Home > 106th Congressional Bills > H.R. 5661 (ih) To amend titles XVIII, XIX, and XXI of the Social Security Act to [Introduced in House] ...H.R. 5661 (ih) To amend titles XVIII, XIX, and XXI of the Social Security Act to [Introduced in House] ...
106th CONGRESS
2d Session
H. R. 5660
To reauthorize and amend the Commodity Exchange Act to promote legal
certainty, enhance competition, and reduce systemic risk in markets for
futures and over-the-counter derivatives, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 14, 2000
Mr. Ewing (for himself, Mr. Combest, Mr. Leach, Mr. LaFalce, and Mr.
Bliley) introduced the following bill; which was referred to the
Committee on Agriculture, and in addition to the Committees on Banking
and Financial Services, Commerce, and the Judiciary, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To reauthorize and amend the Commodity Exchange Act to promote legal
certainty, enhance competition, and reduce systemic risk in markets for
futures and over-the-counter derivatives, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Commodity Futures
Modernization Act of 2000''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
TITLE I--COMMODITY FUTURES MODERNIZATION
Sec. 101. Definitions.
Sec. 102. Agreements, contracts, and transactions in foreign currency,
government securities, and certain other
commodities.
Sec. 103. Legal certainty for excluded derivative transactions.
Sec. 104. Excluded electronic trading facilities.
Sec. 105. Hybrid instruments; swap transactions.
Sec. 106. Transactions in exempt commodities.
Sec. 107. Application of commodity futures laws.
Sec. 108. Protection of the public interest.
Sec. 109. Prohibited transactions.
Sec. 110. Designation of boards of trade as contract markets.
Sec. 111. Derivatives transaction execution facilities.
Sec. 112. Derivatives clearing.
Sec. 113. Common provisions applicable to registered entities.
Sec. 114. Exempt boards of trade.
Sec. 115. Suspension or revocation of designation as contract market.
Sec. 116. Authorization of appropriations.
Sec. 117. Preemption.
Sec. 118. Predispute resolution agreements for institutional customers.
Sec. 119. Consideration of costs and benefits and antitrust laws.
Sec. 120. Contract enforcement between eligible counterparties.
Sec. 121. Special procedures to encourage and facilitate bona fide
hedging by agricultural producers.
Sec. 122. Rule of construction.
Sec. 123. Technical and conforming amendments.
Sec. 124. Privacy.
Sec. 125. Report to Congress.
Sec. 126. International activities of the Commodity Futures Trading
Commission.
TITLE II--COORDINATED REGULATION OF SECURITY FUTURES PRODUCTS
Subtitle A--Securities Law Amendments
Sec. 201. Definitions under the Securities Exchange Act of 1934.
Sec. 202. Regulatory relief for markets trading security futures
products.
Sec. 203. Regulatory relief for intermediaries trading security futures
products.
Sec. 204. Special provisions for interagency cooperation.
Sec. 205. Maintenance of market integrity for security futures
products.
Sec. 206. Special provisions for the trading of security futures
products.
Sec. 207. Clearance and settlement.
Sec. 208. Amendments relating to registration and disclosure issues
under the Securities Act of 1933 and the
Securities Exchange Act of 1934.
Sec. 209. Amendments to the Investment Company Act of 1940 and the
Investment Advisers Act of 1940.
Sec. 210. Preemption of State laws.
Subtitle B--Amendments to the Commodity Exchange Act
Sec. 251. Jurisdiction of Securities and Exchange Commission; other
provisions.
Sec. 252. Application of the Commodity Exchange Act to national
securities exchanges and national
securities associations that trade security
futures.
Sec. 253. Notification of investigations and enforcement actions.
TITLE III--LEGAL CERTAINTY FOR SWAP AGREEMENTS
Sec. 301. Swap agreement.
Sec. 302. Amendments to the Securities Act of 1933.
Sec. 303. Amendments to the Securities Exchange Act of 1934.
Sec. 304. Savings provision.
TITLE IV--REGULATORY RESPONSIBILITY FOR BANK PRODUCTS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Exclusion of identified banking products commonly offered on
or before December 5, 2000.
Sec. 404. Exclusion of certain identified banking products offered by
banks after December 5, 2000.
Sec. 405. Exclusion of certain other identified banking products.
Sec. 406. Administration of the predominance test.
Sec. 407. Exclusion of covered swap agreements.
Sec. 408. Contract enforcement.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to reauthorize the appropriation for the Commodity
Futures Trading Commission;
(2) to streamline and eliminate unnecessary regulation for
the commodity futures exchanges and other entities regulated
under the Commodity Exchange Act;
(3) to transform the role of the Commodity Futures Trading
Commission to oversight of the futures markets;
(4) to provide a statutory and regulatory framework for
allowing the trading of futures on securities;
(5) to clarify the jurisdiction of the Commodity Futures
Trading Commission over certain retail foreign exchange
transactions and bucket shops that may not be otherwise
regulated;
(6) to promote innovation for futures and derivatives and
to reduce systemic risk by enhancing legal certainty in the
markets for certain futures and derivatives transactions;
(7) to reduce systemic risk and provide greater stability
to markets during times of market disorder by allowing the
clearing of transactions in over-the-counter derivatives
through appropriately regulated clearing organizations; and
(8) to enhance the competitive position of United States
financial institutions and financial markets.
