II
Calendar No. 461
114th CONGRESS
2d Session
S. 2917
IN THE SENATE OF THE UNITED STATES
May 10, 2016
Mr. Roberts, from the Committee on Agriculture, Nutrition, and Forestry, reported the following original bill; which was read twice and placed on the calendar
A BILL
To reauthorize the Commodity Futures Trading Commission, to ensure protections of futures customers, to provide relief for farmers, ranchers, and end-users that manage risk to help keep consumer costs low, and for other purposes.
Short title; table of contents
Short title
This Act may be cited as the Commodity End-User Relief Act
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—Consumer Protection
Sec. 101. Enhanced protections for futures customers.
Sec. 102. Electronic confirmation of customer funds.
Sec. 103. Notice and certifications providing additional customer protections.
Sec. 104. Futures commission merchant compliance.
Sec. 105. Certainty for futures customers and market participants.
TITLE II—Commodity Futures Trading Commission Reforms
Sec. 201. Extension of operations.
Sec. 202. Clarification of exemptive authority.
Sec. 203. Privilege retention.
Sec. 204. Judicial review of Commission rules.
Sec. 205. Report on status of any application of metals exchange to register as a foreign board of trade; deadline for action on application.
Sec. 206. Predominantly engaged.
Sec. 207. Public interest exemptions.
TITLE III—End-User Relief
Sec. 301. Transactions with utility special entities.
Sec. 302. Relief for grain elevator operators, agricultural producers, agricultural counterparties, and commercial market participants.
Sec. 303. Relief for end-users who use physical contracts with volumetric optionality and treatment of Federal home loan bank products.
Sec. 304. Study of swap dealer de minimis exemption level.
Sec. 305. Models for non-bank swap dealers.
Sec. 306. Bona fide hedge defined to protect end-user risk management needs.
Sec. 307. Exemption of qualified charitable organizations from designation and regulation as commodity pool operators.
TITLE IV—Technical corrections
Sec. 401. Correction of cross-references.
Sec. 402. Elimination of obsolete references to derivative transaction execution facilities.
Sec. 403. Elimination of obsolete references to electronic trading facilities.
Sec. 404. Elimination of obsolete references to exempt boards of trade.
Sec. 405. Elimination of obsolete reference to significant price discovery contract.
Sec. 406. Clarifications of retail foreign currency.
Sec. 407. Elimination of obsolete references to dealer options.
Sec. 408. Correction of references to designated contract markets.
Sec. 409. Compliance report flexibility.
Sec. 410. Reservations.
Sec. 411. Flexibility for registered entities.
Sec. 412. Elimination of obsolete reference to alternative swap execution facilities.
Sec. 413. Elimination of redundant references to types of registered entities.
Sec. 414. Clarification of Commission authority over swaps trading.
Sec. 415. Elimination of duplicative reference to Commission.
Sec. 416. Miscellaneous corrections.
Sec. 417. Elimination of report due in 1986.
Consumer Protection
Enhanced protections for futures customers
Section 17 of the Commodity Exchange Act (7 U.S.C. 21) (as amended by section 416(o)(1)) is amended by adding at the end the following:
Enhanced protections for futures customers
Each registered futures association shall submit to the Commission rules that—
require each member of the association that is a futures commission merchant to maintain written policies and procedures regarding the maintenance of—
the residual interest of the member, as described in section 1.23 of title 17, Code of Federal Regulations (or successor regulations), in any customer segregated funds of the member, as identified in section 1.20 of that title (or successor regulations), and in any foreign futures and foreign options customer secured amount funds of the member, as identified in section 30.7 of that title (or successor regulations); and
the residual interest of the member, as described in section 22.2(e)(4) of that title (or successor regulations), in any cleared swaps customer collateral of the member, as identified in section 22.2 of that title (or successor regulations); and
govern the withdrawal, transfer, or disbursement by any member, as described in section 1.23 of that title (or successor regulations), of the association, that is a futures commission merchant, of the residual interest of the member in any customer segregated funds as provided in section 1.20 of that title (or successor regulations), in any foreign futures and foreign options customer secured amount funds, identified as provided in section 30.7 of that title (or successor regulations), and in any cleared swaps customer collateral, identified as provided in section 22.2 of that title (or successor regulations).
.
Electronic confirmation of customer funds
Section 17 of the Commodity Exchange Act (7 U.S.C. 21) (as amended by section 101), is amended by adding at the end the following:
Electronic confirmation of customer funds
Each registered futures association shall submit to the Commission rules that require any member of the association that is a futures commission merchant—
to use an electronic system or systems to report financial and operational information to the association or another party designated by the registered futures association, including information related to customer segregated funds accounts, foreign futures and foreign options customer secured amount funds accounts, and cleared swaps customer collateral accounts, in accordance with such terms, conditions, documentation standards, and regular time intervals as are established by the registered futures association;
to instruct each depository, including any bank, trust company, derivatives clearing organization, or futures commission merchant, holding customer segregated funds under section 1.20 of title 17, Code of Federal Regulations (or successor regulations), foreign futures and foreign options customer secured amount funds under section 30.7 of that title (or successor regulations), or cleared swaps customer collateral under section 22.2 of that title (or successor regulations), to report balances in section 1.20 customer segregated funds accounts, section 30.7 foreign futures and foreign options customer secured amount funds accounts, and section 22.2 cleared swaps customer collateral accounts of the futures commission merchant, to the registered futures association or another party designated by the registered futures association, in the form, manner, and interval prescribed by the registered futures association; and
to hold section 1.20 customer segregated funds, section 30.7 foreign futures and foreign options customer secured amount funds and section 22.2 cleared swaps customer collateral in a depository that reports the balances in those accounts of the futures commission merchant held at the depository to the registered futures association or another party designated by the registered futures association in the form, manner, and interval prescribed by the registered futures association.
