To implement regulatory oversight of the swap markets, to improve regulator's access to information about all swaps, to encourage clearing while preventing concentration of inadequately hedged risks in central clearinghouses and ensuring that corporate end users can continue to hedge their unique business risks, and to improve market transparency.

SA 3816. Mr. CHAMBLISS (for himself, Mr. Shelby, Mr. McConnell, Mr.
Gregg, Mr. Crapo, Mr. Johanns, Mr. Cochran, Mrs. Hutchison, Mr. Cornyn,
Mr. Roberts, Mr. Bennett, Mr. Vitter, and Mr. Thune) submitted an
amendment intended to be proposed to amendment SA 3739 proposed by Mr.
Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to the bill S. 3217,
to promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes; which was ordered to lie on the table; as follows:

Strike title VII and insert the following:

TITLE VII--OVER-THE-COUNTER DERIVATIVES MARKET

SEC. 701. SHORT TITLE; PURPOSES.

(a) Short Title.--This title may be cited as the ``Over-
the-Counter Swaps Markets Transparency and Accountability Act
of 2010''.
(b) Purposes.--The purposes of this title are--
(1) to improve regulators' access to information by
establishing well-regulated repositories for the reporting of
all swaps;
(2) to repeal the statutory provisions that prohibit
regulators from overseeing the over-the-counter swaps
markets;
(3) to increase the number of derivatives transactions that
are centrally cleared;
(4) to ensure that corporate end users can continue to
hedge their unique business risks through customized
derivatives;
(5) to prevent concentration of inadequately hedged risks
in individual firms or central clearinghouses; and
(6) to provide investors and other swap market participants
with information about transactions and positions in order to
help them mark existing swap positions to market, make
informed decisions before executing future transactions, and
assess the quality of transactions they have executed.

Subtitle A--Regulatory Authority

SEC. 711. DEFINITIONS.

In this subtitle, the terms ``prudential regulator'',
``swap'', ``swap participant'', ``swap data repository'',
``associated person of a swap participant'', ``eligible
contract participant'', ``non-security-based swap execution
facility'', ``broad-based security index'', ``non-security-
based swap'', ``non-security-based swap data repository'',
``security-based swap'', and ``security-based swap data
repository'' have the meanings given the terms in section 1a
of the Commodity Exchange Act (7 U.S.C. 1a).

SEC. 712. REVIEW OF REGULATORY AUTHORITY.

(a) Consultation.--
(1) Rules; orders.--In developing and promulgating rules or
orders pursuant to this subsection--
(A) the Commodity Futures Trading Commission shall consider
the views of--
(i) the Securities and Exchange Commission; and
(ii) the prudential regulators; and
(B) the Securities and Exchange Commission shall consider
the views of--
(i) the Commodity Futures Trading Commission; and
(ii) the prudential regulators.
(2) 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.
(b) Global Rulemaking Timeframe.--Unless otherwise provided
in a particular provision of this title, or an amendment made
by this title, the Commodity Futures Trading Commission or
the Securities and Exchange Commission, or both, shall
promulgate rules and regulations required of each Commission
under this title or an amendment made by this title not later
than 1 year after the date of enactment of this Act.
(c) Regulatory Authority.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
prescribe such regulations as may be necessary to carry out
the provisions of this title.

SEC. 713. DETERMINATION OF STATUS OF NEW PRODUCTS.

(a) In General.--If the Securities and Exchange Commission
and the Commodity Futures Trading Commission are unable to
determine whether any new product is a security, future,
option on a future, security-based swap, or non-security-
based swap, either agency may petition the Financial
Stability Oversight Council (referred to in this Act as the
``Council'') for a binding determination of the status of the
new product as a security, future, option on a future,
security-based swap, or non-security-based swap.
(b) Deadline for Determination.--The Council shall issue
its determination within 60 days after the date of receipt of
a petition described in subsection (a).

SEC. 714. STUDY ON ENFORCEMENT CONSISTENCY.

(a) Study.--The Council shall conduct a study to compare
the nature and amount of penalties and other sanctions
imposed for violations of this title and any regulations
adopted thereunder.
(b) Report.--Not later than 4 years after the enactment of
this Act, the Council shall submit a report 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 that sets forth--
(1) the findings of the study required under subsection
(a); and
(2) recommendations for statutory changes to enhance the
consistency with which this Act and the regulations adopted
thereunder are enforced.

SEC. 715. JURISDICTION.

(a) The provisions of this title shall not apply to
activities outside the United States, unless those
activities--
(1) have a direct and significant connection with
activities in, or an effect on, United States commerce; or
(2) contravene such rules or regulations as the Securities
and Exchange Commission and Commodity Futures Trading
Commission may jointly, by rule or regulation, prescribe as
necessary or appropriate to prevent the evasion of any
provision of this Act.
(b) The Commodity Futures Trading Commission and the
Securities and Exchange Commission may exempt a person from
some or all requirements of this title, if they jointly
determine by rule or order that the person is subject to
comparable requirements as part of comprehensive supervision
and regulation on a consolidated basis by an appropriate
regulatory authority in a foreign jurisdiction and such
regulatory authority has entered into an information sharing
agreement with the Commodity Futures Trading Commission and
the Securities and Exchange Commission.

SEC. 716. INTERNATIONAL HARMONIZATION.

(a) International Standards.--The Department of the
Treasury shall consult and coordinate with foreign regulatory
authorities on the establishment of consistent international
standards with respect to the regulation of swaps, swap
market participants, swap data repositories, and central
clearing entities.
(b) International Information-Sharing Agreements.--Nothing
in subsection (a) shall be construed to prohibit the
Commodity Futures Trading Commission and the Securities and
Exchange Commission, from entering into information-sharing
arrangements with foreign regulators as may be deemed to be
necessary in furtherance of the purposes of this title.

SEC. 717. CONFIDENTIALITY OF INFORMATION.

(a) Confidentiality of Information Provided to Members of
Congress.--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 shall each establish, by rule or resolution
of such House, procedures to protect from unauthorized
disclosure all confidential information (including
information covered by sections 1905 and 1906 of title 18,
United States Code,) that is furnished to the committees and
Members of Congress under this title. Such procedures shall
be established in consultation with the appropriate
regulatory agencies.
(b) Confidentiality of Information Provided to
Regulators.--No non-public information provided to or
obtained by the Commodity Futures Trading Commission, the
Securities and Exchange Commission, any prudential regulator,
the Financial Stability Oversight Council, or the Department
of Justice under this title may be disclosed to any other
person. Nothing in this section shall authorize the Commodity
Futures Trading Commission, the Securities and Exchange
Commission, any prudential regulator, the Financial Stability
Oversight Council, or the Department of Justice to withhold
information from Congress, or prevent the Commodity Futures
Trading Commission, the Securities and Exchange Commission,
any prudential regulator, the Financial Stability Oversight
Council, or the Department of Justice from complying with a
request for information from any other Federal department or
agency.

[[Page S3174]]

SEC. 718. COMMON FRAMEWORK FOR CLEARINGHOUSE RISK MANAGEMENT.

(a) Common Framework for Risk Management.--The Commodity
Futures Trading Commission and the Securities and Exchange
Commission shall consult with the Federal Reserve Board of
Governors to jointly develop risk management supervision
programs for derivatives clearing organizations and clearing
agencies (``clearinghouses''). Not later than 1 year after
the date of enactment of this Act, the Commodity Futures
Trading Commission, the Securities and Exchange Commission,
and the Federal Reserve Board of Governors shall submit a
joint report to the Committee on Banking, Housing, and Urban
Affairs and the Committee on Agriculture, Nutrition, and
Forestry of the Senate, and the Committee on Financial
Services and the Committee on Agriculture of the House of
Representatives recommendations for--
(1) improving consistency in the clearinghouse oversight
programs of the Securities and Exchange Commission and the
Commodity Futures Trading Commission;
(2) promoting robust risk management by clearinghouses;
(3) promoting robust risk management oversight by
regulators of clearinghouses; and
(4) improving regulators' ability to monitor the potential
effects of clearinghouse risk management on the stability of
the financial system of the United States.
(b) Dually Registered Persons.--
(1) In general.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall develop and,
subject to approval by the Council, implement an oversight
plan with respect to each person that is subject to
registration as--
(A) both a derivatives clearing organization and a clearing
agency; or
(B) both a non-security-based swap data repository and
security-based swap data repository.
(2) Contents of plans.--Each plan shall identify
recordkeeping, reporting and other requirements imposed on
the person by the Commodity Futures Trading Commission and
the Securities and Exchange Commission that are inconsistent,
an approach for eliminating inconsistencies where
appropriate, and ways in which the two commissions can
coordinate their inspection and examination of the person.
Such plan, if appropriate, may designate one regulator as the
person's primary regulator.
(3) Submission of plans.--The Commissions shall submit each
plan, including any recommended legislative changes to
facilitate the plan, 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 on or before 1 year after the date
on which the person becomes dually registered.

SEC. 719. RECOMMENDATIONS FOR CHANGES TO PORTFOLIO MARGINING
LAWS.

Not later than 1 year after the date of enactment of this
Act, the Securities and Exchange Commission, the Commodity
Futures Trading Commission, and the prudential regulators
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 recommendations for legislative changes to
the Federal laws to facilitate--
(1) the portfolio margining of securities and commodity
futures and options, commodity options, swaps, and other
financial instrument positions;
(2) the portability of customer swap positions and
associated margin upon the insolvency of a clearing
participant; and
(3) harmonization of the insolvency laws to provide for
uniform treatment across similar entities, regardless of
whether they are registered with or regulated by the
Securities and Exchange Commission or the Commodity Futures
Trading Commission.

SEC. 720. ABUSIVE SWAPS.

The Council may, by rule or order--
(1) collect information as may be necessary concerning the
markets for any types of swaps; and
(2) issue a report with respect to any types of swaps that
the Council determines to be detrimental to the financial
system stability of the United States.

Subtitle B--Regulation Non-Security-Based 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) through (17), (18)
through (23), (24) through (28), (29), (30), (31) through
(33), and (34) as paragraphs (5), (8) through (22), (26)
through (31), (34) through (38), (40), (41), (43) through
(45), and (49), respectively;
(2) by inserting after paragraph (1) the following:
``(2) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the meaning given
the term in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
``(3) Associated person of a swap participant.--
``(A) In general.--The term `associated person of a swap
participant' means--
``(i) any partner, officer, director, or branch manager of
a swap participant (including any individual who holds a
similar status or performs a similar function with respect to
any partner, officer, director, or branch manager of a swap
participant);
``(ii) any person that directly or indirectly controls, is
controlled by, or is under common control with, a swap
participant; and
``(iii) any employee of a swap participant.
``(B) Exclusion.--Other than for purposes of section
4s(b)(6), the term `associated person of a swap participant'
does not include any person associated with a swap
participant the functions of which are solely clerical or
ministerial.
``(4) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.'';
(3) by inserting after paragraph (5) (as redesignated by
paragraph (1)) the following:
``(6) Broad-based security index.--The term `broad-based
security index' means an index that--
``(A) is not a narrow-based security index, as defined in
this section; or
``(B) the Commission and the Securities and Exchange
Commission have jointly determined should not be treated as a
narrow-based security index.
``(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 or a clearing agency regulated with the Securities
and Exchange Commission.'';
(4) in paragraph (10) (as redesignated by paragraph (1)),
by inserting ``security futures product, or non-security-
based swap'' after ``facility,'';
(5) in paragraph (11)(A)(i)(I) (as redesignated by
paragraph (1)), 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 non-security-based swap'';
(6) in paragraph (16) (as redesignated by paragraph (1)) in
subparagraph (A), in the matter preceding clause (i), by
striking ``paragraph (12)(A)'' and inserting ``paragraph
(17)(A)'';
(7) in paragraph (17) (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 (16)(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'';
(8) in paragraph (21) (as redesignated by paragraph (1)),
by inserting ``security futures product, or non-security-
based swap'' after ``of any contract market or derivatives
transaction execution facility'';
(9) in paragraph (22) (as redesignated by paragraph (1)),
by inserting ``, security futures product, or non-security-
based swap'' after ``of any contract market or derivatives
transaction execution facility'';
(10) by inserting after paragraph (22) (as redesignated by
paragraph (1)) the following:
``(23) Foreign exchange forward.--The term `foreign
exchange forward' means a transaction that--
``(A) occurs at a later time on the trade date or on a
specific future date; and
``(B) solely involves--
``(i) the exchange of 2 different currencies at a fixed
rate agreed to at the inception of the contract; or
``(ii) 1 or more payments determined by reference to the
rate of exchange of 2 different currencies, or the movement
thereof in accordance with a method agreed to at the
inception of a contract.
``(24) Foreign exchange swap.--The term `foreign exchange
swap' means a transaction that does not involve any payment
or delivery based on the level of interest rates, the price
of any commodity other than a currency, or the price of, or
default under, any debt or equity security or loan and solely
involves--
``(A) the exchange of 2 different currencies at a fixed
rate agreed to at the inception of the contract that occurs
at a later time on the trade date or on a specific future
date and a reverse exchange of the same currencies at a date
further in the future; or
``(B) 1 or more payments determined by reference to the
rate of exchange of 2 different currencies, or the movement
thereof in accordance with a method agreed to at the
inception of the contract, at a later time on the trade date
or on a specific future date and a payment at a date further
in the future that is determined by reference to the rate of
exchange of the same currencies or the movement thereof in
accordance with a method agreed to at the inception of the
contract.
``(25) Foreign exchange option.--The term `foreign exchange
option' means a transaction, including a put or a call, that
solely entitles the buyer, upon exercise, on a specified date
or upon a specified event--
``(A) to purchase from the seller a specified quantity or 1
or more currencies and to sell to the seller a specified
quantity of 1 or more currencies; or
``(B) to require the seller to make a payment determined by
reference to the exchange rate of such currencies or the
movement thereof in accordance with a method agreed to at the
inception of the contract.'';

