To promote legal certainty, enhance competition, and reduce systemic risk in markets for futures and over-the-counter derivatives, and for other purposes.

SA 3851. Mr. HARKIN (for himself, Mr. Chambliss, Mrs. Feinstein, Mr.
Levin, Ms. Snowe, Mr. Crapo, Mr. Conrad, Ms. Cantwell, Ms. Collins, Mr.
Dorgan, Mr. Durbin, Mr. Lieberman, and Mr. Schumer) proposed an
amendment to amendment SA 3500 proposed by Mr. Harkin (for himself, Mr.
Chambliss, Mr. Baucus, and Mr. Grassley) to the bill H.R. 2419, to
provide for the continuation of agricultural programs through fiscal
year 2012, and for other purposes; as follows:

At the end, add the following:

TITLE XIII--AMENDMENTS TO COMMODITY EXCHANGE ACT

SECTION 13101. SHORT TITLE.

This title may be cited as the ``CFTC Reauthorization Act
of 2007''.

Subtitle A--General Provisions

SEC. 13102. CFTC AUTHORITY OVER OFF-EXCHANGE RETAIL FOREIGN
CURRENCY TRANSACTIONS.

(a) In General.--Section 2(c)(2) of the Commodity Exchange
Act (7 U.S.C. 2(c)(2)) is amended by striking subparagraphs
(B) and (C) and inserting the following:
``(B) Agreements, contracts, and transactions in retail
foreign currency.--
``(i) This Act applies to, and the Commission shall have
jurisdiction over, an agreement, contract, or transaction in
foreign currency that--

``(I) is a contract of sale of a commodity for future
delivery (or an option on such a contract) or 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))); and
``(II) is offered to, or entered into with, a person that
is not an eligible contract participant, unless the
counterparty, or the person offering to be the counterparty,
of the person is--

``(aa) a financial institution;
``(bb)(AA) a broker or dealer registered under section
15(b) (except paragraph (11) thereof) or 15C of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b), 78o-5); or
``(BB) an associated person of a broker or dealer
registered under section 15(b) (except paragraph (11)
thereof) or 15C of the Securities Exchange Act of 1934 (15
U.S.C. 78o(b), 78o-5) concerning the financial or securities
activities of which the broker or dealer makes and keeps
records under section 15C(b) or 17(h) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-5(b), 78q(h));
``(cc) a futures commission merchant registered under this
Act (that is not also a person described in item (bb)), or an
affiliated person of such a futures commission merchant (that
is not also a person described in item (bb)) if such futures
commission merchant makes and keeps records under section
4f(c)(2)(B) of this Act concerning the futures and other
financial activities of such affiliated person;
``(dd) an insurance company described in section
1a(12)(A)(ii) of this Act, or a regulated subsidiary or
affiliate of such an insurance company;
``(ee) a financial holding company (as defined in section 2
of the Bank Holding Company Act of 1956); or
``(ff) an investment bank holding company (as defined in
section 17(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78q(i))).
``(ii) Notwithstanding item (cc) of clause (i)(II) of this
subparagraph, agreements, contracts, or transactions
described in clause (i) of this subparagraph shall be subject
to subsection (a)(1)(B) of this section and sections 4(b),
4b, 4c(b), 4o, 6(c) and 6(d) (except to the extent that
sections 6(c) and 6(d) prohibit manipulation of the market
price of any commodity in interstate commerce, or for future
delivery on or subject to the rules of any market), 6c, 6d,
8(a), 13(a), and 13(b) if the agreements, contracts, or
transactions are offered, or entered into, by a person that
is registered as a futures commission merchant or an
affiliated person of a futures commission merchant registered
under this Act that is not also a person described in any of
items (aa), (bb), (dd), (ee), or (ff) of clause (i) of this
subparagraph.
``(iii)(I) Notwithstanding item (cc) of clause (i)(II), a
person shall not participate in the solicitation or
recommendation of any agreement, contract, or transaction
described in clause (i) entered into with or to be entered
into with a person described in such item, unless the
person--

``(aa) is registered in such capacity as the Commission by
rule, regulation, or order shall determine; and
``(bb) is a member of a futures association registered
under section 17.
``(II) Subclause (I) shall not apply to--