.
Notice and certifications providing additional customer protections
Section 17 of the Commodity Exchange Act (7 U.S.C. 21) (as amended by section 102) is amended by adding at the end the following:
Notification required
A futures commission merchant that has adjusted net capital in an amount less than the amount required by regulations established by the Commission or a self-regulatory organization of which the futures commission merchant is a member shall immediately notify the Commission and the self-regulatory organization of that occurrence.
Insufficient funds in segregated accounts
A futures commission merchant that does not hold a sufficient amount of funds in segregated accounts for futures customers under section 1.20 of title 17, Code of Federal Regulations (or successor regulations), in foreign futures and foreign options secured amount accounts for foreign futures and foreign options secured amount customers under section 30.7 of that title (or successor regulations), or in segregated accounts for cleared swap customers under section 22.2 of that title (or successor regulations), as required by regulations established by the Commission or a self-regulatory organization of which the futures commission merchant is a member, shall immediately notify the Commission and the self-regulatory organization of that occurrence.
Internal compliance program assessment report
Not later than the last day of such period as is established by the Commission after the end of each fiscal year, each futures commission merchant shall file with the Commission a report from the chief compliance officer of the futures commission merchant containing an assessment of the internal compliance programs of the futures commission merchant.
.
Futures commission merchant compliance
In general
Section 4d(a) of the Commodity Exchange Act (7 U.S.C. 6d(a)) is amended—
by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and indenting appropriately;
by striking Sec. 4d.
and all that follows through It shall be unlawful
and inserting the following:
Dealing by unregistered futures commission merchants or introducing brokers prohibited
Registration requirements and duties
In general
It shall be unlawful
; and
by adding at the end the following:
Residual interest requirement
Any rules or regulations requiring a futures commission merchant to maintain a residual interest in accounts held for the benefit of customers in amounts at least sufficient to exceed the sum of all uncollected margin deficits of the customers shall provide that a futures commission merchant shall meet the residual interest requirement as of the end of each business day calculated as of the close of business on the previous business day.
.
Conforming amendments
Section 4d(h) of the Commodity Exchange Act (7 U.S.C. 6d(h)) is amended by striking Notwithstanding subsection (a)(2)
and inserting Notwithstanding subsection (a)(1)(B)
.
Section 15(c)(3)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)(C)) is amended by striking 4d(a)(2)
and inserting 4d(a)(1)(B)
.
Certainty for futures customers and market participants
Section 20(a) of the Commodity Exchange Act (7 U.S.C. 24(a)) is amended—
in paragraph (4), by striking and
at the end;
in paragraph (5), by striking the period at the end and inserting ; and
; and
by adding at the end the following:
that cash, securities, or other property of the estate, including the trading or operating accounts of the commodity broker and commodities held in inventory by the commodity broker, shall be included in customer property, subject to any otherwise unavoidable security interest, or otherwise unavoidable contractual offset or netting rights of creditors (including rights set forth in a rule or bylaw of a derivatives clearing organization or a securities clearing agency) in respect of the property, but only to the extent that the property that is otherwise customer property is insufficient to satisfy the net equity claims of public customers (as that term may be defined by the Commission by rule or regulation) of the commodity broker.
.
Commodity Futures Trading Commission Reforms
Extension of operations
Section 12(d) of the Commodity Exchange Act (7 U.S.C. 16(d)) is amended by striking 2013
and inserting 2019
.
Clarification of exemptive authority
Section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) is amended—
in the matter preceding subparagraph (A), by inserting , or any swap,
after otherwise subject to subsection (a)
; and
by striking except that—
and all that follows through (B) the Commission
and inserting except that the Commission
.
Privilege retention
Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is amended—
by redesignating subsections (h) and (i) as subsections (i) and (j), respectively; and
by inserting after subsection (g) the following:
Sharing privileged information with other authorities
Definitions
In this subsection:
Foreign law enforcement authority
The term foreign law enforcement authority means any foreign authority that is empowered under foreign law to detect, investigate, or prosecute potential violations of law.
Privilege
The term privilege includes any applicable work-product privilege, attorney-client privilege, governmental privilege, or other privilege recognized under Federal, State, or foreign law.
Privileged information provided by the Commission
The Commission shall not be considered to have waived any privilege by transferring information to or permitting that information to be used in accordance with subsection (e).
Nondisclosure of privileged information provided to the Commission
The Commission shall not be compelled to disclose privileged information obtained from any foreign futures authority, or foreign law enforcement authority, if the authority has in good faith determined and represented to the Commission that the information is privileged.
Nonwaiver of privileged information provided to the Commission
The entities listed in subsection (e) shall not be considered to have waived any privilege by transferring information to or permitting information to be used by the Commission.
.
Judicial review of Commission rules
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by adding at the end the following:
Judicial review of Commission rules
In general
Except as provided in subsection (e), a person adversely affected by a rule of the Commission promulgated under this Act may obtain review of the rule in the United States Court of Appeals for the District of Columbia Circuit or the United States Court of Appeals for the circuit where the party resides or has the principal place of business, by filing in the court, not later than 60 days after publication in the Federal Register of the entry of the rule, a written petition requesting that the rule be set aside.
Action by Commission
After a written petition described in subsection (a) has been filed—
the clerk of the court shall transmit to an officer designated by the Commission for that purpose a copy of the petition; and
the Commission shall file in the court the record on which the rule complained of is entered, as provided in section 2112 of title 28, United States Code, and the Federal Rules of Appellate Procedure.