[[Page S3175]]

(11) in paragraph (28) (as redesignated by paragraph (1))--
(A) in subparagraph (A)--
(i) by inserting ``, security futures product, or non-
security-based swap'' after ``facility''; and
(ii) by striking ``; and'' and inserting a semicolon;
(B) in subparagraph (B), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following:
``(C) Exclusion.--The term `futures commission merchant'
does not include a person who acts only as a counterparty for
non-security-based swaps with eligible contract participants
and who does not otherwise engage in the activities of a
futures commission merchant.'';
(12) in paragraph (30) (as redesignated by paragraph (1)),
in subparagraph (B), by striking ``state'' and inserting
``State'';
(13) in paragraph (31) (as redesignated by paragraph (1)),
by inserting ``security futures product, or non-security-
based swap,'' after ``facility'';
(14) by inserting after paragraph (31) (as redesignated by
paragraph (1)) the following:
``(32) Swap participant.--
``(A) In general.--The term `swap participant' means any
person who--
``(i) is engaged in the business of purchasing or selling
swaps for such person's own account or for others;
``(ii) is making a market in swaps; or
``(iii) engages in transactions in swaps and is not a swap
end user.
``(B) Exceptions.--A person shall not be deemed to be a
swap participant pursuant to subparagraph (A)--
``(i) solely because that person buys or sells swaps for
such person's own account or the account of any person under
common control with such person, either individually or in a
fiduciary capacity, but not as a part of a regular business;
or
``(ii) if that person engages in a de minimis quantity of
activities described in subparagraph (A) in connection with
transactions with or on behalf of customers.
``(33) Swap end user.--
``(A) In general.--The term `swap end user' means any
person the gross aggregate notional value of whose
outstanding swaps that do not qualify as bona fide hedging
swap transactions--
``(i) is 5 percent or less of the gross aggregate notional
value of the person's outstanding swaps; or
``(ii) is 7 percent or less of the gross aggregate notional
value of the person's outstanding swaps and security-based
swaps, provided that the aggregate notional value of the
person's outstanding swaps and security-based swaps that do
not qualify as bona fide hedging transactions and were
executed in connection with the person's commercial
transactions is 2 percent or more of the gross aggregate
notional value of the person's outstanding swaps.
``(B) Enumerated swap end users.--The term `swap end user'
shall include--
``(i) an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.); and
``(ii) an employee benefit plan as defined in section 3(3)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(3)) that is subject to title I of that Act (29
U.S.C. 1001 et seq.).
``(C) Enumerated exceptions.--The term `swap end user'
shall not include--
``(i) entities defined in section 1303(20) of the Federal
Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4502(20)); or
``(ii) an investment fund that would be an investment
company (as defined in section 3 of the Investment Company
Act o f 1940 (15 U.S.C. 80a-3)) but for paragraph (1) or (7)
of section 3(c) of that Act (15 U.S.C. 80a-3(c)), and is not
a partnership or other entity or any subsidiary that is
primarily invested in physical assets (which shall include
but not be limited to commercial real estate) directly or
through interests in partnerships or limited liability
companies that own such assets.
``(D) Availability of information.--Upon written request
from the Commission, the Securities and Exchange Commission,
or the Financial Stability Oversight Council, a swap end user
must provide information regarding the swaps that it holds.
This information may not be disclosed to any other person.
Nothing in this subsection shall authorize the Commission,
the Securities and Exchange Commission, or the Financial
Stability Oversight Council to withhold information from
Congress, or prevent the Commission, the Securities and
Exchange Commission, or the Financial Stability Oversight
Council from complying with a request for information from
any other Federal department or agency or foreign government
with which the Commission, the Securities and Exchange
Commission, or the Financial Stability Oversight Council has
an information sharing arrangement that requests the
information for purposes within the scope of its
jurisdiction, or complying with an order of a court of the
United States in an action brought by the United States or
the Commission.
``(33A) Bona fide hedging swap transaction.--
``(A) In general.--The term `bona fide hedging swap
transaction' means a purchase or sale by any person of a bona
fide swap that is economically appropriate to the reduction
or offsetting of risks arising from--
``(i) the potential change in the value of assets which
such person owns, produces, manufactures, processes, or
merchandises or anticipates owning, producing, manufacturing,
processing, or merchandising;
``(ii) the potential change in the cost or value of
liabilities which such person owns or anticipates incurring;
or
``(iii) the potential change in the cost or value of goods
or services which such person provides, purchases, or
anticipates providing or purchasing.
``(B) Prevention of evasion.--A swap transaction that is
undertaken solely for the purpose of avoiding registration as
a swap participant shall not constitute a bona fide hedging
swap transaction.'';
(15) by inserting after paragraph (38) (as redesignated by
paragraph (1)) the following:
``(39) Prudential regulator.--The term `prudential
regulator' means--
``(A) the Office of the Comptroller of the Currency, in the
case of--
``(i) any national banking association;
``(ii) any Federal branch or agency of a foreign bank; or
``(iii) any Federal savings association;
``(B) the Federal Deposit Insurance Corporation, in the
case of--
``(i) any insured State bank;
``(ii) any foreign bank having an insured branch; or
``(iii) any State savings association;
``(C) the Board of Governors of the Federal Reserve System,
in the case of--
``(i) any noninsured State member bank;
``(ii) any branch or agency of a foreign bank with respect
to any provision of the Federal Reserve Act (12 U.S.C. 221 et
seq.) which is made applicable under the International
Banking Act of 1978 (12 U.S.C. 3101 et seq.);
``(iii) any foreign bank which does not operate an insured
branch;
``(iv) any agency or commercial lending company other than
a Federal agency; or
``(v) supervisory or regulatory proceedings arising from
the authority given to the Board of Governors under section
7(c)(1) of the International Banking Act of 1978 (12 U.S.C.
3105(c)(1)), including such proceedings under the Financial
Institutions Supervisory Act of 1966 (12 U.S.C. 1464 et
seq.);
``(D) the Federal Housing Finance Agency, in the case of a
swap participant that is a regulated entity (as defined in
section 1303(20) of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4502(20))); and
``(E) the Farm Credit Administration, in the case of a swap
participant that is an institution chartered under the Farm
Credit Act of 1971 (12 U.S.C. 2001 et seq.).'';
(16) 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'';
(D) by inserting after subparagraph (C) (as so
redesignated) the following:
``(D) a non-security-based swap execution facility
registered under section 5h;
``(E) a non-security-based swap data repository; and'';
(17) 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)).
``(42A) Non-security-based swap.--The term `non-security-
based swap' means any swap that is not a security-based
swap.'';
(18) in paragraph (45) (as redesignated by paragraph (1)),
by striking ``subject to section 2(h)(7)'' and inserting
``subject to section 2(h)(5)'';
(19) by inserting after paragraph (45) (as redesignated by
paragraph (1)) the following:
``(46) Swap.--
``(A) In general.--The term `swap' means any agreement,
contract, or transaction that--
``(i) 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) 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) 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;

[[Page S3176]]

``(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) a broad-based security index swap;
``(XI) an equity index swap;
``(XII) an equity swap;
``(XIII) a debt index swap;
``(XIV) a debt swap;
``(XV) a credit spread;
``(XVI) a credit default swap;
``(XVII) a credit swap;
``(XVIII) a weather swap;
``(XIX) an energy swap;
``(XX) a metal swap;
``(XXI) an agricultural swap;
``(XXII) an emissions swap; and
``(XXIII) a commodity swap;

``(iv) provides for the purchase or sale, on a fixed,
contingent, or variable basis, of any commodity, currency,
instrument, interest, right, service, good, article, or
property of any kind;
``(v) is an agreement, contract, or transaction that is, or
in the future becomes, commonly known to the trade as a swap;
or
``(vi) is any combination or permutation of, or option on,
any agreement, contract, or transaction described in clauses
(i) through (v).
``(B) Exclusions.--The term `swap' does not include--
``(i) any contract of sale of a commodity for future
delivery traded on or subject to the rules of any board of
trade designated as a contract market under section 5 or 5f;
``(ii) any purchase or sale of a nonfinancial commodity for
deferred or delayed shipment or delivery, so long as the
transaction provides for physical delivery and is undertaken
as part of, or in contemplation of, commercial or
merchandising activities;
``(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, in whole
or in part, on the value thereof, whether physically or cash
settled, unless such agreement, contract, or transaction
predicates such purchase or sale (or a net cash payment in
lieu thereof) on the occurrence of a bona fide contingency
that might reasonably be expected to affect or be affected by
the creditworthiness of 1 or more reference entities;
``(iv) any agreement, contract, or transaction that is
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));
``(v) any purchase or sale of 1 or more securities on a
non-contingent basis for deferred or delayed delivery;
``(vi) any agreement, contract, or transaction providing
for the purchase or sale of 1 or more securities (or a net
cash payment in lieu thereof) on a contingent basis, unless
such agreement, contract, or transaction predicates such
purchase or sale (or a net cash payment in lieu thereof) on
the occurrence of a bona fide contingency that might
reasonably be expected to affect or be affected by the
creditworthiness of 1 or more reference entities;
``(vii) any agreement, contract, or transaction for the
purchase or sale, on an immediate settlement basis within the
relevant regular way settlement cycle, of any currency,
commodity, security, instrument of indebtedness, financial
instrument, or property of any kind, or any interest therein;
``(viii) 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)) or paragraph (10) of this
subsection, or that would be a `swap' pursuant to section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) solely as a result of bearing a variable rate of
return;
``(ix) any agreement, contract, or transaction that is--

``(I) based on, or references, 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;

``(x) any security futures product;
``(xi) any agreement, contract, or transaction that is--

``(I) predominantly a banking product as provided in
section 405 of the Commodity Futures Modernization Act of
2000 (Public Law 106-554; 114 Stat. 2763A-455);
``(II) not marketed or sold as an alternative to a swap;
and
``(III) issued or sold by a bank as defined in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a));

``(xii) any hybrid instrument that is predominantly a
security as provided in section 2(f) as in effect on the day
before the date of enactment of this paragraph;
``(xiii)(I) any identified banking product specified in
paragraphs (1) through (5) of section 206(a) of the Gramm-
Leach-Bliley Act (15 U.S.C. 78c(a)), that is--

``(aa) not marketed or sold as an alternative to a swap,
and
``(bb) issued or sold by a bank, as defined in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)); or

``(II) any agreement, contract, or transaction executed in
conjunction with an identified banking product described in
subclause (I), between a bank and a borrower that is not an
eligible contract participant to convert the variable rate
interest cost of debt to a fixed rate interest cost or vice
versa, or to limit the maximum interest cost of such debt;
``(xiv) any mortgage or mortgage purchase commitment, or
any sale of installment loan contracts or receivables, if
such product or instrument is not marketed or sold as an
alternative to a swap;
``(xv) 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 or insurance company for the benefit of any
individual or commingled fund available as an investment in a
defined contribution plan (as defined in section 3(34) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(34)) or a qualified tuition program (as defined in
section 529 of the Internal Revenue Code of 1986 (26 U.S.C.
529));
``(xvi) any agreement, contract, or transaction a
counterparty of which is a Federal Reserve bank, the United
States government, a foreign central bank, or a foreign
government;
``(xvii) any agreement, contract, or transaction for the
performance of services;
``(xviii) any agreement, contract, or transaction that is
commercial in nature or employment-related, that is not
marketed as a swap, and that would otherwise be a `swap'
pursuant to subparagraph (A) solely as a result of an
incidental price, compensation, or rate escalation clause;
``(xix) any agreement, contract, or transaction--

``(I) under which a payment or performance is dependent on
the occurrence, non-occurrence, or the extent of the
occurrence of a contingency beyond the direct control of the
parties to the agreement, contract, or transaction and which
conditions such payment or performance obligation on the
incurrence of a loss arising from such contingency; and
``(II) that is an insurance or endowment policy or annuity
contract or optional annuity contract issued by a corporation
that is subject to the supervision of the insurance
commissioner, bank commissioner, or any agency or officer
performing like functions, of any State or territory of the
United States or the District of Columbia, unless such
agreement, contract, or transaction predicates such purchase
or sale (or a net cash payment in lieu thereof) on the
occurrence of a bona fide contingency that might reasonably
be expected to affect or be affected by the creditworthiness
of one or more reference entities;

``(xx) any agreement, contract, or transaction that the
Commission, jointly with the Securities and Exchange
Commission, determines, by rule or order and consistent with
the purposes of the Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010, should be
excluded from the definition of swap.
``(47) Non-security-based swap data repository.--The term
`non-security-based swap data repository' means any person
that collects, calculates, prepares, or maintains information
or records with respect to transactions or positions in, or
the terms and conditions of, non-security-based swaps entered
into by third parties.
``(48) Non-security-based swap execution facility.--The
term `non-security-based swap execution facility' means a
facility in which multiple participants have the ability to
execute or trade non-security-based swaps by accepting bids
and offers made by other participants that are open to
multiple participants in the facility or system, or
confirmation facility, that--
``(A) facilitates the execution of non-security-based swaps
between persons; and
``(B) is not a designated contract market.''; and
(20) in paragraph (49) (as redesignated by paragraph (1)),
in subparagraph (A)(i), by striking ``partipants'' and
inserting ``participants''.
(b) 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) an 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(17)(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 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(17)(B)(ii)''; and

