[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 961 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 961
To authorize the regulation of credit default swaps and other swap
agreements, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 4, 2009
Mr. Levin (for himself and Ms. Collins) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To authorize the regulation of credit default swaps and other swap
agreements, 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. SHORT TITLE.
This Act may be cited as the ``Authorizing the Regulation of Swaps
Act''.
SEC. 2. REPEAL OF PROHIBITION ON CERTAIN REGULATION OF SWAP AGREEMENTS.
The following provisions of law are repealed:
(1) Sections 206A, 206B, and 206C of the Gramm-Leach-Bliley
Act (15 U.S.C. 78c note).
(2) Section 2A of the Securities Act of 1933 (15 U.S.C.
77b-1).
(3) Section 17(d) of the Securities Act of 1933 (15 U.S.C.
77q(d)).
(4) Section 3A of the Securities Exchange Act of 1934 (15
U.S.C. 78c-1).
(5) Section 9(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78i(i)).
(6) Section 15(i) of the Securities Exchange Act of 1934
(15 U.S.C. 78o(i)), as added by section 303(f) of the Commodity
Futures Modernization Act of 2000 (Public Law 106-554; 114
Stat. 2763A-455).
(7) Section 16(g) of the Securities Exchange Act of 1934
(15 U.S.C. 78p(g)).
(8) Section 20(f) of the Securities Exchange Act of 1934
(15 U.S.C. 78t(f)).
(9) Section 21A(g) of the Securities Exchange Act of 1934
(15 U.S.C. 78u-1(g)).
(10) Sections 301(b) and 304 of the Commodity Futures
Modernization Act of 2000 (Public Law 106-554; 114 Stat. 2763A-
451, 2763A-457).
(11) Sections 403, 404, and 407 of the Legal Certainty for
Bank Products Act of 2000 (7 U.S.C. 27a, 27b, 27e).
(12) Subsection (d), subsection (g), and paragraphs (1) and
(2) of subsection (h) of section 2 of the Commodity Exchange
Act (7 U.S.C. 2).
(13) Section 5d of the Commodity Exchange Act (7 U.S.C. 7a-
3).
SEC. 3. AUTHORIZATION OF REGULATION AND OVERSIGHT REGARDING SWAP
AGREEMENTS.
(a) Authorization of Regulation and Oversight.--Notwithstanding any
other provision of law, and subject to subsections (b) through (d),
each Federal financial regulator may--
(1) exercise oversight over--
(A) any swap agreement that is entered into,
purchased, or sold (or as to which the transaction,
purchase, or sale is effected) by any financial
institution, entity, or person (for its own account or
for the account of others) that is subject to the
jurisdiction of the Federal financial regulator; and
(B) any swap agreement that is subject to the
jurisdiction of the Federal financial regulator; and
(2) promulgate, interpret, and enforce regulations, issue
orders of general applicability, and impose disclosure,
reporting, or recordkeeping requirements, procedures, or
standards, relating to any swap agreement--
(A) that is entered into, purchased, or sold (or as
to which the transaction, purchase, or sale is
effected) by any financial institution, entity, or
person (for its own account or for the account of
others) that is subject to the jurisdiction of the
Federal financial regulator; and
(B) that is subject to the jurisdiction of the
Federal financial regulator.
(b) Exchanges and Trading Facilities.--In carrying out subsection
(a)--
(1) the Securities and Exchange Commission (and not any
other Federal financial regulator) shall exercise oversight and
carry out regulatory or oversight activity over--
(A) any exchange or clearing agency (as those terms
are defined in section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)); and
(B) any swap agreement traded on or cleared through
such exchange or clearing agency; and
(2) the Commodity Futures Trading Commission (and not any
other Federal financial regulator) shall exercise oversight and
carry out regulatory or oversight activity over--
(A) any trading facility or registered entity (as
those terms are defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); and
(B) any swap agreement executed on, traded on, or
cleared through such trading facility or registered
entity.
(c) Rules of Construction.--Nothing in this Act may be construed
as--
(1) limiting or reducing the authority of a Federal
financial regulator in effect on the date of enactment of this
Act with respect to swap agreements;
(2) affecting the authority of the Commodity Futures
Trading Commission under section 2(h)(3) or 4(c) of the
Commodity Exchange Act (7 U.S.C. 2(h)(3), 6(c)), or affecting
any exemption granted under that section 4(c); or
(3) requiring any swap agreement to be--
(A) conducted on or subject to the rules of a board
of trade which has been designated or registered by the
Commodity Futures Trading Commission as a contract
market or derivatives transaction execution facility;
or
(B) traded through an exchange or broker or dealer
registered or required to be registered under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.).
