[Congressional Record Volume 146, Number 132 (Thursday, October 19, 2000)]
[House]
[Pages H10411-H10415]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      PROVIDING FOR CONSIDER ATION OF MOTIONS TO SUSPEND THE RULES

  Mrs. MYRICK. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 640 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 640

       Resolved, That it shall be in order at any time on the 
     legislative day of Thursday, October 19, 2000, for the 
     Speaker to entertain motions to suspend the rules and pass, 
     or adopt, the following measures:
       (1) the bill (H.R. 2780) to authorize the Attorney General 
     to provide grants for organizations to find missing adults;
       (2) the resolution (H. Res. 605) expressing the sense of 
     the House of Representatives that communities should 
     implement the Amber Plan to expedite the recovery of abducted 
     children;
       (3) the bill (H.R. 4541) to reauthorize and amend the 
     Commodity Exchange Act to promote legal certainty, enhance 
     competition, and reduce systemic risk in markets for futures 
     and over-the-counter derivatives, and for other purposes;
       (4) the concurrent resolution (H. Con. Res. 271) expressing 
     the support of Congress for activities to increase public 
     awareness of multiple sclerosis; and
       (5) the bill (H.R. 2592) to amend the Consumer Products 
     Safety Act to provide that low-speed electric bicycles are 
     consumer products subject to such Act.
       Sec. 2. House Resolutions 615 and 633 are laid on the 
     table.

  The SPEAKER pro tempore (Mr. Isakson). The gentlewoman from North 
Carolina (Mrs. Myrick) is recognized for 1 hour.
  Mrs. MYRICK. Mr. Speaker, for purposes of debate only, I yield the 
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), 
pending which I yield myself such time as I may consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.
  Mr. Speaker, yesterday, the Committee on Rules met and passed this 
resolution, providing that it shall be in order at any time on the 
legislative day of Thursday, October 19, for the Speaker to entertain 
motions to suspend the rules and pass or adopt the following measures:
  The bill H.R. 2780, to authorize the Attorney General to provide 
grants for organizations to find missing adults; the resolution, House 
Resolution 605, expressing the sense of the House that communities 
should implement the Amber Plan to expedite the recovery of abducted 
children; the bill H.R. 4541, to reauthorize and amend the Commodity 
Exchange Act to promote legal certainty, enhance competition, and 
reduce systemic risk in markets for futures and over-the-counter 
derivatives, and for other purposes; the concurrent resolution, H. Con. 
Res. 271, expressing the support of Congress for activities to increase 
public awareness of multiple sclerosis; and, five, the bill H.R. 2592, 
to amend the Consumer Products Safety Act to provide that low-speed 
electric bicycles are consumer products subject to such an Act.
  Finally, the rule provides that House Resolutions 615 and 623 are 
laid upon the table.
  Mr. Speaker, as we all know, we are coming to the end of the 
congressional session and floor time is at a premium. This resolution 
allows us to consider several bills today under the expedited 
suspension procedure. I must stress that we have had all day to examine 
these bills, four of which are totally noncontroversial. These 
suspensions are not a surprise.
  In addition, this resolution is within the spirit of the House rules. 
Under clause 1 of rule XV of the rules of the House, the Speaker may 
only entertain motions to suspend the rules on Mondays and Tuesdays and 
during the last 6 days of the session.
  The House has not yet passed an adjournment resolution, but I think 
all of us hope and expect that we are in the last 6 days of this 
session. This resolution simply abides by the spirit of the standing 
rules of the House.
  One of these bills is a bill I introduced in honor of Kristen 
Modafferi, a college student from Charlotte, North Carolina, who 
disappeared after her 18th birthday. When Kristen's parents called the 
National Center for Missing and Exploited Children to ask for help, 
they were told, ``No, we can't help you because Kristen is 18 years 
old.'' If we pass Kristen's Act, that will never happen again.
  The National Center for Missing Children has been an incredibly 
effective resource for the recovery of minors. Kristen's Act would 
create the same type of center for missing adults. It is just common 
sense. We should build upon the success of the National Center for 
Missing Children.
  H. Res. 640 also allows the House to consider H.R. 4541, the 
reauthorization of the Commodity Exchange Act under suspension of the 
rules. H.R. 4541 will lift a portion of the regulatory burden from our 
commodity and futures exchanges, allowing them to compete within the 
world's modern financial markets.
  I must state, though, that I am disappointed with one aspect of the 
measure. While the intent of H.R. 4541 is to deregulate U.S. markets, 
it actually places retroactive regulation on some of our newest and 
most innovative electronic markets.
  Foreign countries are taking advantage of electronic technology at a 
more rapid pace and with less red tape than our domestic market. With 
this in mind, the House Committee on Banking and Financial Services 
placed language in its version of the bill that would have ensured 
freedom from regulation for U.S. companies that are developing and 
implementing new electronic technology within the swaps market.
  I was extremely disappointed to see the Committee on Banking and 
Financial Services language stripped from the bill we are considering 
today. We should encourage business innovation and not stifle new 
companies with regulatory uncertainty. If we fail to restore the 
Committee on Banking and Financial Services's language, we will place 
our domestic electronic exchanges at a relative disadvantage to their 
foreign competitors.
  I am confident our colleagues in the Senate will take care of the 
problem. If not, our homegrown companies will have to move overseas.
  Now, Mr. Speaker, despite my disappointment with part of H.R. 4541, I 
strongly support this rule and urge my colleagues to do the same. With 
this resolution, we will consider five bills before we adjourn for the 
year.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I thank the gentlewoman from North 
Carolina for yielding me the customary 30 minutes, and I yield myself 
such time as I may consume.
  Mr. Speaker, I will not actively oppose the rule. The underlying 
suspension bills that the rule make in order are important for many of 
our constituents. But it is astonishing that the Committee on Rules 
must generate resolutions such as these to create the illusion that 
Congress is diligently performing its obligation.
  This body is floating in a Never-Never Land 2 weeks into the fiscal 
year, considering suspension bills at a time when only 7 of the 13 
spending