[[Page S3177]]

(B) in subclause (II), by striking ``section 1a(12)'' and
inserting ``section 1a(17)''.
(9) The Legal Certainty for Bank Products Act of 2000 (7
U.S.C. 27 et seq.) is amended--
(A) in section 402--
(i) in subsection (a)(7), by striking ``section 1a(20)''
and inserting ``section 1a'';
(ii) in subsection (b)(2), by striking ``section 1a(12)''
and inserting ``section 1a'';
(iii) in subsection (c), by striking ``section 1a(4)'' and
inserting ``section 1a''; and
(iv) in subsection (d)--

(I) in the matter preceding paragraph (1), by striking
``section 1a(4)'' and inserting ``section 1a(9)'';
(II) in paragraph (1)--

(aa) in subparagraph (A), by striking ``section 1a(12)''
and inserting ``section 1a''; and
(bb) in subparagraph (B), by striking ``section 1a(33)''
and inserting ``section 1a'';

(III) in paragraph (2)--

(aa) in subparagraph (A), by striking ``section 1a(10)''
and inserting ``section 1a'';
(bb) in subparagraph (B), by striking ``section
1a(12)(B)(ii)'' and inserting ``section 1a(18)(B)(ii)'';
(cc) in subparagraph (C), by striking ``section 1a(12)''
and inserting ``section 1a(17)''; and
(dd) in subparagraph (D), by striking ``section 1a(13)''
and inserting ``section 1a''; and
(B) in section 404(1) by striking ``section 1a(4)'' and
inserting ``section 1a''.
(c) Legal Certainty for Certain Transactions in Exempt
Commodities.--
(1) Petition.--Not 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) Temporary allowance to operate under section 2(h).--The
Commodity Futures Trading Commission--
(A) shall consider any petition submitted under subsection
(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.
(d) Agricultural Swaps.--
(1) In general.--Except as provided in paragraph (2), no
person shall offer to enter into, or confirm the execution
of, any swap in an agricultural commodity (as defined by the
Commodity Futures Trading Commission).
(2) Exception.--Notwithstanding paragraph (1), 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.

SEC. 722. JURISDICTION.

(a) Exclusive Jurisdiction.--Section 2(a)(1)(A) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended in
the first sentence--
(1) by inserting ``the Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010 (including an
amendment made by that Act) and'' after ``otherwise provided
in'';
(2) by striking ``(c) through (i) of this section'' and
inserting ``(c) and (f)'';
(3) by striking ``contracts of sale'' and inserting ``non-
security-based swaps or contracts of sale''; and
(4) by striking ``or derivatives transaction execution
facility registered pursuant to section 5 or 5a'' and
inserting ``pursuant to section 5''.
(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 non-security-based 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 swap-related provisions of this
Act that were enacted by the Over-the-Counter Swaps Markets
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 Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010.''.

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) and (B) of subsection (a)(1), subsections (f) and (g),
sections 1a, 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) and (f) 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 and 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 non-security-based swap unless the non-
security-based 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 non-security-based 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) Swaps subject to mandatory clearing requirement.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall, jointly with the Securities and Exchange
Commission and the Federal Reserve Board of Governors, adopt
rules to establish criteria for determining that a swap or
any group, category, type, or class of swap is required to be
cleared.
``(B) Factors.--In carrying out subparagraph (A), the
following factors shall be considered:
``(i) Whether 1 or more derivatives clearing organizations
or clearing agencies accepts the swap or group, category,
type, or class of swap for clearing.
``(ii) Whether the swap or group, category, type, or class
of swap is traded pursuant to standard documentation and
terms.
``(iii) The liquidity of the swap or group, category, type,
or class of swap and its underlying commodity, security,
security of a reference entity, or group or index thereof.
``(iv) The ability to value the swap group, category, type,
or class of swap and its underlying commodity, security,
security of a reference entity, or group or index thereof
consistent with an accepted pricing methodology, including
the availability of intraday prices.
``(v) The size of the market for the swap or group,
category, type, or class of swap and the available capacity,
operational expertise, and resources of the derivatives
clearing organization or clearing agency that accepts it for
clearing.
``(vi) Whether a clearing mandate would mitigate risk to
the financial system or whether it would unduly concentrate
risk in a clearing participant, derivatives clearing
organization, or clearing agency in a manner that could
threaten the solvency of that clearing participant, the
derivatives clearing organization, or the clearing agency.
``(vii) Such other factors as the Commission, the
Securities and Exchange Commission, and the Federal Reserve
Board of Governors jointly may determine are relevant.
``(C) Non-security-based swaps subject to clearing
requirement.--The Commission--
``(i) shall review each non-security-based swap, or any
group, category, type, or class of non-security-based swap
that is currently listed for clearing and those which a
derivatives clearing organization notifies the Commission
that the derivatives clearing organization plans to list for
clearing after the date of enactment of this subsection;
``(ii) may require, pursuant to the rules adopted under
clause (i) and through notice-and-comment rulemaking, that a
particular non-security-based swap, group, category, type, or
class of non-security-based swap must be cleared if--

``(I) both counterparties are swap participants;
``(II) the transaction was entered into after the later of
the date of publication of the rules adopted under
subparagraph (A) in the Federal Register or the effective
date of the requirement; and
``(III) one counterparty directly or indirectly controls,
is controlled by, or is under common control with the other
counterparty, provided, however, that the Commission, jointly
with the Financial Stability Oversight Council, may
determine, by rule or order, that transactions between
certain parties under common control are subject to any
requirement to clear under clause (ii); and

[[Page S3178]]

``(iii) shall rely on economic analysis provided by
economists of the Commission in making any determination
under clause (ii), which economic analysis may refer to any
peer-reviewed or other relevant literature conducted by
independent researchers.
``(D) Effect.--
``(i) In general.--Nothing in this paragraph affects the
ability of a derivatives clearing organization to list for
permissive clearing any swap, or group, category, type, or
class of swap.
``(ii) Prohibition.--The Commission shall not compel a
derivatives clearing organization to list a swap, group,
category, type, or class of swap for clearing if the
derivatives clearing organization determines that the swap,
group, category, type, or class of swap would adversely
impact its business operations, impair the financial
integrity of the derivatives clearing organization, or pose a
threat to the financial stability of the United States.
``(E) Prevention of evasion.--The Commission may prescribe
rules, or issue interpretations of such rules, as necessary
to prevent evasions of any requirement to clear under
subparagraph (C). In issuing such rules or interpretations,
the Commission shall consider--
``(i) the extent to which the terms of the non-security-
based swap, group, category, type, or class of non-security-
based swap are similar to the terms of other non-security-
based swaps, groups, categories, types, or classes of non-
security-based swap that are required to be cleared by swap
participants under subparagraph (C); and
``(ii) whether there is an economic purpose for any
differences in the terms of the non-security-based swap or
group, category, type, or class of non-security-based swap
that are required to be cleared by swap participants under
subparagraph (C).
``(F) Elimination of requirement to clear.--The Commission
may, pursuant to the rules adopted under subparagraph (A) and
through notice-and-comment rulemaking, rescind a requirement
imposed under subparagraph (C) with respect to a non-
security-based swap, group, category, type, or class of non-
security-based swap.
``(G) Petition for rulemaking.--Any person may file a
petition, pursuant to the rules of practice of the
Commission, requesting that the Commission use its authority
under subparagraph (C) to require swap participants to clear
a particular non-security-based swap, group, category, type,
or class of non-security-based swap or to use its authority
under subparagraph (F) to rescind a requirement for non-
security-based swap participants to clear a particular non-
security-based swap, group, category, type, or class of non-
security-based swap.
``(H) Option to clear for counterparties that are not swap
participants.--Before entering into a non-security-based swap
transaction, any counterparty that is not a swap participant
may elect to clear a non-security-based swap that is subject
to a clearing requirement under subparagraph (C). If such
counterparty elects to clear, it shall have the sole right to
select the derivatives clearing organization or clearing
agency at which the non-security-based swap will be cleared.
``(I) Foreign exchange forwards, swaps, and options.--
Foreign exchange forwards, swaps, and options shall not be
subject to a clearing requirement under subparagraph (C)
unless the Department of the Treasury and the Board of
Governors determine that such a requirement is appropriate
after taking into consideration whether there exists an
effective settlement system for such foreign exchange
forwards, swaps, and options and any other factors that the
Department of the Treasury and the Board of Governors deem to
be relevant.''.

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) is amended by
adding at the end the following:
``(f) Swaps.--
``(1) Cleared swaps.--
``(A) Segregation required.--A futures commission merchant
or a swap participant shall treat and deal with all money,
securities, and property of any swap customer received to
margin, guarantee, or secure a swap cleared by or through a
derivatives clearing organization (including money,
securities, or property accruing to the swap customer as the
result of such a swap) as belonging to the swap customer.
``(B) Commingling prohibited.--Money, securities, and
property of a swap customer described in subparagraph (A)
shall be separately accounted for and shall not be commingled
with the funds of the futures commission merchant or the swap
participant or be used to margin, secure, or guarantee any
trades or contracts of any swap customer or person other than
the person for whom the same are held.
``(2) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding paragraph (1), money,
securities, and property of a swap customer of a futures
commission merchant or a swap participant described in
paragraph (1) may, for convenience, be commingled and
deposited in the same 1 or more accounts with any bank or
trust company or with a derivatives clearing organization.
``(ii) Withdrawal.--Notwithstanding paragraph (1), 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 (1), in
accordance with such terms and conditions as the Commission
may prescribe by rule, regulation, or order, any money,
securities, or property of the swap customer of a futures
commission merchant or a swap participant described in
paragraph (1) may be commingled and deposited as provided in
this section with any other money, securities, or property
received by the futures commission merchant or swap
participant and required by the Commission to be separately
accounted for and treated and dealt with as belonging to the
swap customer of the futures commission merchant.
``(3) Permitted investments.--Money described in paragraph
(1) may be invested in obligations of the United States or in
any other investment that has minimal credit, market, and
liquidity risks 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.
``(4) Commodity contract.--A non-security-based 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
swap customer received by a futures commission merchant, a
swap participant, or a derivatives clearing organization to
margin, guarantee, or secure the non-security-based swap
(including money, securities, or property accruing to the
customer as the result of the swap).
``(5) Prohibition.--It shall be unlawful for any person,
including any derivatives clearing organization and any
depository, that has received any money, securities, or
property for deposit in a separate account or accounts as
provided in paragraph (1) to hold, dispose of, or use any
such money, securities, or property as belonging to the
depositing futures commission merchant, a swap participant or
any person other than the swap customer of the futures
commission merchant or swap participant.''.
(b) Bankruptcy Treatment of Cleared Non-security-based
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, a
swap participant, 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 Non-security-
based Swaps.--Section 4s of the Commodity Exchange Act (as
added by section 729) is amended by adding at the end the
following:
``(l) Segregation Requirements for Initial Margin.--
``(1) Segregation of initial margin.--
``(A) Notification of right to segregate.--A swap
participant shall notify its counterparty before entering
into a non-security-based swap transaction of the
counterparty's right to require segregation of the funds or
other property supplied as initial margin for the purpose of
margining, guaranteeing, or securing the obligations of the
counterparty.
``(B) Segregation and maintenance of funds.--At the
request, made before entering into a non-security-based swap
transaction, of a counterparty that provides funds or other
property as initial margin to a swap participant for the
purpose of margining, guaranteeing, or securing the
obligations of the counterparty, the 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 jointly with the Securities and
Exchange Commission, maintain the funds or other property in
a segregated account separate from the assets and other
interests of the swap participant.
``(C) Notification of excess variation margin.--Pursuant to
rules or regulations adopted by the Commission, a swap
participant who received funds or other property shall notify
any counterparty who provided such funds or other property if
the swap participant is holding excess net variation margin
from that counterparty.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a non-security-based swap between a
counterparty and a swap participant that is not submitted for
clearing to a derivatives clearing organization; and
``(B)(i) not apply to variation margin payments; and
``(ii) not preclude any commercial arrangement regarding--
``(I) the investment of segregated funds or other property
that may only be invested in

[[Page S3179]]

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), if requested
by the counterparty, may 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 as initial margin for the purpose of margining,
guaranteeing, or securing the obligations of the
counterparty, the swap participant shall report to the
counterparty of the swap participant on a quarterly basis
that the back office procedures of the swap participant
relating to initial 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 non-security-based 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 Banks and Clearing Agencies;
Exemptions; 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) Required Registration for Banks and Clearing
Agencies.--A person that is required to be registered as a
derivatives clearing organization under this section shall
register with the Commission regardless of whether the person
is also licensed as a bank or a clearing agency registered
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(h) Existing Banks and Clearing Agencies.--
``(1) In general.--A bank 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 date of
enactment of this subsection--
``(A) the bank cleared swaps as a multilateral clearing
organization; or
``(B) the clearing agency cleared swaps.
``(2) Conversion of bank.--A bank to which this paragraph
applies may, by the vote of the shareholders owning not less
than 51 percent of the voting interests of the bank, 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.''.
(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 derivatives clearing organization to meet
each financial obligation of the derivatives clearing
organization to each member and participant of the
derivatives clearing organization; 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, and 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.

