[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5592 Introduced in House (IH)]
<DOC>
114th CONGRESS
2d Session
H. R. 5592
To amend the Commodity Exchange Act to clarify which fees the Commodity
Futures Trading Commission may assess and collect, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 28, 2016
Mr. Cummings introduced the following bill; which was referred to the
Committee on Agriculture, and in addition to the Committees on
Financial Services, and the Judiciary, 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 amend the Commodity Exchange Act to clarify which fees the Commodity
Futures Trading Commission may assess and collect, 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 ``Derivatives Oversight and Taxpayer
Protection Act''.
TITLE I--STRENGTHENING OVERSIGHT AND ENFORCEMENT
SEC. 101. FEES TO RECOVER COSTS.
(a) In General.--The Commodity Exchange Act is amended by inserting
after section 10 (7 U.S.C. 17) the following:
``SEC. 11. FEES TO RECOVER COSTS.
``(a) Recovery of Certain Costs of Annual Appropriation.--
``(1) In general.--Effective beginning October 1, 2016, so
as to recover the costs to the Federal Government of the annual
appropriation to the Commission by Congress, the Commission
shall assess and collect fees under this subsection.
``(2) Requirements.--Subject to paragraph (3), the
Commission may--
``(A) assess fees to recover the costs of the
regulatory services provided by the Commission; and
``(B) assess fees from registered entities and
persons registered under this Act.
``(3) Service fees.--The Commission may assess fees to
recover the costs of the following regulatory services provided
by the Commission:
``(A) Designated contract market compliance
examinations.
``(B) Foreign board of trade registration reviews.
``(C) Swap execution facility designation reviews.
``(D) Swap data repository registration reviews.
``(E) Designated contract market designation
reviews.
``(F) Swap execution facility compliance
examinations.
``(G) Swap data repository compliance reviews.
``(H) Designated contract market contract review
and approvals.
``(I) Swap execution facility contract review and
approvals.
``(J) Designated contract market contract
certification and rule reviews.
``(K) Swap execution facility contract
certification and rule reviews.
``(L) Swap data repository rule reviews.
``(M) Reviews of mergers, transfers, and other
action requests from designated contract markets, swap
execution facilities, and swap data repositories.
``(N) Designated self-regulatory organization
financial surveillance reviews.
``(O) Registered futures association compliance
program reviews.
``(P) Derivatives clearing organization reviews.
``(Q) Futures commission merchant examinations.
``(R) Registered foreign exchange dealer
examinations.
``(S) Swap dealer registration reviews.
``(T) Swap dealer examinations.
``(U) Other entity registration, reviews, or
examinations, or other regulatory services provided by
the Commission.
``(4) Fee rates.--Fees assessed shall--
``(A) be reasonably related to the cost to the
Commission of providing the services of the Commission;
``(B) take into consideration the full-time
equivalent number of employees performing the services,
overhead costs, and other factors that the Commission
determines are necessary in the public interest;
``(C) support market access for smaller market
participants hedging or mitigating commercial or
agricultural risk, including farmers and ranchers; and
``(D) minimize negative impacts on market liquidity
and maintain the efficiency, competitiveness, and
financial integrity of futures and swaps markets in the
United States.
``(5) Collection of fees.--The Commission shall collect
fees paid in accordance with paragraph (2) in a manner and
within such time as determined by the Commission.
``(b) Publication.--Not later than 60 days after the date on which
a law providing a regular appropriation to the Commission for a fiscal
year is enacted, the Commission shall publish in the Federal Register--
``(1) notices of the fee rates for the fiscal year,
including any estimates or projections on which the fees are
based; and
``(2) a schedule of fees for the fiscal year, including an
explanation of the method used for calculating applicable fee
rates.
``(c) Deposit of Fees.--
``(1) Offsetting collections.--Fees collected under
subsection (a) for any fiscal year--
``(A) shall be deposited and credited as offsetting
collections to the account providing appropriations to
the Commission; and
``(B) except as provided in subsection (e), shall
not be collected or available for obligation for any
fiscal year except to the extent provided in advance in
appropriation Acts.
``(2) General revenues prohibited.--No fees collected under
subsection (a) shall be deposited and credited as general
revenue of the Treasury.
