S.Amdt. 4113

SA 4113. Mrs. FEINSTEIN 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 the table; as follows:

Beginning on page 699, strike line 20 and all that follows
through page 704, line 13, and insert the following:
``(A) Registration.--The Commission may adopt rules and
regulations requiring registration with the Commission for a
foreign board of trade that provides the members of the
foreign board of trade or other participants located in the
United States with direct access to the electronic trading
and order matching system of the foreign board of trade,
including rules and regulations prescribing procedures and
requirements applicable to the registration of such foreign
boards of trade. For purposes of this paragraph, `direct
access' refers to an explicit grant of authority by a foreign
board of trade to an identified member or other participant
located in the United States to enter trades directly into
the trade matching system of the foreign board of trade. In
adopting such rules and regulations, the commission shall
consider: (i) whether any such foreign board of trade is
subject to comparable, comprehensive supervision and
regulation by the appropriate governmental authorities in the
foreign board of trade's home country; and (ii) any previous
commission findings that the foreign board of trade is
subject to comparable comprehensive supervision and
regulation by the appropriate government authorities in the
foreign board of trade's home country.
``(B) Linked contracts.--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.

``(C) Existing foreign boards of trade.--Subparagraphs (A)
and (B) shall not be effective with respect to any foreign
board of trade to which, prior to the date of enactment of
this paragraph, the Commission granted direct access
permission until the date that is 180 days after that date of
enactment.''.
(b) Liability of Registered Persons Trading on a Foreign
Board of Trade.--Section 4 of the Commodity Exchange Act (7
U.S.C. 6) is amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by inserting ``or by subsection (e)'' after ``Unless
exempted by the Commission pursuant to subsection (c)''; and
(2) by adding at the end the following:
``(e) Liability of Registered Persons Trading on a Foreign
Board of Trade.--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 subparagraphs (A) and (B) of
subsection (b)(1).''.
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