered, and maintain registration, as a security-based swap data repository, the security-based swap data repository shall comply with— “(i) the requirements and core principles described in this subsection; and “(ii) any requirement that the Commission may impose by rule or regulation. “(B) Reasonable discretion of security-based swap data repository.— Unless otherwise determined by the Commission, by rule or regulation, a security-based swap data repository described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the security-based swap data repository complies with the core principles described in this subsection. “(4) Standard setting.— “(A) Data identification.— “(i) In general.— In accordance with clause (ii), the Commission shall prescribe standards that specify the data elements for each security-based swap that shall be collected and maintained by each registered security-based swap data repository. “(ii) Requirement.— In carrying out clause (i), the Commission shall prescribe consistent data element standards applicable to registered entities and reporting counterparties. “(B) Data collection and maintenance.— The Commission shall prescribe data collection and data maintenance standards for security-based swap data repositories. “(C) Comparability.— The standards prescribed by the Commission under this subsection shall be comparable to the data standards imposed by the Commission on clearing agencies in connection with their clearing of security-based swaps. “(5) Duties.— A security-based swap data repository shall— “(A) accept data prescribed by the Commission for each security-based swap under subsection (b); “(B) confirm with both counterparties to the security-based swap the accuracy of the data that was submitted; “(C) maintain the data described in subparagraph (A) in such form, in such manner, and for such period as may be required by the Commission; “(D) (i) provide direct electronic access to the Commission (or any designee of the Commission, including another registered entity); and “(ii) provide the information described in subparagraph (A) in such form and at such frequency as the Commission may require to comply with the public reporting requirements set forth in subsection (m); “(E) at the direction of the Commission, establish automated systems for monitoring, screening, and analyzing security-based swap data; “(F) maintain the privacy of any and all security-based swap transaction information that the security-based swap data repository receives from a security-based swap dealer, counterparty, or any other registered entity; and “(G) on a confidential basis pursuant to section 24, upon request, and after notifying the Commission of the request, make available all data obtained by the security-based swap data repository, including individual counterparty trade and position data, to— “(i) each appropriate prudential regulator; “(ii) the Financial Stability Oversight Council; “(iii) the Commodity Futures Trading Commission; “(iv) the Department of Justice; and “(v) any other person that the Commission determines to be appropriate, including— “(I) foreign financial supervisors (including foreign futures authorities); “(II) foreign central banks; and “(III) foreign ministries. “(H) Confidentiality and indemnification agreement.— Before the security-based swap data repository may share information with any entity described in subparagraph (G)— “(i) the security-based swap data repository shall receive a written agreement from each entity stating that the entity shall abide by the confidentiality requirements described in section 24 relating to the information on security-based swap transactions that is provided; and “(ii) each entity shall agree to indemnify the security-based swap data repository and the Commission for any expenses arising from litigation relating to the information provided under section 24. “(6) Designation of chief compliance officer.— “(A) In general.— Each security-based swap data repository shall designate an individual to serve as a chief compliance officer. “(B) Duties.— The chief compliance officer shall— “(i) report directly to the board or to the senior officer of the security-based swap data repository; “(ii) review the compliance of the security-based swap data repository with respect to the requirements and core principles described in this subsection; “(iii) in consultation with the board of the security-based swap data repository, a body performing a function similar to the board of the security-based swap data repository, or the senior officer of the security-based swap data repository, resolve any conflicts of interest that may arise; “(iv) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(v) ensure compliance with this title (including regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; “(vi) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any— “(I) compliance office review; “(II) look-back; “(III) internal or external audit finding; “(IV) self-reported error; or “(V) validated complaint; and “(vii) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(C) Annual reports.— “(i) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(I) the compliance of the security-based swap data repository of the chief compliance officer with respect to this title (including regulations); and “(II) each policy and procedure of the security-based swap data repository of the chief compliance officer (including the code of ethics and conflict of interest policies of the security-based swap data repository). “(ii) Requirements.— A compliance report under clause (i) shall— “(I) accompany each appropriate financial report of the security-based swap data repository that is required to be furnished to the Commission pursuant to this section; and “(II) include a certification that, under penalty of law, the compliance report is accurate and complete. “(7) Core principles applicable to security-based swap data repositories.— “(A) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this title, the swap data repository shall not— “(i) adopt any rule or take any action that results in any unreasonable restraint of trade; or “(ii) impose any material anticompetitive burden on the trading, clearing, or reporting of transactions. “(B) Governance arrangements.— Each security-based swap data repository shall establish governance arrangements that are transparent— “(i) to fulfill public interest requirements; and “(ii) to support the objectives of the Federal Government, owners, and participants. “(C) Conflicts of interest.— Each security-based swap data repository shall— “(i) establish and enforce rules to minimize conflicts of interest in the decision-making process of the security-based swap data repository; and “(ii) establish a process for resolving any conflicts of interest described in clause (i). “(D) Additional duties developed by commission.— “(i) In general.— The Commission may develop 1 or more additional duties applicable to security-based swap data repositories. “(ii) Consideration of evolving standards.— In developing additional duties under subparagraph (A), the Commission may take into consideration any evolving standard of the United States or the international community. “(iii) Additional duties for commission designees.— The Commission shall establish additional duties for any registrant described in section 13(m)(2)(C) in order to minimize conflicts of interest, protect data, ensure compliance, and guarantee the safety and security of the security-based swap data repository. “(8) Required registration for security-based swap data repositories.