``(d) Fee Orders.--
``(1) Annual adjustment.--For each fiscal year, the
Commission shall by order set the fees applicable under
subsection (a) for the fiscal year at rates that are reasonably
likely to produce aggregate fee collections under this section
that are equal to the costs to the Federal Government of the
annual appropriation to the Commission by Congress.
``(2) Mid-year adjustment.--
``(A) In general.--For each fiscal year, the
Commission shall determine, not later than March 1 of
the fiscal year, whether, based on the actual fees
collected during the first 5 months of the fiscal year,
the collections generated under the fee rates
determined under paragraph (1) for the fiscal year are
reasonably likely to be 10 percent (or more) greater or
less than the annual appropriation to the Commission
for the fiscal year.
``(B) Adjustment.--
``(i) In general.--If the Commission makes
an affirmative determination, the Commission
shall by order, not later than March 1, adjust
the fees for the fiscal year to rates that are
reasonably likely to produce aggregate fee
collections under this section that are equal
to the cost to the Federal Government of the
annual appropriation to the Commission by
Congress.
``(ii) Factors.--The fee rates shall be
assessed based on the same factors described in
subsection (a).
``(e) Lapse of Appropriation.--If on the first day of a fiscal year
a regular appropriation to the Commission has not been enacted, the
Commission shall continue to collect (as offsetting collections) the
fees and assessments under subsection (a) at the rates in effect on
September 30 of the preceding fiscal year, until 90 days after the date
a regular appropriation is enacted.''.
(b) Conforming Amendments.--
(1) Section 2(d) of the Commodity Exchange Act (7 U.S.C.
2(d)) is amended by striking ``and 9'' and inserting ``9, and
11''.
(2) Section 4(c)(1)(A)(i)(I) of the Commodity Exchange Act
(7 U.S.C. 6(c)(1)(A)(i)(I)) is amended by inserting ``11,''
after ``8e,''.
(3) Section 15(a)(3) of the Commodity Exchange Act (7
U.S.C. 19(a)(3)) is amended by adding at the end the following:
``(D) An action under section 11.''.
SEC. 102. CIVIL PENALTIES AND FINES UNDER THE COMMODITY EXCHANGE ACT
AND RELATED ENFORCEMENT ACTIONS.
(a) Civil Penalties Generally.--Section 6(c)(10) of the Commodity
Exchange Act (7 U.S.C. 9(10)) is amended by striking subparagraph (C)
and inserting the following:
``(C) assess such person--
``(i) a civil penalty of not more than an
amount equal to the greater of--
``(I) $1,000,000, in the case of a
person who is an individual, for each
violation;
``(II) $10,000,000, in the case of
any person other than an individual,
for each violation;
``(III) triple the monetary gain to
the person and all other persons acting
in concert with the person, for each
such violation; or
``(IV) triple the total amount of
losses to persons proximately caused by
each such violation; or
``(ii) a civil penalty of triple the
maximum amount otherwise available under clause
(i) if the person, within 5 years preceding the
violation, has been--
``(I) found in a proceeding brought
by the Commission, or by agreement of
settlement to which the Commission is a
party, to have recklessly, knowingly,
or willfully violated any provision of
this Act or of the rules, regulations,
or orders of the Commission thereunder;
``(II) found in a proceeding
brought by the Securities and Exchange
Commission, or by agreement of
settlement to which the Securities and
Exchange Commission is a party, to have
recklessly, knowingly, or willfully
violated any provision of the
Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment
Company Act of 1940, or the Investment
Advisers Act of 1940, or of the rules,
regulations, or orders of the
Securities and Exchange Commission
thereunder;
``(III) found in a proceeding
brought by the Federal Energy
Regulatory Commission, or by agreement
of settlement to which the Federal
Energy Regulatory Commission is a
party, to have recklessly, knowingly,
or willfully violated any provision of
the Federal Power Act (16 U.S.C. 792 et
seq.), the Natural Gas Act (15 U.S.C.
717 et seq.), the Public Utility
Regulatory Policies Act of 1978 (16
U.S.C. 2601 et seq.), the Natural Gas
Policy Act of 1978 (15 U.S.C. 3301 et
seq.), or the rules, regulations, or
orders of the Federal Energy Regulatory
Commission issued thereunder;
``(IV) convicted of any criminal
violation of this Act or of the rules,
regulations, or orders of the
Commission thereunder;
``(V) convicted of any criminal
violation of the Securities Act of
1933, the Securities Exchange Act of
1934, the Investment Company Act of
1940, or the Investment Advisers Act of
1940, or of the rules, regulations, or
orders of the Securities and Exchange
Commission thereunder; or
``(VI) convicted of any other
criminal offense that involves any
conduct, transaction, advice or
activity related to any commodity
interest, as that term is defined by
the Commission, or security-based swap;
and''.
(b) Fines and Civil Penalties Related to Violation of Cease and
Desist Order.--Section 6(d) of the Commodity Exchange Act (7 U.S.C.
13b) is amended--
(1) by inserting ``(1)'' after ``(d)'';
(2) by striking ``$140,000 or triple the monetary gain to
such person,'' and inserting ``(A) $1,000,000, in the case of a
person who is an individual, for each violation, (B)
$10,000,000, in the case of any person other than an
individual, for each violation, (C) triple the monetary gain to
the person and all other persons acting in concert with the
person, for each such violation, or (D) triple the total amount
of losses to persons proximately caused by each such
violation,''; and
(3) by adding at the end the following:
``(2) A person may be held liable for a civil penalty in triple the
amount otherwise available for a violation under this subsection if the
person, within 5 years preceding such violation, has been--
``(A) found in a proceeding brought by the Commission, or
by agreement of settlement to which the Commission is a party,
to have recklessly, knowingly, or willfully violated any
provision of this Act or the rules, regulations, or orders of
the Commission thereunder;
``(B) found in a proceeding brought by the Securities and
Exchange Commission, or by agreement of settlement to which the
Securities and Exchange Commission is a party, to have
recklessly, knowingly, or willfully violated any provision of
the Securities Act of 1933, the Securities Exchange Act of
1934, the Investment Company Act of 1940, or the Investment
Advisers Act of 1940, or of the rules, regulations, or orders
of the Securities and Exchange Commission thereunder;
``(C) found in a proceeding brought by the Federal Energy
Regulatory Commission, or by agreement of settlement to which
the Federal Energy Regulatory Commission is a party, to have
recklessly, knowingly, or willfully violated any provision of
the Federal Power Act (16 U.S.C. 792 et seq.), the Natural Gas
Act (15 U.S.C. 717 et seq.), the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2601 et seq.), the Natural Gas
Policy Act of 1978 (15 U.S.C. 3301 et seq.), or the rules,
regulations, or orders of the Federal Energy Regulatory
Commission issued thereunder;
``(D) convicted of any criminal violation of this Act or
the rules, regulations, or orders of the Commission thereunder;
``(E) convicted of any criminal violation of the Securities
Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, or the Investment Advisers Act
of 1940, or of the rules, regulations, or orders of the
Securities and Exchange Commission thereunder; or
``(F) convicted of any other criminal offense that involves
any conduct, transaction, advice or activity related to any
commodity interest, as that term is defined by the Commission,
or security-based swap.''.
(c) Nonenforcement of Rules of Government or Other Violations.--
Section 6b of the Commodity Exchange Act (7 U.S.C. 13a) is amended--
(1) in the first sentence, by striking ``$500,000 for each
such violation, or, in any case of manipulation or attempted
manipulation in violation of section 6(c), 6(d), or 9(a)(2), a
civil penalty of not more than $1,000,000 for each such
violation'' and inserting ``(A) $1,000,000, in the case of a
person who is an individual, for each violation, (B)
$10,000,000, in the case of any person other than an
individual, for each violation, (C) triple the monetary gain to
the person and all other persons acting in concert with the
person, for each such violation, or (D) triple the total amount
of losses to persons proximately caused by each such violation,
and such civil penalty shall be assessed for each violation on
which a failure to enforce or other violation occurs or has
occurred; provided that such registered entity, director,
officer, agent, or employee may be assessed a civil penalty of
triple the amount otherwise available if the person, within 5
years of such violation, has been (i) found in a proceeding
brought by the Commission, or by agreement of settlement to
which the Commission is a party, to have recklessly, knowingly,
