[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6613 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 6613

  To establish the Securities and Derivatives Commission in order to 
 combine the functions of the Commodity Futures Trading Commission and 
    the Securities and Exchange Commission in a single independent 
                         regulatory commission.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 29, 2012

Mr. Frank of Massachusetts (for himself and Mr. Capuano) 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 establish the Securities and Derivatives Commission in order to 
 combine the functions of the Commodity Futures Trading Commission and 
    the Securities and Exchange Commission in a single independent 
                         regulatory commission.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Markets and 
Trading Reorganization Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definition.
                  TITLE I--ESTABLISHMENT OF COMMISSION

Sec. 101. Establishment.
Sec. 102. Members; appointment; terms.
Sec. 103. Organization of Commission.
                    TITLE II--TRANSFERS OF FUNCTIONS

Sec. 201. Commodity futures trading commission functions.
Sec. 202. Securities and exchange commission functions.
                  TITLE III--ADMINISTRATIVE PROVISIONS

Sec. 301. Personnel provisions.
Sec. 302. General administrative provisions.
                  TITLE IV--FEE AND FUNDING AUTHORITY

Sec. 401. Fees to cover costs of the Commission.
Sec. 402. Funding Authority of the Commission.
       TITLE V--TRANSITIONAL, SAVINGS, AND CONFORMING PROVISIONS

Sec. 501. Savings provisions.
Sec. 502. Reference.
Sec. 503. Amendments.
                        TITLE VI--EFFECTIVE DATE

Sec. 601. Effective date.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to establish a single Federal regulatory body with 
        jurisdiction over securities, derivatives, options, futures, 
        and related markets and instruments;
            (2) to coordinate the regulation of relevant financial 
        markets;
            (3) to strengthen investor confidence in United States 
        financial markets; and
            (4) to ensure the efficiency and competitiveness of those 
        markets.

SEC. 3. DEFINITION.

    As used in this Act, the term ``Commission'', other than where 
expressly referring to the Securities and Exchange Commission or the 
Commodity Futures Trading Commission, means the Securities and 
Derivatives Commission established by section 101 of this Act.

                  TITLE I--ESTABLISHMENT OF COMMISSION

SEC. 101. ESTABLISHMENT.

    There is established an independent regulatory commission to be 
known as the Securities and Derivatives Commission.

SEC. 102. MEMBERS; APPOINTMENT; TERMS.

    (a) Composition of Commission.--The Commission shall be composed of 
5 commissioners appointed by the President, by and with the advice and 
consent of the Senate. One of the commissioners shall be designated by 
the President as chairperson. Not more than three of such commissioners 
shall be members of the same political party. Each commissioner shall 
be selected solely on the basis of integrity and demonstrated knowledge 
of the operations of the markets subject to the jurisdiction of the 
Commission.
    (b) Qualifications.--In appointing commissioners under subsection 
(a), the President shall--
            (1) select persons who each have demonstrated knowledge of 
        securities, futures, swaps, or other derivatives, the 
        regulation of such instruments, or the markets for agricultural 
        or other types of commodities underlying transactions subject 
        to the oversight of the Commission under this Act; and
            (2) seek to ensure that the demonstrated knowledge of the 
        commissioners is balanced with respect to such areas, with at 
        least one commissioner having knowledge of the agricultural 
        commodities market.
    (c) Terms.--Each commissioner shall be appointed for a term of 5 
years, except that a commissioner may continue to serve after the 
expiration of such term until a successor is appointed and has 
qualified.
            (1) The terms of office of the commissioners first taking 
        office after the enactment of this Act shall expire, as 
        designated by the President at the time of their appointment--
                    (A) one at the end of 1 year;
                    (B) two at the end of 3 years; and
                    (C) two at the end of 5 years.
            (2) Any commissioner appointed to fill a vacancy occurring 
        prior to the expiration of the term for which the predecessor 
        was appointed shall be appointed for the remainder of such 
        term.

SEC. 103. ORGANIZATION OF COMMISSION.

