HR-4413 : Still Just a Bill

Customer Protection and End User Relief Act - Futures Customer Protection Act - Amends the Commodity Exchange Act (CEA) to direct registered futures associations to require their futures commission merchant members to: (1) maintain written policies and procedures governing maintenance of members’ specified residual interests in customer segregated funds accounts, including cleared swaps customer collateral accounts; and (2) establish rules governing the withdrawal, transfer, or disbursement of a member's residual interest in customer segregated funds, in foreign futures and foreign options customer secured amount funds, and from a cleared swaps customer collateral.

Authorizes the Commodity Futures Trading Commission (CFTC) to require that property of the bankruptcy estate, including trading or operating accounts and commodities held in inventory, of a commodity broker who is a Chapter 7 debtor in bankruptcy be included in customer property to the extent that such property is insufficient to satisfy the net equity claims of the broker's public customers.

Directs the CFTC to examine the effect of high-frequency trading upon markets under its jurisdiction.

Commodity Futures Trading Commission Reform Act - Extends authority for CFTC operations. Amends the Commodity Exchange Act (CEA) to revise the requirement that the CFTC, before promulgating a regulation or issuing an order, consider the costs and benefits of the action. Requires the CFTC, through the Office of the Chief Economist (established by this Act), to: (1) assess and publish the costs and benefits, both qualitative and quantitative, of the proposed regulation; and (2) require the proposed regulation or order to state its statutory justification.

Requires the CFTC to submit every five years to certain congressional committees a detailed strategic technology plan focused on its acquisition and use of technology.

Requires CFTC staff and the Chief Economist to develop comprehensive internal risk control mechanisms to safeguard and govern the storage of all market data, including CFTC market data sharing agreements, and academic research performed at the CFTC using market data.

Requires the CFTC to direct its staff to develop and publish in any proposed rule a plan for: (1) when and for how long the proposed rule will be subject to public comment, and (2) a deadline for compliance with the final rule.

Instructs the Comptroller General (GAO) to: (1) study whether CFTC resources are sufficient to enable the CFTC to carry out its duties effectively; and (2) examine prior CFTC expenditures on hardware, software, and analytical processes to protect customers in the areas of market surveillance and risk detection, and market data collection, aggregation, interpretation, standardization, harmonization, and streamlining.

End-User Relief and Market Certainty Act - Amends the CEA to exempt, from the rules of prudential regulators for swap dealers and major swap participants with respect to initial and variation margin requirements for swaps not cleared by a registered derivatives clearing organization, those swaps in which one of the counterparties: (1) is eligible for an exception from clearing requirements for certain significant price discovery agreements, contracts, or transactions in a commodity exempt from regulation by the CFTC, or an exemption from certain clearing requirements for cooperative entities; or (2) satisfies certain criteria for the treatment of affiliates.

Revises the treatment of affiliate transactions that may be exempt from clearing requirements to authorize such an exemption only if such affiliate enters into the swap to hedge or mitigate the commercial risk of the person that is not a financial entity (as under current law), except that if the transfer of commercial risk is addressed by entering into a swap with a swap dealer or major swap participant, a credit support measure or other mechanism is utilized.

Prescribes reporting requirements for transactions in utility operations-related swaps.

Requires the CFTC, in determining whether to exempt from designation as a swap dealer an entity that engages in a de minimis quantity of swap dealing, to treat a utility operations-related swap entered into with a utility special entity as if the entity were not a special entity.

Excludes from the definition of financial entity subject to clearing requirements specified entities that are not supervised by a prudential regulator, yet are commercial market participants deemed to be a financial entity because they: (1) predominantly engage in physical delivery contracts; or (2) enter into swaps, contracts for future delivery, and other derivatives on behalf of, or to hedge or mitigate the commercial risk of affiliates that are not so supervised or described.

Directs the CFTC to: (1) provide by rule for the public reporting of swap transactions in illiquid markets that are not cleared and entered into by a non-financial entity that is hedging or mitigating commercial risk; and (2) ensure that certain swap transaction information is publicly available no sooner than 30 days after the swap transaction has been executed, or at such later date as the CFTC determines appropriate to protect the identity of participants and positions in illiquid markets and to prevent the elimination or reduction of market liquidity.

Sets forth recordkeeping requirements for a member of a designated contract market or a swap execution facility that is neither registered with the CFTC nor required to be so registered.

Excludes from the definition of “swap” any purchase or sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled (as under current law), including any stand-alone or embedded option: (1) for which exercise results in a physical delivery obligation, (2) which cannot be severed or marketed separately from the overall transaction for the purpose of financial settlement, and (3) in which both parties are commercial market participants.

Requires a new affirmative CFTC rule or regulation in order to amend or reduce the de minimis quantity of swap dealing that is currently set at $8 billion.

Directs the CFTC, in consultation with the prudential regulators and the Securities and Exchange Commission (SEC), to the extent that swap dealers and major swap participants that are banks are permitted by the regulators or the SEC to use approved financial models to calculate minimum capital requirements and minimum initial and variation margin requirements, including the use of non-cash collateral, to permit the use of comparable financial models by swap dealers and major swap participants that are not banks.

Directs the CFTC to amend regulations regarding criteria that qualify certain registered commodity pool operators for exemption from requirements for specified risk disclosures, performance disclosures, periodic reporting, annual reporting, and recordkeeping.

Alters one criterion for qualification for such exemptions currently granted to: (1) registered commodity pool operators who sell participations in a pool solely to qualified eligible persons in an offering which qualifies for exemption from the registration requirements of the Securities Act, and (2) certain banks registered as commodity pool operators in connection with a pool that is a collective trust fund whose securities are exempt from registration under the Securities Act.

Authorizes the CFTC to define a bona fide hedging transaction, consistent with certain CEA requirements.

Directs the CFTC to issue rules governing cross-border regulation of derivatives transactions.

Makes enactment of this Act retroactive to July 21, 2010 (the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act).