Jurisdiction of the court
On the filing of the petition, the court has jurisdiction, which becomes exclusive on the filing of the record, to affirm and enforce or to set aside the rule in whole or in part.
Requirements
The court shall affirm and enforce the rule unless the action of the Commission in promulgating the rule is found to be—
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
contrary to constitutional right, power, privilege, or immunity;
in excess of statutory jurisdiction, authority, or limitations, or without statutory authorization; or
without observance of procedure required by law.
District court alternative
Notwithstanding the direct review process authorized by subsection (a), a person adversely affected by a rule of the Commission promulgated under this Act may, in the alternative, obtain review by filing an action in the United States District Court for the judicial district where the party resides or has the principal place of business or in the United States District Court for the District of Columbia.
.
Report on status of any application of metals exchange to register as a foreign board of trade; deadline for action on application
Report to Congress
Not later than 90 days after the date of enactment of this Act, the Commodity Futures Trading Commission shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a written report describing—
the status of the review by the Commission of any application submitted by a metals exchange to register with the Commission under section 4(b)(1) of the Commodity Exchange Act (7 U.S.C. 6(b)(1));
the status of Commission negotiations with foreign regulators regarding aluminum warehousing; and
the status of consultations with all United States market participants concerning metals exchanges and warehousing, including major producers and consumers.
Deadline for action
Not later than September 30, 2017, the Commission shall take action on any application described in subsection (a)(1) that is submitted to the Commission on or before August 14, 2012.
Predominantly engaged
Section 2(h)(7)(C) of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)) is amended by adding at the end the following:
Regulations
In general
Not later than 90 days after the date of enactment of this clause, the Commission shall promulgate regulations to define the term predominantly engaged
for purposes of clause (i)(VIII).
Revenue requirement
Regulations under this clause shall provide that an entity will not be considered to be predominantly engaged in activities that are in the business of banking or financial in nature if the consolidated revenues of the entity derived from such activities constitute less than 85 percent of the total consolidated revenues of the entity.
Determination
For purposes of subclause (II), in determining the percentage of the revenues of an entity that are derived from activities that are in the business of banking or financial in nature, all revenues that are, or result from, transactions used to hedge or mitigate commercial risk shall be excluded.
.
Public interest exemptions
Section 4(c)(6) of the Commodity Exchange Act (7 U.S.C. 6(c)(6)) is amended in the matter preceding subparagraph (A) by inserting , on the condition that an exemption pursuant to this paragraph shall include an exemption from section 22,
after requirements of this Act
.
End-User Relief
Transactions with utility special entities
In general
Section 1a(49) of the Commodity Exchange Act (7 U.S.C. 1a(49)) is amended by adding at the end the following:
Certain transactions with a utility special entity
In making a determination to exempt pursuant to subparagraph (D), the Commission shall treat a utility operations-related swap entered into with a utility special entity as if the swap were entered into with an entity that is not a special entity (as defined in section 4s(h)(2)(C)).
.
Reporting transactions in utility operations-related swaps
Section 4r(a)(3) of the Commodity Exchange Act (7 U.S.C. 6r(a)(3)) is amended by adding at the end the following:
Transactions in utility operations-related swaps
Transactions in utility operations-related swaps shall be reported pursuant to this section.
.
Utility operations-related swap
Section 1a(47)(A)(iii) of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(iii)) is amended—
in subclause (XXI), by striking and
at the end;
in subclause (XXII), by adding and
at the end; and
by adding at the end the following:
a utility operations-related swap;
.
Definitions
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended by adding at the end the following:
Utility operations-related swap
The term utility operations-related swap means a swap that—
is entered into by a utility to hedge or mitigate a commercial risk;
is not a contract, agreement, or transaction based on, derived on, or referencing—
an interest rate, credit, equity, or currency asset class;
except as used for fuel for electric energy generation, a metal, agricultural commodity, or crude oil or gasoline commodity of any grade; or
any other commodity or category of commodities identified for this purpose in a rule or order adopted by the Commission in consultation with the appropriate Federal and State regulatory commissions; and
is associated with—
the generation, production, purchase, or sale of natural gas or electric energy, the supply of natural gas or electric energy to a utility, or the delivery of natural gas or electric energy service to utility customers;
fuel supply for the facilities or operations of a utility;
compliance with an electric system reliability obligation;
compliance with an energy, energy efficiency, conservation, or renewable energy or environmental law, regulation, or government order applicable to a utility; or
any other electric energy or natural gas swap to which a utility is a party.
Utility special entity
The term utility special entity means a special entity, or any instrumentality, department, or corporation of or established by a State or political subdivision of a State, that—
owns or operates, or anticipates owning or operating, an electric or natural gas facility or an electric or natural gas operation;
supplies, or anticipates supplying, natural gas and or electric energy to another utility special entity;
has, or anticipates having, public service obligations under Federal, State, or local law (including regulations) to deliver electric energy or natural gas service to customers; or
is a Federal power marketing agency (as defined in section 3 of the Federal Power Act (16 U.S.C. 796)).
.
Relief for grain elevator operators, agricultural producers, agricultural counterparties, and commercial market participants
The Commodity Exchange Act is amended by inserting after section 4t (7 U.S.C. 6t) the following:
Recordkeeping requirements applicable to nonregistered members of certain registered entities
In general
Except as provided in section 4(a)(3), a member of a designated contract market or a swap execution facility that is not registered with the Commission and not required to be registered with the Commission in any capacity shall satisfy the recordkeeping requirements of this Act and any recordkeeping rule, order, or regulation under this Act by maintaining a written record of each transaction in a contract for future delivery, option on a future, swap, swaption, trade option, and related cash or forward transactions.