— Any person that is required to be registered as a security-based swap data repository under this subsection shall register with the Commission, regardless of whether that person is also licensed under the Commodity Exchange Act as a swap data repository. “(9) Rules.— The Commission shall adopt rules governing persons that are registered under this subsection.” . SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS. (a) In General.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 15E (15 U.S.C. 78o–7) the following: “SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS. “(a) Registration.— “(1) Security-based swap dealers.— It shall be unlawful for any person to act as a security-based swap dealer unless the person is registered as a security-based swap dealer with the Commission. “(2) Major security-based swap participants.— It shall be unlawful for any person to act as a major security-based swap participant unless the person is registered as a major security-based swap participant with the Commission. “(b) Requirements.— “(1) In general.— A person shall register as a security-based swap dealer or major security-based swap participant by filing a registration application with the Commission. “(2) Contents.— “(A) In general.— The application shall be made in such form and manner as prescribed by the Commission, and shall contain such information, as the Commission considers necessary concerning the business in which the applicant is or will be engaged. “(B) Continual reporting.— A person that is registered as a security-based swap dealer or major security-based swap participant shall continue to submit to the Commission reports that contain such information pertaining to the business of the person as the Commission may require. “(3) Expiration.— Each registration under this section shall expire at such time as the Commission may prescribe by rule or regulation. “(4) Rules.— Except as provided in subsections (d) and (e), the Commission may prescribe rules applicable to security-based swap dealers and major security-based swap participants, including rules that limit the activities of non-bank security-based swap dealers and major security-based swap participants. “(5) Transition.— Deadline. Not later than 1 year after the date of enactment of the Wall Street Transparency and Accountability Act of 2010, the Commission shall issue rules under this section to provide for the registration of security-based swap dealers and major security-based swap participants. “(6) Statutory disqualification.— Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, it shall be unlawful for a security-based swap dealer or a major security-based swap participant to permit any person associated with a security-based swap dealer or a major security-based swap participant who is subject to a statutory disqualification to effect or be involved in effecting security-based swaps on behalf of the security-based swap dealer or major security-based swap participant, if the security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of the statutory disqualification. “(c) Dual Registration.— “(1) Security-based swap dealer.— Any person that is required to be registered as a security-based swap dealer under this section shall register with the Commission, regardless of whether the person also is registered with the Commodity Futures Trading Commission as a swap dealer. “(2) Major security-based swap participant.— Any person that is required to be registered as a major security-based swap participant under this section shall register with the Commission, regardless of whether the person also is registered with the Commodity Futures Trading Commission as a major swap participant. “(d) Rulemaking.— “(1) In general.— The Commission shall adopt rules for persons that are registered as security-based swap dealers or major security-based swap participants under this section. “(2) Exception for prudential requirements.— “(A) In general.— The Commission may not prescribe rules imposing prudential requirements on security-based swap dealers or major security-based swap participants for which there is a prudential regulator. “(B) Applicability.— Subparagraph (A) does not limit the authority of the Commission to prescribe rules as directed under this section. “(e) Capital and Margin Requirements.— “(1) In general.— “(A) Security-based swap dealers and major security-based swap participants that are banks.— Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the prudential regulator shall by rule or regulation prescribe under paragraph (2)(A). “(B) Security-based swap dealers and major security-based swap participants that are not banks.— Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation prescribe under paragraph (2)(B). “(2) Rules.— “(A) Security-based swap dealers and major security-based swap participants that are banks.— The prudential regulators, in consultation with the Commission and the Commodity Futures Trading Commission, shall adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is a prudential regulator imposing— “(i) capital requirements; and “(ii) both initial and variation margin requirements on all security-based swaps that are not cleared by a registered clearing agency. “(B) Security-based swap dealers and major security-based swap participants that are not banks.— The Commission shall adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap participant, for which there is not a prudential regulator imposing— “(i) capital requirements; and “(ii) both initial and variation margin requirements on all swaps that are not cleared by a registered clearing agency. “(C) Capital.— In setting capital requirements for a person that is designated as a security-based swap dealer or a major security-based swap participant for a single type or single class or category of security-based swap or activities, the prudential regulator and the Commission shall take into account the risks associated with other types of security-based swaps or classes of security-based swaps or categories of security-based swaps engaged in and the other activities conducted by that person that are not otherwise subject to regulation applicable to that person by virtue of the status of the person. “(3) Standards for capital and margin.— “(A) In general.— To offset the greater risk to the security-based swap dealer or major security-based swap participant and the financial system arising from the use of security-based swaps that are not cleared, the requirements imposed under paragraph (2) shall — “(i) help ensure the safety and soundness of the security-based swap dealer or major security-based swap participant; and “(ii) be appropriate for the risk associated with the non-cleared security-based swaps held as a security-based swap dealer or major security-based swap participant. “(B) Rule of construction.— “(i) In general.— Nothing in this section shall limit, or be construed to limit, the authority— “(I) of the Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) (except for section 15(b)(11) thereof) in accordance with section 15(c)(3); or “(II) of the Commodity Futures Trading Commission to set financial responsibility rules for a futures commission merchant or introducing broker registered pursuant to section 4f(a) of the Commodity Exchange Act (except for section 4f(a)(3) thereof) in accordance with section 4f(b) of the Commodity Exchange Act. “(ii) Futures commission merchants and other dealers.— A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this title or the Commodity Exchange Act. “(C) Margin requirements.