or willfully violated any provision of this Act or the rules,
regulations, or orders of the Commission thereunder, (ii) found
in a proceeding brought by the Securities and Exchange
Commission, or by agreement of settlement to which the
Securities and Exchange Commission is a party, to have
recklessly, knowingly, or willfully violated any provision of
the Securities Act of 1933, the Securities Exchange Act of
1934, the Investment Company Act of 1940, or the Investment
Advisers Act of 1940, or of the rules, regulations, or orders
of the Securities and Exchange Commission thereunder, (iii)
found in a proceeding brought by the Federal Energy Regulatory
Commission, or by agreement of settlement to which the Federal
Energy Regulatory Commission is a party, to have recklessly,
knowingly, or willfully violated any provision of the Federal
Power Act (16 U.S.C. 792 et seq.), the Natural Gas Act (15
U.S.C. 717 et seq.), the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. 2601 et seq.), the Natural Gas Policy Act of
1978 (15 U.S.C. 3301 et seq.), or the rules, regulations, or
orders of the Federal Energy Regulatory Commission issued
thereunder; (iv) convicted of any criminal violation of this
Act or the rules, regulations, or orders of the Commission
thereunder; (v) convicted of any criminal violation of the
Securities Act of 1933, the Securities Exchange Act of 1934,
the Investment Company Act of 1940, or the Investment Advisers
Act of 1940, or of the rules, regulations, or orders of the
Securities and Exchange Commission thereunder; or (vi)
convicted of any other criminal offense that involves any
conduct, transaction, advice or activity related to any
commodity interest, as that term is defined by the Commission,
or security-based swap''; and
(2) in the second sentence, by striking ``$500,000'' and
inserting ``$1,000,000''.
(d) Action To Enjoin or Restrain Violations.--Section 6c(d) of the
Commodity Exchange Act (7 U.S.C. 13a-1(d)) is amended--
(1) in paragraph (1), by inserting ``a civil penalty in the
amount of'' after ``violation''; and
(2) by striking subparagraphs (A) and (B) of paragraph (1)
and inserting the following:
``(A) not more than the greater of--
``(i) $1,000,000, in the case of a person
who is an individual, for each violation;
``(ii) $10,000,000, in the case of any
person other than an individual, for each
violation;
``(iii) triple the monetary gain to the
person and all other persons acting in concert
with the person, for each such violation; or
``(iv) triple the total amount of losses by
persons proximately caused by each such
violation; or
``(B) triple the maximum amount otherwise available
under subparagraph (A) if the person, within 5 years
preceding the violation, has been--
``(i) found in a proceeding brought by the
Commission, or by agreement of settlement to
which the Commission is a party, to have
recklessly, knowingly, or willfully violated
any provision of this Act or of the rules,
regulations, or orders of the Commission
thereunder;
``(ii) found in a proceeding brought by the
Securities and Exchange Commission, or by
agreement of settlement to which the Securities
and Exchange Commission is a party, to have
recklessly, knowingly, or willfully violated
any provision of the Securities Act of 1933,
the Securities Exchange Act of 1934, the
Investment Company Act of 1940, or the
Investment Advisers Act of 1940, or of the
rules, regulations, or orders of the Commission
thereunder;
``(iii) found in a proceeding brought by
the Federal Energy Regulatory Commission, or by
agreement of settlement to which the Federal
Energy Regulatory Commission is a party, to
have recklessly, knowingly, or willfully
violated any provision of the Federal Power Act
(16 U.S.C. 792 et seq.), the Natural Gas Act
(15 U.S.C. 717 et seq.), the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2601
et seq.), the Natural Gas Policy Act of 1978
(15 U.S.C. 3301 et seq.), or the rules,
regulations, or orders of the Federal Energy
Regulatory Commission issued thereunder;
``(iv) convicted of any criminal violation
of this Act or of the rules, regulations, or
orders of the Commission thereunder;
``(v) convicted of any criminal violation
of the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company
Act of 1940, or the Investment Advisers Act of
1940, or of the rules, regulations, or orders
of the Securities and Exchange Commission
thereunder; or
``(vi) convicted of any other criminal
offense that involves any conduct, transaction,
advice or activity related to any commodity
interest, as that term is defined by the
Commission, or security-based swap.''.
(e) Criminal Penalties.--Section 9(a) of the Commodity Exchange Act
(7 U.S.C. 13(a)) is amended in the matter preceding paragraph (1) by
inserting after ``$1,000,000'' the following: ``in the case of an
individual for each violation or $10,000,000 in the case of any person
other than an individual for each violation,''.