``(iv) Offsetting economically equivalent positions.--The
rules of a registered derivatives clearing organization shall
prescribe that all swaps with the same terms and conditions
are economically equivalent and may be offset with each other
within the derivatives clearing organization.
``(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

[[Page S3180]]

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 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 other 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 appropriate to
achieve the purposes of this Act, a derivatives clearing
organization may 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 support the objectives 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) 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:
``(j) Reporting Requirements.--
``(1) Duty of derivatives clearing organizations.--Each
derivatives clearing organization that clears non-security-
based 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 non-security-based swaps cleared by
derivatives clearing organizations that are comparable to the
corresponding requirements for non-security-based swaps data
reported to non-security-based swap data repositories.
``(3) Information sharing.--The Commission shall require
derivatives clearing organizations to provide information
collected under paragraph (2) to any of the following
regulatory authorities that requires it--
``(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.
``(4) Public information.--Each derivatives clearing
organization that clears non-security-based 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).''.
(e) 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.''.
(f) 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).

[[Page S3181]]

(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. 726. TRANSPARENCY OF SWAP TRANSACTION DATA.

(a) Purposes.--The Commodity Futures Trading Commission is
directed, consistent with the purposes of this title, to use
its authority under this title to facilitate the prompt and
accurate collection, calculation, processing or preparation,
and public dissemination of information on transactions and
positions in non-security-based swaps.
(b) Transparency of Non-Security-Based Swap Transaction
Data.--The Commodity Exchange Act is amended by inserting
after section 4q (7 U.S.C. 6o-1) the following:

``SEC. 4R. REPORTING AND RECORDKEEPING FOR NON-SECURITY-BASED
SWAPS.

``(a) Mandatory Reporting of Non-security-based Swap
Transactions.--
``(1) In general.--Any person that enters into or effects a
transaction in a non-security-based swap shall report such
transaction through a derivatives clearing organization or a
non-security-based swap data repository registered with the
Commission pursuant to section 21 within the period specified
by any rule or regulation adopted by the Commission under
this paragraph. If no registered non-security-based swap data
repository accepts the non-security-based swap, the person
shall report the transaction to the Commission pursuant to
the requirements that the Commission may by rule or
regulation prescribe. Each transaction report shall disclose
whether the transaction is a bona fide hedging swap
transaction as defined in section 1a(33B) and any other
information that the Commission has, by rule or regulation,
prescribed as necessary or appropriate in furtherance of the
purposes of this section.
``(2) Permissible reporting for a counterparty that is not
a swap participant.--A swap participant may report a
transaction on behalf of its counterparty to that transaction
provided that counterparty is not a swap participant.
``(3) Rulemaking required.--Not later than 180 days after
the date of enactment of this section, the Commission shall
by rule or regulation establish a schedule for the reporting
through a derivatives clearing organization or registered
non-security-based swap data repository or to the Commission
of each non-security-based swap, group, category, type, or
class of non-security-based swap entered into--
``(A) before the effective date of the Commission's rule or
regulation and still outstanding as of such effective date;
and
``(B) on or after the effective date of the Commission's
rule or regulation.
``(b) Confidentiality of Information Provided.--No non-
public information provided to or obtained by the Commission
under this section may be disclosed to any other person.
Nothing in this subsection shall authorize the Commission to
withhold information from Congress, or prevent the Commission
from complying with a request for information from any other
Federal department or agency or foreign government with which
the Commission has an information sharing arrangement that
requests the information for purposes within the scope of its
jurisdiction, or complying with an order of a court of the
United States in an action brought by the United States or
the Commission.
``(c) Public Dissemination of Certain Information
Provided.--
``(1) In general.--Notwithstanding subsection (b), the
Commission is directed to use its authority under this Act to
facilitate the public dissemination of prices and volumes of
completed non-security-based swap transactions to provide
investors and other market participants with information
about recently executed transactions for the purposes of
helping them to mark existing swap positions to market, make
informed decisions before executing future transactions, and
assess the quality of transactions they have executed. For
each non-security-based swap, group, category, type, or class
of non-security-based swap, the Commission shall determine by
rule the extent to which individual or aggregated transaction
data must be disseminated and the timeliness of such
disseminations.
``(2) Reliance on economic analysis.--In making
determinations under this subsection, the Commission shall
rely on economic analyses provided by the Chief Economist of
the Commission and independent researchers that empirically
evaluate the effects of increasing price transparency on
measures of efficiency, competition, and market quality,
including transaction costs and liquidity. To facilitate such
empirical analyses, the Commission may design pilot programs
that increase price transparency on selected non-security-
based swaps.
``(3) Chief economist report.--Whenever the Commission
publishes a release giving notice of a proposed rulemaking
under this subsection, and affords interested persons an
opportunity to comment on such proposed rulemaking or
publishes a release adopting a final rule, such release shall
include as a part thereof a report by the Chief Economist of
the Commission. Each report shall describe the economic
analysis of the expected consequences of the proposed or
final Commission action, refer to any peer-reviewed or other
literature, including any empirical study undertaken by the
staff of the Commission, that is relevant to the analysis
contained in the report, and describe the extent to which the
conclusions of the report remain subject to uncertainty.
``(4) Protection of proprietary information.--In making
determinations under this subsection, the Commission shall
consider whether public dissemination of individual or
aggregate transaction data could result in the dissemination
of proprietary information about the swap transactions,
positions, trading strategies, or the ability of particular
market participants to conduct effective hedging or risk
management. The rules that the Commission adopts under this
subsection shall include protections to ensure that the
public dissemination of swap transaction data does not result
in the disclosure of such proprietary information.''.
``(5) Registered entities and public reporting.--The
Commission may require derivatives clearing organizations and
registered non-security-based swap data repositories to
publicly disseminate the non-security-based swap transaction
and pricing data required to be reported under this
paragraph.
``(6) Quarterly public reporting of aggregate non-security-
based swap data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a quarterly basis
to make available to the public information relating to--
``(i) the trading and clearing in the major non-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 any information reported directly to the
Commission and information from registered non-security-based
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.''.

SEC. 727. SWAP DATA REPOSITORIES.

The Commodity Exchange Act is amended by inserting after
section 20 (7 U.S.C. 24) the following:

``SEC. 21. NON-SECURITY-BASED SWAP DATA REPOSITORIES.

``(a) Registration.--
``(1) In general.--A non-security-based swap data
repository may register by filing with the Commission an
application in such form as the Commission, by rule or
regulation, shall prescribe containing such information as
the Commission, by rule or regulation, may prescribe as
necessary or appropriate in furtherance of the purposes of
this section.
``(2) Inspection and examination.--Each registered non-
security-based swap data repository shall be subject to
inspection and examination by any representative of the
Commission.
``(3) Information sharing.--The Commission shall require
each registered non-security-based swap data repository to
provide information with respect to its functions as a non-
security-based swap data repository to any of the following
regulatory authorities that requests it--
``(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.
``(b) Standard Setting.--
``(1) Data identification.--The Commission shall prescribe
standards that specify the data elements for each non-
security-based swap, including whether the transaction is a
bona fide hedging swap transaction as defined in section 1a,
that shall be collected and maintained by each registered
non-security-based swap data repository.
``(2) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance
standards for non-security-based 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
non-security-based swaps.
``(c) Duties.--A registered non-security-based swap data
repository shall--
``(1) accept data prescribed by the Commission for one or
more non-security-based swaps;
``(2) confirm with both counterparties to the non-security-
based 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 726 of the Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010;
``(5) at the direction of the Commission, establish
automated systems for monitoring,

[[Page S3182]]

screening, and analyzing non-security-based swap data;
``(6) maintain the confidentiality non-security-based swap
transaction information that the registered non-security-
based swap data repository receives from a counterparty, swap
participant, or any other registered entity in accordance
with the requirements that the Commission shall jointly with
the Securities and Exchange Commission prescribe through
notice-and-comment rulemaking.
``(d) Core Principles Applicable to Registered Non-
security-based Swap Data Repositories.--
``(1) Antitrust considerations.--Unless specifically
reviewed and approved by the Commission for antitrust
purposes, a registered non-security-based swap data
repository may 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 registered non-
security-based swap data repository shall establish
governance arrangements that are transparent and assure fair
representation of its participants in reasonable proportion
to their use of the non-security-based data repository in the
selection of its directors and administration of its affairs.
``(3) Conflicts of interest.--Each registered non-security-
based swap data repository shall--
``(A) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the non-security-
based swap data repository; and
``(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
``(4) Nondiscriminatory access.--A registered non-security-
based swap data repository--
``(A) may not mandate directly or indirectly the
substantive terms and conditions of transactions reported to
the non-security-based data repository;
``(B) must provide for the equitable allocation of
reasonable dues, fees, and other charges among its
participants and must not impose any schedule of prices, or
fix rates or other fees, for services rendered by its
participants;
``(C) provide for participation in the non-security-based
swap data repository by any swap participant and any other
person or class of persons as the Commission, by rule or
regulation, may determine to be necessary or appropriate in
furtherance of the purposes of this section; and
``(D) may not unfairly discriminate in the admission of
participants or among participants in the use of the non-
security-based swap data repository.
``(e) Rules.--The Commission shall adopt rules, jointly
with the Securities and Exchange Commission, governing
persons that are registered under this section.''.

SEC. 728. LARGE NON-SECURITY-BASED 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 729) the
following:

``SEC. 4T. LARGE NON-SECURITY-BASED 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 non-
security-based 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
non-security-based 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 non-security-based 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
non-security-based swaps and any transactions and positions
in any related commodity traded on or subject to the rules of
any board of trade, and of cash or spot transactions in,
inventories of, and purchase and sale commitments of, such a
commodity.
``(b) Requirements.--Books and records described in
subsection (a)(2)(B) shall--
``(1) show such complete details concerning all
transactions and positions as the Commission may prescribe by
rule or regulation; and
``(2) be open at all times to inspection and examination by
any representative of the Commission.
``(c) Applicability.--For purposes of this section, the
non-security-based swaps, futures, and cash or spot
transactions and positions of any person shall include the
non-security-based 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 non-security-based 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. 729. REGISTRATION AND REGULATION OF SWAP PARTICIPANTS.

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4r (as added by section 726) the
following:

``SEC. 4S. REGISTRATION AND REGULATION OF SWAP PARTICIPANTS.

``(a) Registration.--Swap participants must register with
the Commission.
``(b) Notice Registration.--A swap participants shall be
exempt from registration with the Commission, if it files a
notice registration with the Commission in the form and
manner that the Commission shall prescribe, jointly with the
Securities and Exchange Commission, by notice-and-comment
rulemaking and--
``(1) it is exempt pursuant to a rule or order, issued by
the Commission, jointly with the Securities and Exchange
Commission, to exempt swap participants that engage primarily
in security-based swap transactions and are registered as
swap participants with the Securities and Exchange
Commission; or
``(2) all of its outstanding swap transactions are cleared
swaps.
``(c) Requirements.--
``(1) In general.--A person shall register as a 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 and containing such information as the
Commission, jointly with the Securities and Exchange
Commission through notice-and-comment rulemaking, shall
prescribe concerning the swap participant's swap activities.
``(B) Continual reporting.--A person that is registered as
a swap participant shall continue to submit to the Commission
reports that contain such information pertaining to the swap
participant's swap activities as the Commission may require.
``(3) Transition.--Rules under this section shall provide
for the registration of swap participants 1 year after the
date of enactment of the Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010.
``(4) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or
order, it shall be unlawful for a swap participant to permit
any person associated with a swap participant who is subject
to a statutory disqualification to effect or be involved in
effecting swaps on behalf of the swap participant, if the
swap participant knew, or in the exercise of reasonable care
should have known, of the statutory disqualification.
``(d) Capital and Margin Requirements.--
``(1) Capital requirements for prudentially regulated swap
participants.--Each swap participant for which there is a
prudential regulator shall meet such minimum capital
requirements as such prudential regulator shall prescribe
pursuant to the authority of the prudential regulator.
``(2) Margin requirements for swap participants for
uncleared non-security-based swaps.--
``(A) In general.--Except as provided in subparagraph (C),
the Commission shall prescribe by rule or regulation the
minimum margin requirements that apply to transactions
between swap participants in a particular uncleared non-
security-based swap or any group, category, type, or class of
uncleared non-security-based swap, as the Commission deems
appropriate for the risk of that particular uncleared non-
security-based swap or class, group, category, type of
uncleared non-security-based swap, for the purposes of--
``(i) reducing the risk of losses to counterparties; and
``(ii) preserving the financial integrity of markets
trading non-security-based swaps.
``(B) Considerations.--The Commission shall not issue rules
under this subsection unless the Commission determines that
such rules--
``(i) would not inappropriately encourage or discourage the
clearing of certain non-security-based swaps, resulting in an
undue increase in risk to the financial system;
``(ii) are supported by economic analysis provided by the
Chief Economist of the Commission; and
``(iii) would not impose any unnecessary burden on
competition.
``(C) Exceptions.--The Commission shall not impose minimum
margin requirements on--
``(i) positions in foreign exchange forwards, swaps, or
options; and
``(ii) non-security-based swap transactions in which one
counterparty directly or indirectly controls, is controlled
by, or is under common control with the other counterparty,
provided, however, that the Commission, jointly with the
Financial Stability Oversight Council, may determine, by
notice-and-comment rulemaking, that transactions between
certain parties under common control are subject to the
minimum margin requirements imposed by the Commission under
this subsection.
``(D) Outstanding swap positions.--The Commission and the
Securities and Exchange Commission may by joint notice-and-
comment rulemaking or order exempt any