— In prescribing margin requirements under this subsection, the prudential regulator with respect to security-based swap dealers and major security-based swap participants that are depository institutions, and the Commission with respect to security-based swap dealers and major security-based swap participants that are not depository institutions shall permit the use of noncash collateral, as the regulator or the Commission determines to be consistent with— “(i) preserving the financial integrity of markets trading security-based swaps; and “(ii) preserving the stability of the United States financial system. “(D) Comparability of capital and margin requirements.— “(i) In general.— Deadline. Consultation. The prudential regulators, the Commission, and the Securities and Exchange Commission shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin requirements. “(ii) Comparability.— The entities described in clause (i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation margin requirements, including the use of noncash collateral, for— “(I) security-based swap dealers; and “(II) major security-based swap participants. “(f) Reporting and Recordkeeping.— “(1) In general.— Each registered security-based swap dealer and major security-based swap participant— “(A) shall make such reports as are required by the Commission, by rule or regulation, regarding the transactions and positions and financial condition of the registered security-based swap dealer or major security-based swap participant; “(B) (i) for which there is a prudential regulator, shall keep books and records of all activities related to the business as a security-based swap dealer or major security-based swap participant in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and “(ii) for which there is no prudential regulator, shall keep books and records in such form and manner and for such period as may be prescribed by the Commission by rule or regulation; and “(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission. “(2) Rules.— The Commission shall adopt rules governing reporting and recordkeeping for security-based swap dealers and major security-based swap participants. “(g) Daily Trading Records.— “(1) In general.— Each registered security-based swap dealer and major security-based swap participant shall maintain daily trading records of the security-based swaps of the registered security-based swap dealer and major security-based swap participant and all related records (including related cash or forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls, for such period as may be required by the Commission by rule or regulation. “(2) Information requirements.— The daily trading records shall include such information as the Commission shall require by rule or regulation. “(3) Counterparty records.— Each registered security-based swap dealer and major security-based swap participant shall maintain daily trading records for each counterparty in a manner and form that is identifiable with each security-based swap transaction. “(4) Audit trail.— Each registered security-based swap dealer and major security-based swap participant shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions. “(5) Rules.— The Commission shall adopt rules governing daily trading records for security-based swap dealers and major security-based swap participants. “(h) Business Conduct Standards.— “(1) In general.— Each registered security-based swap dealer and major security-based swap participant shall conform with such business conduct standards as prescribed in paragraph (3) and as may be prescribed by the Commission by rule or regulation that relate to— “(A) fraud, manipulation, and other abusive practices involving security-based swaps (including security-based swaps that are offered but not entered into); “(B) diligent supervision of the business of the registered security-based swap dealer and major security-based swap participant; “(C) adherence to all applicable position limits; and “(D) such other matters as the Commission determines to be appropriate. “(2) Responsibilities with respect to special entities.— “(A) Advising special entities.— A security-based swap dealer or major security-based swap participant that acts as an advisor to special entity regarding a security-based swap shall comply with the requirements of paragraph (4) with respect to such special entity. “(B) Entering of security-based swaps with respect to special entities.— A security-based swap dealer that enters into or offers to enter into security-based swap with a special entity shall comply with the requirements of paragraph (5) with respect to such special entity. “(C) Special entity defined.— For purposes of this subsection, the term ‘special entity’ means— “(i) a Federal agency; “(ii) a State, State agency, city, county, municipality, or other political subdivision of a State or; “(iii) any employee benefit plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002); “(iv) any governmental plan, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002); or “(v) any endowment, including an endowment that is an organization described in section 501(c)(3) of the Internal Revenue Code of 1986. “(3) Business conduct requirements.— Business conduct requirements adopted by the Commission shall— “(A) establish a duty for a security-based swap dealer or major security-based swap participant to verify that any counterparty meets the eligibility standards for an eligible contract participant; “(B) require disclosure by the security-based swap dealer or major security-based swap participant to any counterparty to the transaction (other than a security-based swap dealer, major security-based swap participant, security-based swap dealer, or major security-based swap participant) of— “(i) information about the material risks and characteristics of the security-based swap; “(ii) any material incentives or conflicts of interest that the security-based swap dealer or major security-based swap participant may have in connection with the security-based swap; and “(iii) (I) for cleared security-based swaps, upon the request of the counterparty, receipt of the daily mark of the transaction from the appropriate derivatives clearing organization; and “(II) for uncleared security-based swaps, receipt of the daily mark of the transaction from the security-based swap dealer or the major security-based swap participant; “(C) establish a duty for a security-based swap dealer or major security-based swap participant to communicate in a fair and balanced manner based on principles of fair dealing and good faith; and “(D) establish such other standards and requirements as the Commission may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this Act. “(4) Special requirements for security-based swap dealers acting as advisors.— “(A) In general.— It shall be unlawful for a security-based swap dealer or major security-based swap participant— “(i) to employ any device, scheme, or artifice to defraud any special entity or prospective customer who is a special entity; “(ii) to engage in any transaction, practice, or course of business that operates as a fraud or deceit on any special entity or prospective customer who is a special entity; or “(iii) to engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative. “(B) Duty.— Any security-based swap dealer that acts as an advisor to a special entity shall have a duty to act in the best interests of the special entity. “(C) Reasonable efforts.— Any security-based swap dealer that acts as an advisor to a special entity shall make reasonable efforts to obtain such information as is necessary to make a reasonable determination that any security-based swap recommended by the security-based swap dealer is in the best interests of the special entity, including information relating to— “(i) the financial status of the special entity; “(ii) the tax status of the special entity; “(iii) the investment or financing objectives of the special entity; and “(iv) any other information that the Commission may prescribe by rule or regulation. “(5) Special requirements for security-based swap dealers as counterparties to special entities.