,,ii #aacth ,,congress #b;d ,session ,s4 #bccj ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #ac1 #bjad,mr4 ,chambliss introduced the following bill2 which was read twice and referred to the ,committee on ,agriculture1 ,nutrition1 and ,forestry ,a ,,bill ,to amend the ,commodity ,exchange ,act to improve futures and swaps trading1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,end-,user ,protection ,act of #bjad4 #b4 ,definitions 7a7 ,in general ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 by redesignating paragraphs 7#h7 through 7#ea7 as paragraphs 7#i7 through 7#eb71 respectively2 7#b7 by inserting after paragraph 7#g7 the following3 7#h7 ,commercial market participant ,the term commercial market participant means any producer1 processor1 merchant1 or commercial user of an exempt or agricultural commodity1 or the products or by-products of an exempt or agricultural commodity4 2 7#c7 in subparagraph 7,b7 of paragraph 7#dh7 7as so redesignated71 by striking clause 7ii7 and inserting the following3 7ii7 any purchase or sale of a nonfinancial commodity or security for deferred shipment or delivery1 so long as the transaction is intended to be physically settled1 including any stand-alone or embedded option for which exercise would result in a physical delivery obligation2 2 and 7#d7 in paragraph 7#ej7 7as redesignated by paragraph 7#a771 by striking subparagraph 7,d7 and inserting the following3 7,d7 ,de minimis exception 7i7 ,in general ,the ,commission shall exempt from designation as a swap dealer an entity that engages in a de minimis quantity of swap dealing 7which shall not be less than #h1jjj1jjj1jjj7 in connection with transactions with or on behalf of its customers4 7ii7 ,regulations ,the ,commission shall promulgate regulations to establish the factors to be used in a determination under clause 7i7 to exempt1 including any monetary or other levels established by the ,commission1 and those levels shall only be amended or changed through an affirmative action of the ,commission undertaken by rule or regulation4 4 7b7 ,financial entity ,section #b7;h77#g77;,c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;h77#g77;,c77 is amended-- 7#a7 in clause 7iii7-- 7,a7 by striking an entity whose and inserting the following3 8an entity-- 7,i7 whose 2 7,b7 by striking the period at the end and inserting a semicolon2 and 7,c7 by adding at the end the following3 7,,ii7 that is-- 7aa7 a commercial market participant2 7bb7 included in clause 7i77,,viii72 and 7cc7 not supervised by a prudential regulator2 or 7,,iii7 that is included in clause 7i77,,viii7 because-- 7aa7 the entity regularly enters into foreign exchange or derivatives transactions on behalf of1 or to hedge or mitigate1 whether directly or indirectly1 the commercial risk of #a or more entities within the same commercial enterprise as the entity2 or 7bb7 of the making of loans to #a or more entities within the same commercial enterprise as the entity4 2 and 7#b7 by adding at the end the following3 7iv7 ,same commercial enterprise ,for purposes of clause 7iii77,,iii71 an entity shall be considered to be within the same commercial enterprise as another entity if-- 7,i7 #a of the entities owns1 directly or indirectly1 at least a majority ownership interest in the other entity and reports its financial statements on a consolidated basis and the consolidated financial statements include the financial results of both entities2 or 7,,ii7 a third party owns at least a majority ownership interest in both entities and reports its financial statements on a consolidated basis and the financial statements of the third party include the financial results of both entities4 7v7 ,predominantly engaged 7,i7 ,in general ,not later than #ij days after the date of enactment of this clause1 the ,commission shall promulgate regulations defining the term predominantly engaged for purposes of clause 7i77,,viii74 7,,ii7 ,minimum revenues ,the regulations shall provide that an entity shall 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 the activities constitute less than a percentage 7as specified by the ,commission in the regulations7 of the total consolidated revenues of the entity4 7,,iii7 ,revenues from banking or financial activities ,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 nature1 the regulations shall