(Sec. 102) Excludes the following agreements, contracts, and transactions, except as otherwise provided for, from coverage under the Act: (1) foreign currency, other than those transactions conducted on an organized exchange between specified regulated entities and persons who are not eligible contract participants; (2) government securities; (3) security warrants; (4) security rights; (5) resales of installment loan contracts; (6) repurchase transactions in an excluded commodity; or (7) mortgages or mortgage purchase agreements.
(Sec. 103) Excludes from coverage under the Act a transaction in an excluded commodity: (1) entered into between eligible contract participants and not executed on a trading facility; or (2) executed on electronic trading facilities as long as the transaction is entered into on a principal-to-principal basis by eligible contract participants trading for themselves.
(Sec. 104) Excludes from coverage under the Act electronic trading of excluded and exempt commodities. States that a board of trade designated as a contract market or derivatives transaction execution facility may establish and operate an electronic trading facility.
(Sec. 105) Excludes from coverage under the Act a hybrid instrument that is predominantly a security or deposit instrument.
(Sec. 106) Excludes from coverage under the Act certain transactions in exempt commodities and swap transactions.
(Sec. 108) States that no provision of the Act or this Act shall create a presumption of coverage of any transaction or contract otherwise excluded from such coverage.
(Sec. 109) Revises public interest protection and prohibited transaction provisions.
(Sec. 111) Provides for designation of boards of trade as contract markets. Sets forth designation and status maintenance criteria.
(Sec. 112) Authorizes a board of trade, in lieu of compliance with contract market designation requirements, to elect to operate as a registered derivatives transaction execution facility if: (1) designated as a contract market; or (2) registered as a derivatives transaction execution facility. Sets forth related trading requirements and registration criteria and core principles.
(Sec. 113) Amends the Federal Deposit Insurance Corporation Improvement Act of 1991to define "multilateral clearing organization" and "over- the-counter derivative instrument."
Prohibits, with specified clearing organization exemptions, a person from operating a multilateral clearing organization for over-the-counter derivative instruments unless such person is a national bank or an affiliate, a State member bank, an insured State member or nonmember bank, or a corporation chartered under the Federal Reserve Act.
Amends the Federal Reserve Act to provide the Federal Reserve Board with enforcement authority over uninsured State member banks and resolution authority over such banks operating as multilateral clearing organizations.
Amends Federal bankruptcy law to provide for the liquidation of clearing banks (an uninsured State member bank or corporation operating as multilateral clearing organization).
Amends the Federal Reserve Act to provide the Board with resolution authority over Edge Act corporations.
Amends the Act to provide for registration and voluntary registration of derivatives clearing organizations. Sets forth registration provisions.
(Sec. 114) Amends the Act to permit the Commodity Futures Trading Commission (Commission) to issue or approve interpretations of acceptable business practices under core provisions for all registered entities (contract markets, derivatives clearing organizations, derivatives transaction execution facilities).
Permits a registered entity to: (1) delegate functions to a registered futures association or other registered entity; and (2) trade new products.
(Sec. 115) Authorizes a board of trade to elect to operate as an exempt board of trade if: (1) the commodity underlying the trade has a nearly inexhaustible delivery supply, is not susceptible to manipulation, or has no cash market; (2) the futures contracts are entered into only by eligible contract participants; and (3) the contracts do not involve securities. Subjects exempt- board futures contracts to antimanipulation provisions and Commission jurisdiction.
(Sec. 116) Subjects a registered entity to suspension or revocation of designation for noncompliance with provisions of the Act.
(Sec. 117) Authorizes appropriations through FY 2005.
(Sec. 118) Revises preemption provisions.
(Sec. 119) Permits predispute resolution agreements for institutional customers.
(Sec. 120) Requires the Commission to consider the costs and benefits of its action before issuing an order or regulation, with exceptions for emergency actions or adjudicatory or investigative matters.
(Sec. 121) States that an agreement, contract, or transaction between eligible parties shall not be voidable or unenforceable solely because of a failure to comply with the terms of an exemption or exclusion from any provision of the Act or Commission regulation.
(Sec. 122) Directs the Commission to consider issuing rules to encourage contract markets to facilitate producer participation.
(Sec. 125) Extends specified privacy provisions to any entity or person subject to the Commission.
(Sec. 127) Expresses the sense of Congress that the Commission should continue foreign coordination activities in order to facilitate cross-border transactions, and enhance international supervisory efforts and market and customer protection.
Title II: Coordinated Regulation of Security Futures Products - Subtitle A: Securities Law Amendments - Amends the Securities Exchange Act of 1934 to define specified terms.