— “(A) In general.— Any security-based swap dealer or major security-based swap participant that offers to or enters into a security-based swap with a special entity shall— “(i) comply with any duty established by the Commission for a security-based swap dealer or major security-based swap participant, with respect to a counterparty that is an eligible contract participant within the meaning of subclause (I) or (II) of clause (vii) of section 1a(18) of the Commodity Exchange Act, that requires the security-based swap dealer or major security-based swap participant to have a reasonable basis to believe that the counterparty that is a special entity has an independent representative that— “(I) has sufficient knowledge to evaluate the transaction and risks; “(II) is not subject to a statutory disqualification; “(III) is independent of the security-based swap dealer or major security-based swap participant; “(IV) undertakes a duty to act in the best interests of the counterparty it represents; “(V) makes appropriate disclosures; “(VI) will provide written representations to the special entity regarding fair pricing and the appropriateness of the transaction; and “(VII) in the case of employee benefit plans subject to the Employee Retirement Income Security act of 1974, is a fiduciary as defined in section 3 of that Act (29 U.S.C. 1002); and “(ii) before the initiation of the transaction, disclose to the special entity in writing the capacity in which the security-based swap dealer is acting. “(B) Commission authority.— The Commission may establish such other standards and requirements under this paragraph as the Commission may determine are appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this Act. “(6) Rules.— The Commission shall prescribe rules under this subsection governing business conduct standards for security-based swap dealers and major security-based swap participants. “(7) Applicability.— This subsection shall not apply with respect to a transaction that is— “(A) initiated by a special entity on an exchange or security-based swaps execution facility; and “(B) the security-based swap dealer or major security-based swap participant does not know the identity of the counterparty to the transaction.” “(i) Documentation Standards.— “(1) In general.— Each registered security-based swap dealer and major security-based swap participant shall conform with such standards as may be prescribed by the Commission, by rule or regulation, that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all security-based swaps. “(2) Rules.— The Commission shall adopt rules governing documentation standards for security-based swap dealers and major security-based swap participants. “(j) Duties.— Each registered security-based swap dealer and major security-based swap participant shall, at all times, comply with the following requirements: “(1) Monitoring of trading.— The security-based swap dealer or major security-based swap participant shall monitor its trading in security-based swaps to prevent violations of applicable position limits. “(2) Risk management procedures.— The security-based swap dealer or major security-based swap participant shall establish robust and professional risk management systems adequate for managing the day-to-day business of the security-based swap dealer or major security-based swap participant. “(3) Disclosure of general information.— The security-based swap dealer or major security-based swap participant shall disclose to the Commission and to the prudential regulator for the security-based swap dealer or major security-based swap participant, as applicable, information concerning— “(A) terms and conditions of its security-based swaps; “(B) security-based swap trading operations, mechanisms, and practices; “(C) financial integrity protections relating to security-based swaps; and “(D) other information relevant to its trading in security-based swaps. “(4) Ability to obtain information.— The security-based swap dealer or major security-based swap participant shall— “(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and “(B) provide the information to the Commission and to the prudential regulator for the security-based swap dealer or major security-based swap participant, as applicable, on request. “(5) Conflicts of interest.— The security-based swap dealer and major security-based swap participant shall implement conflict-of-interest systems and procedures that— “(A) establish structural and institutional safeguards to ensure that the activities of any person within the firm relating to research or analysis of the price or market for any security-based swap or acting in a role of providing clearing activities or making determinations as to accepting clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of persons whose involvement in pricing, trading, or clearing activities might potentially bias their judgment or supervision and contravene the core principles of open access and the business conduct standards described in this title; and “(B) address such other issues as the Commission determines to be appropriate. “(6) Antitrust considerations.— Unless necessary or appropriate to achieve the purposes of this title, the security-based swap dealer or major security-based swap participant shall not— “(A) adopt any process or take any action that results in any unreasonable restraint of trade; or “(B) impose any material anticompetitive burden on trading or clearing. “(7) Rules.— The Commission shall prescribe rules under this subsection governing duties of security-based swap dealers and major security-based swap participants. “(k) Designation of Chief Compliance Officer.— “(1) In general.— Each security-based swap dealer and major security-based swap participant shall designate an individual to serve as a chief compliance officer. “(2) Duties.— The chief compliance officer shall— “(A) report directly to the board or to the senior officer of the security-based swap dealer or major security-based swap participant; “(B) review the compliance of the security-based swap dealer or major security-based swap participant with respect to the security-based swap dealer and major security-based swap participant requirements described in this section; “(C) in consultation with the board of directors, a body performing a function similar to the board, or the senior officer of the organization, resolve any conflicts of interest that may arise; “(D) be responsible for administering each policy and procedure that is required to be established pursuant to this section; “(E) ensure compliance with this title (including regulations) relating to security-based swaps, including each rule prescribed by the Commission under this section; “(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any— “(i) compliance office review; “(ii) look-back; “(iii) internal or external audit finding; “(iv) self-reported error; or “(v) validated complaint; and “(G) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. “(3) Annual reports.— “(A) In general.— In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of— “(i) the compliance of the security-based swap dealer or major swap participant with respect to this title (including regulations); and “(ii) each policy and procedure of the security-based swap dealer or major security-based swap participant of the chief compliance officer (including the code of ethics and conflict of interest policies). “(B) Requirements.