Sufficiency
A written record described in subsection (a) shall be sufficient if the written record includes the final agreement between the parties and the material economic terms of the transaction.
.
Relief for end-users who use physical contracts with volumetric optionality and treatment of Federal home loan bank products
Section 1a(47)(B) of the Commodity Exchange Act (7 U.S.C. 1a(47)(B)) is amended—
in clause (ix), by striking and
at the end;
in clause (x), by striking the period at the end and inserting a semicolon; and
by adding at the end the following:
any option in a nonfinancial commodity for which exercise is intended to result in a physical delivery obligation; and
any advance by a Federal Home Loan Bank.
.
Study of swap dealer de minimis exemption level
In general
The Commodity Futures Trading Commission shall conduct a study of the appropriate de minimis exemption level of swap dealing under section 1a(49)(D) of the Commodity Exchange Act (7 U.S.C. 1a(49)(D)).
Considerations
In conducting the study described in subsection (a), the Commission may consider—
the potential impact of modifying the de minimis threshold;
whether the de minimis threshold should be increased or decreased;
the factors that are useful for identifying swap dealing activity, including the application of the dealer trader distinction for that purpose, and the potential use of objective tests or safe harbors as part of the analysis; and
any other factors, or any other analysis of swap data and information relating to swaps, that the Commission considers to be relevant.
Regulation required
In general
Based on the information gathered in the study under this section, the Commission, through a rulemaking, shall promulgate a regulation that sets an appropriate swap dealer de minimis exemption level.
Existing exemption level
In general
The swap dealer de minimis exemption level in effect on the date of enactment of this Act shall remain in effect until changed by the Commission through a rulemaking described in paragraph (1).
Effectiveness
Any Commission regulation that changes the swap dealer de minimis exemption level shall take effect not less than 1 year after the date on which the final regulation is published in the Federal Register.
Models for non-bank swap dealers
In general
Section 4s(e) of the Commodity Exchange Act (7 U.S.C. 6s(e)) is amended—
in paragraph (2)(B), in the matter preceding clause (i), by striking The Commission
and inserting In consultation with the prudential regulators and the Securities and Exchange Commission, the Commission
; and
in paragraph (3)(D)—
in clause (ii), in the matter preceding subclause (I), by inserting and in consultation with each other
after practicable
; and
by adding at the end the following:
Financial models
To the extent that swap dealers and major swap participants that are banks are permitted to use financial models approved by the prudential regulators or the Securities and Exchange Commission to calculate minimum capital requirements and minimum initial and variation margin requirements, including the use of noncash collateral, the Commission shall, in consultation with the prudential regulators and the Securities and Exchange Commission and to the maximum extent practicable, permit the use of comparable financial models by swap dealers and major swap participants that are not banks.
.
Conforming amendment
Section 15F(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–10(e)) is amended—
in paragraph (2)(B), in the matter preceding clause (i), by striking The Commission
and inserting In consultation with the prudential regulators and the Commodity Futures Trading Commission, the Commission
; and
in paragraph (3)(D)—
in clause (ii), in the matter preceding subclause (I), by inserting and in consultation with each
after practicable
; and
by adding at the end the following:
Financial models
To the extent that security-based swap dealers and major security-based swap participants that are banks are permitted to use financial models approved by the prudential regulators or the Commodity Futures Trading Commission to calculate minimum capital requirements and minimum initial and variation margin requirements, including the use of noncash collateral, the Commission shall, in consultation with the Commodity Futures Trading Commission and to the maximum extent practicable, permit the use of comparable financial models by security-based swap dealers and major security-based swap participants that are not banks.
.
Bona fide hedge defined to protect end-user risk management needs
Section 4a(c) of the Commodity Exchange Act (7 U.S.C. 6a(c)) is amended—
in paragraph (1), in the second sentence—
by striking may
and inserting shall
; and
by striking future for which
and inserting future, to be determined by the Commission, for which either an appropriate swap is available or
;
in paragraph (2)—
in the matter preceding subparagraph (A), by striking subsection (a)(2)
and all that follows through position as
and inserting paragraphs (2) and (5) of subsection (a) for swaps, contracts of sale for future delivery, or options on the contracts or commodities, a bona fide hedging transaction or position is
; and
in subparagraph (A)(ii), by striking of risks
and inserting or management of current or anticipated risks
; and
by adding at the end the following:
Bona fide hedging transaction
The Commission may further define, by rule or regulation, what constitutes a bona fide hedging transaction, if the rule or regulation is consistent with the requirements of subparagraphs (A) and (B) of paragraph (2).
.
Exemption of qualified charitable organizations from designation and regulation as commodity pool operators
Exclusion from definition of commodity pool
Section 1a(10) of the Commodity Exchange Act (7 U.S.C. 1a(10)) is amended by adding at the end the following:
Exclusion
The term commodity pool does not include any investment trust, syndicate, or similar form of enterprise excluded from the definition of investment company
pursuant to paragraph (10) or (14) of section 3(c) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)).
.
Inapplicability of prohibition on use of instrumentalities of interstate commerce by unregistered commodity trading advisor
Section 4m of the Commodity Exchange Act (7 U.S.C. 6m) is amended—
by striking Sec. 4m. (1) It
and inserting the following:
Use of mails or other means or instrumentalities of interstate commerce by commodity trading advisors and commodity pool operators
Prohibition
In general
It
;
in the second sentence—
by striking The provisions of this section
and inserting the following:
Exceptions
Commodity trading advisors
In general
Subject to clause (ii) and except as provided in subparagraphs (B) and (C), this section
;
by striking commodity trading advisor who is a (1) dealer
and inserting the following: “commodity trading advisor who is a—
dealer
;
by striking or (2) nonprofit
and inserting the following: “; or
nonprofit
;
by striking Commodity Futures Trading Commission Act of 1974; if the advice by the person described in clause (1) or (2) of this sentence
and inserting the following: “Commodity Futures Trading Commission Act of 1974.
