I 112th CONGRESS 2d Session H. R. 5649 IN THE HOUSE OF REPRESENTATIVES May 8, 2012 Mr. Schilling (for himself, Mr. Owens, and Mr. McIntyre) introduced the following bill; which was referred to the Committee on Agriculture A BILL To amend the Commodity Exchange Act to clarify the exemptions for captive finance companies from the definition of major swap participant and from the swap clearing requirement.

1.

Short title

This Act may be cited as the Manufacturing Certainty and Captive Finance Affiliate Clarification Act.

2.

Clarification of the exemptions for captive finance companies from the definition of major swap participant and from the swap clearing requirement

(a)

Exclusion from definition of major swap participant

Section 1a(33)(D) of the Commodity Exchange Act (7 U.S.C. 1a(33)(D)) is amended to read as follows: (D)

Exclusion of certain captive finance entities

(i)

In general

The definition under this paragraph shall not include an entity whose primary business is providing financing that facilitates the sale or lease of products by or on behalf of the parent company or another subsidiary of the parent company, and uses derivatives only for the purpose of hedging underlying commercial risks in a consolidated financing and leasing portfolio, at least 90 percent of which, as of the end of its preceding fiscal year, is qualifying financing (including loans, notes, installment sales contracts, receivables, and operating and financing leases). (ii)

Definitions

In this subparagraph: (I)

Qualifying financing

The term qualifying financing means— (aa)any financing or lease of, or that includes, a product; or (bb)any financing to or for the benefit of an affiliate of the entity, a distribution entity, or any customer or affiliate of a distribution entity, except that the term does not include any financing that does not facilitate the sale of a product manufactured by the entity or its affiliates, as determined by the Commission.(II)

Product

The term product means— (aa)any good that is manufactured or sold by an affiliate of the entity; and (bb)any service that is provided by an affiliate of the entity. (III)

Distribution entity

The term distribution entity means a person whose primary business is the sale, lease or servicing of a product that is manufactured by the entity or its affiliates. (IV)

Affiliate

The term affiliate means, with respect to an entity— (aa)a person that reports information or prepares financial statements on a consolidated basis with the entity, or for which a parent company reports information or prepares financial statements on a consolidated basis for the person and the entity; or (bb)a person of which the entity or the parent of the entity holds 50 percent or more of the equity interests. (V)

Person

The term person means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. . (b)

Exclusion from swap clearing requirement

Section 2(h)(7)(C)(iii) of such Act (7 U.S.C. 2(h)(7)(C)(iii)) is amended to read as follows: (iii)

Exclusion of certain captive finance entities

Such term shall not include an entity excluded from the definition of major swap participant by reason of section 1a(33)(D). .

3.

Effective date

The amendments made by this Act shall take effect as if they had been included in subtitle A of title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.