    (a) Required Divisions.--The Commission shall establish the 
principal divisions and subdivisions of the Commission, including, at a 
minimum, the following three divisions:
            (1) A Markets and Trading Division with oversight of market 
        conduct and utilities, the conduct of market professionals, and 
        self-regulatory organizations with regard to such market 
        professionals, including related examination functions.
            (2) An Issuers and Financial Disclosures Division with 
        oversight of the issuance of securities, including investment 
        companies and related rules and examinations.
            (3) An Enforcement Division responsible for the enforcement 
        of all rules of the Commission.
    (b) Other Offices.--The Commission may establish such other offices 
as it determines useful in the conduct of the Commission's affairs.

                    TITLE II--TRANSFERS OF FUNCTIONS

SEC. 201. COMMODITY FUTURES TRADING COMMISSION FUNCTIONS.

    There are transferred to the Commission all functions of the 
Commodity Futures Trading Commission and of any officer or component of 
the Commodity Futures Trading Commission.

SEC. 202. SECURITIES AND EXCHANGE COMMISSION FUNCTIONS.

    There are transferred to the Commission all functions of the 
Securities and Exchange Commission and of any officer or component of 
the Securities and Exchange Commission.

                  TITLE III--ADMINISTRATIVE PROVISIONS

SEC. 301. PERSONNEL PROVISIONS.

    (a) Appointment and Compensation.--The Commission may appoint and 
fix the compensation of such officers and employees as may be necessary 
to carry out the functions of the Commission. Except as otherwise 
provided by law, such officers and employees shall be appointed in 
accordance with the civil service laws and the compensation of such 
employees shall be fixed in accordance with section 4802 of title 5, 
United States Code. The Commission shall, in accordance with such 
section, adjust the compensation of employees so that the compensation 
of employees transferred from the Commodity Futures Trading Commission 
pursuant to subsection (b) and the compensation of employees 
transferred from the Securities and Exchange Commission under such 
subsection are aligned. In making such an adjustment, the Commission 
shall not reduce the compensation of any employee.
    (b) Transfer of Employees.--
            (1) In general.--All employees of the Commodity Futures 
        Trading Commission and the Securities and Exchange Commission 
        shall be transferred to the Commission. Each employee to be 
        transferred under this subsection shall be transferred not 
        later than 90 days after the effective date set forth in 
        section 601.
            (2) Employee status and functions.--
                    (A) Status.--The transfer of employees under this 
                section shall not affect the status of the transferred 
                employees as employees of an agency of the United 
                States under any provision of law. Each transferred 
                employee shall be placed in a position at the 
                Commission with the same status and tenure as the 
                transferred employee held on the day before the date on 
                which the employee was transferred.
                    (B) Functions.--To the extent practicable, each 
                transferred employee shall be placed in a position at 
                the Commission responsible for the same functions and 
                duties as the transferred employee had on the day 
                before the date on which the employee was transferred, 
                in accordance with the expertise and preferences of the 
                transferred employee.
            (3) Personnel actions limited.--
                    (A) Protection.--Except as provided in subparagraph 
                (B), each transferred employee shall not, during the 3-
                year period beginning on the transfer date, be 
                involuntarily separated, or involuntarily reassigned 
                outside his or her locality pay area.
                    (B) Exceptions.--Subparagraph (A) does not limit 
                the right of the Commission to--
                            (i) separate an employee for cause or for 
                        unacceptable performance;
                            (ii) terminate an appointment to a position 
                        excepted from the competitive service because 
                        of its confidential policy-making, policy-
                        determining, or policy-advocating character; or
                            (iii) reassign an employee outside such 
                        employee's locality pay area when the 
                        Commission determines that the reassignment is 
                        necessary for the efficient operation of the 
                        Commission.
            (4) Pay.--
                    (A) Protection.--
                            (i) In general.--Except as provided in 
                        clause (ii), each transferred employee shall, 
                        during the 3-year period beginning on the 
                        designated transfer date, receive pay at a rate 
                        equal to not less than the basic rate of pay 
                        (including any geographic differential) that 
                        the employee received during the pay period 
                        immediately preceding the date of transfer.
                            (ii) Limitation.--Notwithstanding clause 
                        (i), if the employee was receiving a higher 
                        rate of basic pay on a temporary basis (because 
                        of a temporary assignment, temporary promotion, 
                        or other temporary action) immediately before 
                        the date of transfer, the Commission may reduce 
                        the rate of basic pay on the date on which the 
                        rate would have been reduced but for the 
                        transfer, and the protected rate for the 
                        remainder of the 3-year period shall be the 
                        reduced rate that would have applied, but for 
                        the transfer.
                    (B) Exceptions.--Subparagraph (A) does not limit 
                the right of the Commission to reduce the rate of basic 
                pay of a transferred employee--
                            (i) for cause or for unacceptable 
                        performance; or
                            (ii) with the consent of the employee.
                    (C) Protection only while employed.--Subparagraph 
                (A) applies to a transferred employee only while that 
                employee remains employed by the Commission.
                    (D) Pay increases permitted.--Subparagraph (A) does 
                not limit the authority of the Commission to increase 
                the pay of a transferred employee.