TITLE I--COMMODITY FUTURES MODERNIZATION
SEC. 101. DEFINITIONS.
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
(1) by redesignating paragraphs (1) through (7), (8)
through (12), (13) through (15), and (16) as paragraphs (2)
through (8), (16) through (20), (22) through (24), and (28),
respectively;
(2) by inserting before paragraph (2) (as redesignated by
paragraph (1)) the following:
``(1) Alternative trading system.--The term `alternative
trading system' means an organization, association, or group of
persons that--
``(A) is registered as a broker or dealer pursuant
to section 15(b) of the Securities Exchange Act of 1934
(except paragraph (11) thereof);
``(B) performs the functions commonly performed by
an exchange (as defined in section 3(a)(1) of the
Securities Exchange Act of 1934);
``(C) does not--
``(i) set rules governing the conduct of
subscribers other than the conduct of such
subscribers' trading on the alternative trading
system; or
``(ii) discipline subscribers other than by
exclusion from trading; and
``(D) is exempt from the definition of the term
`exchange' under such section 3(a)(1) by rule or
regulation of the Securities and Exchange Commission on
terms that require compliance with regulations of its
trading functions.'';
(3) by striking paragraph (2) (as redesignated by paragraph
(1)) and inserting the following:
``(2) Board of trade.--The term `board of trade' means any
organized exchange or other trading facility.'';
(4) by inserting after paragraph (8) (as redesignated by
paragraph (1)) the following:
``(9) Derivatives clearing organization.--
``(A) In general.--The term `derivatives clearing
organization' means a clearinghouse, clearing
association, clearing corporation, or similar entity,
facility, system, or organization that, with respect to
an agreement, contract, or transaction--
``(i) enables each party to the agreement,
contract, or transaction to substitute, through
novation or otherwise, the credit of the
derivatives clearing organization for the
credit of the parties;
``(ii) arranges or provides, on a
multilateral basis, for the settlement or
netting of obligations resulting from such
agreements, contracts, or transactions executed
by participants in the derivatives clearing
organization; or
``(iii) otherwise provides clearing
services or arrangements that mutualize or
transfer among participants in the derivatives
clearing organization the credit risk arising
from such agreements, contracts, or
transactions executed by the participants.
``(B) Exclusions.--The term `derivatives clearing
organization' does not include an entity, facility,
system, or organization solely because it arranges or
provides for--
``(i) settlement, netting, or novation of
obligations resulting from agreements,
contracts, or transactions, on a bilateral
basis and without a central counterparty;
``(ii) settlement or netting of cash
payments through an interbank payment system;
or
``(iii) settlement, netting, or novation of
obligations resulting from a sale of a
commodity in a transaction in the spot market
for the commodity.
``(10) Electronic trading facility.--The term `electronic
trading facility' means a trading facility that--
``(A) operates by means of an electronic or
telecommunications network; and
``(B) maintains an automated audit trail of bids,
offers, and the matching of orders or the execution of
transactions on the facility.
``(11) Eligible commercial entity.--The term `eligible
commercial entity' means, with respect to an agreement,
contract or transaction in a commodity--
``(A) an eligible contract participant described in
clause (i), (ii), (v), (vii), (viii), or (ix) of
paragraph (12)(A) that, in connection with its
business--
``(i) has a demonstrable ability, directly
or through separate contractual arrangements,
to make or take delivery of the underlying
commodity;
``(ii) incurs risks, in addition to price
risk, related to the commodity; or
``(iii) is a dealer that regularly provides
risk management or hedging services to, or
engages in market-making activities with, the
foregoing entities involving transactions to
purchase or sell the commodity or derivative
agreements, contracts, or transactions in the
commodity;
``(B) an eligible contract participant, other than
a natural person or an instrumentality, department, or
agency of a State or local governmental entity, that--
``(i) regularly enters into transactions to
purchase or sell the commodity or derivative
agreements, contracts, or transactions in the
commodity; and
``(ii) either--
``(I) in the case of a collective
investment vehicle whose participants
include persons other than--
``(aa) qualified eligible
persons, as defined in
Commission rule 4.7(a) (17 CFR
4.7(a));
``(bb) accredited
investors, as defined in
Regulation D of the Securities
and Exchange Commission under
the Securities Act of 1933 (17
CFR 230.501(a)), with total
assets of $2,000,000; or
``(cc) qualified
purchasers, as defined in
section 2(a)(51)(A) of the
Investment Company Act of 1940;
in each case as in effect on the date
of the enactment of the Commodity
Futures Modernization Act of 2000, has,
or is one of a group of vehicles under
common control or management having in
the aggregate, $1,000,000,000 in total
assets; or
``(II) in the case of other
persons, has, or is one of a group of
persons under common control or
management having in the aggregate,
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