II 110th CONGRESS 2d Session S. 3255 IN THE SENATE OF THE UNITED STATES July 11, 2008 Mr. Levin (for himself and Mrs. Feinstein) 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 provide for the oversight of large trades of over-the-counter energy and agricultural contracts to prevent price manipulation and excessive speculation, and for other purposes.

1.

Short title

This Act may be cited as the Over-the-Counter Speculation Act.

2.

Large over-the-counter transactions

Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following: (j)

Commission oversight of over-the-counter transactions

(1)

Over-the-counter transactions

(A)

Definition

The term over-the-counter transaction means a contract, agreement, or transaction in an exempt or agricultural commodity that is— (i)entered into only between persons that are eligible contract participants at the time the persons enter into the agreement, contract, or transaction; (ii)not entered into on a trading facility; and (iii)not a sale of any cash commodity for deferred shipment or delivery. (B)

All OTC transactions included

Notwithstanding subsections (g) and (h) and any exemption issued by the Commission under section 4(c), each over-the-counter transaction shall be subject to this subsection. (2)

Commission oversight authority

(A)

In general

In the case of a major market disturbance, as determined by the Commission, the Commission may require any trader required to report information under paragraph (3) to take such action as the Commission considers to be necessary to maintain or restore orderly trading in any contract listed for trading on a registered entity, including— (i)the liquidation of any over-the-counter transaction; and (ii)the fixing of any limit that may apply to a market position involving any over-the-country transaction acquired in good faith before the date of the determination of the Commission. (B)

Major market disturbance

The term major market disturbance means any market disturbance in a commodity market that prevents the commodity market from accurately reflecting the forces of supply and demand for a commodity, including— (i)a threatened or actual market manipulation or corner; (ii)excessive speculation; and (iii)any action of the United States or a foreign government that affects a commodity. (C)

Market disturbance

The term market disturbance shall be interpreted in a manner consistent with section 8a(9). (D)

Judicial review

Any action taken by the Commission under subparagraph (A) shall be subject to judicial review carried out in accordance with section 8a(9). (3)

Reporting; recordkeeping

(A)

In general

The Commission shall require each covered person to submit to the Commission a report at such times and in such manner as the Commission determines appropriate, and containing the information required under subparagraph (C) to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity. (B)

Covered person

In this subsection, the term covered person means a person that enters into an over-the-counter transaction the reporting of which is required as the result of a determination made under paragraph (D). (C)

Contents of report

A report required under subparagraph (A) shall contain— (i)information describing large trading positions of the covered person obtained through 1 or more over-the-counter transactions that involve— (I)substantial quantities of a commodity in the cash market; or (II)substantial positions, investments, or trades in agreements or contracts relating to the commodity; and (ii)any other information relating to each covered over-the-counter transaction carried out by the covered person that the Commission determines to be necessary to accomplish the purposes described in subparagraph (A). (D)

Large transactions

The Commission shall identify the large over-the-counter transactions or class of large over-the-counter transactions the reporting of which the Commission determines to be appropriate to assist the Commission in detecting and preventing potential price manipulation of, or excessive speculation in, any contract listed for trading on a registered entity. In making the determinations as to which over-the-counter transactions shall be reported, the Commission shall consider the extent to which one or more of the following criteria applies— (i)a standardized agreement is used to execute the transaction; (ii)the transaction settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity; (iii)the price of the transaction is reported to a third party, published, or otherwise disseminated; (iv)the price of the transaction is referenced in any other transaction; (v)there is a significant volume of transactions; and (vi)any other factor that the Commission determines to be appropriate. (E)

Recordkeeping

The Commission, by rule, shall require each covered person— (i)in accordance with section 4i, to maintain such records as directed by the Commission for a period of 5 years, or longer, if directed by the Commission; and (ii)to provide such records upon request to the Commission or the Department of Justice. (4)

Protection of proprietary information

In carrying out this subsection, the Commission may not— (A)require the real-time publication of any proprietary information; (B)prohibit the commercial sale or licensing of any real-time proprietary information; and (C)except as provided in section 8, publicly disclose any information relating to any market position, business transaction, trade secret, or name of any customer of a covered person. (5)

Rulemaking

(A)

Proposed rulemaking

Not later than 180 days after the date of enactment of this subsection, the Commission shall issue a notice of proposed rulemaking to specify the information required to be provided and maintained by a covered person under this subsection. (B)

Final rule

Not later than 1 year after the date of enactment of this subsection, the Commission shall promulgate a final rule to accomplish the purpose described in subparagraph (A). .