[[Page S3183]]

swap, group, category, type, or class of swap entered into on
or before the date of enactment of this Act. In determining
whether an exemption is appropriate, the Commission and the
Securities and Exchange Commission shall take into account
the notional value, the tenor, and the risk to the financial
stability of the United States posed by the underlying swap,
group, category, type, or class of swap.
``(3) Special margin requirements for uncleared swap
transactions involving a swap participant with a substantial
net uncollateralized swap position.--
``(A) In general.--If a swap participant has a substantial
net uncollateralized swap position, any subsequent swap
transaction, regardless of whether the swap participant's
counterparty is a swap participant, shall be subject to--
``(i) any applicable clearing requirement under section
(h); and
``(ii) any applicable margin requirements that the
Commission has prescribed under paragraph (2).
``(B) Substantial net uncollateralized position.--
``(i) In general.--From time to time, the Financial
Stability Oversight Council shall define, by rule or
regulation, `substantial net uncollateralized swap position'
by identifying the level of a net uncollateralized position
in swaps that a swap participant can hold without posing a
threat to the financial system stability of the United
States.
``(ii) Reliance on economic analysis.--In making
determinations under this subsection, the Commission and the
Board of Governors shall rely on economic analysis provided
by economists of the Commission and economists of the Board
of Governors.
``(e) Reporting and Recordkeeping.--With respect to its
swap business, each swap participant registered with the
Commission--
``(1) shall make such reports as are required by the
Commission, jointly with the Securities and Exchange
Commission through notice-and-comment rulemaking;
``(2)(A) for which there is a prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the prudential regulator; and
``(B) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as is prescribed by the Commission, jointly with the
Securities and Exchange Commission through notice-and-comment
rulemaking, by rule or regulation; and
``(3) shall keep books and records described in
subparagraph (B) open to inspection and examination by any
representative of the Commission.
``(f) Business Conduct Standards and Requirements.--With
respect to its swap business, each swap participant--
``(1) for which there is a prudential regulator, shall
comply with such business conduct standards and requirements
as the prudential regulator may impose; and
``(2) for which there is no prudential regulator, shall
comply with such business conduct standards and requirements
as the Commission, jointly with the Securities and Exchange
Commission through notice-and-comment rulemaking, shall
prescribe. Such business conduct requirements shall--
``(A) establish the standard of care required for a swap
participant to verify that any counterparty meets the
eligibility standards for an eligible contract participant;
and
``(B) require disclosure by the swap participant to any
counterparty to the swap (other than a counterparty that is a
swap participant) of--
``(i) information about the material risks and
characteristics of the swap; and
``(ii) any material conflicts of interest that the swap
participant may have in connection with the swap.
``(g) Documentation and Back Office Standards.--Each swap
participant registered with the Commission--
``(1) for which there is a prudential regulator, shall
comply with such documentation and back office standards as
the prudential regulator may impose; and
``(2) for which there is no prudential regulator, shall
conform with such standards as the Commission, jointly with
the Securities and Exchange Commission through notice-and-
comment rulemaking, may prescribe that relate to timely and
accurate confirmation, processing, netting, documentation,
and valuation of all swaps.
``(h) Confidentiality.--Notwithstanding any other provision
of law, the Commission may not be compelled to disclose any
information required by Commission rule or regulation to be
reported to the Commission under this subsection, except that
nothing in this paragraph authorizes the Commission to
withhold information from Congress, or prevent the Commission
from complying with a request for information from any other
Federal department or agency requesting information for
purposes within the scope of its jurisdiction, or complying
with an order of a court of the United States in an action
brought by the United States or the Commission. For purposes
of section 552 of title 5, United States Code, this
subsection shall be considered a statute described in
subsection (b)(3)(B) of such section 552.''.

SEC. 730. NON-SECURITY-BASED SWAP EXECUTION FACILITIES.

The Commodity Exchange Act is amended by inserting after
section 5g (7 U.S.C. 7b-2) the following:

``SEC. 5H. NON-SECURITY-BASED SWAP EXECUTION FACILITIES.

``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of non-security-based swaps unless the
facility is registered as a non-security-based swap execution
facility or as a designated contract market under this
section.
``(2) Dual registration.--Any person that is required to
register as a non-security-based 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.
``(b) Trading and Trade Processing.--A non-security-based
swap execution facility that is registered under subsection
(a) may--
``(1) make available for trading any non-security-based
swap; and
``(2) facilitate trade processing of any non-security-based
swap.
``(c) Trading by Contract Markets.--A board of trade that
operates a contract market shall, to the extent that the
board of trade also operates a non-security-based swap
execution facility and uses the same electronic trade
execution system for trading on the contract market and the
non-security-based swap execution facility, identify whether
the electronic trading is taking place on the contract market
or the non-security-based swap execution facility.
``(d) Core Principles for Non-security-based Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a non-security-based swap execution
facility, the non-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 pursuant to section 8a(5).
``(B) Reasonable discretion of non-security-based swap
execution facility.--Unless otherwise determined by the
Commission by rule or regulation, a non-security-based swap
execution facility described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which the
non-security-based swap execution facility complies with the
core principles described in this subsection.
``(2) Compliance with rules.--A non-security-based swap
execution facility shall--
``(A) monitor and enforce compliance with any rule of the
non-security-based swap execution facility, including--
``(i) the terms and conditions of the non-security-based
swaps traded or processed on or through the non-security-
based swap execution facility; and
``(ii) any limitation on access to the non-security-based
swap execution facility; and
``(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.
``(3) Swaps not readily susceptible to manipulation.--The
non-security-based swap execution facility shall permit
trading only in non-security-based swaps that are not readily
susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The non-
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
non-security-based swap execution facility; and
``(ii) procedures for trade processing of non-security-
based swaps on or through the facilities of the non-security-
based swap execution facility; and
``(B) monitor trading in non-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) Information sharing.--The non-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 section;
``(B) provide the information to the following on request--
``(i) the Commission;
``(ii) the Securities and Exchange Commission;
``(iii) the Board;
``(iv) each appropriate prudential regulator;
``(v) the Council;
``(vi) the Department of Justice; and
``(vii) any other foreign regulatory authority that the
Commission determines to be appropriate and with whom the
Commission has entered into an information sharing agreement;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(6) Position limits or accountability.--

[[Page S3184]]

``(A) In general.--To reduce the potential threat of market
manipulation or congestion, especially during trading in the
delivery month, the non-security-based swap execution
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 non-security-based swap execution
facility shall set its position limitation at a level no
higher than the Commission limitation.
``(C) Position enforcement.--For any contract that is
subject to a position limitation established by the
Commission pursuant to section 4a(a), a non-security-based
swap execution facility shall reject any proposed non-
security-based swap transaction if, based on information
readily available to a non-security-based swap execution
facility, any proposed non-security-based swap transaction
would cause a non-security-based swap execution facility
customer that would be a party to such swap transaction to
exceed such position limitation.
``(7) Financial integrity of transactions.--The non-
security-based swap execution facility shall establish and
enforce rules and procedures for ensuring the financial
integrity of non-security-based swaps entered on or through
the facilities of the non-security-based swap execution
facility, including the clearance and settlement of the non-
security-based swaps pursuant to section 2(h)(1).
``(8) Emergency authority.--The non-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 non-security-based swap or to suspend
or curtail trading in a non-security-based swap.
``(9) Timely publication of trading information.--
``(A) In general.--The non-security-based swap execution
facility shall make public timely information on price,
trading volume, and other trading data on non-security-based
swaps to the extent prescribed by the Commission.
``(B) Capacity of non-security-based swap execution
facility.--The non-security-based swap execution facility
shall be required to have the capacity to electronically
capture trade information with respect to transactions
executed on the facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A non-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
Act.
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for non-security-based
swap execution facilities that are comparable to
corresponding requirements for derivatives clearing
organizations and non-security-based swap data repositories.
``(11) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the non-
security-based swap execution facility shall avoid--
``(A) adopting any rules or taking any actions that result
in any unreasonable restraint of trade; or
``(B) imposing any material anticompetitive burden on
trading or clearing.
``(12) Conflicts of interest.--The non-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.
``(13) Financial resources.--
``(A) In general.--The non-security-based swap execution
facility shall have adequate financial, operational, and
managerial resources to discharge each responsibility of the
non-security-based swap execution facility.
``(B) Determination of resource adequacy.--The financial
resources of a non-security-based swap execution facility
shall be considered to be adequate if the value of the
financial resources exceeds the total amount that would
enable the non-security-based swap execution facility to
cover the operating costs of the non-security-based swap
execution facility for a 1-year period, as calculated on a
rolling basis.
``(14) System safeguards.--The non-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 are
designed to allow for--
``(i) the timely recovery and resumption of operations; and
``(ii) the fulfillment of the responsibilities and
obligation of the non-security-based swap execution facility;
and
``(C) periodically conduct tests to verify that the backup
resources of the non-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.
``(e) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a non-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 Securities and Exchange Commission, a prudential
regulator, or the appropriate governmental authorities in the
home country of the facility.
``(f) Rules.--The Commission shall prescribe rules
governing the regulation of alternative non-security-based
swap execution facilities under this section.''.

SEC. 731. 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).

SEC. 732. 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 board of trade.--
``(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 board of trade.--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 board of trade.--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

[[Page S3185]]

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 non-security-based 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 promote the objectives 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 appropriate to
achieve the purposes of this Act, the board of trade shall,
to the maximum extent practicable, avoid--
``(A) adopting any rule or taking any action that results
in any unreasonable restraint of trade; or
``(B) imposing 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.''.

SEC. 733. 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. 734. POSITION LIMITS ON NON-SECURITY-BASED SWAPS.

(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 ``non-security-based 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 ``non-security-based swaps traded on or subject to
the rules of a non-security-based swaps execution facility,
or non-security-based swaps not traded on or subject to the
rules of a non-security-based swaps execution facility that
perform a significant price discovery function with respect
to a registered entity,''; and
(4) by adding at the end the following:
``(2) Aggregate position limits.--The Commission may, by
rule or regulation, establish limits (including related hedge
exemption provisions) on the aggregate number or amount of
positions in contracts based on 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, or in relation to, 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 the electronic trading and order
matching system of the foreign board of trade;
``(C) non-security-based swaps traded on or subject to the
rules of a non-security-based swap execution facility; and
``(D) non-security-based swaps not traded on or subject to
the rules of a non-security-based swap execution facility
that perform or affect a significant price discovery function
with respect to a registered entity.
``(3) Significant price discovery function.--In making a
determination as to

[[Page S3186]]

whether a non-security-based swap performs or affects a
significant price discovery function with respect to
registered entities, the Commission shall consider, as
appropriate, the following factors:
``(A) Price linkage.--The extent to which the non-security-
based swap uses or otherwise relies on a daily or final
settlement price, or other major price parameter, of another
contract traded on a registered entity based on 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
non-security-based swap is sufficiently related to the price
of another contract traded on a registered entity based on
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 non-security-based 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 registered entity 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 non-security-based swaps being traded in the commodity is
sufficient to have a material effect on another contract
traded on a registered entity.
``(E) Other material factors.--Such other material factors
as the Commission specifies by rule or regulation as relevant
to determine whether a non-security-based swap serves a
significant price discovery function with respect to a
regulated market.
``(4) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any
person or class of persons, any non-security-based swap or
class of non-security-based swaps, or any transaction or
class of transactions from any requirement that the
Commission establishes 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 non-security-based 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 non-security-based swap
execution facility''.

SEC. 735. 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.--
``(3) 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) In general.--It shall be unlawful for 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.

``(B) Existing foreign boards of trade.--Subparagraph (A)
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.--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 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 has complied with paragraphs (1) and (2) of subsection
(b).''.
(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 736) 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. 736. LEGAL CERTAINTY FOR NON-SECURITY-BASED 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) Non-security-based 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 an
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 non-security-based swap
under section 1a; or
``(ii) to be cleared in accordance with section 2(h)(1).
``(5) Legal certainty.--
``(A) Effect on non-security-based swaps.--Unless
specifically reserved in the applicable bilateral trading
agreement, neither the enactment of the Over-the-Counter
Swaps Markets 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

[[Page S3187]]

costs, regulatory change, or similar event under a bilateral
trading agreement (including any related credit support
arrangement) that would permit a party to terminate,
renegotiate, modify, amend, or supplement 1 or more
transactions under the bilateral trading agreement.
``(B) Position limits.--Any position limit established
under the Over-the-Counter Swaps Markets 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. 737. MULTILATERAL CLEARING ORGANIZATIONS.

Sections 408 and 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4421, 4422)
are repealed.

SEC. 738. ENFORCEMENT.

(a) 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 non-security-based
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 non-security-based
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
non-security-based swap, on a group or index of securities
(or any interest therein or based on the value thereof) that
is a broad-based security index--
``(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 non-security-
based 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
non-security-based 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 non-security-
based 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 non-security-based 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 non-
security-based swap,'' before ``or to corner''; and
(ii) in paragraph (4), by inserting ``registered non-
security-based swap data repository,'' before ``or futures
association'' and
(B) in subsection (e)(1)--
(i) by inserting ``registered non-security-based swap data
repository,'' before ``or registered futures association'';
and
(ii) by inserting ``, or non-security-based 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 8(b) of the Federal Deposit Insurance Act (12
U.S.C. 1818(b)) is amended by adding at the end the
following:
``(11) Swaps.--
``(A) In general.--Subject to subparagraph (B), this
section shall apply to any swap participant, derivatives
clearing organization, registered non-security-based swap
data repository, security-based swap data repository, or non-
security-based swap execution facility regardless of whether
the participant, organization, repository, or facility is an
insured depository institution, for which the Board, the
Corporation, or the Office of the Comptroller of the Currency
is the appropriate Federal banking agency or prudential
regulator for purposes of the amendments made by the Over-
the-Counter Swaps Markets Transparency and Accountability Act
of 2010.
``(B) Limitation.--The authority described in subparagraph
(A) shall be limited by, and exercised in accordance with,
section 4b-1 of the Commodity Exchange Act.''.