``(aa) any person described in any of items (aa), (bb),
(dd), (ee), or (ff) of subparagraph (B)(i)(II); or
``(bb) any such person's associated persons.
``(C)(i)(I) This subparagraph shall apply to any agreement,
contract, or transaction in foreign currency that is--
``(aa) offered to, or entered into with, a person that is
not an eligible contract participant (except that this
subparagraph shall not apply if the counterparty, or the
person offering to be the counterparty, of the person that is
not an eligible contract participant is a person described in
any of items (aa), (bb), (dd), (ee), or (ff) of subparagraph
(B)(i)(II)); and
``(bb) offered, or 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) Subclause (I) shall not apply to--
``(aa) a security that is not a security futures product;
or
``(bb) a contract of sale that--

``(AA) results in actual delivery within 2 days; or
``(BB) creates an enforceable obligation to deliver between
a seller and buyer that have the ability to deliver and
accept delivery, respectively, in connection with their line
of business.

[[Page S15562]]

``(ii)(I) Agreements, contracts, or transactions described
in clause (i) of this subparagraph shall be subject to
subsection (a)(1)(B) of this section and sections 4(b), 4b,
4c(b), 4o, 6(c) and 6(d) (except to the extent that sections
6(c) and 6(d) prohibit manipulation of the market price of
any commodity in interstate commerce, or for future delivery
on or subject to the rules of any market), 6c, 6d, 8(a),
13(a), and 13(b).
``(II) Subclause (I) of this clause shall not apply to--
``(aa) any person described in any of items (aa), (bb),
(dd), (ee), or (ff) of subparagraph (B)(i)(II); or
``(bb) any such person's associated persons.
``(iii)(I) A person shall not participate in the
solicitation or recommendation of any agreement, contract, or
transaction described in clause (i) of this subparagraph
unless the person is registered in such capacity as the
Commission by rule, regulation, or order shall determine, and
is a member of a futures association registered under section
17.
``(II) Subclause (I) shall not apply to--
``(aa) any person described in any of items (aa), (bb),
(dd), (ee), or (ff) of subparagraph (B)(i)(II); or
``(bb) any such person's associated persons.
``(iv)(I) Sections 4(b) and 4b shall apply to any
agreement, contract, or transaction described in clause (i)
of this subparagraph as if the agreement, contract, or
transaction were a contract of sale of a commodity for future
delivery.
``(II) The Commission may, after issuing notice and
soliciting comment, issue rules proscribing fraud in
connection with any agreement, contract, or transaction
described in clause (i) in an exempt commodity or an
agricultural commodity. Nothing in this provision shall
affect the determination of whether such agreement, contract,
or transaction is a contract for the purchase or sale of a
commodity for future delivery for purposes of section 4(a).
``(v) This subparagraph shall not be construed to limit any
jurisdiction that the Commission may otherwise have under any
other provision of this Act over an agreement, contract, or
transaction that is a contract of sale of a commodity for
future delivery.
``(vi) This subparagraph shall not be construed to limit
any jurisdiction that the Commission or the Securities and
Exchange Commission may otherwise have under any other
provision of this Act with respect to security futures
products and persons effecting transactions in security
futures products.''.
(b) Effective Date.--Clause (iii) of section 2(c)(2)(B) and
clause (iii) of section 2(c)(2)(C) of the Commodity Exchange
Act, as amended by subsection (a) of this section, shall be
effective 120 days after the date of the enactment of this
Act or such other time as the Commodity Futures Trading
Commission shall determine.

SEC. 13103. LIAISON WITH DEPARTMENT OF JUSTICE.

Section 2(a)(9) of the Commodity Exchange Act (7 U.S.C.
2(a)(9)) is amended by adding at the end the following:
``(C) Liaison with department of justice.--
``(i) In general.--The Commission shall, in cooperation
with the Attorney General, maintain a liaison between the
Commission and the Department of Justice to coordinate civil
and criminal investigations and prosecutions of violations of
this Act as appropriate.
``(ii) Designation.--The Attorney General shall designate a
person as liaison and take such steps as are necessary to
facilitate communications described in clause (i).''.

SEC. 13104. ANTI-FRAUD AUTHORITY OVER PRINCIPAL-TO-PRINCIPAL
TRANSACTIONS.

Section 4b of the Commodity Exchange Act (7 U.S.C. Section
6b) is amended--
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by striking ``SEC.4b.'' and all that follows through
the end of subsection (a) and inserting the following:

``SEC. 4B. CONTRACTS DESIGNED TO DEFRAUD OR MISLEAD.

