HR-2289 : Still Just a Bill

Commodity End User Relief Act

Amends the Commodity Exchange Act (CEA) to direct registered futures associations to require their futures commission merchant members to:

• maintain written policies and procedures governing maintenance of members’ specified residual interests in customer segregated funds accounts, including cleared swaps customer collateral accounts; and
• 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.

Extends authority for CFTC operations. Amends the 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 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.

Directs the Government Accountability Office, among other things, to:

• assess whether CFTC resources are sufficient to enable the CFTC to carry out its duties effectively; and
• 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.

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 hedge or mitigation of the commercial risk is addressed by entering into a swap with a swap dealer or major swap participant, an appropriate credit support measure or other mechanism must be 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).

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.

Considers the swaps regulatory requirements of eight foreign jurisdictions with the largest swaps markets to be comparable to and as comprehensive as U.S. swaps requirements.

Exempts from U.S. swaps requirements either a non-U.S. person or a transaction between two non-U.S. persons if the person or transaction is in compliance with the swaps regulatory requirements of specified foreign jurisdictions.

Entitles to expedited CFTC consideration a petition for review that is requested by either a registered entity, commercial market participant, or CFTC registrant with respect to a CFTC determination regarding foreign jurisdiction regulatory requirements.