(f) Statute of Limitations.--Section 9 of the Commodity Exchange
Act (7 U.S.C. 13) is amended by adding at the end the following:
``(f) Statute of Limitations.--
``(1) In general.--An action, suit or proceeding for the
enforcement of any civil fine, penalty, or forfeiture,
pecuniary or otherwise, shall not be entertained unless
commenced within 10 years after the date when the cause of
action first accrued if, within the same period, the offender
or the property is found within the United States in order that
proper service may be made thereon.
``(2) Accrual.--A cause of action accrues as of the date
the Commission learns of facts sufficient to give the
Commission notice that a violation has occurred.''.
(g) Effective Date.--The amendments made by this section shall take
effect on the date that is 90 days after the date of the enactment of
this Act.
SEC. 103. CLOSING THE CROSS-BORDER LOOPHOLE.
Section 2(i) of the Commodity Exchange Act (7 U.S.C. 2(i)) is
amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(2) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The provisions'' and inserting the
following:
``(1) In general.--The provisions'';
(3) in paragraph (1), as so designated--
(A) in subparagraph (A), as so redesignated, by
striking ``or'' at the end;
(B) in subparagraph (B), as so redesignated, by
striking the period at the end and inserting ``; or'';
and
(C) by adding at the end the following:
``(C) except as provided in paragraph (2), involve
a swaps transaction in which a financial entity that is
domiciled or organized in the United States, or a
subsidiary entity that is majority owned or controlled
by a financial entity that is domiciled or organized in
the United States, bears swaps-related risks.''; and
(4) by adding at the end the following:
``(2) Substituted compliance.--Notwithstanding paragraph
(1)(C), the Commission may allow a swaps transaction that
involves a subsidiary entity that is majority owned or
controlled by a financial entity that is domiciled or organized
in the United States to be conducted in whole or in part under
the rules and oversight of a foreign jurisdiction if the
Commission determines, by rule, that--
``(A) the applicable elements of the foreign rules
are substantively equivalent to, or offer greater
protection than, the applicable rules in the United
States; and
``(B) enforcement of and oversight with respect to
the rules described in subparagraph (A) is not less
stringent than enforcement of and oversight with
respect to the applicable rules in the United
States.''.
SEC. 104. PROVIDING OVERSIGHT OF FOREIGN EXCHANGE SWAPS.
Section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a(47)) is
amended by striking subparagraph (E) and inserting the following:
``(E) Treatment of foreign exchange swaps and
forwards.--Foreign exchange swaps and foreign exchange
forwards shall be considered swaps under this
paragraph.''.
SEC. 105. IMPROVING DATA SHARING BETWEEN REGULATORS.
Section 21 of the Commodity Exchange Act (7 U.S.C. 24a) is amended
by adding at the end the following:
``(i) Data Sharing.--The Commission shall make data with respect to
any person that is required to be registered as a swap data repository
under this section available to any other financial regulatory agency--
``(1) upon request; and
``(2) as soon as is practicable after receiving a
request.''.
SEC. 106. IMPROVING DATA QUALITY AND ACCESSIBILITY.
Section 4s of the Commodity Exchange Act (7 U.S.C. 6s) is amended
by adding at the end the following:
``(m) Data Quality and Accessibility.--
``(1) In general.--Not later than 2 years after the date of
enactment of this subsection, the Commission and the Securities
and Exchange Commission shall determine whether the data that
swap dealers registered under this section provide to swap data
repositories--
``(A) are accurate; and
``(B) use consistent and standardized formats that
allow that data to be aggregated and analyzed by
regulators.
``(2) Penalty.--The Commission shall revoke the license of
any swap dealer that the Commission and the Securities and
Exchange Commission has found violated paragraph (1).''.
TITLE II--SHIFTING DERIVATIVES RISKS FROM TAXPAYERS TO FINANCIAL
INSTITUTIONS
SEC. 201. ENDING FAVORABLE TREATMENT OF DERIVATIVES IN BANKRUPTCY.
Section 560 of title 11, United States Code, is repealed.
SEC. 202. REVERSING THE CFTC'S INTERAFFILIATE MARGIN EXCEPTION.