(d) Consistent Treatment of Swap Agreements.--Prior to taking
action under subsection (a)(2), each Federal financial regulator shall
consult, work, and cooperate with other Federal financial regulators to
promote consistency in the treatment of swap agreements.
SEC. 4. DEFINITIONS.
For the purposes of this Act, the following definitions shall
apply:
(1) Federal financial regulator.--
(A) In general.--The term ``Federal financial
regulator'' means--
(i) the Commodity Futures Trading
Commission;
(ii) the Federal Deposit Insurance
Corporation;
(iii) the Board of Governors of the Federal
Reserve System;
(iv) the National Credit Union
Administration;
(v) the Office of the Comptroller of the
Currency;
(vi) the Office of Thrift Supervision;
(vii) the Securities and Exchange
Commission; and
(viii) any other Federal agency that is
authorized under any provision of Federal law
to regulate any financial institution or type
or class of financial instrument or offering
thereof.
(2) Purchase; sale.--The terms ``purchase'' and ``sale'',
when used with respect to a swap agreement, means the
execution, termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under a swap agreement,
as the context may require.
(3) Swap agreement.--
(A) In general.--The term ``swap agreement'' means
any agreement, contract, or transaction between
eligible contract participants (as defined in section
1a(12) of the Commodity Exchange Act (7 U.S.C.
1a(12))), the material terms of which (other than price
and quantity) are subject to individual negotiation and
that--
(i) is a put, call, cap, floor, collar, or
similar option of any kind for the purchase or
sale of, or based on the value of, 1 or more
interest or other rates, currencies,
commodities, indices, quantitative measures, or
other financial or economic interests or
property of any kind;
(ii) provides for any purchase, sale,
payment, or delivery (other than a dividend on
an equity security) that is dependent on the
occurrence, nonoccurrence, or the extent of the
occurrence of any event or contingency
associated with a potential financial,
economic, or commercial consequence;
(iii) provides on an executory basis for
the exchange, on a fixed or contingent basis,
of 1 or more payments based on the value or
level of 1 or more interest or other rates,
currencies, commodities, securities, instrument
of indebtedness, indices, quantitative
measures, or other financial or economic
interests or property of any kind, or any
interest therein or based on the value thereof,
and that transfers, as between the parties to
the transactions, in whole or in part, the
financial risk associated with a future change
in any such value or level without also
conveying a current or future direct or
indirect ownership interest in an asset
(including any enterprise or investment pool)
or liability that incorporates the financial
risk so transferred, including any such
agreement, contract, or transaction commonly
known as an ``interest rate swap'', including a
rate floor, rate cap, rate collar, cross-
currency rate swap, basis swap, currency swap,
equity index swap, equity swap, debt index
swap, debt swap, credit spread, credit default
swap, credit swap, weather swap, or commodity
swap;
(iv) provides for the purchase or sale, on
a fixed or contingent basis, of any commodity,
currency, instrument, interest, right, service,
good, articles, or property of any kind; or
(v) is any combination or permutation of,
or option on, any agreement, contract, or
transaction described in any of clauses (i)
through (iv).
(B) Exclusions.--The term ``swap agreement'' does
not include--
(i) any put, call, straddle, option, or
privilege on any security, certificate of
deposit, or group or index of securities,
including any interest therein or based on the
value thereof;
(ii) any put, call, straddle, option, or
privilege entered into on a national securities
exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C.
78f(a)) relating to foreign currency;
(iii) any agreement, contract, or
transaction providing for the purchase or sale
of 1 or more securities on a fixed basis;
(iv) any agreement, contract, or
transaction providing for the purchase or sale
of 1 or more securities on a contingent basis,
unless the agreement, contract, or transaction
predicates the purchase or sale on the
occurrence of a bona fide contingency that
might reasonably be expected to affect or be
affected by the creditworthiness of a party
other than a party to the agreement, contract,
or transaction;
(v) any note, bond, or evidence of
indebtedness that is a security; or
(vi) any agreement, contract, or
transaction that is--
(I) based on a security; and
(II) entered into directly or
through an underwriter (as defined in
section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a))) by the issuer
of the security for the purpose of
raising capital, unless such agreement,
contract, or transaction is entered
into to manage a risk associated with
capital raising.