SEC. 302. GENERAL ADMINISTRATIVE PROVISIONS.

    (a) General Authority.--In carrying out any function transferred by 
this Act, the Commission, or any officer or employee of the Commission, 
may exercise any authority available by law with respect to such 
function to the official or agency from which such function is 
transferred, and the actions of the Commission, or any officer or 
employee of the Commission in exercising such authority shall have the 
same force and effect as when exercised by such official or agency.
    (b) Rules.--The Commission may prescribe such rules and regulations 
as the Commission determines necessary or appropriate to administer and 
manage the functions of the Commission.
    (c) Contracts.--The Commission may make, enter into, and perform 
such contracts, grants, leases, cooperative agreements, or other 
similar transactions with Federal or other public agencies (including 
State and local governments) and private organizations and persons, and 
make such payments, by way of advance or reimbursement, as the 
Commission may determine necessary or appropriate to carry out 
functions of the Commission.
    (d) Regional and Field Offices.--The Commission may establish, 
alter, discontinue, or maintain such regional or other field offices as 
the Commission may find necessary or appropriate to perform functions 
of the Commission.
    (e) Reserve Fund.--The Commission may obligate amounts in the 
Reserve Fund established under section 4(i) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78d(i)), not to exceed a total of $100,000,000 
in any 1 fiscal year, as the Commission determines is necessary to 
carry out the functions of the Commission, including those transferred 
by title II of this Act. Any amounts in the reserve fund shall remain 
available until expended. Not later than 10 days after the date on 
which the Commission obligates amounts under this subsection, the 
Commission shall notify Congress of the date, amount, and purpose of 
the obligation.

                  TITLE IV--FEE AND FUNDING AUTHORITY

SEC. 401. FEES TO COVER COSTS OF THE COMMISSION.

