[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4507 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4507

 To limit the authority of the Commodity Futures Trading Commission to 
alter the regulation of certain hybrid instruments and swap agreements 
                   under the Commodity Exchange Act.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 6, 1998

     Mr. Smith of Oregon (for himself, Mr. Combest, and Mr. Ewing) 
 introduced the following bill; which was referred to the Committee on 
                              Agriculture

_______________________________________________________________________

                                 A BILL


 
 To limit the authority of the Commodity Futures Trading Commission to 
alter the regulation of certain hybrid instruments and swap agreements 
                   under the Commodity Exchange Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Markets Reassurance Act of 
1998''.

SEC. 2. REGULATORY RESTRAINT ON QUALIFYING HYBRID INSTRUMENTS AND SWAP 
              AGREEMENTS.

    (a) Definitions.--In this section:
            (1) Commission.--The term ``Commission'' means the 
        Commodity Futures Trading Commission.
            (2) Qualifying hybrid instrument or swap agreement.--The 
        term ``qualifying hybrid instrument or swap agreement'' means a 
        hybrid instrument or swap agreement that--
                    (A) was entered into before the start of the 
                restraint period or is entered into during the 
                restraint period; and
                    (B) is exempt under part 34 or part 35 of title 17, 
                Code of Federal Regulations (as in effect on January 1, 
                1998), qualifies for the safe harbor contained in the 
                Policy Statement of the Commission regarding swap 
                agreements published in the Federal Register on July 
                21, 1989 (54 Fed. Reg. 30694), or qualifies for the 
                exclusion set forth in the Statutory Interpretation of 
                the Commission concerning certain hybrid instruments 
                published in the Federal Register on April 11, 1990 (55 
                Fed. Reg. 13582).
            (3) Restraint period.--The term ``restraint period'' means 
        the period--
                    (A) beginning on the date of the enactment of this 
                Act; and
                    (B) ending on September 30, 1999, or the first date 
                on which legislation is enacted that authorizes 
                appropriations for the Commission for a fiscal year 
                after fiscal year 2000, whichever occurs first.
    (b) Limitation on Regulatory Changes.--During the restraint period, 
the Commission may not propose or issue any rule or regulation, or 
issue any interpretation or policy statement, that restricts or 
regulates activity in a qualifying hybrid instrument or swap agreement.
    (c) Exceptions.--Notwithstanding subsection (b), during the 
restraint period, the Commission may--
            (1) act on a petition for exemptive relief under section 
        4(c) of the Commodity Exchange Act (7 U.S.C. 6(c));
            (2) enter such cease and desist orders and take such 
        enforcement action, including the imposition of sanctions, as 
        the Commission considers necessary to enforce any provision of 
        the Commodity Exchange Act (7 U.S.C. 1 et seq.) or title 17, 
        Code of Federal Regulations, in connection with a qualifying 
        hybrid instrument or swap agreement, to the extent such 
        provision is otherwise applicable to that qualifying hybrid 
        instrument or swap agreement or a transaction involving that 
        qualifying hybrid instrument or swap agreement;
            (3) take such action as the Commission considers 
        appropriate with regard to agricultural trade options; and
            (4) take such action as the Commission considers 
        appropriate to respond to a market emergency.
    (d) Relation to Certain Commission Documents.--The legal status of 
contracts involving a qualifying hybrid instrument or swap agreement 
shall not differ from the legal status afforded such contracts during 
the period beginning on July 21, 1989, which was the date on which the 
Commission adopted a Policy Statement regarding swap agreements (54 
Fed. Reg. 30694), and ending on January 1, 1998. Neither the comment 
letter of the Commission submitted on February 26, 1998, to the 
Securities and Exchange Commission regarding the proposal known as 
``Broker-Dealer Lite'', nor the Concept Release of the Commission 
regarding over-the-counter derivatives published in the Federal 
Register on May 12, 1998 (63 Fed. Reg. 26114), shall alter or affect 
the legal status of a qualifying hybrid instrument or swap agreement 
under the Commodity Exchange Act (7 U.S.C. 1 et seq.).
    (e) Rule of Construction.--Nothing in this section shall be 
construed as reflecting or implying a determination that a qualifying 
hybrid instrument or swap agreement, or a transaction involving a 
qualifying hybrid instrument or swap agreement, is subject to the 
Commodity Exchange Act (7 U.S.C. 1 et seq.).
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