Applicability
Clause (i) only applies if the advice by the person described in subclause (I) or (II) of clause (i)
;
by striking business:
and inserting business.
; and
by striking Provided, That such person shall be subject to proceedings under section 14 of this Act.
and inserting the following:
Complaints against excepted persons
A person described in subclause (I) or (II) of clause (i) shall be subject to proceedings under section 14.
Charitable organizations
This section shall not apply to any commodity trading advisor that is—
a charitable organization, as defined in section 3(c)(10)(D)(iii) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(10)(D)(iii)), or a trustee, director, officer, employee, or volunteer of such a charitable organization acting within the scope of the employment or duties of the person with the organization, whose trading advice is provided only to, or with respect to, 1 or more of—
any such charitable organization; or
an investment trust, syndicate, or similar form of enterprise excluded from the definition of investment company pursuant to section 3(c)(10) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(10)); or
any plan, company, or account described in section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(14)), any person or entity who establishes or maintains such a plan, company, or account, or any trustee, director, officer, employee, or volunteer for any of the foregoing plans, persons, or entities acting within the scope of the employment or duties of the person with the organization, whose trading advice is provided only to, or with respect to, any investment trust, syndicate, or similar form of enterprise excluded from the definition of investment company pursuant to section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(14)).
;
by striking (2) Nothing in this Act
and inserting the following:
Relationship to other law
Nothing in this Act
;
by striking (3) Exception.—
and all that follows through Paragraph (1) shall not apply
and inserting the following:
Exception
In general
Subsection (a) shall not apply
;
by striking (B) Engaged primarily.—For purposes of subparagraph (A)
and inserting the following:
Engaged primarily
For purposes of paragraph (1)
;
by striking (C) Commodity interests.—For purposes of this paragraph
and inserting the following:
Commodity interests
For purposes of this subsection
; and
by adding at the end the following:
Disclosure concerning excluded charitable organizations
The operator of or advisor to any investment trust, syndicate, or similar form of enterprise excluded from the definition of commodity pool by reason of section 1a(10)(C) of this Act pursuant to section 3(c)(10) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(10)) shall provide disclosure in accordance with section 7(e) of that Act (15 U.S.C. 80a–7(e).
.
Technical corrections
Correction of cross-references
Section 2(h)(8)(A)(ii) of the Commodity Exchange Act (7 U.S.C. 2(h)(8)(A)(ii)) is amended by striking 5h(f) of this Act
and inserting 5h(g)
.
Section 5c(c)(5)(C)(i) of the Commodity Exchange Act (7 U.S.C. 7a–2(c)(5)(C)(i)) is amended in the matter preceding subclause (I) by striking section 1a(2)(i))
and inserting section 1a(19)(A))
.
Section 23(f) of the Commodity Exchange Act (7 U.S.C. 26(f)) is amended by striking section 7064
and inserting section 706
.
Elimination of obsolete references to derivative transaction execution facilities
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—
in paragraph (12)(B)(vi), by striking or derivatives transaction execution facility
;
in paragraph (34)—
by striking the paragraph designation and heading and inserting the following:
Member
; and
by striking or derivatives transaction execution facility
each place it appears; and
in paragraph (35)(B)(iii)(I), by striking or registered derivatives transaction execution facility
.
Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended—
in subsection (a)—
in paragraph (1)—
in subparagraph (C)—
in clause (ii), in the matter preceding subclause (I)—
by striking , or register a derivatives transaction execution facility that trades or executes,
;
by striking , and no derivatives transaction execution facility shall trade or execute such contracts of sale (or options on such contracts) for future delivery
; and
by striking or the derivatives transaction execution facility,
; and
in clause (v)—
in subclause (I), by striking , or any derivatives transaction execution facility on which such contract or option is traded,
;
in subclause (II), by striking or derivatives transaction execution facility
each place it appears; and
in subclause (V), by striking or registered derivatives transaction execution facility
; and
in subparagraph (D)—
in clause (i)—
in the matter preceding subclause (I)—
by striking , or register a derivatives transaction execution facility
; and
by striking , or registered as a derivatives transaction execution facility for,
; and
in subclause (IV), by striking registered derivatives transaction execution facility,
each place it appears;
in clause (ii)—
by striking subclause (I) and inserting the following:
the transaction is conducted on, or subject to, the rules of a board of trade that has been designated by the Commission as a contract market in the security futures product; or
;
in subclause (II)—
by striking (II) the contract
and inserting the following:
the contract
; and
by striking or registered derivatives transaction execution facility
; and
in subclause (III)—
by striking or registered derivatives transaction execution facility member
; and
by striking (III) the security
and inserting the following:
the security
; and
in clause (vi)(III)(aa), by striking and registered derivatives transaction execution facilities
; and
in paragraph (9)(B)(ii)—
by striking or registration
each place it appears;
by striking or derivatives transaction execution facility
each place it appears;
in the second sentence, by striking or register
; and
in the fourth sentence—
by striking , registering,
; and
by striking , registration
; and
in subsection (c)(2), by striking or a derivatives transaction execution facility
each place it appears.
Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended—
in subsection (a)—
in paragraph (1), by striking or derivatives transaction execution facility
; and
in paragraph (3), by striking or derivatives transaction execution facility
; and
in subsection (c)—
in paragraph (1), in the matter preceding subparagraph (A), by striking or registered as a contract market or derivatives transaction execution facility
and inserting as a contract market
; and
in paragraph (2)(B)(ii), by striking “or derivatives transaction execution facility”.
Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended—
in subsection (a)(1)—
by striking or derivatives transaction execution facilities
; and
by striking or derivatives transaction execution facility
; and
in subsection (e)—
by striking , derivatives transaction execution facility,
each place it appears; and
by striking or derivatives transaction execution facility
.
Section 4c(g) of the Commodity Exchange Act (7 U.S.C. 6c(g)) is amended by striking or derivatives transaction execution facility
each place it appears.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended by striking or derivatives transaction execution facility
each place it appears.
Section 4e of the Commodity Exchange Act (7 U.S.C. 6e) is amended by striking or derivatives transaction execution facility
.
Section 4f of the Commodity Exchange Act (7 U.S.C. 6f) is amended by striking or derivatives transaction execution facility
each place it appears.
Section 4i of the Commodity Exchange Act (7 U.S.C. 6i) is amended in the matter preceding paragraph (1) by striking or derivatives transaction execution facility
.
Section 4j of the Commodity Exchange Act (7 U.S.C. 6j) is amended—
in the section heading, by striking and registered derivatives transaction execution facilities
;
in subsection (a), in the first sentence, by striking and registered derivatives transaction execution facility
;
in subsection (b), in the matter preceding paragraph (1), by striking or registered derivatives transaction execution facility
; and
in subsection (c), in the matter preceding paragraph (1), by striking or registered derivatives transaction execution facility members
.
Section 4k(5) of the Commodity Exchange Act (7 U.S.C. 6k(5)) is amended, in the matter preceding subparagraph (A), by striking or registered derivatives transaction execution facility
.
Section 4l of the Commodity Exchange Act (7 U.S.C. 6l) is amended by striking or registered derivatives transaction execution facilities
each place it appears.
Section 4p of the Commodity Exchange Act (7 U.S.C. 6p) is amended—
in subsection (a), in the third sentence, by striking contract markets, or derivatives transaction execution facilities
and inserting or contract markets
; and
in subsection (b), by striking derivatives transaction execution facility,
.
Section 5(e) of the Commodity Exchange Act (7 U.S.C. 7(e)) is amended—
by striking the subsection designation and heading and all that follows through a contract for
in paragraph (1) and inserting the following:
Current agricultural commodities
A contract for
; and
by striking paragraph (2).
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a–2) is amended—
in subsection (b), by striking , derivatives transaction execution facility,
each place it appears; and
in subsection (f)—
in the matter preceding paragraph (1), by striking and registered derivatives transaction execution facility
; and
in paragraph (1), by striking or registered derivatives transaction execution facility
.
Section 6 of the Commodity Exchange Act is amended—
by striking the section designation (42 Stat. 1001, chapter 39) and all that follows through Any person
in subsection (a) (7 U.S.C. 8) and inserting the following:
Application for designation as contract market
Application
Any person
;
in subsection (a) (7 U.S.C. 8)—
in the first sentence, by striking or registered as a contract market or derivatives transaction execution facility
and inserting as a contract market
; and
in the last sentence, by striking or register
; and
in subsections (a) and (b) (7 U.S.C. 8)—
by striking or derivatives transaction execution facility
each place it appears; and
by striking or registration
each place it appears.
Section 6a of the Commodity Exchange Act (7 U.S.C. 10a) is amended—
in subsection (a), by striking or registered as a contract market or a derivatives transaction execution facility exclude
and inserting as a contract market shall exclude
; and
in subsection (b)—
by striking or registered
; and
by striking or a derivatives transaction execution facility
.
Section 6d(1) of the Commodity Exchange Act (7 U.S.C. 13a–2(1)) is amended by striking derivatives transaction execution facility,
.
Elimination of obsolete references to electronic trading facilities
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—
in paragraph (18)(A)(x), by striking (other than an electronic trading facility with respect to a significant price discovery contract)
; and
in paragraph (40)—
in subparagraph (D), by adding and
at the end;
in subparagraph (E), by striking ; and
at the end and inserting a period; and
by striking subparagraph (F).
Section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended in the first sentence by striking (including significant price discovery contracts)
.
Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) (as amended by section 402(d)) is amended—
in subsection (b)—
in paragraph (1), by striking with respect to a significant price discovery contract
; and
in paragraph (2), by striking any contract
and all that follows through price discovery contract
and inserting any contract market or swap execution facility
; and
in subsection (e)—
in the first sentence—
by striking or by any electronic trading facility
;
by striking or on an electronic trading facility
; and
by striking or electronic trading facility
each place it appears; and
in the second sentence, by striking or electronic trading facility with respect to a significant price discovery contract
.
Section 4g(a) of the Commodity Exchange Act (7 U.S.C. 6g(a)) is amended by striking and in any significant price discovery contract traded or executed on an electronic trading facility or any agreement, contract, or transaction that is treated by a derivatives clearing organization, whether registered or not registered, as fungible with a significant price discovery contract;
.
Section 4i of the Commodity Exchange Act (7 U.S.C. 6i) is amended in the matter preceding paragraph (1) by striking , or any significant price discovery contract traded or executed on an electronic trading facility or any agreement, contract, or transaction that is treated by a derivatives clearing organization, whether registered or not registered, as fungible with a significant price discovery contract
.
Section 5c(b) of the Commodity Exchange Act (7 U.S.C. 7a–2(b)) (as amended by section 402(o)) is amended—
in paragraph (1)—
by striking or electronic trading facility with respect to a significant price discovery contract
; and
by striking that is not an electronic trading facility
;
in paragraph (2), by striking or electronic trading facility
; and
in paragraph (3), by striking or electronic trading facility
.