Not later than 180 days after the date of enactment of this Act,
the Commodity Futures Trading Commission shall modify the rule on
margin requirements entitled ``Margin Requirements for Uncleared Swaps
for Swap Dealers and Major Swap Participants'' (81 Fed. Reg. 636
(January 6, 2016)) to require entities to collect margin in all
interaffiliate swaps.
SEC. 203. BANNING CLOSEOUT NETTING FOR CAPITAL PURPOSES; ENSURING
MINIMUM CAPITAL.
Section 165(b)(1) of the Financial Stability Act of 2010 (12 U.S.C.
5365(b)(1)) is amended by adding at the end the following:
``(C) Consolidated assets.--
``(i) Definition.--In this subparagraph,
the term `covered financial institution'
means--
``(I) a swap dealer registered
under section 4s of the Commodity
Exchange Act (7 U.S.C. 6s);
``(II) a security-based swap
dealer, as defined in section 3(a) of
the Securities Exchange Act of 1934 (15
U.S.C. 78c(a));
``(III) an insured depository
institution, as defined in section 3 of
the Federal Deposit Insurance Act (12
U.S.C. 1813);
``(IV) a nonbank financial company
supervised by the Board of Governors;
``(V) a major swap participant, as
defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a);
``(VI) a bank holding company
described in subsection (a); and
``(VII) any subsidiary of a bank
holding company described in subsection
(a).
``(ii) In general.--For purposes of
determining the amount of capital required
under the risk-based capital requirements and
leverage limits required under subparagraph
(A)(i), consolidated assets shall include the
fair value and potential future exposure of
derivatives exposures, without recognizing the
benefits of any netting arrangement, unless the
netting arrangement--
``(I)(aa) is documented under a
formal master netting agreement or
other formal arrangement with a
derivatives clearing organization
registered with a primary Federal
financial regulatory agency; and
``(bb) meets financial standards
approved by the Board of Governors and
the Corporation; or
``(II)(aa) is documented under a
formal master netting agreement with a
counterparty; and
``(bb) requires the covered
financial institution, as a matter of
ongoing business practice, to--
``(AA) exchange collateral
daily for the fulfillment of
variation margin requirements
on a net basis; and
``(BB) fulfill all
contractual payment
requirements, including
payments for contract
determination, on a net basis,
with such net exchange of
collateral and payments
encompassing all derivatives
exposures covered by the formal
arrangement.
``(D) Total derivatives risk exposures.--For
purposes of determining the amount of capital required
under leverage limits required under subparagraph
(A)(i)--
``(i) total derivatives risk exposures
shall not be assessed at a level less than 2
percent of total gross notional derivatives
contracts to which the covered financial
institution, as defined in subparagraph (C)(i),
is a party; and
``(ii) such leverage limits shall not vary
for derivatives exposures as compared to other
assets.''.
SEC. 204. REPORT ON CLEARINGHOUSES.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Commodity Futures Trading Commission, the Office of
the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and the Board of Governors of the Federal Reserve System
shall jointly publish a report that answers the following questions:
(1) Are prefunded default funds at major clearinghouses,
along with prefunded liquidity resources, adequate to absorb
losses and continue operations in the event of the failure of
multiple large clearing members during a systemic stress event
affecting the financial system as a whole?
(2) Are capital and liquidity resources associated with
cleared derivatives at clearinghouse members adequate to meet
clearinghouse capital and margin calls that might occur during
a systemic stress event associated with the failure of multiple
large clearing members during a systemic stress event?
(3) Based on planned resource levels at clearinghouses and
major clearing members, in what ways might a lack of prefunded
resources at a clearing house, or the level of member capital
and liquidity resources associated with cleared derivatives,
contribute to increased financial system stress during a
systemic event?
(4) How would the answers to the questions in paragraphs
(1) through (3) be affected if portfolio correlation levels in
clearinghouse margin and default fund models were significantly
lower than those assumed in current risk models?
(5) Are such lower correlation levels possible in a stress
event?
(6) Are capital levels held by clearinghouses currently
adequate to align risk management incentives between
clearinghouses themselves, their members, and end user clients
of their members?
(7) Do the fiduciary duties of clearinghouse management to
their stockholders in any way conflict with the public
interest?
(b) Policy Recommendations.--The report required under subsection
(a) shall contain policy recommendations associated with the answers to
the questions posed under paragraphs (1) through (7) of that
subsection.
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