[[Page H10412]]

bills are on their way to the President. I wish I could justify 
unqualified support for this measure with the excuse that Congress was 
hard at work and needed this flexibility to complete its commitments, 
but my constituents know better.
  Instead of working to ensure affordable prescription drugs for 
seniors or working to secure funds for school construction, this body 
routinely adjourns in the early afternoon to ponder what post office we 
will name on the following legislative day. The long stretches of 
idleness in this body surely can be replaced with meaningful 
deliberation on important measures.
  Instead, my colleagues and I are left at the mercy of the 
leadership's scheduling whims. If the majority is going to abuse the 
power of suspensions, I implore them to put them to good use and make a 
real difference in the lives of the American people.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. MYRICK. Mr. Speaker, I yield such time as he may consume to the 
gentleman from California (Mr. Dreier).
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks.)
  Mr. DREIER. Mr. Speaker, I rise in strong support of this rule and 
want to congratulate my colleague the gentlewoman from North Carolina 
(Mrs. Myrick) for her very, very able management of it.
  This rule addresses the legitimate concern of Members who very much 
want an opportunity to review in advance any legislation that will be 
considered under the suspension of the rules procedure. The rule 
provides suspension authority only to those measures that are listed in 
the rule, so there will be no surprises whatsoever.
  One of the measures listed in the rule, Mr. Speaker, is a bill 
authored by the manager of this rule, the gentlewoman from North 
Carolina (Mrs. Myrick), which would establish a national center to 
collect and disseminate information on missing adult cases. I want to 
commend my friend from Charlotte for her work on behalf of the millions 
of Americans who are searching for their loved ones, and I strongly 
support her legislation.
  Mr. Speaker, the rule also allows under suspension of the rules the 
consideration of H.R. 4541, critically important legislation to 
modernize the financial futures market. It is a collaborative effort 
between the Committee on Agriculture, the Committee on Banking and 
Financial Services and the Committee on Commerce, and I want to commend 
the chairmen of those committees, the gentleman from Texas (Mr. 
Combest), the gentleman from Iowa (Mr. Leach), and the gentleman from 
Virginia (Mr. Bliley); as well as the gentleman from Illinois (Mr. 
Ewing), the gentleman from Louisiana (Mr. Baker), and the gentleman 
from Ohio (Mr. Oxley) for their hard work and dedication in bringing 
this legislation to the floor.