``(a) Unlawful Actions.--It shall be unlawful--
``(1) for any person, in or in connection with any order to
make, or the making of, any contract of sale of any commodity
in interstate commerce or for future delivery that is made,
or to be made, on or subject to the rules of a designated
contract market, for or on behalf of any other person; or
``(2) for any person, in or in connection with any order to
make, or the making of, any contract of sale of any commodity
for future delivery, or other agreement, contract, or
transaction subject to paragraphs (1) and (2) of section
5a(g), that is made, or to be made, for or on behalf of, or
with, any other person, other than on or subject to the rules
of a designated contract market--
``(A) to cheat or defraud or attempt to cheat or defraud
the other person;
``(B) willfully to make or cause to be made to the other
person any false report or statement or willfully to enter or
cause to be entered for the other person any false record;
``(C) willfully to deceive or attempt to deceive the other
person by any means whatsoever in regard to any order or
contract or the disposition or execution of any order or
contract, or in regard to any act of agency performed, with
respect to any order or contract for or, in the case of
paragraph (2), with the other person; or
``(D)(i) to bucket an order if the order is either
represented by the person as an order to be executed, or is
required to be executed, on or subject to the rules of a
designated contract market; or
``(ii) to fill an order by offset against the order or
orders of any other person, or willfully and knowingly and
without the prior consent of the other person to become the
buyer in respect to any selling order of the other person, or
become the seller in respect to any buying order of the other
person, if the order is either represented by the person as
an order to be executed, or is required to be executed, on or
subject to the rules of a designated contract market unless
the order is executed in accordance with the rules of the
designated contract market.
``(b) Clarification.--Subsection (a)(2) of this section
shall not obligate any person, in or in connection with a
transaction in a contract of sale of a commodity for future
delivery, or other agreement, contract or transaction subject
to paragraphs (1) and (2) of section 5a(g), with another
person, to disclose to the other person nonpublic information
that may be material to the market price, rate, or level of
the commodity or 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.''.

SEC. 13105. CRIMINAL AND CIVIL PENALTIES.

(a) Enforcement Powers of the Commission.--Section 6(c) of
the Commodity Exchange Act (7 U.S.C. 9, 15) is amended in
paragraph (3) of the 10th sentence--
(1) by inserting ``(A)'' after ``assess such person''; and
(2) by inserting after ``each such violation'' the
following: ``, or (B) in any case of manipulation or
attempted manipulation in violation of this subsection,
subsection (d), or section 9(a)(2), a civil penalty of not
more than the greater of $1,000,000 or triple the monetary
gain to such person for each such violation,''.
(b) Nonenforcement of Rules of Government or Other
Violations.--Section 6b of the Commodity Exchange Act (7
U.S.C. 13a) is amended--
(1) in the first sentence, by inserting before the period
at the end the following: ``, or, in any case of manipulation
or attempted manipulation in violation of sections 6(c),
6(d), or 9(a)(2), a civil penalty of not more than $1,000,000
for each such violation''; and
(2) in the second sentence, by inserting before the period
at the end the following: ``, except that if the failure or
refusal to obey or comply with the order involved any offense
under section 9(a)(2), the registered entity, director,
officer, agent, or employee shall be guilty of a felony and,
on conviction, shall be subject to penalties under section
9(a)(2)''.
(c) Action to Enjoin or Restrain Violations.--Section 6c(d)
of the Commodity Exchange Act (7 U.S.C. 13a-1(d)) is amended
by striking ``(d)'' and all that follows through the end of
paragraph (1) and inserting the following:
``(d) Civil Penalties.--
``(1) In general.--In any action brought under this
section, the Commission may seek and the court shall have
jurisdiction to impose, on a proper showing, on any person
found in the action to have committed any violation--
``(A) a civil penalty in the amount of not more than the
greater of $100,000 or triple the monetary gain to the person
for each violation; or
``(B) in any case of manipulation or attempted manipulation
in violation of sections 6(c), 6(d), or 9(a)(2), a civil
penalty in the amount of not more than the greater of
$1,000,000 or triple the monetary gain to the person for each
violation.''.
(d) Violations Generally.--Section 9 of the Commodity
Exchange Act (7 U.S.C. 13) is amended--
(1) in subsection (a), in the matter preceding paragraph
(1)--
(A) by striking ``(or $500,000 in the case of a person who
is an individual)''; and
(B) by striking ``five years'' and inserting ``10 years'';
(2) by re-designating subsection (f) as subsection (e); and
(3) in paragraph (1) of subsection (e) (as redesignated by
paragraph (2)), by striking the period at the end and
inserting ``; or''.