SEC. 739. 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 ``(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)).

``(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.
``(v) Actual delivery.--For purposes of clause (ii)(III),
the term `actual delivery' does not include delivery to a
third party in a financed transaction in which the commodity
is held as collateral.''.
(b) Gramm-Leach-Bliley Act.--Section 206 of the Gramm-
Leach-Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is
amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by striking ``For purposes of'' and inserting ``Except
as provided in subsection (e), for purposes of''; and
(2) by adding at the end the following:
``(e) Limitation of Definition of Identified Banking
Product.--Except as provided in section 403 of the Legal
Certainty for Bank Products Act of 2000 (7 U.S.C. 27a), for
purposes of section 131 of the Over-the-Counter Swaps Markets
Transparency and Accountability Act of 2010, the term
`identified banking product' does not include a retail
commodity transaction.''.

SEC. 740. 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. 741. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.

(a) Core Principles for Contract Markets.--Section 5(d) of
the Commodity Exchange Act (7 U.S.C. 7(d)) (as amended by
section 732(b)) is amended by striking paragraph (1) and
inserting the following:
``(1) Designation.--
``(A) In general.--To be designated as, and to maintain the
designation of, a board of trade as a contract market, the
board of trade 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) Discretion of board of trade.--Unless the Commission
determines otherwise by rule or regulation, the board of
trade shall have reasonable discretion in establishing the
manner by which the board of trade complies with each core
principle.''.
(b) Core Principles.--Section 5b(c)(2) of the Commodity
Exchange Act (7 U.S.C. 7a-1(c)(2)) (as amended by section
725(c)) is amended by striking subparagraph (A) and inserting
the following:
``(A) Registration.--
``(i) In general.--To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with--

``(I) the core principles described in this paragraph; and
``(II) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).

[[Page S3188]]

``(ii) Discretion of commission.--Unless the Commission
determines otherwise by rule or regulation, a derivatives
clearing organization shall have reasonable discretion in
establishing the manner by which the derivatives clearing
organization complies with each core principle.''.
(c) 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).''.

SEC. 742. 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 non-security-based
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 non-security-based swap.
``(4) Imparting of 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 non-security-based swap; and
``(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 non-security-based swap; and
``(C) Theft of nonpublic information.--It shall be unlawful
for any person knowingly to steal, convert, or misappropriate
acquire, by any means whatsoever, governmental 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 non-security-based swap, where such person knows, or in
the exercise of reasonable care should know 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 non-security-based 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 non-security-based swap
described in clauses (i), (ii), or (iii).''.

SEC. 743. CONFORMING AMENDMENTS.

(a) Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C.
2(c)(1)) is amended, in the matter preceding subparagraph
(A), by striking ``5a (to the extent provided in section
5a(g)),''.
(b) 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.''.
(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), 2(f), or 2(i) 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(b)(1)(A) of the Commodity Exchange Act (7
U.S.C. 25(b)(1)(A)) is amended by striking ``section 2(h)(7)
or''.
(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''.

Subtitle C--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 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.'';
(2) 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.'';
(3) in paragraph (39)--
(A) in subparagraph (B)(i)(I), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, or swap participant'';
(B) in subparagraph (B)(i)(II), by inserting ``swap
participant,'' after ``government securities dealer,'';
(C) in subparagraph (C), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, or swap participant''; and
(D) in subparagraph (D), by inserting ``swap participant,''
after ``government securities dealer,''; and
(4) 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) Swap participant.--The term `swap participant' has
the same meaning as in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a).

[[Page S3189]]

``(67) Security-based swap.--The term `security-based swap'
means--
``(A) an instrument that is not a security; and
``(B) a swap, of which 1 or more material terms--
``(i) is based on the price, yield, value, or volatility
of--

``(I) any single security, any narrow-based group or
narrow-based index of securities, or any interest therein; or
``(II) any single loan, any narrow-based group or narrow-
based index of loans, or any interest therein;

``(ii) is dependent on the occurrence, non-occurrence, or
the extent of the occurrence of an event or contingency
associated with a potential financial, economic, or
commercial consequence that is related to or based on--

``(I) a single security, an interest in a security, an
issuer of a security, or narrow-based group or narrow-based
index of securities, or interests in securities or issuers of
securities; or
``(II) a single loan, an interest in a loan, a recipient of
a loan, or narrow-based group or narrow-based index of loans,
or interests in loans or recipients of loans;

``(iii) provides for the purchase or sale of no more than 9
securities or loans on a contingent basis, whether physically
or cash settled, if such agreement, contract, or transaction
predicates such purchase or sale (or a net cash payment in
lieu thereof) on the occurrence of a bona fide contingency
that might reasonably be expected to affect or be affected by
the creditworthiness of 1 or more reference entities; or
``(iv) allows for payment, settlement, termination,
fulfillment, or extinguishment of the swap or delivery on the
swap, by means of the transfer or receipt of no more than 9
securities or loans, including any narrow-based group or
narrow-based index of securities or loans.
``(68) 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 Commodity Futures Trading Commission or a clearing
agency registered with the Commission.
``(69) Swap.--The term `swap' has the same meaning as in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
``(70) Associated person of a swap participant.--
``(A) In general.--The term `associated person of a swap
participant' means--
``(i) any partner, officer, director, or branch manager of
a swap participant (including any individual who holds a
similar status or performs a similar function with respect to
any partner, officer, director, or branch manager of a swap
participant);
``(ii) any person that directly or indirectly controls, is
controlled by, or is under common control with, a swap
participant; and
``(iii) any employee of a swap participant.
``(B) Exclusion.--The term `associated person of a swap
participant' does not include any person associated with a
swap participant the functions of which are solely clerical
or ministerial.
``(71) 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)).
``(72) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(73) Prudential regulator.--The term `prudential
regulator' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(74) Security-based swap data repository.--The term
`security-based swap data repository' means any person that
collects, calculates, prepares, or 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.
``(75) Swap end user.--The term `swap end user' has the
same meaning as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).
``(76) Broad-based security index.--The term `broad-based
security index' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. la).''.
(b) Definitions Under the Securities Act of 1933.--Section
2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is
amended--
(1) 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 which it references, 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
(2) by adding at the end the following:
``(17) The terms `security-based swap', and `swap', have
the same meanings as in paragraphs (67) and (69),
respectively, of section 3(a) of the Securities Exchange Act
of 1934.
``(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,
novation, or similar transfer or conveyance of, or
extinguishment (prior to its scheduled extinguishment date)
of material rights or obligations under, a security-based
swap, as the context may require.''.

SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SWAPS.

(a) Repeal of Law.--The following provisions of law are
repealed:
(1) Sections 206A, 206B, and 206C of the Gramm-Leach-Bliley
Act (15 U.S.C. 78c note).
(2) Section 2A of the Securities Act of 1933 (15 U.S.C.
77b-1).
(3) Section 17(d) of the Securities Act of 1933 (15 U.S.C.
77q(d)).
(4) Section 3A of the Securities Exchange Act of 1934 (15
U.S.C. 78c-1).
(5) Section 9(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78i(i)).
(6) Section 15(i) of the Securities Exchange Act of 1934
(15 U.S.C. 78o(i)), as added by section 303(f) of the
Commodity Futures Modernization Act of 2000 (Public Law 106-
554; 114 Stat. 2763A-455).
(7) Section 16(g) of the Securities Exchange Act of 1934
(15 U.S.C. 78p(g)).
(8) Section 20(f) of the Securities Exchange Act of 1934
(15 U.S.C. 78t(f)).
(9) Section 21A(g) of the Securities Exchange Act of 1934
(15 U.S.C. 78u-1(g)).
(b) Conforming Amendment to the Securities Act of 1933.--
Section 17(a) of the Securities Act of 1933 (15 U.S.C.
77q(a)) is amended by striking ``agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act)'' and inserting
``(as defined in section 3(a)(67) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(67))''.
(c) Conforming and Other 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 9(a) (15 U.S.C. 78i(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 swap 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 or broker, or other person selling or
offering for sale or purchasing or offering to purchase the
security to induce the purchase or sale of any security
registered on a national securities exchange, any security
not so registered, or any swap 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 or broker, or the person selling or
offering for sale or purchasing or offering to purchase the
security, to make, regarding any security registered on a
national securities exchange, any security not so registered,
or any swap with respect to such security, for the purpose of
inducing the purchase or sale of such security or such swap,
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 he knew or had
reasonable ground to believe was so false or misleading.
``(5) For a consideration, received directly or indirectly
from a dealer or broker, or other person selling or offering
for sale or purchasing or offering to purchase the security,
to induce the purchase of any security registered on a
national securities exchange, any security not so registered,
or any swap 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.'';
(2) in section 10 (15 U.S.C. 78j)--
(A) by striking ``agreement (as defined in section 206B of
the Gramm-Leach-Bliley Act)''; and
(B) by striking ``agreements (as defined in section 206B of
the Gramm-Leach-Bliley Act)'' each place that term appears;
(3) in section 15(c) (15 U.S.C. 78o(c)), by striking
``agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act)'' each place that term appears;
(4) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking ``agreement (as
defined in section 206(b) of the Gramm-Leach-Bliley Act)'';
(B) in subsection (a)(3)(B), by striking ``agreement (as
defined in section 206B of the Gramm-Leach-Bliley Act)''; and
(C) in subsection (b), by striking ``agreement (as defined
in section 206B of the Gramm-Leach-Bliley Act)'' each place
that the term appears;
(5) in section 20(d) (15 U.S.C. 78t(d)), by striking
``agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act)''; and
(6) in section 21A(a)(1) (15 U.S.C. 78u-1), by striking
``agreement (as defined in section 206B of the Gramm-Leach-
Bliley Act)''.

SEC. 763. CLEARING.

(a) Registered Clearing Agencies.--Section 17A(b)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q-1) is amended
by adding at the end the following:
``(J) The Commission shall require clearing agencies to
provide information collected related to the clearing of
security-based swaps by such agencies to any of the following
regulatory authorities that requests such information:
``(i) The Board.
``(ii) The Commodity Futures Trading Commission.
``(iii) Each appropriate prudential regulator.

[[Page S3190]]

``(iv) The Financial Stability Oversight Council.
``(v) The Department of Justice.
``(vi) 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.

``(K) A person that is required to be registered as a
clearing agency under this section shall register with the
Commission regardless of whether the person is also licensed
as a bank or a derivatives clearing organization registered
with the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 7a-1).''.
(b) Required Clearing.--The Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) is amended by inserting after section
17C, as added by this subtitle, the following:

``SEC. 17D. CLEARING OF SECURITY-BASED SWAP TRANSACTIONS.

``(a) Clearing Requirement.--
``(1) Swaps subject to mandatory clearing requirement.--In
accordance with paragraph (2), the Commission shall, jointly
with the Commodity Futures Trading Commission and the Board,
adopt rules to establish criteria for determining that a
swap, or any group, category, type, or class of swap is
required to be cleared.
``(2) Factors.--In carrying out paragraph (1), the
following factors shall be considered--
``(A) whether 1 or more derivatives clearing organizations
or clearing agencies accepts the swap or the group, category,
type, or class of swap for clearing;
``(B) whether the swap or the group, category, type, or
class of swap is traded pursuant to standard documentation
and terms;
``(C) the liquidity of the swap or the group, category,
type, or class of swap and its underlying commodity,
security, security of a reference entity, or group or index
thereof;
``(D) the ability to value the swap or the group, category,
type, or class of swap and its underlying commodity,
security, security of a reference entity, or group or index
thereof consistent with an accepted pricing methodology,
including the availability of intraday prices;
``(E) the size of the market for the swap or the group,
category, type, or class of swap and the available capacity,
operational expertise, and resources of the derivatives
clearing organization or clearing agency that accepts it for
clearing;
``(F) whether a clearing mandate would mitigate risk to the
financial system or whether such a mandate would unduly
concentrate risk in a clearing participant, derivatives
clearing organization, or clearing agency in a manner that
could threaten the solvency of that clearing participant, the
derivatives clearing organization, or the clearing agency;
and
``(G) such other factors as the Commission, the Commodity
Futures Trading Commission, and the Board may jointly
determine are relevant.
``(3) Security-based swaps subject to clearing
requirement.--The Commission--
``(A) shall review each security-based swap, or any group,
category, type, or class of security-based swap that is
currently listed for clearing and those which a clearing
agency notifies the Commission that the clearing agency plans
to list for clearing after the date of enactment of this
subsection;
``(B) may require, pursuant to the rules adopted under
paragraph (1) and through notice-and-comment rulemaking, that
a particular security-based swap or any group, category,
type, or class of security-based swap must be cleared if--
``(i) both counterparties are swap participants;
``(ii) the transaction was entered into on or before the
later of--

``(I) the date of publication of the requirement in the
Federal Register; or
``(II) the effective date of the requirement; and