                              {time}  1730

  Similar to the Graham-Leach-Bliley Financial Services Modernization 
Act, H.R. 4541 will remove actually the impediments to financial 
innovation and will be competitive by bringing the antiquated 
regulatory framework for financial futures and derivatives into the 
21st century. While I strongly support the bill, it is not perfect.
  As my friend from Charlotte, North Carolina (Mrs. Myrick), so clearly 
noted, the bill does not remove all of the necessary regulatory 
impediments to electronic systems that are used in trading financial 
futures and derivatives. It is important that this legislation not only 
promote competition and innovation within traditional markets but that 
it promote competition and innovation for emerging technologies.
  Otherwise, these innovative companies, which are the key to the 
continued growth of our economy, will simply take their operations 
overseas where the regulatory climate today is much more favorable 
toward competition from electronic trading systems.
  Mr. Speaker, passing H.R. 4541 will allow the process to move 
forward. It is my hope that this bill can be further improved when it 
is considered by the other body. But before we can consider it, we need 
to pass this rule, and we need to debate and pass that legislation.
  So I want to urge my colleagues to move just as expeditiously as 
possible to pass this measure again so that all can have an opportunity 
to look at the different pieces of legislation that we will be 
considering.
  Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to my colleague, the 
gentlewoman from New York (Mrs. Maloney).
  Mrs. MALONEY of New York. Mr. Speaker, I thank the gentlewoman for 
yielding me the time and for her leadership.
  Mr. Speaker, I rise in support of the rule and in support of the 
underlying legislation, which is among one of the most important bills 
that this Congress will consider this session.
  The notional value of the derivatives market is fast approaching $100 
trillion. By comparison, the entire Federal budget is closer to $1.7 
trillion. This legislation increases the legal certainty of these 
instruments and makes sure that market participants are held 
responsible for their losses or gains.
  In the Committee on Banking, I offered an amendment that was 
supported by the CFTC to limit the trading of energy derivatives when 
conducted off exchange and out of public view. Energy derivatives are 
based on underlying commodities, such as oil and gas, that are 
critically important to consumers. While my amendment was narrowly 
defeated, I continued to work on this issue after the markup.
  I am pleased to report that my concern has now been addressed at 
least in part. This legislation now gives additional authority to the 
CFTC to monitor day-to-day prices and to issue regulations to police 
fraud and manipulation in off-exchange energy derivatives trades. These 
powers will increase public confidence in the markets and reduce the 
potential of manipulation by big players operating off-exchanges.
  This provision could be further improved by deleting language that 
favors electronic trading facilities over traditional exchanges. 
Monitoring derivatives markets will be a major focus of the Committee 
on Banking for years to come. When properly used, large companies and 
financial institutions decrease economic risks and benefit consumers 
through the use of derivatives.
  Large financial institutions use derivatives to hedge interest rate 
risk and decrease potential market disruptions.
  I just want to close very briefly by thanking the chairman of the 
Committee on Banking, the gentleman from Iowa (Mr. Leach), for his 6 
years of leadership and the ranking member, the gentleman from New York 
(Mr. LaFalce). This will probably be the last bill from the Committee 
on Banking while he is chair of the committee.
  Mrs. MYRICK. Mr. Speaker, I yield 5 minutes to the gentleman from 
Texas (Mr. Combest).
  Mr. COMBEST. Mr. Speaker, I thank the gentlewoman for yielding me the 
time.
  Mr. Speaker, I did not intend to comment on the rule, but I want to 
let my colleagues know that I rise in strong support and appreciate the 
work that the Committee on Rules did giving us an opportunity to bring 
the Commodities Exchange Act in front of the Congress today under a 
suspension. And since we are establishing a record here, I wanted to 
take the opportunity to make a couple of comments in response to the 
gentlewoman from North Carolina (Mrs. Myrick) in regards to one area 
that she specifically singled out as having had some concern.
  This has been a long going process, and the process has been with the 
intention and the goal of trying to relieve to the extent possible the 
regulatory burden on the exchange activity and commodities in the 
United States, giving them much more of a level playing field in 
regards to some of their foreign competitors. And at the same time 
while the interest and endeavor has been to relieve some of the 
regulatory burdens, we wanted to make sure that there was still a great 
amount of public confidence by the fact that there would be an 
oversight regulatory body that would be in fact monitoring these 
trades.
  The specific new businesses that the gentlewoman from North Carolina 
(Mrs. Myrick) referred to we generally call electronic billboards. I 
just wanted to make mention that I had met with a number of them over a 
long period of time; and certainly as an endeavor not

[[Page H10413]]

