[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1317 Referred in Senate (RFS)]
<DOC>
114th CONGRESS
1st Session
H. R. 1317
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 17, 2015
Received; read twice and referred to the Committee on Agriculture,
Nutrition, and Forestry
_______________________________________________________________________
AN ACT
To amend the Commodity Exchange Act and the Securities Exchange Act of
1934 to specify how clearing requirements apply to certain affiliate
transactions, 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. TREATMENT OF AFFILIATE TRANSACTIONS.
(a) Commodity Exchange Act Amendments.--Section 2(h)(7)(D) of the
Commodity Exchange Act (7 U.S.C. 2(h)(7)(D)) is amended--
(1) by redesignating clause (iii) as clause (v);
(2) by striking clauses (i) and (ii) and inserting the
following:
``(i) In general.--An affiliate of a person
that qualifies for an exception under
subparagraph (A) (including affiliate entities
predominantly engaged in providing financing
for the purchase of the merchandise or
manufactured goods of the person) may qualify
for the exception only if the affiliate--
``(I) enters into the swap to hedge
or mitigate the commercial risk of the
person or other affiliate of the person
that is not a financial entity, and the
commercial risk that the affiliate is
hedging or mitigating has been
transferred to the affiliate;
``(II) is directly and wholly-owned
by another affiliate qualified for the
exception under this subparagraph or an
entity that is not a financial entity;
``(III) is not indirectly majority-
owned by a financial entity;
``(IV) is not ultimately owned by a
parent company that is a financial
entity; and
``(V) does not provide any
services, financial or otherwise, to
any affiliate that is a nonbank
financial company supervised by the
Board of Governors (as defined under
section 102 of the Financial Stability
Act of 2010).
``(ii) Limitation on qualifying
affiliates.--The exception in clause (i) shall
not apply if the affiliate is--
``(I) a swap dealer;
``(II) a security-based swap
dealer;
``(III) a major swap participant;
``(IV) a major security-based swap
participant;
``(V) a commodity pool;
``(VI) a bank holding company;
``(VII) a private fund, as defined
in section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80-b-
2(a));
``(VIII) an employee benefit plan
or government plan, as defined in
paragraphs (3) and (32) of section 3 of
the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002);
``(IX) an insured depository
institution;
``(X) a farm credit system
institution;
``(XI) a credit union;
``(XII) a nonbank financial company
supervised by the Board of Governors
(as defined under section 102 of the
Financial Stability Act of 2010); or
``(XIII) an entity engaged in the
business of insurance and subject to
capital requirements established by an
insurance governmental authority of a
State, a territory of the United
States, the District of Columbia, a
country other than the United States,
or a political subdivision of a country
other than the United States that is
engaged in the supervision of insurance
companies under insurance law.
``(iii) Limitation on affiliates'
affiliates.--Unless the Commission determines,
by order, rule, or regulation, that it is in
the public interest, the exception in clause
(i) shall not apply with respect to an
affiliate if the affiliate is itself affiliated
with--
``(I) a major security-based swap
participant;
``(II) a security-based swap
dealer;
``(III) a major swap participant;
or
``(IV) a swap dealer.
``(iv) Conditions on transactions.--With
respect to an affiliate that qualifies for the
exception in clause (i)--
``(I) the affiliate may not enter
into any swap other than for the
purpose of hedging or mitigating
commercial risk; and
``(II) neither the affiliate nor
any person affiliated with the
affiliate that is not a financial
entity may enter into a swap with or on
behalf of any affiliate that is a
financial entity or otherwise assume,
net, combine, or consolidate the risk
of swaps entered into by any such
financial entity, except one that is an
affiliate that qualifies for the
exception under clause (i).''; and
(3) by adding at the end the following:
``(vi) Risk management program.--Any swap
entered into by an affiliate that qualifies for
the exception in clause (i) shall be subject to
a centralized risk management program of the
affiliate, which is reasonably designed both to
monitor and manage the risks associated with
the swap and to identify each of the affiliates
on whose behalf a swap was entered into.''.
(b) Securities Exchange Act of 1934 Amendment.--Section 3C(g)(4) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) is
amended--
(1) by redesignating subparagraph (C) as subparagraph (E);
(2) by striking subparagraphs (A) and (B) and inserting the
following:
``(A) In general.--An affiliate of a person that
qualifies for an exception under this subsection
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise
or manufactured goods of the person) may qualify for
the exception only if the affiliate--
``(i) enters into the security-based swap
to hedge or mitigate the commercial risk of the
person or other affiliate of the person that is
not a financial entity, and the commercial risk
that the affiliate is hedging or mitigating has
been transferred to the affiliate;
``(ii) is directly and wholly-owned by
another affiliate qualified for the exception
under this paragraph or an entity that is not a
financial entity;
``(iii) is not indirectly majority-owned by
a financial entity;
``(iv) is not ultimately owned by a parent
company that is a financial entity; and
``(v) does not provide any services,
financial or otherwise, to any affiliate that
is a nonbank financial company supervised by
the Board of Governors (as defined under
section 102 of the Financial Stability Act of
2010).
``(B) Limitation on qualifying affiliates.--The
exception in subparagraph (A) shall not apply if the
affiliate is--
``(i) a swap dealer;
``(ii) a security-based swap dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap
participant;
``(v) a commodity pool;
``(vi) a bank holding company;
``(vii) a private fund, as defined in
section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80-b-2(a));
``(viii) an employee benefit plan or
government plan, as defined in paragraphs (3)
and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1002);
``(ix) an insured depository institution;
``(x) a farm credit system institution;
``(xi) a credit union;
``(xii) a nonbank financial company
supervised by the Board of Governors (as
defined under section 102 of the Financial
Stability Act of 2010); or
``(xiii) an entity engaged in the business
of insurance and subject to capital
requirements established by an insurance
governmental authority of a State, a territory
of the United States, the District of Columbia,
a country other than the United States, or a
political subdivision of a country other than
the United States that is engaged in the
supervision of insurance companies under
insurance law.
``(C) Limitation on affiliates' affiliates.--Unless
the Commission determines, by order, rule, or
regulation, that it is in the public interest, the
exception in subparagraph (A) shall not apply with
respect to an affiliate if such affiliate is itself
affiliated with--
``(i) a major security-based swap
participant;
``(ii) a security-based swap dealer;
``(iii) a major swap participant; or
``(iv) a swap dealer.
``(D) Conditions on transactions.--With respect to
an affiliate that qualifies for the exception in
subparagraph (A)--
``(i) such affiliate may not enter into any
security-based swap other than for the purpose
of hedging or mitigating commercial risk; and
``(ii) neither such affiliate nor any
person affiliated with such affiliate that is
not a financial entity may enter into a
security-based swap with or on behalf of any
affiliate that is a financial entity or
otherwise assume, net, combine, or consolidate
the risk of security-based swaps entered into
by any such financial entity, except one that
is an affiliate that qualifies for the
exception under subparagraph (A).''; and
(3) by adding at the end the following:
``(F) Risk management program.--Any security-based
swap entered into by an affiliate that qualifies for
the exception in subparagraph (A) shall be subject to a
centralized risk management program of the affiliate,
which is reasonably designed both to monitor and manage
the risks associated with the security-based swap and
to identify each of the affiliates on whose behalf a
security-based swap was entered into.''.
Passed the House of Representatives November 16, 2015.
Attest:
KAREN L. HAAS,
Clerk.