Section 6(b) of the Commodity Exchange Act (7 U.S.C. 8(b)) is amended by striking or electronic trading facility
each place it appears.
Section 12(e)(2) of the Commodity Exchange Act (7 U.S.C. 16(e)(2)) is amended by striking in the case of—
and all that follows through the period at the end and inserting the following: in the case of an agreement, contract, or transaction that is excluded from this Act under subsection (c) or (f) of section 2 of this Act or title IV of the Commodity Futures Modernization Act of 2000 (as enacted by section 1(a)(5) of the Consolidated Appropriations Act, 2001 (Public Law 106–554; 114 Stat. 2763, 2763A–457)), or exempted under section 4(c) (regardless of whether any such agreement, contract, or transaction is otherwise subject to this Act).
.
Elimination of obsolete references to exempt boards of trade
Section 1a(18)(A)(x) of the Commodity Exchange Act (7 U.S.C. 1a(18)(A)(x)) (as amended by section 403(a)(1)) is amended by striking “or an exempt board of trade”.
Section 12(e)(1)(B)(i) of the Commodity Exchange Act (7 U.S.C. 16(e)(1)(B)(i)) is amended by striking “or exempt board of trade”.
Elimination of obsolete reference to significant price discovery contract
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended by striking paragraph (46) and inserting the following:
Reserved
.
Clarifications of retail foreign currency
Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended—
in subparagraph (B)—
by striking (gg)
each place it appears and inserting (ee)
;
in clause (i)(II), by redesignating item (ff) as item (ee);
in clause (iii), by striking item (aa), (bb), (ee), or (ff) of clause (i)(II) of this subparagraph
and inserting item (aa), (bb), or (dd) of clause (i)(II)
; and
in clause (iv)—
in subclauses (I) and (II), by striking (ee), or (ff)
each place it appears and inserting or (dd)
;
in subclause (I)(bb), by inserting , or otherwise act as a commodity trading advisor with respect to any agreement, contract, or transaction described in clause (i)
before the semicolon; and
in subclause (IV)(aa), by striking (ff)
and inserting (dd)
; and
in subparagraph (C)—
by striking (ee), or (ff)
each place it appears and inserting or (dd)
;
by striking item (aa) through (ff)
each place it appears and inserting items (aa) through (dd)
; and
in clause (iii)(I)(bb), by inserting , or otherwise act as a commodity trading advisor with respect to any agreement, contract, or transaction described in clause (i)
before the semicolon.
Elimination of obsolete references to dealer options
In general
Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is amended—
by striking subsections (d) and (e); and
by redesignating subsections (f) and (g) as subsections (d) and (e), respectively.
Conforming amendments
Section 2(d) of the Commodity Exchange Act (7 U.S.C. 2(d)) is amended by striking (g) of
and inserting (e) of
.
Section 4f(a)(4)(A)(i) of the Commodity Exchange Act (7 U.S.C. 6f(a)(4)(A)(i)) is amended by striking , (d), (e), and (g)
and inserting and (e)
.
Section 4k(5)(A) of the Commodity Exchange Act (7 U.S.C. 6k(5)(A)) is amended by striking , (d), (e), and (g)
and inserting and (e)
.
Section 5f(b)(1)(A) of the Commodity Exchange Act (7 U.S.C. 7b–1(b)(1)(A)) is amended by striking , (e), and (g)
and inserting and (e)
.
Section 9(a)(2) of the Commodity Exchange Act (7 U.S.C. 13(a)(2)) is amended by striking through (e) of subsection 4c
and inserting and (c) of section 4c
.
Correction of references to designated contract markets
Section 4a(c)(1) of the Commodity Exchange Act (7 U.S.C. 6a(c)(1)) is amended in the second sentence by striking an exchange
and inserting a designated contract market
.
Section 4b(c) of the Commodity Exchange Act (7 U.S.C. 6b(c)) is amended in the first proviso—
by striking the exchange
and inserting the designated contract market
; and
by striking such exchange
and inserting that designated contract market
.
Section 4g(e) of the Commodity Exchange Act (7 U.S.C. 6g(e)) is amended by striking the exchange
and inserting each designated contract market and swap execution facility
.
Section 4s(h)(7)(A) of the Commodity Exchange Act (7 U.S.C. 6s(h)(7)(A)) is amended by striking an exchange
and inserting a designated contract market
.
Section 8c of the Commodity Exchange Act (7 U.S.C. 12c) is amended—
in subsection (a)—
in paragraph (1), by striking exchange
each place it appears and inserting registered entity
; and
in paragraph (2)—
in the first sentence—
by striking an exchange
and inserting a registered entity
; and
by striking the exchange
and inserting the registered entity
; and
in the second sentence—
by striking An exchange
and inserting A registered entity
; and
by striking the exchange
and inserting the registered entity
;
in subsection (b)—
in the first sentence—
by striking an exchange
and inserting a registered entity
; and
by striking the exchange
and inserting the registered entity
; and
in the second sentence, by striking exchange
and inserting registered entity
; and
in subsection (c), by striking exchange
each place it appears and inserting registered entity
.
Compliance report flexibility
Section 4s(k)(3) of the Commodity Exchange Act (7 U.S.C. 6s(k)(3)) is amended by striking subparagraph (B) and inserting the following:
Requirements
A compliance report under subparagraph (A) shall—
include a certification that, under penalty of law, the compliance report is materially accurate and complete; and
be furnished at such time as the Commission determines, by rule, regulation, or order, to be appropriate.
.