    (a) Imposition of Fees.--
            (1) In general.--The Commission shall, by order, impose a 
        fee on each agreement, contract, or transaction that is a 
        contract of sale of a commodity for future delivery, an option 
        on such a contract, or a swap or securities-based swap, so that 
        the total of the fees so imposed during each fiscal year is 
        sufficient to cover the costs of the regulatory activities of 
        the Commission related to such instruments for each fiscal 
        year.
            (2) Limitation.--The fees imposed under this subsection on 
        all transactions of the same kind shall be determined in a 
        uniform manner.
            (3) Mid-year adjustment.--
                    (A) In general.--By March 1 of each fiscal year, 
                the Commission shall determine whether, based on the 
                fees collected under this subsection during the first 5 
                months of the fiscal year, the total of the amounts 
                collected and to be collected under this section for 
                the fiscal year is reasonably likely to be 10 percent 
                (or more) greater or less than the costs described in 
                paragraph (1) for the fiscal year. If the Commission so 
                determines, the Commission shall by order, no later 
                than March 1 of the fiscal year, adjust the fee rates 
                otherwise applicable under this subsection for the 
                fiscal year so that the total of the amounts so 
                collected and to be collected is reasonably likely to 
                equal to the costs so described.
                    (B) Effective date.--An adjusted rate prescribed 
                under subparagraph (A) of this paragraph in a fiscal 
                year shall take effect on the 1st day of the fiscal 
                year to which the rate applies.
            (4) Publication.--The Commission shall publish in the 
        Federal Register notices of the fee rates applicable under this 
        subsection for a fiscal year not later than 30 days after such 
        rates are set, together with any estimates or projections on 
        which the fee rates are based.
            (5) Inapplicability of rulemaking requirements.--In 
        exercising its authority under this subsection, the Commission 
        shall not be required to comply with section 553 of title 5, 
        United States Code.
            (6) No judicial review.--A fee rate prescribed under this 
        subsection and published in accordance with paragraph (4) shall 
        not be subject to judicial review.
    (b) Payment and Collection of Fees.--
            (1) Cleared transactions; uncleared swaps reported to swap 
        data repositories.--
                    (A) Payment of fees.--
                            (i) Cleared transactions.--In the case of a 
                        contract of sale of a commodity for future 
                        delivery, an option on such a contract, or a 
                        swap or securities-based swap that is cleared 
                        by a derivatives clearing organization 
                        registered or exempt from registration under 
                        the Commodity Exchange Act or by a clearing 
                        agency registered or exempt from registration 
                        under the Securities Exchange Act of 1934, as 
                        applicable, each party to the agreement, 
                        contract, or transaction shall pay the fee 
                        determined under subsection (a) to the 
                        derivatives clearing organization or clearing 
                        agency, as applicable.
                            (ii) Uncleared swaps reported to swap data 
                        repositories.--In the case of a swap or 
                        securities-based swap that is not cleared by a 
                        derivatives clearing organization registered or 
                        exempt from registration under the Commodity 
                        Exchange Act or by a clearing agency registered 
                        or exempt from registration under the 
                        Securities Exchange Act of 1934 and that is 
                        accepted by a swap data repository registered 
                        under section 21 of the Commodity Exchange Act 
                        (7 U.S.C. 24a) or a securities-based swap data 
                        repository registered under section 13n of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78m(n)), as applicable, each party to the swap 
                        or securities-based swap shall pay the 
                        transaction fee determined under subsection (a) 
                        to the swap data repository or securities-based 
                        swap data repository.
                    (B) Collection of fees.--The Commission shall 
                collect the fees paid in accordance with subparagraph 
                (A) in such manner and within such time as the 
                Commission determines appropriate.
            (2) Uncleared swaps reported to commission.--In the case of 
        a swap or securities-based swap that is not cleared by a 
        derivatives clearing organization or a clearing agency 
        registered or exempt from registration under the Commodity 
        Exchange Act or the Securities Exchange Act of 1934 and that is 
        reported to the Commission pursuant to such Acts, each party to 
        the swap or securities-based swap shall pay the fee determined 
        under subsection (a) to the Commission in a manner and within 
        such time as the Commission determines appropriate.

SEC. 402. FUNDING AUTHORITY OF THE COMMISSION.

