S.Amdt. 5159

1. Strikes section 6

   Strikes

   In S. 3268 · Placed on Calendar Senate

   Struck: SEC. 6. ELIMINATION OF MANIPULATION AND EXCESSIVE SPECULATION AS CAUSE OF HIGH OIL, GAS, AND ENERGY PRICES.

   Struck: Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 5) is amended by adding at the end the following:

   Struck: "(h) Elimination of Excessive Speculation and Nonlegitimate Hedge Trading as a Cause of High Oil, Gas, and Energy Prices.--

   Struck: "(1) Definition of legitimate hedge trading.--

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   Struck: "(A) In general.--The term 'legitimate hedge trading' means the conduct of trading that involves transactions by commercial producers and purchasers of actual physical petroleum and energy commodities for future delivery and the direct counterparties to such trades (regardless of whether the counterparties are commercial producers or purchasers).

   Struck: "(B) Inclusion.--To the extent a commercial producer or purchaser of an actual physical energy commodity for future delivery trades with an intermediary (referred to in this subparagraph as an 'initial trade'), each subsequent trade by the intermediary arising solely due to the initial trade and that directly results from such initial trade (referred to in this subparagraph as a 'follow-on trade') shall be considered to be the conduct of 'legitimate hedge trading' if each follow-on trade executed by the intermediary is--

   Struck: "(i) done proximate to the initial trade; and

   Struck: "(ii) in the aggregate, economically the same in size and substance as the initial trade.

   Struck: "(2) Identification of legitimate hedge trading.--In carrying out this Act, the Commission shall distinguish between--

   Struck: "(A) legitimate hedge trading; and

   Struck: "(B) all other trading in energy commodities.

   Struck: "(3) Type of trading.--Notwithstanding any other provision of this Act, the Commission shall modify (or delegate any appropriate entity to modify) such definitions, classifications, and data collection under this Act as are necessary to ensure that all direct and indirect parties and counterparties to all trades in the energy commodities market are clearly identified for all purposes as engaging in--

   Struck: "(A) legitimate hedge trading; or

   Struck: "(B) any other type of trading.

   Struck: "(4) Elimination of excessive speculation.--

   Struck: "(A) In general.--Notwithstanding any other provision of this Act, the Commission shall review all regulations, rules, exemptions, exclusions, guidance, no action letters, orders, and other actions taken by or on behalf of the Commission (including any action or inaction taken pursuant to delegated authority by an exchange, self-regulatory organization, or any other entity) regarding all energy futures market participants or market activity (referred to in this subsection individually as a 'prior action') to ensure that--

   Struck: "(i) legitimate hedge trading is protected and promoted; and

   Struck: "(ii) excessive speculation is eliminated.

   Struck: "(B) Prior action.--

   Struck: "(i) In general.--The Commission shall consider modifying or revoking the application after the date of enactment of this subsection of any prior action taken by the Commission (including any prior action taken pursuant to delegated authority by any other entity) with respect to any trade on any market, exchange, foreign board of trade, swap or swap transaction, index or index market participant or trade, hedge fund, pension fund, and any other transaction, trade, trader, or petroleum or energy futures market activity unless the Commission affirmatively determines that such prior action will protect and promote legitimate hedge trading and does not permit or encourage excessive speculation.

   Struck: "(ii) Revocation.--In carrying out this subparagraph, the Commission shall consider modifying or revoking the results of each prior action that, in whole or in part, has the direct or indirect affect of limiting, reducing, or eliminating the filing of any report or data regarding any direct or indirect trade or trader, including the filing of large trader reports.

   Struck: "(C) Speculative position limits applicable to nonlegitimate hedge trading in energy commodities and derivatives.--

   Struck: "(i) Speculative position limits.--

   Struck: "(I) In general.--Not later than 30 days after the date of enactment of this subsection, the Commission shall impose, by rule, regulation, or order, speculative position limits on trading that is not legitimate hedge trading.