Reservations
Section 5 of the Commodity Exchange Act (7 U.S.C. 7) is amended by inserting after subsection (a) the following:
Reserved
.
The Commodity Exchange Act is amended by inserting after section 5 (7 U.S.C. 7) the following:
Reserved
.
Section 5b of the Commodity Exchange Act (7 U.S.C.7a–1) is amended after subsection (i) the following:
Reserved
.
The Commodity Exchange Act is amended by inserting after section 5c (7 U.S.C. 7a–2) the following:
Reserved
.
Flexibility for registered entities
Section 5c(b) of the Commodity Exchange Act (7 U.S.C. 7a–2(b)) (as amended by sections 402(o) and 403(f)) is amended by striking contract market
each place it appears and inserting registered entity
.
Elimination of obsolete reference to alternative swap execution facilities
Section 5h(h) of the Commodity Exchange Act (7 U.S.C. 7b–3(h)) is amended by striking alternative
.
Elimination of redundant references to types of registered entities
Section 6b of the Commodity Exchange Act (7 U.S.C. 13a) is amended in the first sentence by striking as set forth in sections 5 through 5c
.
Clarification of Commission authority over swaps trading
Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended—
in paragraph (7)—
in the matter preceding subparagraph (A), by inserting the protection of swaps traders and to assure fair dealing in swaps,
after appropriate for
;
in subparagraph (A), by inserting swaps or
after conditions in
; and
in subparagraph (B), by inserting or swaps
after future delivery
; and
in paragraph (9), in the first sentence—
by inserting swap or
after or liquidation of any
; and
by inserting swap or
after margin levels on any
.
Elimination of duplicative reference to Commission
Section 13(c) of the Commodity Exchange Act (7 U.S.C. 13c(c)) is amended by striking or the Commission
.
Miscellaneous corrections
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—
in paragraph (12)(A)(i)(II), by adding a semicolon at the end; and
in paragraph (19)—
by redesignating clauses (i) through (iv) as subparagraphs (A) through (D), respectively, and indenting the subparagraphs appropriately; and
in each of subparagraphs (B) and (D) (as so redesignated)—
by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively, and indenting the clauses appropriately; and
by striking clause (i)
each place it appears and inserting subparagraph (A)
.
Section 2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) is amended—
in clause (ii), by indenting subclause (III) appropriately;
by indenting clause (iii) appropriately;
in clause (iv), by striking under or
and inserting under
;
by indenting clause (v) appropriately; and
in clause (v)(VI), by striking III
and inserting (III)
.
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 section, 5b, or
and inserting section 5b or
.
Section 4(c)(3)(H) of the Commodity Exchange Act (7 U.S.C. 6(c)(3)(H)) is amended by striking state
and inserting State
.
Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is amended by striking subsection (c) and inserting the following:
Regulations
The Commission shall issue regulations to continue to permit the trading of options on contract markets under such terms and conditions that the Commission from time to time may prescribe.
.
Section 4d(b) of the Commodity Exchange Act (7 U.S.C. 6d(b)) is amended by striking paragraph (2) of this section
and inserting subsection (a)(1)(B)
.
Section 4f(c) of the Commodity Exchange Act (7 U.S.C. 6f(c)) is amended—
in paragraph (3)(A), by striking the first comma; and
in paragraph (4)—
in subparagraph (A), in the first sentence, by striking in developing
and inserting In developing
; and
in subparagraph (B), by striking 1817(a)
and inserting 1817(a))
.
Section 4p(b) of the Commodity Exchange Act (7 U.S.C. 6p(b)) is amended by striking state law
and inserting State law
.
Section 5f(b)(1) of the Commodity Exchange Act (7 U.S.C. 7b–1(b)(1)) is amended in the matter preceding subparagraph (A) by striking section 5f
and inserting this section
.
Section 6(a) of the Commodity Exchange Act (7 U.S.C. 8(a)) is amended in the first sentence by striking the the
and inserting the
.
Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended in paragraphs (2)(E)(i) and (3)(B)(i) by striking Investors
each place it appears and inserting Investor
.
Section 12(b) of the Commodity Exchange Act (7 U.S.C. 16(b)) is amended by indenting paragraph (4) appropriately.
Section 14(a) of the Commodity Exchange Act (7 U.S.C. 18(a)) is amended—
by indenting paragraph (2) appropriately; and
in paragraph (2), by indenting subparagraph (B) appropriately.
Section 17(b) of the Commodity Exchange Act (7 U.S.C. 21(b)) is amended—
in paragraph (9)(D), by striking the semicolon at the end and inserting a period;
in paragraph (10)(C)(ii), by striking and
at the end;
in paragraph (11), by striking the period at the end and inserting a semicolon;
in paragraph (12)—
by striking (A)
; and
by striking the period at the end and inserting ; and
; and
in paragraph (13), in the matter preceding subparagraph (A), by striking A major
and inserting a major
.
Section 17 of the Commodity Exchange Act (7 U.S.C. 21) is amended—
by redesignating subsection (r) as subsection (s); and
by redesignating the second subsection (q) (relating to comprehensive rule implementation programs) as subsection (r).
Section 22 of the Commodity Exchange Act (7 U.S.C. 25) is amended—
in subsection (a)(1)(C), by indenting clause (iv) appropriately; and
in subsection (b)—
in paragraph (3), by striking of registered
and inserting of a registered
; and
in paragraph (4), by inserting a comma after entity
.
Elimination of report due in 1986
Section 26 of the Futures Trading Act of 1978 (7 U.S.C. 16a) is amended—
by striking subsection (b); and
by redesignating subsection (c) as subsection (b).
May 10, 2016
Read twice and placed on the calendar