    (a) Commodity Futures Trading Commission.--Section 12 of the 
Commodity Exchange Act (7 U.S.C. 16) is amended--
            (1) in subsection (b)(1), by striking ``and as may be from 
        time to time appropriated for by Congress'';
            (2) by striking subsection (d); and
            (3) in subsection (f)(3), by striking ``Any payment or 
        reimbursement accepted shall be considered a reimbursement to 
        the appropriated funds of the Commission.'' and inserting 
        ``Such payments or reimbursements shall be available to the 
        Commission without further appropriation.''.
    (b) Securities Exchange Commission.--Section 31 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78ee) is amended--
            (1) in subsection (a)--
                    (A) in the heading for such subsection, by striking 
                ``Recovery of Costs of Annual Appropriation'' and 
                inserting ``In General''; and
                    (B) by striking ``recover the costs to the 
                Government of the annual appropriation to the 
                Commission by Congress'' and inserting ``cover the 
                costs to the Commission for the supervision and 
                regulation of securities markets and securities 
                professionals, and use such fees and assessments 
                without further appropriation'';
            (2) by striking subsection (i);
            (3) in subsection (j)--
                    (A) by striking ``regular appropriation to the 
                Commission by Congress'' each place such term appears 
                and inserting ``target offsetting collection amount''; 
                and
                    (B) by amending paragraph (4)(A) to read as 
                follows:
                    ``(A) Annual adjustment.--An adjusted rate 
                prescribed under paragraph (1) shall take effect on the 
                first day of the fiscal year to which such rate 
                applies.''; and
            (4) by striking subsection (k).

       TITLE V--TRANSITIONAL, SAVINGS, AND CONFORMING PROVISIONS

SEC. 501. SAVINGS PROVISIONS.

    (a) Continuity of Legal Instruments.--All orders, determinations, 
rules, regulations, permits, grants, contracts, certificates, licenses, 
and privileges--
            (1) which have been issued, made, granted, or allowed to 
        become effective by the President, the Securities and Exchange 
        Commission, or the Commodity Futures Trading Commission, or any 
        component thereof, or by a court of competent jurisdiction, in 
        the performance of functions which are transferred under this 
        Act to the Commission, and
            (2) which are in effect at the time this Act takes effect,
shall continue in effect according to their terms until modified, 
terminated, superseded, set aside, or revoked in accordance with the 
law by the President, the Commission, or other authorized official, a 
court of competent jurisdiction, or by operation of law.
    (b) Continuity of Proceedings.--
            (1) In general.--The provisions of this Act shall not 
        affect any proceedings, including notices of proposed 
        rulemaking, or any application for any license, permit, 
        certificate, or financial assistance pending on the effective 
        date of this Act before either the Securities and Exchange 
        Commission or the Commodity Futures Trading Commission, or any 
        component thereof, functions of which are transferred by this 
        Act. Such proceedings and applications, to the extent that they 
        relate to functions so transferred, shall be continued. Orders 
        shall be issued in such proceedings, appeals shall be taken 
        therefrom, and payments shall be made pursuant to such orders, 
        as if this Act had not been enacted and orders issued in any 
        such proceedings shall continue in effect until modified, 
        terminated, superseded, or revoked by the Commission, by a 
        court of competent jurisdiction, or by operation of law. 
        Nothing in this subsection shall be construed to prohibit the 
        discontinuance or modification of any such proceeding under the 
        same terms and conditions and to the same extent that such 
        proceeding could have been discontinued or modified if this Act 
        had not been enacted.
            (2) Regulations concerning transfers.--The Commission may 
        prescribe regulations providing for the orderly transfer of 
        proceedings continued under paragraph (1) to the Commission.
    (c) Pending Litigation.--Except as provided in subsection (e)--
            (1) the provisions of this Act shall not affect suits 
        commenced prior to the effective date of this Act; and
            (2) in all such suits, proceedings shall be had, appeals 
        taken, and judgments rendered in the same manner and effect as 
        if this Act had not been enacted.
    (d) Nonabatement.--No suit, action, or other proceeding commenced 
by or against any officer in the official capacity of such individual 
as an officer of the Securities and Exchange Commission or the 
Commodity Futures Trading Commission, or any component thereof, 
functions of which are transferred by this Act, shall abate by reason 
of the enactment of this Act. No cause of action by or against any 
department or agency, functions of which are transferred by this Act, 
or by or against any officer thereof in the official capacity of such 
officer shall abate by reason of the enactment of this Act.
    (e) Substitution of Parties.--If, before the date on which this Act 
takes effect, the Securities and Exchange Commission or the Commodity 
Futures Trading Commission, or any component thereof, or officer 
thereof in the official capacity of such officer, is a party to a suit, 
and under this Act any function of such department, agency, or officer 
is transferred to the Commission or any other official of the 
Commission, then such suit shall be continued with the Commission or 
other appropriate official of the Commission substituted or added as a 
party.
    (f) Judicial Review as Required by Existing Law.--Orders and 
actions of the Commission in the exercise of functions transferred 
under this Act shall be subject to judicial review to the same extent 
and in the same manner as if such orders and actions had been by the 
agency or office, or part thereof, exercising such functions 
immediately preceding their transfer. Any statutory requirements 
relating to notice, hearings, action upon the record, or administrative 
review that apply to any function transferred by this Act shall apply 
to the exercise of such function by the Commission.