SEC. 13106. AUTHORIZATION OF APPROPRIATIONS.

Section 12(d) of the Commodity Exchange Act (7 U.S.C.
16(d)) is amended to read as follows:
``(d) There are authorized to be appropriated such sums as
are necessary to carry out this Act for each of the fiscal
years 2008 through 2013.''.

SEC. 13107. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Section 4a(e) of the Commodity Exchange Act (7 U.S.C.
6a(e)) is amended in the last proviso by striking ``section
9(c)'' and inserting ``section 9(a)(5)''.
(b) Section 4f(c)(4)(B)(i) of such Act (7 U.S.C.
6f(c)(4)(B)(i)) is amended by striking ``compiled'' and
inserting ``complied''.
(c) Section 4k of such Act (7 U.S.C. 6k) is amended by
redesignating the second paragraph (5) as paragraph (6).
(d) The Commodity Exchange Act is amended--
(1) by redesignating the first section 4p (7 U.S.C. 6o-1),
as added by section 121 of the Commodity Futures
Modernization Act of 2000, as section 4q; and
(2) by moving such section to after the second section 4p,
as added by section 206 of Public Law 93-446.

[[Page S15563]]

(e) Subsections (a)(1) and (d)(1) of section 5c of such Act
(7 U.S.C. 7a-2(a)(1), (d)(1)) are each amended by striking
``5b(d)(2)'' and inserting ``5b(c)(2)''.
(f) Sections 5c(f) and 17(r) of such Act (7 U.S.C. 7a-2(f),
21(r)) are each amended by striking ``4d(3)'' and inserting
``4d(c)''.
(g) Section 8(a)(1) of such Act (7 U.S.C. 12(a)(1)) is
amended in the matter following subparagraph (B)--
(1) by striking ``commenced'' in the 2nd place it appears;
and
(2) by inserting ``commenced'' after ``in a judicial
proceeding''.
(h) Section 22(a)(2) of such Act (7 U.S.C. 25(a)(2)) is
amended by striking ``5b(b)(1)(E)'' and inserting
``5b(c)(2)(H)''.

SEC. 13108. PORTFOLIO MARGINING AND SECURITY INDEX ISSUES.

(a) The agencies represented on the President's Working
Group on Financial Markets shall work to ensure that the
Securities and Exchange Commission (SEC), the Commodity
Futures Trading Commission (CFTC), or both, as appropriate,
have taken the actions required under subsection (b).
(b) The SEC, the CFTC, or both, as appropriate, shall take
action under their existing authorities to permit--
(1) by September 30, 2008, risk-based portfolio margining
for security options and security futures products; and
(2) by June 30, 2008, the trading of futures on certain
security indexes by resolving issues related to foreign
security indexes.

Subtitle B--Significant Price Discovery Contracts on Exempt Commercial
Markets

SEC. 13201. SIGNIFICANT PRICE DISCOVERY CONTRACTS.