— A compliance report under subparagraph (A) shall— “(i) accompany each appropriate financial report of the security-based swap dealer or major security-based swap participant that is required to be furnished to the Commission pursuant to this section; and “(ii) include a certification that, under penalty of law, the compliance report is accurate and complete. “(l) Enforcement and Administrative Proceeding Authority.— “(1) Primary enforcement authority.— “(A) Securities and exchange commission.— Except as provided in subparagraph (B), (C), or (D), the Commission shall have primary authority to enforce subtitle B, and the amendments made by subtitle B of the Wall Street Transparency and Accountability Act of 2010, with respect to any person. “(B) Prudential regulators.— The prudential regulators shall have exclusive authority to enforce the provisions of subsection (e) and other prudential requirements of this title (including risk management standards), with respect to security-based swap dealers or major security-based swap participants for which they are the prudential regulator. “(C) Referral.— “(i) Violations of nonprudential requirements.— If the appropriate Federal banking agency for security-based swap dealers or major security-based swap participants that are depository institutions has cause to believe that such security-based swap dealer or major security-based swap participant may have engaged in conduct that constitutes a violation of the nonprudential requirements of this section or rules adopted by the Commission thereunder, the agency may recommend in writing to the Commission that the Commission initiate an enforcement proceeding as authorized under this title. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation. “(ii) Violations of prudential requirements.— If the Commission has cause to believe that a securities-based swap dealer or major securities-based swap participant that has a prudential regulator may have engaged in conduct that constitute a violation of the prudential requirements of subsection (e) or rules adopted thereunder, the Commission may recommend in writing to the prudential regulator that the prudential regulator initiate an enforcement proceeding as authorized under this title. The recommendation shall be accompanied by a written explanation of the concerns giving rise to the recommendation. “(D) Backstop enforcement authority.— “(i) Initiation of enforcement proceeding by prudential regulator.— If the Commission does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the Commission receives a written report under subsection (C)(i), the prudential regulator may initiate an enforcement proceeding. “(ii) Initiation of enforcement proceeding by commission.— If the prudential regulator does not initiate an enforcement proceeding before the end of the 90-day period beginning on the date on which the prudential regulator receives a written report under subsection (C)(ii), the Commission may initiate an enforcement proceeding. “(2) Censure, denial, suspension; notice and hearing.— The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, or revoke the registration of any security-based swap dealer or major security-based swap participant that has registered with the Commission pursuant to subsection (b) if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public interest and that such security-based swap dealer or major security-based swap participant, or any person associated with such security-based swap dealer or major security-based swap participant effecting or involved in effecting transactions in security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, whether prior or subsequent to becoming so associated— “(A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), or (E) of paragraph (4) of section 15(b); “(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the commencement of the proceedings under this subsection; “(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); “(D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); or “(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). “(3) Associated persons.— With respect to any person who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, who was associated or was seeking to become associated with a security-based swap dealer or major security-based swap participant for the purpose of effecting or being involved in effecting security-based swaps on behalf of such security-based swap dealer or major security-based swap participant, the Commission, by order, shall censure, place limitations on the activities or functions of such person, or suspend for a period not exceeding 12 months, or bar such person from being associated with a security-based swap dealer or major security-based swap participant, if the Commission finds, on the record after notice and opportunity for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person— “(A) has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), or (E) of paragraph (4) of section 15(b); “(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the commencement of the proceedings under this subsection; “(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); “(D) is subject to an order or a final order specified in subparagraph (F) or (H), respectively, of such paragraph (4); or “(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). “(4) Unlawful conduct.— It shall be unlawful— “(A) for any person as to whom an order under paragraph (3) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a security-based swap dealer or major security-based swap participant in contravention of such order; or “(B) for any security-based swap dealer or major security-based swap participant to permit such a person, without the consent of the Commission, to become or remain a person associated with the security-based swap dealer or major security-based swap participant in contravention of such order, if such security-based swap dealer or major security-based swap participant knew, or in the exercise of reasonable care should have known, of such order.” . (b) Savings Clause.— Notwithstanding any other provision of this title, nothing in this subtitle shall be construed as divesting any appropriate Federal banking agency of any authority it may have to establish or enforce, with respect to a person for which such agency is the appropriate Federal banking agency, prudential or other standards pursuant to authority by Federal law other than this title. SEC. 765. RULEMAKING ON CONFLICT OF INTEREST. (a) In General.— In order to mitigate conflicts of interest, not later than 180 days after the date of enactment of the Wall Street Transparency and Accountability Act of 2010, the Securities and Exchange Commission shall adopt rules which may include numerical limits on the control of, or the voting rights with respect to, any clearing agency that clears security-based swaps, or on the control of any security-based swap execution facility or national securities exchange that posts or makes available for trading security-based swaps, by a bank holding company (as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841)) with total consolidated assets of $50,000,000,000 or more, a nonbank financial company (as defined in section 102) supervised by the Board of Governors of the Federal Reserve System, affiliate of such a bank holding company or nonbank financial company, a security-based swap dealer, major security-based swap participant, or person associated with a security-based swap dealer or major security-based swap participant. (b) Purposes.