``(iii) one of the counterparties directly or indirectly
controls, is controlled by, or is under common control with
the other counterparty to the transaction, provided, however,
that the Commission, jointly with the Financial Stability
Oversight Council, may determine, by rule or order, that
transactions between certain parties under common control are
subject to any requirement to clear under this clause; and
``(C) shall rely on economic analysis provided by
economists of the Commission in making any determination
under subparagraph (B), which economic analysis may refer to
any peer-reviewed or other relevant literature conducted by
independent researchers.
``(4) Effect.--
``(A) Nothing in this subsection affects the ability of a
clearing agency to list for permissive clearing any security-
based swap, or group, category, type, or class of security-
based swap.
``(B) The Commission shall not compel a clearing agency to
list a security-based swap or any group, category, type, or
class of security-based swap for clearing if the clearing
agency determines that the security-based swap or the group,
category, type, or class of security-based swap would--
``(i) adversely impact the business operations of the
clearing agency;
``(ii) impair the financial integrity of the clearing
agency; or
``(iii) pose a threat to the financial stability of the
United States.
``(5) Prevention of evasion.--
``(A) In general.--The Commission may prescribe rules, or
issue interpretations of such rules, as necessary to prevent
evasions of any requirement to clear under paragraph (3).
``(B) Considerations.--In issuing rules or interpretations
under subparagraph (A), the Commission shall consider--
``(i) the extent to which the terms of the security-based
swap or any group, category, type, or class of security-based
swap are similar to the terms of other security-based swaps
or other groups, categories, types, or classes of security-
based swaps that are required to be cleared by swap
participants under paragraph (3); and
``(ii) whether there is an economic purpose for any
differences in the terms of the security-based swap or group,
category, type, or class of security-based swap that are
required to be cleared by swap participants under paragraph
(3).
``(6) Elimination of requirement to clear.--The Commission
may, pursuant to the rules adopted under paragraph (1) and
through notice-and-comment rulemaking, rescind a requirement
imposed under paragraph (3) with respect to a security-based
swap or any group, category, type, or class of security-based
swap.
``(7) Petition for rulemaking.--Any person may file a
petition, pursuant to the rules of practice of the
Commission, requesting that the Commission--
``(A) use the authority granted to the Commission under
paragraph (3) to require swap participants to clear a
particular security-based swap or any group, category, type,
or class of security-based swap; or
``(B) use the authority granted to the Commission under
paragraph (6) to rescind a requirement for swap participants
to clear a particular security-based swap or any group,
category, type, or class of security-based swap.
``(8) Option to clear for counterparties that are not swap
participants.--Before entering into a security-based swap
transaction, any counterparty that is not a swap participant
may elect to clear a security-based swap that is subject to a
clearing requirement under paragraph (3). If such
counterparty elects to clear, it shall have the sole right to
select the derivatives clearing organization or clearing
agency at which the security-based swap will be cleared.
``(b) Segregation Requirements for Cleared Security-Based
Swaps.--
``(1) In general.--
``(A) Segregation required.--A swap participant shall treat
and deal with all money, securities, and property of any swap
customer received to margin, guarantee, or secure a security-
based swap cleared by or through a clearing agency (including
money, securities, or property accruing to the swap customer
as the result of such a swap) as belonging to the swap
customer.
``(B) Commingling prohibited.--Money, securities, and
property of a swap customer described in subparagraph (A)--
``(i) shall be separately accounted for; and
``(ii) shall not be--

``(I) commingled with the funds of the swap participant; or
``(II) used to margin, secure, or guarantee any trades or
contracts of any swap customer or person other than the
person for whom the same are held.

``(2) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding paragraph (1), money,
securities, and property of a swap customer of a swap
participant described in paragraph (1) 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.
``(ii) Withdrawal.--Notwithstanding paragraph (1), 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 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 swap.
``(B) Commission action.--Notwithstanding paragraph (1), in
accordance with such terms and conditions as the Commission
may prescribe by rule, regulation, or order, any money,
securities, or property of the swap customer of a swap
participant described in paragraph (1) may be commingled and
deposited as provided in this subsection with any other
money, securities, or property received by the swap
participant and required by the Commission to be separately
accounted for and treated and dealt with as belonging to the
swap customer.
``(3) Permitted investments.--Money described in paragraph
(1) may be invested in obligations of the United States or in
any other investment that has minimal credit, market, and
liquidity risks 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.
``(4) 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
paragraph (1) to hold, dispose of,

[[Page S3191]]

or use any such money, securities, or property as belonging
to the depositing swap participant or any person other than
the swap customer of the swap participant.''.

SEC. 764. TRANSPARENCY OF SECURITY-BASED SWAP TRANSACTION
DATA.

(a) Purposes.--The Securities and Exchange Commission is
directed, consistent with the purposes of this subtitle, to
use the authorities granted to it under this title, and the
amendments made by this subtitle, to facilitate the prompt
and accurate collection, calculation, processing or
preparation, and public dissemination of information on
transactions and positions in security-based swaps.
(b) National Trade Reporting of Security-Based Swap
Transactions.--The Securities Exchange Act of 1934 is amended
by inserting after section 17B (15 U.S.C. 78q-2) the
following:

``SEC. 17C. NATIONAL TRADE REPORTING OF SECURITY-BASED SWAP
TRANSACTIONS.

``(a) Mandatory Reporting of Security-Based Swap
Transactions.--
``(1) In general.--
``(A) Transactions in security-based swaps.--Any person
that enters into or effects a transaction in a security-based
swap shall report such transaction through a clearing agency
or a security-based swap data repository registered with the
Commission within the period specified by any rule or
regulation adopted by the Commission under this paragraph.
``(B) Uncleared security-based swaps.--If no registered
security-based swap data repository accepts an uncleared
security-based swap, the person shall report the transaction
to the Commission pursuant to the requirements that the
Commission may by rule or regulation prescribe.
``(C) Mandatory disclosures.--Each transaction report
required under subparagraph (A) shall disclose whether the
transaction is a bona fide hedging swap transaction, as that
term is defined in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a), and any other information that the Commission
has, by rule or regulation, prescribed as necessary or
appropriate in furtherance of the purposes of this section.
``(2) Permissible reporting for a counterparty that is not
a security-based swap participant.--A swap participant may
report a transaction in accordance with this section on
behalf of its counterparty to that transaction provided that
counterparty is not a swap participant.
``(3) Rulemaking required.--Not later than 180 days after
the date of enactment of this section, the Commission shall
by rule or regulation establish a schedule for the reporting
through a clearing agency or registered security-based swap
data repository or to the Commission of each security-based
swap transaction or group, category, type, or class of
security-based swap transactions entered into--
``(A) before the effective date of the Commission's rule or
regulation and still outstanding as of such effective date;
and
``(B) on or after the effective date of the Commission's
rule or regulation.
``(b) Confidentiality of Information Provided.--No non-
public information provided to or obtained by the Commission
under this section may be disclosed to any other person.
Nothing in this subsection shall authorize the Commission to
withhold information from Congress, or prevent the Commission
from complying with a request for information from any other
Federal department or agency or foreign government with which
the Commission has an information sharing arrangement that
requests the information for purposes within the scope of its
jurisdiction, or complying with an order of a court of the
United States in an action brought by the United States or
the Commission.
``(c) Public Dissemination of Certain Information
Provided.--
``(1) In general.--
``(A) Prices and volumes.--Notwithstanding subsection (b),
the Commission is directed to use the authority granted to
the Commission under this title to facilitate the public
dissemination of prices and volumes of completed security-
based swap transactions to provide investors and other market
participants with information about recently executed
transactions for the purposes of helping such investors and
participants to--
``(i) mark existing security-based swap positions to
market;
``(ii) make informed decisions before executing future
transactions; and
``(iii) assess the quality of transactions that such
investors and participants have executed.
``(B) Rulemaking.--For each security-based swap or group,
category, type, or class of security-based swap, the
Commission shall determine by rule the extent to which
individual or aggregated transaction data shall be
disseminated and the timeliness of such disseminations.
``(2) Reliance on economic analysis.--
``(A) In general.--In making determinations under this
subsection, the Commission shall rely on economic analyses
provided by the Chief Economist of the Commission and
independent researchers that empirically evaluate the effects
of increasing price transparency on measures of efficiency,
competition, and market quality, including transaction costs
and liquidity.
``(B) Pilot programs.--To facilitate the empirical analyses
under subparagraph (A), the Commission may design pilot
programs that increase price transparency on selected
security-based swaps.
``(3) Chief economist report.--
``(A) In general.--Whenever the Commission publishes a
release giving notice of a proposed rulemaking under this
subsection, and affords interested persons an opportunity to
comment on such proposed rulemaking or publishes a release
adopting a final rule, such release shall include as a part
thereof a report by the Chief Economist of the Commission.
``(B) Required inclusions.--Each report required under
subparagraph (A) shall--
``(i) describe the economic analysis of the expected
consequences of the proposed or final Commission action;
``(ii) refer to any peer-reviewed or other literature,
including any empirical study undertaken by the staff of the
Commission, that is relevant to the analysis contained in the
report; and
``(iii) describe the extent to which the conclusions of the
report remain subject to uncertainty.
``(4) Protection of proprietary information.--
``(A) Considerations.--In making determinations under this
subsection, the Commission shall consider whether public
dissemination of individual or aggregate transaction data
could result in the dissemination of proprietary information
about the swap transactions, positions, trading strategies,
or the ability of particular market participants to conduct
effective hedging or risk management.
``(B) Required rules.--Any rules adopted by the Commission
under this subsection shall include protections to ensure
that the public dissemination of security-based swap
transaction data does not result in the disclosure of the
proprietary information described in subparagraph (A).
``(5) Registered entities and public reporting.--The
Commission may require clearing agencies and registered
security-based swap data repositories to publicly disseminate
the security-based swap transaction and pricing data required
to be reported under this subsection.
``(6) Quarterly 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 quarterly 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 any information reported directly to the
Commission and information from registered 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.
``(d) Registration.--
``(1) In general.--A security-based swap data repository
may register by filing with the Commission an application in
such form as the Commission, by rule or regulation, shall
prescribe containing such information as the Commission, by
rule or regulation, may prescribe as necessary or appropriate
in furtherance of the purposes of this section.
``(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) Sharing of information.--The Commission shall require
each registered security-based swap data repository to
provide information collected related to its functions as a
security-based swap data repository to any of the following
regulatory authorities that requests such information:
``(A) The Board.
``(B) The Commodity Futures Trading Commission.
``(C) Each appropriate prudential regulator.
``(D) The Financial Stability Oversight Council.
``(E) The Department of Justice.
``(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.
``(e) Standard Setting.--
``(1) Data identification.--The Commission shall prescribe
standards that specify the data elements for each security-
based swap, including whether the transaction is a bona fide
hedging swap transaction as defined in section 1a of the
Commodity Exchange Act (7 U.S.C. la), that shall be collected
and maintained by each registered security-based swap data
repository.
``(2) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance
standards for security-based 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 clearing agencies
in connection with such agencies' clearing of security-based
swaps.
``(f) Duties.--A registered security-based swap data
repository shall--

[[Page S3192]]

``(1) accept data prescribed by the Commission for 1 or
more security-based swap under subsection (b);
``(2) confirm with both counterparties to the security-
based 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 under
subsection (c)(6);
``(5) at the direction of the Commission, establish
automated systems for monitoring, screening, and analyzing
security-based swap data; and
``(6) maintain the confidentiality of security-based swap
transaction information that the registered security-based
swap data repository receives from a counterparty, swap
participant, or any other registered entity in accordance
with the requirements that the Commission shall jointly with
the Commodity Futures Trading Commission prescribe through
notice-and-comment rulemaking.
``(g) Regulatory Requirements Applicable to Registered
Security-Based Swap Data Repositories.--The Commission shall
adopt rules, by notice-and-comment rulemaking, for security-
based swap data repositories that address the following:
``(1) Antitrust considerations.--Unless specifically
reviewed and approved by the Commission for antitrust
purposes, a registered security-based swap data repository
may 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 registered security-
based swap data repository shall establish governance
arrangements--
``(A) that are transparent; and
``(B) that assure fair representation of the participants
of the repository in reasonable proportion to the use of the
repository by such participants in the selection of the
directors of the repository and the administration of the
affairs of the repository.
``(3) Conflicts of interest.--Each registered security-
based swap data repository shall--
``(A) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the security-based
swap data repository; and
``(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
``(4) Non-discriminatory access.--A registered security-
based swap data repository--
``(A) may not mandate directly or indirectly the
substantive terms and conditions of transactions reported to
the repository;
``(B) shall provide for the equitable allocation of
reasonable dues, fees, and other charges among the
participants of the repository and shall not impose any
schedule of prices, or fix rates or other fees, for services
rendered by such participants;
``(C) shall provide for participation in the repository by
any swap participant and any other person or class of persons
as the Commission, by rule or regulation, may determine to be
necessary or appropriate in furtherance of the purposes of
this section; and
``(D) shall not unfairly discriminate in the admission of
participants or among participants in the use of the
repository.''.

SEC. 765. REGISTRATION AND REGULATION OF SWAP PARTICIPANTS.