(a) Definitions.--Section la of the Commodity Exchange Act
(7 U.S.C. la) is amended--
(1) by redesignating paragraph (33) as paragraph (34); and
(2) by inserting after paragraph (32) the following:
``(33) Significant price discovery contract.--The term
`significant price discovery contract' means an agreement,
contract, or transaction subject to section 2(h)(7)(A).''.
(b) Standards Applicable to Significant Price Discovery
Contracts.--Section 2(h) of the Commodity Exchange Act (7
U.S.C. 2(h)) is amended by adding at the end the following:
``(7) Standards applicable to significant price discover
contracts.--
``(A) In general.--An agreement, contract, or transaction
conducted in reliance on the exemption in paragraph (3) shall
be subject to the provisions of subparagraphs (B) through
(E), under such rules and regulations as the Commission may
promulgate, provided that the Commission determines, in its
discretion, that the agreement, contract, or transaction
performs a significant price discovery function as described
in subparagraph (B).
``(B) Significant price discovery determination.--In making
a determination whether an agreement, contract, or
transaction performs a significant price discovery function,
the Commission shall consider, as appropriate:
``(i) Price linkage.--The extent to which the agreement,
contract, or transaction uses or otherwise relies on a daily
or final settlement price, or other major price parameter, of
a contract or contracts listed, for trading on or subject to
the rules of a designated contract market or a derivatives
transaction execution facility, or a significant price
discovery contract traded on an electronic trading facility,
to value a position, transfer or convert a position, cash or
financially settle a position, or close out a position.
``(ii) Arbitrage.--The extent to which the price for the
agreement, contract, or transaction is sufficiently related
to the price of a contract or contracts listed for trading on
or subject to the rules of a designated contract market or
derivatives transaction execution facility so as to permit
market participants to effectively arbitrage between the
markets by simultaneously maintaining positions or executing
trades in the contracts on the electronic trading facility
and the designated contract market or derivatives transaction
execution facility on a frequent and recurring basis.
``(iii) Material price reference.--The extent to which, on
a frequent and recurring basis, bids, offers, or transactions
in a commodity are directly based on, or are determined by
referencing, the prices generated by agreements, contracts,
or transactions being traded or executed on the electronic
trading facility.
``(iv) Material liquidity.--The extent to which the volume
of agreements, contracts, or transactions in the commodity
being traded on the electronic trading facility is sufficient
to have a material impact on other agreements, contracts, or
transactions listed for trading on or subject to the rules of
a designated contract market, a derivatives trading execution
facility, or an electronic trading facility operating in
reliance on the exemption in paragraph (3).
``(v) Other material factors.--Such other material factors
as the Commission specifies by rule as relevant to determine
whether an agreement, contract, or transaction serves a
significant price discovery function.
``(C) Core principles applicable to significant price
discovery contracts.--
``(i) In general.--An electronic trading facility on which
significant price discovery contracts are traded or executed
shall, with respect to those contracts, comply with the core
principles specified in this subparagraph.
``(ii) Core principles.--The electronic trading facility
shall have reasonable discretion in establishing the manner
in which it complies with the following core principles:

``(I) Contracts not readily susceptible to manipulation.--
The electronic trading facility shall list only significant
price discovery contracts that are not readily susceptible to
manipulation.
``(II) Monitoring of trading.--The electronic trading
facility shall monitor trading in significant price discovery
contracts to prevent market manipulation, price distortion,
and disruptions of the delivery or cash-settlement process
through market surveillance, compliance, and disciplinary
practices and procedures, including methods for conducting
real-time monitoring of trading and comprehensive and
accurate trade reconstructions.
``(III) Ability to obtain information.--The electronic
trading facility shall--

``(aa) establish and enforce rules that will allow the
electronic trading facility to obtain any necessary
information to perform any of the functions described in this
subparagraph;
``(bb) provide such information to the Commission upon
request; and
``(cc) have the capacity to carry out such international
information-sharing agreements as the Commission may require.

``(IV) Position limitations or accountability.--The
electronic trading facility shall adopt position limitations
or position accountability for speculators in significant
price discovery contracts, where necessary and appropriate,
to reduce the potential threat of market manipulation, price
distortion, and disruptions of the delivery or cash-
settlement process or congestion, especially during trading
in the delivery month.
``(V) Emergency authority.--The electronic trading facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the
Commission, where necessary and appropriate, including the
authority--

``(aa) to liquidate open positions in a significant price
discovery contract; and
``(bb) to suspend or curtail trading in a significant price
discovery contract.

``(VI) Daily publication of trading information.--The
electronic trading facility shall make public daily
information on price, trading volume, and other trading data
for significant price discovery contracts, as the Commission
considers appropriate.
``(VII) Compliance with rules.--The electronic trading
facility shall monitor and enforce compliance with any rules
of the electronic trading facility applicable to significant
price discovery contracts, including the terms and conditions
of such contracts and any limitations on access to the
electronic trading facility with respect to such contracts.
``(VIII) Conflict of interest.--The electronic trading
facility shall--

``(aa) establish and enforce rules to minimize conflicts of
interest in its decision-making process; and
``(bb) establish a process for resolving the conflicts.