SEC. 502. REFERENCE.

    Any reference in any other Federal law to the Securities and 
Exchange Commission or the Commodity Futures Trading Commission shall 
be deemed a reference to the Securities and Derivatives Commission 
established by this Act.

SEC. 503. AMENDMENTS.

    (a) Executive Schedule Salaries.--
            (1) Chairperson.--Section 5314 of title 5, United States 
        Code, is amended--
                    (A) by striking ``Chairman, Securities and Exchange 
                Commission.'' and inserting ``Chairperson, Securities 
                and Derivatives Commission.''; and
                    (B) by striking ``Chairman, Commodity Futures 
                Trading Commission.''.
            (2) Members.--Section 5315 of title 5, United States Code, 
        is amended--
                    (A) by striking ``Members, Securities and Exchange 
                Commission'' and inserting ``Members, Securities and 
                Derivatives Commission''; and
                    (B) by striking ``Members, Commodity Futures 
                Trading Commission.''.
    (b) Conforming Amendments.--
            (1) Securities exchange act.--Sections 4(a) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78d(a)) is amended--
                    (A) by striking ``There is hereby established a 
                Securities and Exchange Commission (hereinafter 
                referred to as the `Commission') to be composed of five 
                commissioners to be appointed by the President by and 
                with the advice and consent of the Senate. Not more 
                than three of such commissioners shall be members of 
                the same political party, and in making appointments 
                members of different political parties shall be 
                appointed alternately as nearly as may be 
                practicable.''; and
                    (B) by striking ``Each commissioner shall hold 
                office for a term of five years and until his successor 
                is appointed and has qualified, except that he shall 
                not so continue to serve beyond the expiration of the 
                next session of Congress subsequent to the expiration 
                of said fixed term of office, and except (1) any 
                commissioner appointed to fill a vacancy occurring 
                prior to the expiration of the term for which his 
                predecessor was appointed shall be appointed for the 
                remainder of such term, and (2) the terms of office of 
                the commissioners first taking office after the 
                enactment of this title shall expire as designated by 
                the President at the time of nomination, one at the end 
                of one year, one at the end of two years, one at the 
                end of three years, one at the end of four years, and 
                one at the end of five years, after the date of the 
                enactment of this title.''.
            (2) Commodity exchange act.--Section 2(a) of the Commodity 
        Exchange Act (7 U.S.C. 2a) is amended by striking paragraphs 
        (2), (3), and (4).
            (3) Dodd-frank.--Section 111(b)(1) of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act (12 U.S.C. 
        5321(b)(1)) is amended--
                    (A) by amending subparagraph (E) to read as 
                follows:
                    ``(E) the Chairperson of the Securities and 
                Derivatives Commission;'';
                    (B) by striking subparagraph (G); and
                    (C) by redesignating subparagraphs (H), (I), and 
                (J) as subparagraphs (G), (H), and (I), respectively.

                        TITLE VI--EFFECTIVE DATE

SEC. 601. EFFECTIVE DATE.

    The provisions of this Act shall take effect 1 year after the date 
of enactment of this Act, except that the President may nominate and 
the Senate confirm Commissioners prior to such date.
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