exclude all revenues that are or result from foreign exchange or derivatives transactions used to hedge or mitigate commercial risk 7as defined by the ,commission in the regulations74 4 #c4 ,reporting of illiquid swaps so as to not disadvantage certain non-financial end users ,section #b7;a77#ac7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#ac77 is amended-- 7#a7 in subparagraph 7,c71 by striking ,the ,commission and inserting ,except as provided in subparagraph 7,d71 the ,commission2 7#b7 by redesignating subparagraphs 7,d7 through 7,g7 as subparagraphs 7,e7 through 7,h71 respectively2 and 7#c7 by inserting after subparagraph 7,c7 the following3 7,d7 ,requirements for swap transactions in illiquid markets 7i7 ,definition of illiquid markets ,in this subparagraph1 the term illiquid markets means any market in which the volume and frequency of trading in swaps is at such a level as to allow identification of individual market participants4 7ii7 ,requirements ,notwithstanding subparagraph 7,c71 the ,commission shall-- 7,i7 provide by rule for the public reporting of swap transactions1 including price and volume data1 in illiquid markets that are not cleared and entered into by a nonfinancial entity that is hedging or mitigating commercial risk in accordance with subsection 7h77#g77;,a72 and 7,,ii7 ensure that the swap transaction information described in subclause 7,i7 is available to the public not sooner than #cj days after the swap transaction has been executed or at such later date as the ,commission determines appropriate to protect the identity of participants and positions in illiquid markets and to prevent the elimination or reduction of market liquidity4 4 #d4 ,treatment of affiliates ,section #b7;h77#g77;,d77i7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;h77#g77;,d77i77 is amended-- 7#a7 by striking ,an affiliate and inserting ,a person that is a financial entity and is an affiliate2 7#b7 by striking 7including affiliate entities predominantly engaged in providing financing for the purchase of the merchandise or manufactured goods of the person72 and 7#c7 by striking and as an agent4 #e4 ,applicability to bona fide hedge transactions or positions ,section #d;a7c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;a7c77 is amended-- 7#a7 in the second sentence of paragraph 7#a71 by striking into the future for which and inserting in the future1 to be determined by the ,commission1 for which either an appropriate swap is available or2 and 7#b7 in paragraph 7#b7-- 7,a7 in the matter preceding subparagraph 7,a71 by striking subsection 7a77#b7 and all that follows through position that-- and inserting paragraphs 7#b7 and 7#e7 of subsection 7a7 for swaps1 contracts of sale for future delivery1 or options on the contracts or commodities1 a bona fide hedging transaction or position is a transaction or position that--2 and 7,b7 in subparagraph 7,a77ii71 by striking of risks and inserting or management of current or anticipated risks2 and 7#c7 by adding at the end the following3 7#c7 ,commission definition ,the ,commission may further define1 by rule or regulation1 what constitutes a bona fide hedging transaction or position so long as the rule or regulation is consistent with the requirements of subparagraphs 7,a7 and 7,b7 of paragraph 7#b74 4 #f4 ,reporting and recordkeeping ,section #d;g7f7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;g7f77 is amended-- 7#a7 by striking 7f7 ,nothing contained in this section and inserting the following3 7f7 ,authority of ,commission ,to make separate determinations unimpaired 7#a7 ,in general ,except as provided in paragraph 7#b71 nothing in this section 2 and 7#b7 by adding at the end the following3 7#b7 ,exception ,if the ,commission imposes any requirement under this section on any person that is not registered1 or required to be registered1 with the ,commission in any capacity1 that person shall satisfy the requirements of any rule1 order1 or regulation under this section by maintaining a written record of each cash or forward transaction related to a reportable or hedging commodity interest transaction1 futures contract1 option on a futures contract1 or swap4 7#c7 ,sufficiency ,a written record described in paragraph 7#b7 shall be sufficient if the written record-- 7,a7 memorializes the final agreement between the