``(IX) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the
electronic trading facility shall endeavor to avoid--

``(aa) adopting any rules or taking any actions that result
in any unreasonable restraints of trade; or
``(bb) imposing any material anticompetitive burden on
trading on the electronic trading facility.
``(D) Implementation.--The electronic trading facility
shall have discretion to take into account differences
between cleared and uncleared significant price discovery
contracts in applying core principles in subclauses (IV) and
(V) of subparagraph (C), and the Commission shall take such
differences into consideration when reviewing the
implementation of such core principles by an electronic
trading facility.
``(E) New significant price discovery contracts.--
``(i) Notification.--An electronic trading facility shall
notify the Commission whenever the electronic trading
facility has reason to believe that an agreement, contract,
or transaction conducted in reliance on the exemption
provided in paragraph (3) displays any of the factors
relating to a significant price discovery function as
described in subparagraph (B) (including regulations under
this paragraph).
``(ii) Review.--In addition to any review conducted upon
receiving a notification pursuant to clause (i), at any other
such time the Commission determines to be appropriate, but at
least on an annual basis, the Commission shall conduct an
evaluation, appropriate to the agreement, contract, or
transaction, to determine whether any agreement, contract, or
transaction conducted on an electronic trading facility in
reliance on the exemption provided in paragraph (3) is
performing a significant price discovery function.''.

SEC. 13202. LARGE TRADER REPORTING.

(a) Reporting and Recordkeeping.--Section 4g of the
Commodity Exchange Act (7 U.S.C. 6g) is amended in subsection
(a) by striking ``elsewhere;'' and inserting ``elsewhere, and
in any significant price discovery contract traded or
executed on an electronic trading facility;''.
(b) Reports of Positions Equal to or in Excess of Trading
Limits.--Section 4i of

[[Page S15564]]

the Commodity Exchange Act (7 U.S.C. 6i) is amended--
(1) by inserting ``, or any significant price discovery
contract on an electronic trading facility'' after ``subject
to the rules of any contract market or derivatives
transaction execution facility'' ; and
(2) by inserting in the matter following paragraph (2),
``or electronic trading facility'' after ``subject to the
rules of any other board of trade''.

SEC. 13203. CONFORMING AMENDMENTS.

