[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1884 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1884

   To amend the Commodity Exchange Act to remove the prohibition on 
          agricultural trade options outside contract markets.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 31, 1998

  Mr. Roberts introduced the following bill; which was read twice and 
   referred to the Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL


 
   To amend the Commodity Exchange Act to remove the prohibition on 
          agricultural trade options outside contract markets.

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

SECTION 1. AGRICULTURAL TRADE OPTIONS OUTSIDE CONTRACT MARKETS.

    The Commodity Exchange Act is amended by inserting after section 4p 
(7 U.S.C. 6p) the following:

``SEC. 4Q. AGRICULTURAL TRADE OPTIONS OUTSIDE CONTRACT MARKETS.

    ``(a) Definitions.--In this section:
            ``(1) Agricultural trade option outside a contract 
        market.--The term `agricultural trade option outside a contract 
        market' means an agreement, contract, or transaction (or class 
        thereof) entered into on other than a contract market for--
                    ``(A) the purchase of an agricultural trade option 
                involving a commodity by a person who is a producer, 
                processor, commercial user, or merchant handler of the 
                commodity;
                    ``(B) the sale or transfer of an agricultural trade 
                option involving a commodity; or
                    ``(C) a purpose related to the business of a person 
                referred to in subparagraph (A).
            ``(2) Commodity.--The term `commodity' means an 
        agricultural commodity referred to in section 1a(3).
    ``(b) Authorization.--Subject to subsection (c), an agricultural 
trade option outside a contract market shall be permitted and shall be 
considered to be consistent with the other provisions of this Act.
    ``(c) Regulation.--
            ``(1) Safeguards.--Subject to paragraph (2), an 
        agricultural trade option outside a contract market shall, to 
        the extent determined to be applicable by the Board, be subject 
        to--
                    ``(A) sections 4b and 4o;
                    ``(B) the provisions of sections 6(c) and 9(a)(2), 
                to the extent that the provisions prohibit manipulation 
                of the market price of any commodity in interstate 
                commerce for future delivery;
                    ``(C) prohibitions against fraud or manipulation 
                under section 4c(b);
                    ``(D) registration requirements of the Commission 
                administered by the National Futures Association;
                    ``(E) a requirement that the person providing the 
                option has a net worth of at least $50,000;
                    ``(F) requirements for full disclosure of risks and 
                responsibilities involved in the contract or agreement 
                for the option; and
                    ``(G) recordkeeping and reporting requirements of 
                the Commission.
            ``(2) Limitations.--
                    ``(A) Total assets.--Except for the fraud and 
                manipulation provisions of the provisions of law 
                referred to in subparagraphs (A), (B), and (C) of 
                paragraph (1), paragraph (1) shall not apply to an 
                agricultural trade option outside a contract market if 
                the buyer and seller of the option each have assets of 
                a value of at least $10,000,000.
                    ``(B) Physical delivery; structure and 
                strategies.--An agricultural trade option outside a 
                contract market shall not be subject to--
                            ``(i) a requirement that the option, if 
                        exercised, be physically delivered; or
                            ``(ii) a limitation on the structure of the 
                        option or trading strategies for the use of the 
                        option.
    ``(c) Termination of Effectiveness.--The authority provided by this 
section terminates effective September 30, 2002.''.

SEC. 2. CONFORMING AMENDMENTS.

    (a) Section 4(a) of the Commodity Exchange Act (7 U.S.C. 6(a)) is 
amended--
            (1) in paragraph (1), by inserting ``(A)'' after ``(1)'';
            (2) by redesignating paragraphs (2) and (3) as 
        subparagraphs (B) and (C), respectively;
            (3) in subparagraph (C) (as so redesignated), by striking 
        the period at the end and inserting ``; or''; and
            (4) by adding at the end the following:
            ``(2) the contract is an agricultural trade option outside 
        a contract market permitted under section 4q.''.
    (b) Section 4c(b) of the Commodity Exchange Act (7 U.S.C. 6c(b)) is 
amended in the first sentence by striking ``No'' and inserting ``Except 
as provided in section 4q, no''.

SEC. 3. REGULATIONS.

    Not later than 90 days after the date of enactment of this Act, the 
Commodity Futures Trading Commission shall issue such regulations as 
the Commission determines are necessary to carry out this Act and the 
amendments made by this Act.
                                 <all>