I 112th CONGRESS 1st Session H. R. 1610 IN THE HOUSE OF REPRESENTATIVES April 15, 2011 Mr. Grimm (for himself, Mr. Neugebauer, and Mr. Garrett) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide end user exemptions from certain provisions of the Commodity Exchange Act and the Securities Exchange Act of 1934, and for other purposes.

1.

Short title

This Act may be cited as the Business Risk Mitigation and Price Stabilization Act of 2011.

2.

Margin Rules

(a)

Commodity Exchange Act amendments

The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended— (1)in section 1a(33)(A), as added by section 721(a)(6) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, by amending clause (ii) to read as follows: (ii)whose outstanding swaps create substantial net counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or ; and (2)in section 4s(e), as added by section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, by adding at the end the following new paragraphs: (4)

Applicability with respect to counterparties

The margin requirements of this subsection shall not apply to swaps in which 1 of the counterparties is not— (A)a swap dealer or major swap participant; (B)an investment fund that— (i)has issued securities, other than debt securities, to greater than five unaffiliated persons; (ii)would be an investment company (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) but for paragraph (1) or (7) of section 3(c) of that Act (15 U.S.C. 80a–3(c)); and (iii)is not primarily invested in physical assets (which shall include commercial real estate) directly or through interest in its affiliates that own such assets; (C)an entity defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)); or (D)a commodity pool. (5)

Margin transition rules

Swaps entered into before the date upon which final rules must be published under section 712(e) of the Wall Street Transparency and Accountability Act of 2010 are exempt from the margin requirements of this subsection. . (b)

Securities Exchange Act of 1934 amendments

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended— (1)in section 3(a)(67)(A), as added by section 761(a)(6) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, by amending clause (ii) to read as follows: (ii)whose outstanding security-based swaps create substantial net counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or ; and (2)in section 15F(e), as added by section 764(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, by adding at the end the following new paragraphs: (4)

Applicability with respect to counterparties

The margin requirements of this subsection shall not apply to security-based swaps in which one of the counterparties is not— (A)a security-based swap dealer or major security-based swap participant; (B)an investment fund that would be an investment company (as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3)) but for paragraph (1) or (7) of section 3(c) of that Act (15 U.S.C. 80a–3(c)); (C)primarily invested in physical assets (which shall include commercial real estate) directly or through interest in its affiliates that own such assets; (D)an entity defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)); or (E)a commodity pool. (5)

Margin transition rules

Security-based swaps entered into before the date upon which final rules must be published under section 712(a)(5) of the Wall Street Transparency and Accountability Act of 2010 are exempt from the margin requirements of this subsection. . (c)

Effective date

The amendments made by this section shall take effect as if included in the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act to which they relate.