— The Securities and Exchange Commission shall adopt rules if the Commission determines, after the review described in subsection (a), that such rules are necessary or appropriate to improve the governance of, or to mitigate systemic risk, promote competition, or mitigate conflicts of interest in connection with a security-based swap dealer or major security-based swap participant’s conduct of business with, a clearing agency, national securities exchange, or security-based swap execution facility that clears, posts, or makes available for trading security-based swaps and in which such security-based swap dealer or major security-based swap participant has a material debt or equity investment. (c) Considerations.— In adopting rules pursuant to this section, the Securities and Exchange Commission shall consider any conflicts of interest arising from the amount of equity owned by a single investor, the ability to vote, cause the vote of, or withhold votes entitled to be cast on any matters by the holders of the ownership interest, and the governance arrangements of any derivatives clearing organization that clears swaps, or swap execution facility or board of trade designated as a contract market that posts swaps or makes swaps available for trading. SEC. 766. REPORTING AND RECORDKEEPING. (a) In General.— The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 13 the following: “SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED SWAPS. “(a) Required Reporting of Security-based Swaps Not Accepted by Any Clearing Agency or Derivatives Clearing Organization.— “(1) In general.— Each security-based swap that is not accepted for clearing by any clearing agency or derivatives clearing organization shall be reported to— “(A) a security-based swap data repository described in section 13(n); or “(B) in the case in which there is no security-based swap data repository that would accept the security-based swap, to the Commission pursuant to this section within such time period as the Commission may by rule or regulation prescribe. “(2) Transition rule for preenactment security-based swaps.— “(A) Security-based swaps entered into before the date of enactment of the wall street transparency and accountability act of 2010.— Each security-based swap entered into before the date of enactment of the Wall Street Transparency and Accountability Act of 2010, the terms of which have not expired as of the date of enactment of that Act, shall be reported to a registered security-based swap data repository or the Commission by a date that is not later than— “(i) 30 days after issuance of the interim final rule; or “(ii) such other period as the Commission determines to be appropriate. “(B) Commission rulemaking.— The Commission shall promulgate an interim final rule within 90 days of the date of enactment of this section providing for the reporting of each security-based swap entered into before the date of enactment as referenced in subparagraph (A). “(C) Effective date.— The reporting provisions described in this section shall be effective upon the date of the enactment of this section. “(3) Reporting obligations.— “(A) Security-based swaps in which only 1 counterparty is a security-based swap dealer or major security-based swap participant.— With respect to a security-based swap in which only 1 counterparty is a security-based swap dealer or major security-based swap participant, the security-based swap dealer or major security-based swap participant shall report the security-based swap as required under paragraphs (1) and (2). “(B) Security-based swaps in which 1 counterparty is a security-based swap dealer and the other a major security-based swap participant.— With respect to a security-based swap in which 1 counterparty is a security-based swap dealer and the other a major security-based swap participant, the security-based swap dealer shall report the security-based swap as required under paragraphs (1) and (2). “(C) Other security-based swaps.— With respect to any other security-based swap not described in subparagraph (A) or (B), the counterparties to the security-based swap shall select a counterparty to report the security-based swap as required under paragraphs (1) and (2). “(b) Duties of Certain Individuals.— Any individual or entity that enters into a security-based swap shall meet each requirement described in subsection (c) if the individual or entity did not— “(1) clear the security-based swap in accordance with section 3C(a)(1); or “(2) have the data regarding the security-based swap accepted by a security-based swap data repository in accordance with rules (including timeframes) adopted by the Commission under this title. “(c) Requirements.— An individual or entity described in subsection (b) shall— “(1) upon written request from the Commission, provide reports regarding the security-based swaps held by the individual or entity to the Commission in such form and in such manner as the Commission may request; and “(2) maintain books and records pertaining to the security-based swaps held by the individual or entity in such form, in such manner, and for such period as the Commission may require, which shall be open to inspection by— “(A) any representative of the Commission; “(B) an appropriate prudential regulator; “(C) the Commodity Futures Trading Commission; “(D) the Financial Stability Oversight Council; and “(E) the Department of Justice. “(d) Identical Data.— In prescribing rules under this section, the Commission shall require individuals and entities described in subsection (b) to submit to the Commission a report that contains data that is not less comprehensive than the data required to be collected by security-based swap data repositories under this title.” . (b) Beneficial Ownership Reporting.— Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended— (1) in subsection (d)(1), by inserting “or otherwise becomes or is deemed to become a beneficial owner of any of the foregoing upon the purchase or sale of a security-based swap that the Commission may define by rule, and” after “Alaska Native Claims Settlement Act,”; and (2) in subsection (g)(1), by inserting “or otherwise becomes or is deemed to become a beneficial owner of any security of a class described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by rule” after “subsection (d)(1) of this section”. (c) Reports by Institutional Investment Managers.— Section 13(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended by inserting “or otherwise becomes or is deemed to become a beneficial owner of any security of a class described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by rule,” after “subsection (d)(1) of this section”. (d) Administrative Proceeding Authority.— Section 15(b)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended— (1) in subparagraph (C), by inserting “security-based swap dealer, major security-based swap participant,” after “government securities dealer,”; and (2) in subparagraph (F), by striking “broker or dealer” and inserting “broker, dealer, security-based swap dealer, or a major security-based swap participant”. (e) Security-based Swap Beneficial Ownership.— Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following: “(o) Beneficial Ownership.— For purposes of this section and section 16, a person shall be deemed to acquire beneficial ownership of an equity security based on the purchase or sale of a security-based swap, only to the extent that the Commission, by rule, determines after consultation with the prudential regulators and the Secretary of the Treasury, that the purchase or sale of the security-based swap, or class of security-based swap, provides incidents of ownership comparable to direct ownership of the equity security, and that it is necessary to achieve the purposes of this section that the purchase or sale of the security-based swaps, or class of security-based swap, be deemed the acquisition of beneficial ownership of the equity security.” . SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.   Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(a)) is amended to read as follows: “(a) Limitation on Judgments.— “(1) In general.— No person permitted to maintain a suit for damages under the provisions of this title shall recover, through satisfaction of judgment in 1 or more actions, a total amount in excess of the actual damages to that person on account of the act complained of. Except as otherwise specifically provided in this title, nothing in this title shall affect the jurisdiction of the securities commission (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations under this title. “(2) Rule of construction.— Except as provided in subsection (f), the rights and remedies provided by this title shall be in addition to any and all other rights and remedies that may exist at law or in equity. “(3) State bucket shop laws.— No State law which prohibits or regulates the making or promoting of wagering or gaming contracts, or the operation of ‘bucket shops’ or other similar or related activities, shall invalidate— “(A) any put, call, straddle, option, privilege, or other security subject to this title (except any security that has a pari-mutuel payout or otherwise is determined by the Commission, acting by rule, regulation, or order, to be appropriately subject to such laws), or apply to any activity which is incidental or related to the offer, purchase, sale, exercise, settlement, or closeout of any such security; “(B) any security-based swap between eligible contract participants; or “(C) any security-based swap effected on a national securities exchange registered pursuant to section 6(b). “(4) Other state provisions.— No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security-based swap or a security futures product, except that this paragraph may not be construed as limiting any State antifraud law of general applicability. A security-based swap may not be regulated as an insurance contract under any provision of State law.” . SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT OF SECURITY-BASED SWAPS. (a) Definitions.— Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is amended— (1) in paragraph (1), by inserting “security-based swap,” after “security future,”; (2) in paragraph (3), by adding at the end the following: “Any offer or sale of a security-based swap by or on behalf of the issuer of the securities upon which such security-based swap is based or is referenced, an affiliate of the issuer, or an underwriter, shall constitute a contract for sale of, sale of, offer for sale, or offer to sell such securities.”; and (3) by adding at the end the following: “(17) The terms ‘swap’ and ‘security-based swap’ have the same meanings as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). “(18) The terms ‘purchase’ or ‘sale’ of a security-based swap shall be deemed to mean 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 security-based swap, as the context may require.” . (b) Registration of Security-based Swaps.— Section 5 of the Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at the end the following: “(d) Notwithstanding the provisions of section 3 or 4, unless a registration statement meeting the requirements of section 10(a) is in effect as to a security-based swap, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, offer to buy or purchase or sell a security-based swap to any person who is not an eligible contract participant as defined in section 1a(18) of the Commodity Exchange Act (7 U.S.C. 1a(18)).” . SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 1940.   Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–2) is amended by adding at the end the following: “(54) The terms ‘commodity pool’, ‘commodity pool operator’, ‘commodity trading advisor’, ‘major swap participant’, ‘swap’, ‘swap dealer’, and ‘swap execution facility’ have the same meanings as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).” . SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 1940.   Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2) is amended by adding at the end the following: “(29) The terms ‘commodity pool’, ‘commodity pool operator’, ‘commodity trading advisor’, ‘major swap participant’, ‘swap’, ‘swap dealer’, and ‘swap execution facility’ have the same meanings as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).” . SEC. 771. OTHER AUTHORITY.   Unless otherwise provided by its terms, this subtitle does not divest any appropriate Federal banking agency, the Securities and Exchange Commission, the Commodity Futures Trading Commission, or any other Federal or State agency, of any authority derived from any other provision of applicable law. SEC. 772. JURISDICTION. (a) In General.— Section 36 of the Securities Exchange Act of 1934 (15 U.S.C. 78mm) is amended by adding at the end the following: “(c) Derivatives.— Unless the Commission is expressly authorized by any provision described in this subsection to grant exemptions, the Commission shall not grant exemptions, with respect to amendments made by subtitle B of the Wall Street Transparency and Accountability Act of 2010, with respect to paragraphs (65), (66), (68), (69), (70), (71), (72), (73), (74), (75), (76), and (79) of section 3(a), and sections 10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 17A(h), 17A(i), 17A(j), 17A(k), and 17A(l); provided that the Commission shall have exemptive authority under this title with respect to security-based swaps as to the same matters that the Commodity Futures Trading Commission has under the Wall Street Transparency and Accountability Act of 2010 with respect to swaps, including under section 4(c) of the Commodity Exchange Act.” . (b) Rule of Construction.— Section 30 of the Securities Exchange Act of 1934 (15 U.S.C. 78dd) is amended by adding at the end the following: “(c) Rule of Construction.— No provision of this title that was added by the Wall Street Transparency and Accountability Act of 2010, or any rule or regulation thereunder, shall apply to any person insofar as such person transacts a business in security-based swaps without the jurisdiction of the United States, unless such person transacts such business in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate to prevent the evasion of any provision of this title that was added by the Wall Street Transparency and Accountability Act of 2010. This subsection shall not be construed to limit the jurisdiction of the Commission under any provision of this title, as in effect prior to the date of enactment of the Wall Street Transparency and Accountability Act of 2010.” . SEC. 773. CIVIL PENALTIES.   Section 21B of the Securities Exchange Act of 1934 15 USC 78u–2. (15 U.S.C. 78p-2) is amended by adding at the end the following: “(f) Security-based Swaps.— “(1) Clearing agency.— Any clearing agency that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 3C shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 3C. “(2) Security-based swap dealer or major security-based swap participant.— Any security-based swap dealer or major security-based swap participant that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of section 3C shall be liable for a civil money penalty in twice the amount otherwise available for a violation of section 3C.” . SEC. 774. EFFECTIVE DATE.   Unless otherwise provided, the provisions of this subtitle shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of this subtitle.