   Struck: "(II) Application.--The Commission shall apply the limits imposed under subclause (I) to any person who executes accounts, agreements, or transactions involving an energy commodity for the own account of the person and to any person for whom an agent in fact or substance executes accounts, agreements, or transactions involving an energy commodity, on a registered entity or in covered over- the-counter trading.

   Struck: "(ii) Advisory group.--

   Struck: "(I) In general.--Not later than 30 days after the date of enactment of this subsection, the Commission shall convene an advisory group primarily consisting of commercial producers and purchasers of actual physical energy commodities for future delivery.

   Struck: "(II) Recommendations.--Not later than 60 days after the date on which the advisory group is convened under subclause (I), and annually thereafter, the advisory group shall submit to the Commission recommendations regarding an appropriate level for position limits--

   Struck: "(aa) that are designed for traders or entities that are not legitimate hedge traders; and

   Struck: "(bb) to replace the position limits imposed by the Commission under clause (i)(I).

   Struck: "(III) Applicability of faca.--The advisory group shall be subject to the Federal Advisory Committee Act (5 U.S.C. App.).

   Struck: "(iii) Review of recommendations.--Not later than 270 days after the date of enactment of this subsection, the Commission shall--

   Struck: "(I) analyze and review the recommendations submitted by the advisory group under clause (ii)(II); and

   Struck: "(II) submit to the appropriate committees of Congress a report describing each recommendation (including each modification to the statutory authority of the Commission that the Commission determines to be necessary to effectuate each recommendation).

   Struck: "(iv) Rulemaking.--

   Struck: "(I) In general.--Not later than 18 months after the date of enactment of this subsection, the Commission shall promulgate a final rule that establishes speculative position limits--

   Struck: "(aa) for any person engaged in nonlegitimate hedge trading of an energy commodity; and

   Struck: "(bb) that are consistent with this Act.

   Struck: "(II) Effective date.--The final rule described in subclause (I) shall take effect on the date that is 30 days after the date on which the Commission promulgates the final rule.

   Struck: "(v) Development of methodology.--

   Struck: "(I) In general.--Not later than 180 days after the date of enactment of this subsection, the Commission shall propose a methodology to determine and set aggregate speculative position limits at the control entity level for all nonlegitimate traders of energy commodities--

   Struck: "(aa) on designated contract markets;

   Struck: "(bb) on derivatives transaction execution facilities; and

   Struck: "(cc) in over-the-counter commodity derivatives.

   Struck: "(II) Report.--Not later than 180 days after the date of enactment of this subsection, the Commission shall submit to the appropriate committees of Congress a report that contains--

   Struck: "(aa) any recommendations regarding any additional statutory authority that the Commission determines to be necessary for the imposition of the speculative position limits described in subclause (I); and

   Struck: "(bb) a description of the resources that the Commission considers to be necessary to implement the speculative position limits.

   Struck: "(D) Maximum level of speculative position limits.--

   Struck: "(i) In general.--In establishing speculative position limits under this section (including subparagraph (C)(iv)), the Commission shall set the limits at the maximum level practicable--

   Struck: "(I) to ensure sufficient market liquidity for the conduct of legitimate hedging activities;

   Struck: "(II) to ensure that price discovery is not disrupted;

   Struck: "(III) to protect and promote legitimate hedge trading;

   Struck: "(IV) to minimize nonlegitimate hedge trading; and

   Struck: "(V) to eliminate excess speculation.

   Struck: "(ii) Effect.--

   Struck: "(I) In general.--Nothing in this subparagraph modifies the spot month position limitation of 3,000 contracts that is designed to prevent a corner or squeeze at the delivery date.

   Struck: "(II) Commission action.--If the Commission sets position limits under clause (i) that are different from the spot month position limit described in subclause (I), the Commission shall include in the report required under subparagraph (C)(v)(II) an analysis describing the reasons for the position limits.".

   Original wording

   Strike section 6.

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As printed