(a) Section 1a(12)(A)(x) of the Commodity Exchange Act (7
U.S.C. 1a(12)(A)(x)) is amended by inserting ``(other than an
electronic trading facility with respect to a significant
price discovery contract)'' after ``registered entity''.
(b) Section 1a(29) of the Commodity Exchange Act (7 U.S.C.
1a(29)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking the period and
inserting ``; and''; and
(3) by adding at the end the following:
``(E) with respect to a contract that the Commission
determines is a significant price discovery contract, any
electronic trading facility on which the contract is executed
or traded.''.
(c)(1) Section 2(a)(1)(A) of the Commodity Exchange Act (7
U.S.C. 2(a)(1)(A)) is amended by inserting after ``section 19
of this Act'' the following: ``, and significant price
discovery contracts traded or executed on an electronic
trading facility''.
(2) Nothing contained in this subtitle or amendments made
by this subtitle shall be construed to affect the
jurisdiction that the Commission or any regulatory authority
may otherwise have under any other provision of law with
respect to contracts, agreements, or transactions that are
not significant price discovery contracts.
(d) Section 2(h)(3) of the Commodity Exchange Act (7 U.S.C.
2(h)(3)) is amended by striking ``paragraph (4)'' and
inserting ``paragraphs (4) and (7)''.
(e) Section 2(h)(4) of the Commodity Exchange Act (7 U.S.C.
2(h)(4)) is amended by striking subparagraph (D) and
inserting the following:
``(D) such rules, regulations, and orders as the Commission
may issue to ensure timely compliance with any of the
provisions of this Act applicable to a significant price
discovery contract traded on or executed on any electronic
trading facility.''.
(f) Section 2(h)(5)(B)(iii)(I) of the Commodity Exchange
Act (7 U.S.C. 2(h)(5)(B)(iii)(I)) is amended by inserting
``or to make the determination described in subparagraph (B)
of paragraph (7)'' after ``paragraph (4)''.
(g) Section 4a of the Commodity Exchange Act (7 U.S.C. 6a)
is amended--
(1) in subsection (a)--
(A) in the first sentence, by inserting ``, or on
electronic trading facilities with respect to a significant
price discovery contract'' after ``derivatives transaction
execution facilities''; and
(B) in the second sentence, by inserting ``, or on an
electronic trading facility with respect to a significant
price discovery contract,'' after ``derivatives transaction
execution facility''; and
(2) in subsection (b)--
(A) in paragraph (1), by inserting ``or electronic trading
facility with respect to a significant price discovery
contract'' after ``facility or facilities''; and
(B) in paragraph (2), by inserting ``or electronic trading
facility with respect to a significant price discovery
contract'' after ``derivatives transaction execution
facility''; and
(3) in subsection (e)--
(A) in the first sentence--
(i) by inserting ``or by any electronic trading facility''
after ``registered by the Commission'';
(ii) by inserting ``or on an electronic trading facility''
after ``derivatives transaction execution facility'' the
second place it appears; and
(iii) by inserting ``or electronic trading facility''
before ``or such board of trade'' each place it appears; and
(B) in the second sentence, by inserting ``or electronic
trading facility with respect to a significant price
discovery contract'' after ``registered by the Commission''.
(h) Section 5a(d) of the Commodity Exchange Act (7 U.S.C.
7a(d)(1)) is amended--
(1) by redesignating paragraphs (4) through (9) as
paragraphs (5) through (10); and
(2) by inserting after paragraph (3) the following:
``(4) Position limits or accountability.--To reduce the
potential threat of market manipulation, price distortion,
and disruption of the delivery or cash-settled process or
congestion, especially during trading in the delivery month,
the derivatives transaction execution facility shall adopt
position limits or position accountability for speculators,
where necessary and appropriate for a contract, agreement or
transaction with an underlying commodity that has a
physically deliverable supply.''.
(i) Section 5c(a) of the Commodity Exchange Act (7 U.S.C.
7a-2(a)) is amended in paragraph (1) by inserting ``, and
section 2(h)(7) with respect to significant price discovery
contracts,'' after ``, and 5b(d)(2)''.
(j) Section 5c(b) of the Commodity Exchange Act (7 U.S.C.
7a-2(b)) is amended--
(1) by striking paragraph (1) and inserting following:
``(1) In general.--A contract market, derivatives
transaction execution facility, or electronic trading
facility with respect to a significant price discovery
contract may comply with any applicable core principle
through delegation of any relevant function to a registered
futures association or a registered entity that is not an
electronic trading facility.'';
(2) in paragraph (2), by striking ``contract market or
derivatives transaction execution facility'' and inserting
``contract market, derivatives transaction execution
facility, or electronic trading facility''; and
(3) in paragraph (3), by striking ``contract market or
derivatives transaction execution facility'' each place it
appears and inserting ``contract market, derivatives
transaction execution facility, or electronic trading
facility''.
(k) Section 5c(d)(1) of the Commodity Exchange Act (7
U.S.C. 7a-2(d)(1)) is amended by inserting ``or 2(h)(7)(C)
with respect to a significant price discovery contract traded
or executed on an electronic trading facility,'' after
``5b(d)(2)''.
(l) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b)
is amended by inserting ``, 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,'' after ``revocation of designation as a
registered entity'' ;
(m) Section 6(b) of the Commodity Exchange Act (7 U.S.C.
8(b)) is amended by striking the first sentence and all that
follows through ``resubmitted in completed form: Provided,''
and inserting the following:
``The Commission is authorized to suspend for a period not
to exceed 6 months or to revoke the designation or
registration of any contract market or derivatives
transaction execution facility, 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, on a showing that the contract market or
derivatives transaction execution facility is not enforcing
or has not enforced its rules of government, made a condition
of its designation or registration as set forth in sections 5
through 5b or section 5f, or that the contract market or
derivatives transaction execution facility or electronic
trading facility, or any director, officer, agent, or
employee thereof, otherwise is violating or has violated any
of the provisions of this Act or any of the rules,
regulations, or orders of the Commission thereunder. Such
suspension or revocation shall only be made after a notice to
the officers of the contract market or derivatives
transaction execution facility or electronic trading facility
affected and upon a hearing on the record: Provided,''.

SEC. 13204. EFFECTIVE DATE.

(a) In General.--Except as provided in this section, this
subtitle shall become effective on the date of enactment of
this Act.
(b) Significant Price Discovery Standards Rulemaking.--The
Commission shall--
(1) not later than 180 days after the date of the enactment
of this Act, issue a proposed rule regarding the significant
price discovery standards in section 13201; and
(2) not later than 270 days after the date of enactment of
this Act, issue a final rule.
(c) Significant Price Discovery Determinations.--With
respect to any electronic trading facility operating on the
effective date of the final rule regarding significant price
discovery standards, the Commission shall complete a review
of the agreements, contracts, and transactions of such
facilities not later than 180 days after that effective date
to determine whether any such agreement, contract, or
transaction performs a significant price discovery function.
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