parties1 including the material economic terms of the transaction2 and 7,b7 is identifiable and searchable by transaction4 4 #g4 ,margin requirements 7a7 ,commodity ,exchange ,act amendment ,section #ds7e7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7e77 is amended by adding at the end the following3 7#d7 ,applicability with respect to counterparties ,the requirements of paragraphs 7#b77;,a77ii7 and 7#b77;,b77ii71 including the initial and variation margin requirements imposed by rules adopted pursuant to paragraphs 7#b77;,a77ii7 and 7#b77;,b77ii71 shall not apply to a swap in which a counterparty qualifies for an exception under section #b7;h77#g77;,a7 or #b7;h77#g77;,d71 or an exemption issued under section #d7;c77#a7 from the requirements of section #b7;h77#a77;,a7 for cooperative entities as defined in that exemption4 4 7b7 ,securities ,exchange ,act amendment ,section #ae;,f7e7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#aj7;e77 is amended by adding at the end the following3 7#d7 ,applicability with respect to counterparties ,the requirements of paragraphs 7#b77;,a77ii7 and 7#b77;,b77ii7 shall not apply to a security-based swap in which a counterparty qualifies for an exception under section #c;,c7g77#a7 or satisfies the criteria in section #c;,c7g77#d74 4 7c7 ,implementation ,the amendments made by this section to the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 shall be implemented-- 7#a7 without regard to-- 7,a7 chapter #ce of title #dd1 ,united ,states ,code2 and 7,b7 the notice and comment provisions of section #eec of title #e1 ,united ,states ,code2 7#b7 through the promulgation of an interim final rule1 pursuant to which public comment is sought before a final rule is issued2 and 7#c7 such that paragraph 7#a7 shall apply solely to changes to rules and regulations1 or proposed rules and regulations1 that are limited to and directly a consequence of the amendments4 #h4 ,analysis by the ,commodity ,futures ,trading ,commission of the costs and benefits of regulations and orders ,section #ae7;a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #ai7;a77 is amended by striking paragraphs 7#a7 and 7#b7 and inserting the following3 7#a7 ,in general ,before promulgating a regulation under this ,act or issuing an order 7except as provided in paragraph 7#c771 the ,commission1 acting through the ,office of the ,chief ,economist1 shall-- 7,a7 state a justification for the regulation or order2 7,b7 state the baseline for the cost-benefit analysis and explain how the regulation or order measures costs against the baseline2 7,c7 assess the costs and benefits1 both qualitative and quantitative1 of the intended regulation or order2 7,d7 measure1 and seek to improve1 the actual results of regulatory requirements2 and 7,e7 propose or adopt a regulation or order only on a reasoned determination that the benefits of the intended regulation or order justify the costs of the intended regulation or order 7recognizing that some benefits and costs are difficult to quantify74 7#b7 ,considerations ,in making a reasoned determination of costs and benefits under paragraph 7#a71 the ,commission shall consider-- 7,a7 the protection of market participants and the public2 7,b7 the efficiency1 competitiveness1 and financial integrity of futures and swaps markets2 7,c7 the impact on market liquidity in the futures and swaps markets2 7,d7 price discovery2 7,e7 sound risk management practices2 7,f7 the cost of available alternatives to direct regulation2 7,g7 the degree and nature of the risks posed by various activities within the scope of the jurisdiction of the ,commission2 7,h7 whether1 consistent with obtaining regulatory objectives1 the regulation or order is tailored to impose the least burden on society1 including market participants1 individuals1 businesses of differing sizes1 and other entities 7including small communities and governmental entities71 taking into account1 to the extent practicable1 the cumulative costs of regulations and orders2 7,i7 whether the regulation or order is inconsistent1 incompatible1 or duplicative of other ,federal regulations and orders2 and 7,j7 whether1 in choosing among alternative regulatory approaches1 those approaches maximize net benefits 7including potential economic1 environmental1 and other benefits1 distributive impacts1 and equity74 4