(Sec. 202) Provides for expedited registration by notice filing of certain designated contract markets. Exempts such notice registrants from specified compliance and rule change requirements.
Makes it unlawful, with exceptions for certain principal-to- principal transactions between eligible contract participants, for any person to trade a security futures product until the later of: (1) one year after enactment of this Act; or (2) such date that certain tax requirements have been met.
Sets forth an expedited Securities Exchange Commission (SEC) review procedure for proposed rule changes by a self-regulatory organization that is a registered exchange or a national securities association.
Requires self-regulating organizations listing or trading security futures products to implement decimal pricing provisions.
(Sec. 203) Provides for expedited broker-dealer registration by notice respecting security futures product transactions. Exempts such notice registrants from specified requirements.
Exempts floor brokers and floor traders on designated contract markets from specified registration requirements.
Permits futures associations to become national securities associations for the purpose of regulating the activities of notice registrant broker-dealers. Amends the Securities Investor Protection Act of 1970 to exempt such broker-dealers from the requirement to join the Securities Investor Protection Corporation.
(Sec. 204) Amends the Securities and Exchange Act of 1934 to authorize the SEC to examine national securities associations, registrant broker-dealers, and exchanges. Requires the SEC to notify the Commission of such examinations.
(Sec. 205) States that the SEC shall have regulatory authority over security futures product trading. Requires the SEC to notify the Commission of any such proceeding.
(Sec. 206) Makes it unlawful to trade security futures products that are not listed on a registered national securities exchange or a national securities association. Sets forth requirements for listing standards and conditions for trading. Authorizes the SEC and the Commission to jointly: (1) modify certain listing standard requirements; and (2) provide listing standard exemptions.
Makes it unlawful for any person (other than a registered national securities exchange or a national securities association) to trade security futures products unless pursuant to rules and procedures established by a national securities association or a national securities exchange regarding surveillance, coordination, audit trails, and trading halts.
Makes it unlawful for any broker, dealer, or member of a national securities exchange to maintain credit for, or collect margin from a customer unless such activities comply with SEC or Commission requirements.
Requires SEC and Commission consultation and cooperation respecting: (1) national market system rulemaking for security futures products; and (2) market emergency powers.
Exempts certain clearing agencies from SEC registration in order to settle security futures transactions.
Sets forth security futures transaction assessment provisions.
Exempts security futures products from short sale provisions.
Provides the SEC with authority to address duplicative registration of dual registrants.
(Sec. 207) Authorizes registered clearing agencies to clear and settle over-the-counter derivatives.
(Sec. 208) Amends the Securities Act of 1933 to provide that any offer or sale of a security futures product by or on behalf of a security issuer, affiliate, or underwriter constitutes a contract for sale of, a sale of, offer for sale of, or offer to sell the underlying securities.
Exempts from registration requirements any security futures product that is: (1) cleared by a registered clearing house; and (2) traded on a registered national securities exchange or association.
Amends the Securities Exchange Act of 1934 to exempt a security futures product from specified registration and reporting requirements.
(Sec. 209) Amends the Investment Company Act of 1940 to define specified terms.
(Sec. 210) Amends the Securities Exchange Act of 1934 to state that State law shall not apply to security futures product transactions, but shall not limit State antifraud laws of general applicability.
Subtitle B: Amendments to the Commodity Exchange Act - Amends the Act to set forth SEC and Commission authorities and jurisdictions respecting security futures, persons effecting such transactions, and related matters.
Subcommittee Consideration and Mark-up Session Held.
Forwarded by Subcommittee to Full Committee (Amended) by Voice Vote.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by Voice Vote.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by Voice Vote.
Reported (Amended) by the Committee on Banking and Financial Services. H. Rept. 106-711, Part II.
Reported (Amended) by the Committee on Banking and Financial Services. H. Rept. 106-711, Part II.
Reported (Amended) by the Committee on Commerce. H. Rept. 106-711, Part III.
Reported (Amended) by the Committee on Commerce. H. Rept. 106-711, Part III.
Placed on the Union Calendar, Calendar No. 477.
Supplemental report filed by the Committee on Banking and Financial Services, H. Rept. 106-711, Part IV.
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Supplemental report filed by the Committee on Banking and Financial Services, H. Rept. 106-711, Part IV.
Mr. Combest moved to suspend the rules and pass the bill, as amended.
Considered under suspension of the rules. (consideration: CR H10416-10448)
DEBATE - The House proceeded with forty minutes of debate on H.R. 4541.
Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 377 - 4 (Roll no. 540).(text: CR H10416-10440)
Roll Call #540 (House)On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 377 - 4 (Roll no. 540). (text: CR H10416-10440)
Roll Call #540 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate.