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S. 3284 (is) To amend title 5, United States Code, to establish a national health program administered by the Office of Personnel Management to offer Federal employee health benefits plans to individuals who are not Federal employees, and for other purpos...
106th CONGRESS 2d Session S. 3283 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 SENATE OF THE UNITED STATES December 15 (legislative day, September 22), 2000 Mr. Lugar (for himself, Mr. Gramm, Mr. Harkin, Mr. Fitzgerald, Mr. Hagel, and Mr. Johnson) introduced the following bill; which was read the first time _______________________________________________________________________ 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 C.F.R. 4.7(a)); ``(bb) accredited investors, as defined in Regulation D of the Securities and Exchange Commission under the Securities Act of 1933 (17 C.F.R. 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, $100,000,000 in total assets; or ``(C) such other persons as the Commission shall determine appropriate and shall designate by rule, regulation, or order.
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