Section 17 of the Securities Exchange Act of 1934 (15
U.S.C. 78q) is amended by adding at the end the following:
``(l) Registration and Regulation of Swap Participants.--
``(1) Registration.--Swap participants shall register with
the Commission.
``(2) Notice registration.--A swap participant shall be
exempt from registration with the Commission if such
participant files a notice registration with the Commission
in the form and manner that the Commission shall prescribe,
jointly with the Commodity Futures Trading Commission, by
notice-and-comment rulemaking and--
``(A) such participant is exempt pursuant to a rule or
order issued by the Commission, jointly with the Commodity
Futures Trading Commission, to exempt swap participants that
engage primarily in non-security-based swap transactions and
are registered as swap participants with the Commodity
Futures Trading Commission; or
``(B) all of its outstanding swap transactions are cleared
swaps.
``(3) Requirements.--
``(A) In general.--A person shall register as a swap
participant by filing a registration application with the
Commission.
``(B) Contents.--
``(i) In general.--An application for registration under
this subsection shall be made in such form and manner and
contain such information as the Commission, jointly with the
Commodity Futures Trading Commission through notice-and-
comment rulemaking, shall prescribe concerning the swap
activities of the swap participant.
``(ii) Continual reporting.--A registered swap participant
shall continue to submit to the Commission reports that
contain such information pertaining to the swap activities of
the swap participant as the Commission may require.
``(C) Transition.--Rules under this section shall provide
for the registration of swap participants not later than the
date that is 1 year after the date of enactment of the Over-
the-Counter Swaps Markets Transparency and Accountability Act
of 2010.
``(D) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or
order, it shall be unlawful for a swap participant to permit
any person associated with a swap participant who is subject
to a statutory disqualification to effect or be involved in
effecting swaps on behalf of the swap participant, if the
swap participant knew, or in the exercise of reasonable care
should have known, of the statutory disqualification.
``(m) Capital and Margin Requirements.--
``(1) Capital requirements for prudentially regulated swap
participants.--Each swap participant for which there is a
prudential regulator shall meet such minimum capital
requirements as such prudential regulator shall prescribe
pursuant to the authority of the prudential regulator.
``(2) Margin requirements for swap participants for
uncleared security-based swaps.--
``(A) In general.--Except as provided in paragraph (C), the
Commission shall prescribe by rule or regulation the minimum
margin requirements that apply to transactions between swap
participants in any particular uncleared security-based swap
or any group, category, type, or class of security-based
swap, as the Commission deems appropriate for the risk of
that particular uncleared security-based swap or class,
group, category, type of security-based swap, for the
purposes of--
``(i) reducing the risk of losses to counterparties; and
``(ii) preserving the financial integrity of markets
trading security-based swaps.
``(B) Considerations.--The Commission shall not issue rules
under this subsection unless the Commission determines that
such rules--
``(i) would not inappropriately encourage or discourage the
clearing of certain security-based swaps, resulting in an
undue increase in risk to the financial system;
``(ii) are supported by economic analysis provided by the
Chief Economist of the Commission; and
``(iii) would not impose any unnecessary burden on
competition.
``(C) Outstanding security-based swap positions.--The
Commission and the Commodity Futures Trading Commission may
by joint notice-and-comment rulemaking or order exempt any
security-based swap, group, category, type, or class of
security-based swap entered into on or before the date of
enactment of this Act. In determining whether an exemption is
appropriate, the Commission and the Commodity Futures Trading
Commission shall take into account the notional value, the
tenor, and the risk to the financial stability of the United
States posed by the underlying security-based swap, group,
category, type, or class of security-based swap.
``(D) Affiliate transactions.--The Commission shall not
impose minimum margin requirements on security-based swap
transactions in which one counterparty directly or indirectly
controls, is controlled by, or is under common control with
the other counterparty, provided, however, that the
Commission, jointly with the Financial Stability Oversight
Council, may determine, by notice-and-comment rulemaking,
that transactions between certain parties under common
control are subject to the minimum margin requirements
imposed by the Commission under this clause.
``(3) Special margin requirements for uncleared security-
based swap transactions involving a swap participant with a
substantial net uncollateralized security-based swap
position.--If a swap participant has a substantial net
uncollateralized swap position, any subsequent swap
transaction, regardless of whether the swap participant's
counterparty is a swap participant, shall be subject to--
``(A) any applicable clearing requirement under section
17D(a); and
``(B) any applicable margin requirements that the
Commission has prescribed under paragraph (2).
``(4) Substantial net uncollateralized position.--
``(A) In general.--From time to time, the Financial
Stability Oversight Council shall define, by rule or
regulation, the term `substantial net uncollateralized
position' by identifying the level of uncollateralized
positions in swaps that a swap participant can hold without
posing a threat to the financial system stability of the
United States.
``(B) Reliance on economic analysis.--In making
determinations under this subsection, the Commission and the
Board shall rely on economic analysis provided by economists
of the Commission and economists of the Board.
``(n) Reporting and Recordkeeping.--With respect to its
swap business, each swap participant registered with the
Commission--
``(1) shall make such reports as are required by the
Commission, jointly with the Commodity Futures Trading
Commission through notice-and-comment rulemaking;

[[Page S3193]]

``(2)(A) for which there is a prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the prudential regulator; and
``(B) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as is be prescribed by the Commission, jointly with
the Commodity Futures Trading Commission through notice-and-
comment rulemaking; and
``(3) shall keep books and records described in paragraph
(2)(B) open to inspection and examination by any
representative of the Commission.
``(o) Business Conduct Standards and Requirements.--With
respect to its swap business, each swap participant--
``(1) for which there is a prudential regulator, shall
comply with such business conduct standards and requirements
as the prudential regulator may impose; and
``(2) for which there is no prudential regulator, shall
comply with such business conduct standards and requirements
as the Commission, jointly with the Commodity Futures Trading
Commission through notice-and-comment rulemaking, shall
prescribe. The business conduct requirements prescribed under
this paragraph shall--
``(A) establish the standard of care required for a swap
participant to verify that any counterparty meets the
eligibility standards for an eligible contract participant;
and
``(B) require disclosure by the swap participant to any
counterparty to the swap (other than a counterparty that is a
swap participant) of--
``(i) information about the material risks and
characteristics of the security-based swap; and
``(ii) any material conflicts of interest that the swap
participant may have in connection with the security-based
swap.
``(p) Documentation and Back Office Standards.--Each swap
participant registered with the Commission--
``(1) for which there is a prudential regulator, shall
comply with such documentation and back office standards as
the prudential regulator may impose; and
``(2) for which there is no prudential regulator, shall
conform with such standards as the Commission, jointly with
the Commodity Futures Trading Commission through notice-and-
comment rulemaking, may prescribe that relate to timely and
accurate confirmation, processing, netting, documentation,
and valuation of all security-based swaps.
``(q) Confidentiality.--
``(1) In general.--Notwithstanding any other provision of
law, the Commission may not be compelled to disclose any
information required by Commission rule or regulation to be
reported to the Commission under this subsection, except that
nothing in this paragraph authorizes the Commission to
withhold information from Congress, or prevent the Commission
from complying with a request for information from any other
Federal department or agency requesting information for
purposes within the scope of its jurisdiction, or complying
with an order of a court of the United States in an action
brought by the United States or the Commission.
``(2) Rule of construction.--For purposes of section 552 of
title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of
such section 552.
``(r) Segregation Requirements for Initial Margin.--
``(1) Segregation of initial margin.--
``(A) Notification of right to segregate initial margin.--A
swap participant shall notify its counterparty before
entering into a security-based swap transaction of the right
of the counterparty to require segregation of the funds or
other property supplied as initial margin for the purpose of
margining, guaranteeing, or securing the obligations of the
counterparty.
``(B) Segregation and maintenance of initial margin.--At
the request, made before entering into a security-based swap
transaction, of a counterparty that provides funds or other
property as initial margin to a swap participant for the
purpose of margining, guaranteeing, or securing the
obligations of the counterparty, the 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 jointly with the Commodity Futures
Trading Commission, maintain the funds or other property in a
segregated account separate from the assets and other
interests of the swap participant.
``(C) Notification of excess variation margin.--Pursuant to
rules and regulations adopted by the Commission, a swap
participant who received funds or other property shall notify
any counterparty who provided such funds or other property if
the swap participant is holding excess net variation margin
from that counterparty.
``(2) Applicability.--The requirements described in
paragraph (1) shall--
``(A) apply only to a security-based swap between a
counterparty and a swap participant that is not submitted for
clearing to a clearing agency;
``(B) not apply to variation margin payments; and
``(C) 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.--Each
segregated account described in paragraph (1), if requested
by the counterparty, may 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 a counterparty does not
choose to require segregation of the funds or other property
supplied as initial margin for the purpose of margining,
guaranteeing, or securing the obligations of the
counterparty, the swap participant shall report to the
counterparty of the swap participant on a quarterly basis
that the back office procedures of the swap participant
relating to initial margin and collateral requirements are in
compliance with the agreement of the counterparties.''.

SEC. 766. LARGE SECURITY-BASED SWAP TRADER REPORTING.

The Securities Exchange Act of 1934 is amended by inserting
after section 10A (15 U.S.C. 78j-1) the following:

``SEC. 10B. LARGE SECURITY-BASED SWAP TRADER REPORTING.

``(a) In General.--A person that buys or sells a security-
based swap shall file or cause to be filed with the
Commission a report, if--
``(1) such person directly or indirectly buys or sells a
particular security-based swap or class of security-based
swap during any day equal to or in excess of any daily
reporting threshold that has been fixed, by rule or
regulation, with respect to a particular security-based swap
or class of security-based swap by the Commission; or
``(2) such person directly or indirectly has or obtains a
net position in such security-based swap or class of
security-based swap equal to or in excess of any net position
reporting threshold that has been fixed, by rule or
regulation, with respect to that particular security-based
swap or class of security-based swap by the Commission.
``(b) Report.--Each report required under subsection (a)
shall--
``(1) be in such form and be filed at such time as the
Commission shall prescribe, by rule or regulation; and
``(2) contain such information regarding any position or
positions in such security-based swap and any group or index
of securities on which such security-based swap is based or
is referenced, or to which such security-based swap is
related, or as to which the issuer of such security is
referenced and any other instrument relating to such security
or group or index of securities.
``(c) Determination of Reporting Thresholds.--
``(1) Chief economist.--In determining the reporting
thresholds set forth in subsection (a), the Commission shall
rely on economic analysis provided by the Chief Economist of
the Commission.
``(2) Considerations.--The economic analysis provided under
paragraph (1) shall take into account--
``(A) the market oversight benefits and the costs to market
participants from preparing reports; and
``(B) the costs to the Commission from processing
reports.''.

SEC. 767. CERTAIN REPORTING REQUIREMENTS.

(a) Beneficial Ownership Reporting.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d), by adding at the end the following:
``(7) For purposes of this subsection, the Commission may
determine by rule or regulation that a person is deemed to
have acquired beneficial ownership of an equity security upon
the purchase or sale of a swap that results in the person
acquiring voting or control rights equivalent to those
arising from beneficial ownership of the equity security.'';
and
(2) in subsection (g), by adding at the end the following:
``(7) For purposes of this subsection, the Commission may
determine by rule or regulation that a person is deemed to
have acquired beneficial ownership of an equity security upon
the purchase or sale of a swap that results in the person
acquiring voting or control rights equivalent to those
arising from beneficial ownership of the equity security.''.
(b) Institutional Investment Manager Reporting.--Section
13(f)(5) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(f)(5)) is amended by adding at the end the following:
``(C) For purposes of this subsection, an account shall be
deemed to be holding equity securities of a class described
in subsection (d)(1), if the account holds swaps that the
Commission has determined, by rule or regulation, result in
the person acquiring voting or control rights equivalent to
those arising from beneficial ownership of the equity
security.''.

SEC. 768. PROHIBITION OF MARKET MANIPULATION, FRAUD, AND
OTHER MARKET ABUSES.

(a) 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--

[[Page S3194]]

(1) in the section heading, by inserting ``AND SECURITY-
BASED SWAP'' after ``SECURITY''; and
(2) by adding at the end the following:
``(j) Abuses Related to Security-Based Swaps.--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. The Commission shall, for purposes of
this subsection, by rule or regulation, 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.''.
(b) Additions of Swaps to Certain Anti-Manipulation
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 swap involving the security or the issuer of the
security;
``(2) any transaction in connection with any security with
relation to which he has, directly or indirectly, any
interest in any--
``(A) such put, call, straddle, option, or privilege;
``(B) such security futures product; or
``(C) such swap; or
``(3) any transaction in any security for any account that
the person has reason to believe has, and that 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 swap involving such security or the issuer of
such security.''.

SEC. 769. 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) Damages Amounts.--
``(1) Actual damages.--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, but 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 such 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 thereunder.
``(2) Applicability of certain state 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-mutual 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).
``(3) Limitation.--Notwithstanding paragraph (2), no
provision of State law regarding the offer, sale, or
distribution of securities shall apply to any transaction in
a security futures product, except that this paragraph may
not be construed as limiting any State antifraud law of
general applicability.''.

SEC. 770. PROTECTIONS FOR MARKETING SECURITY-BASED SWAPS AND
LISTING STANDARDS.

Section 6 of the Securities Exchange Act of 1934 (15 U.S.C.
78f) is amended by adding at the end the following:
``(l) Trading in Security-Based Swaps.--
``(1) In general.--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).
``(2) Listing standards required.--A national securities
exchange or a national securities association registered
pursuant to section 15A(a) may trade security-based swaps
that conform with listing standards that such exchange or
association files with the Commission under section 19(b).''.

SEC. 771. ENFORCEABILITY OF SECURITY-BASED SWAPS.

Section 29(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78cc(b)) is amended by striking ``and (B) that no
contract'' and inserting the following: ``(B) that no
agreement, contract, or transaction that is a security-based
swap shall be void, voidable, or unenforceable by either
party to such security-based swap, and no party thereto shall
be entitled to rescind, or recover any payment made with
respect to, such security-based swap under this section or
any other provision of securities laws based solely on the
failure of either party to the agreement, contract, or
transaction to satisfy its respective obligations under
sections 6(l), 13, 15(b), 17, and 17C of this title with
respect to such security-based swap, and (C) that no
contract''.
______