(C) Inclusion.--The term ``swap agreement''
includes a master agreement that provides for an
agreement, contract, or transaction that is a swap
agreement pursuant to subparagraphs (A) and (B),
together with all supplements to any such master
agreement, without regard to whether the master
agreement contains an agreement, contract, or
transaction that is not a swap agreement pursuant to
subparagraphs (A) and (B), except that the master
agreement shall be considered to be a swap agreement
only with respect to each agreement, contract, or
transaction under the master agreement that is a swap
agreement pursuant to subparagraphs (A) and (B).
(D) Meaning of security.--For purposes of this
paragraph, the term ``security'' has the same meaning
as in section 2(a)(1) of the Securities Act of 1933 (15
U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
SEC. 5. CONFORMING AMENDMENTS.
(a) Securities Act of 1933.--Section 17(a) of the Securities Act of
1933 (15 U.S.C. 77q(a)) is amended by striking ``security-based swap
agreement (as defined in section 206B of the Gramm-Leach-Bliley Act)''
and inserting ``swap agreement''.
(b) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) by striking ``security-based swap agreement (as defined
in section 206B of the Gramm-Leach-Bliley Act)'' each place
that term appears and inserting ``swap agreement'';
(2) by striking ``security-based swap agreements (as
defined in section 206B of the Gramm-Leach-Bliley Act)'' each
place that term appears and inserting ``swap agreements'';
(3) in each of sections 9 and 16 (15 U.S.C. 78i, 78p)--
(A) by striking ``security-based swap agreement''
each place that term appears and inserting ``swap
agreement''; and
(B) by striking ``security-based swap agreements''
each place that term appears and inserting ``swap
agreements'';
(4) in section 10(b) (15 U.S.C. 78j(b)), by striking
``securities-based swap agreement (as defined in section 206B
of the Gramm-Leach-Bliley Act)'' and inserting ``swap
agreement'';
(5) in section 16(a)(2)(C) (15 U.S.C. 78p(a)(2)(C)), by
striking ``security-based swap agreement (as defined in section
206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note))''
and inserting ``swap agreement''; and
(6) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by
striking ``2(c), 2(d), 2(f), or 2(g)'' and inserting ``2(c) or
2(f)''.
(c) Commodity Exchange Act.--
(1) Section 1a of the Commodity Exchange Act (7 U.S.C. 1a)
is amended--
(A) in paragraph (12)(A)(x), by striking ``or an
exempt board of trade''; and
(B) in paragraph (31), in the second sentence, by
striking ``2(c), 2(d), 2(f), or 2(g) of this Act'' and
inserting ``2(c) or 2(f)''.
(2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended--
(A) in subsection (c)(1), by striking ``5d,'';
(B) in subsection (e)--
(i) in paragraph (1), by striking
``2(d)(2), 2(g), or''; and
(ii) in paragraph (2), by striking ``, or
operating as an exempt board of trade'';
(C) in subsection (h)(4)(A), by striking ``5d,'';
and
(D) in subsection (i)--
(i) in paragraph (1)(A), by striking
``2(d), 2(e), 2(f), or 2(g)'' and inserting
``2(e), or 2(f)''; and
(ii) in paragraph (2), by striking ``Act),
5b of this Act, or 5d of this Act'' and
inserting ``Act) or 5b of this Act''.
(3) Section 5a(g)(1) of the Commodity Exchange Act (7
U.S.C. 7a(g)(1)) is amended by striking ``2(c), 2(d), or 2(g)''
and inserting ``2(c)''.
(4) Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-
1) is amended--
(A) in subsection (a)(1), by striking ``2(d), 2(f),
or 2(g)'' and inserting ``or 2(f)''; and
(B) in subsection (b), by striking ``2(c), 2(d),
2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.
(5) Section 12(e) of the Commodity Exchange Act (7 U.S.C.
16(e)) is amended--
(A) in paragraph (1)(B)(i), by striking ``or exempt
board of trade''; and
(B) in paragraph (2)(B), by striking ``2(c), 2(d),
2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.
(d) Federal Deposit Insurance Corporation Improvement Act.--Section
408(2)(C) of the Federal Deposit Insurance Corporation Improvement Act
of 1991 (12 U.S.C. 4421(2)(C)) is amended by striking ``2(c), 2(d),
2(f), or 2(g)'' and inserting ``2(c) or 2(f)''.
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