2. 2010

   Wall Street Transparency and Accountability Act of 2010

   Pub. L. 111–203 § 724(c) · 124 Stat. 1376

   Added · 7 U.S.C. § 6s(l)

   Pub. L. 111–203, § 724(c), added subsec. (l)

   Source evidence

   Code amendment note
   Subsec. (l). Pub. L. 111–203, § 724(c), added subsec. (l).

   Enacted provision · exact public law section
   (c) Segregation Requirements for Uncleared Swaps.— Section 4s of the Commodity Exchange Act 7 USC 6s. (as added by section 731) is amended by adding at the end the following: “(l) Segregation Requirements.— “(1) Segregation of assets held as collateral in uncleared swap transactions.— “(A) Notification.— A swap dealer or major swap participant shall be required to notify the counterparty of the swap dealer or major swap participant at the beginning of a swap transaction that the counterparty has the right to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty. “(B) Segregation and maintenance of funds.— At the request of a counterparty to a swap that provides funds or other property to a swap dealer or major swap participant to margin, guarantee, or secure the obligations of the counterparty, the swap dealer or major swap participant shall— “(i) segregate the funds or other property for the benefit of the counterparty; and “(ii) in accordance with such rules and regulations as the Commission may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the swap dealer or major swap participant. “(2) Applicability.— The requirements described in paragraph (1) shall— “(A) apply only to a swap between a counterparty and a swap dealer or major swap participant that is not submitted for clearing to a derivatives clearing organization; and “(B) (i) not apply to variation margin payments; or “(ii) not preclude any commercial arrangement regarding— “(I) the investment of segregated funds or other property that may only be invested in such investments as the Commission may permit by rule or regulation; and “(II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property. “(3) Use of independent third-party custodians.— The segregated account described in paragraph (1) shall be— “(A) carried by an independent third-party custodian; and “(B) designated as a segregated account for and on behalf of the counterparty. “(4) Reporting requirement.— If the counterparty does not choose to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the swap dealer or major swap participant shall report to the counterparty of the swap dealer or major swap participant on a quarterly basis that the back office procedures of the swap dealer or major swap participant relating to margin and collateral requirements are in compliance with the agreement of the counterparties.” .

3. 2015

   Business Risk Mitigation and Price Stabilization Act of 2015

   Pub. L. 114–1 title III § 302(a) · 129 Stat. 3

   Added · 7 U.S.C. § 6s(e)(4)

   Pub. L. 114–1 added par. (4)

   Source evidence

   Code amendment note
   Subsec. (e)(4). Pub. L. 114–1 added par. (4).

   Enacted provision · exact public law section
   (a) Commodity Exchange Act Amendment.— Section 4s(e) of the Commodity Exchange Act (7 U.S.C. 6s(e)), as added by section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended by adding at the end the following new paragraph: “(4) Applicability with respect to counterparties.— The requirements of paragraphs (2)(A)(ii) and (2)(B)(ii), including the initial and variation margin requirements imposed by rules adopted pursuant to paragraphs (2)(A)(ii) and (2)(B)(ii), shall not apply to a swap in which a counterparty qualifies for an exception under section 2(h)(7)(A), or an exemption issued under section 4(c)(1) from the requirements of section 2(h)(1)(A) for cooperative entities as defined in such exemption, or satisfies the criteria in section 2(h)(7)(D).” .

2 of 3 references resolved to an enrolled provision · 1 partial