to increase regulations on various types of trading associations and 
groups, we wanted to make for certain, as they requested, that we did 
not in fact increase regulatory burdens on them.
  We have not done that, Mr. Speaker. In fact, there are a number of 
sections of the bill that specifically indicate that the type of 
trading that is done by electronic billboards would be totally excluded 
as a part of CEA, would not come under the regulatory burden; and the 
President's working group that also had a great deal of input agreed to 
the fact that there should be exclusion from the CEA.
  A question remains. I have visited with the gentlewoman about it. We 
will continue to look at it into the future. Actually, the problem 
seems to arise from a request of certain of these new electronic 
billboards to have a specific carve-out that in fact would give them 
additional authority that other type exchanges would not have, and it 
is strongly opposed by other exchanges giving them a specific 
advantage. That is the reason that there were not the changes. But in 
terms of the regulatory authority, not only did we not include them, we 
excluded them in some areas in some parts of the bill.
  In regards to liability, we in fact created a number of things that 
electronic billboards, I think, would find very pleasing.
  Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentleman from 
New York (Mr. LaFalce), the ranking member of the Committee on Banking 
and Financial Services.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, I thank the gentlewoman for yielding me the 
time.
  Mr. Speaker, I rise in support of one of the bills that would be 
permitted to be taken up today under the suspension calendar, H.R. 
4541, the Commodities Futures Modernization Act of 2000.
  I do this for one overriding reason. If we do not pass this bill, our 
huge and vibrant exchanges and swap markets will decline while those in 
the rest of the world will flourish.
  Given the alterations taking place in global finance, the need to 
modernize our futures and swaps markets is clear. At every turn, we are 
seeing active innovation in our global environment. Indeed, there is a 
major international merger movement in progress off shore.
  OM is bidding to buy the London Stock Exchange. We now have Euronext, 
the creation of the merger of the Paris, Brussels, and Amsterdam 
bourses. There is Eurex, which now has an interest in merging with some 
United States exchanges. All of these are capable of more flexibility 
than what is permitted in our current market structures.
  Moreover, the financial markets are creating increasingly specialized 
instruments and transactions. The most prominent of these are swaps, 
contractual arrangements which are so diverse in detail that they 
cannot be readily categorized. Their notional value has swollen to 
nearly $100 trillion. Moreover, there are other novelties, such as flex 
options, which are beginning to emerge.
  American law and American regulations have been unable to keep up 
with these innovations except through makeshift and questionable legal 
inventions and contortions, the foundations of which are unclear and 
uncertain.
  H.R. 4541 is merely a first step in this modernization. It opens up a 
new category of future which has heretofore been forbidden, the future 
on single stocks or small groups of stocks. It provides legal certainty 
to swaps innovations, a certainty which has been sorely missing until 
this bill. Moreover, it recognizes that, in most cases, the normal 
consumer is not the proper participant in these markets or that their 
participation is guarded by regulations such as the ``know your 
customer rule.''
  These alterations will assist in streamlining the United States so 
that it can mirror the practices which are emerging in the competitive 
markets of Europe and Asia and prevent those markets from obtaining 
legal advantages. Further, it will keep these burgeoning businesses in 
the United States and not force them to migrate overseas.
  I do not say this is a perfect bill. Indeed, I do not approve of 
using the suspension calendar to consider this sort of legislation. 
There should be opportunity for more than the managers amendment. There 
also should be opportunity for more extensive education and fuller 
debates.
  I am not pleased with some of the bill's provisions, which fail to 
establish an optimal regulatory scheme and might be open to loopholes 
that would undermine the vital transparency and trustworthiness of 
American markets. Consequently, while I do not join others who oppose 
this legislation, I do have considerable sympathy for some of their 
arguments.
  However, I believe the legislative process must be moved along at 
this time. It is doubtful we can come to agreement with the other 
Chamber and the administration in the short period remaining in the 
106th Congress. Indeed, I caution that attempts in the other Chamber to 
push through vast deregulatory schemes, which will prevent the SEC, 
CFTC, and banking authorities from assuring the investing public that 
the markets are not subject to manipulation and fraud, will certainly 
meet with my opposition.
  It is dubious whether Congress can produce a public law this session. 
And if we cannot, passage of today's bill will at least set down a 
marker for us to take up next year. In any case, this is not a subject 
area which is going to go away with one new law. The rapidity and 
breadth of change to which I have alluded assure that. Yet, for today, 
I support the administration's Statement of Policy on this bill and, 
therefore, urge an aye vote.
  Mrs. MYRICK. Mr. Speaker, I yield 1 minute to the gentleman from 
Illinois (Mr. Shimkus).
  (Mr. SHIMKUS asked and was given permission to revise and extend his 
remarks.)
  Mr. SHIMKUS. Mr. Speaker, I am going to be brief because I know there 
is a lot of activity going on.
  Some of the great exchanges of our Nation are in Chicago, Illinois. 
We have been fighting to preserve and protect those.
  As many of my colleagues know, this bill modernizes the regulation of 
the exchange trade and futures. It establishes legal certainly for 
over-the-counter derivative products, and it reforms Shad-Johnson.
  To the gentleman from Illinois (Mr. Ewing), who is my friend, my 
counselor, and part author of this legislation, I just want to say, job 
well done.
  Mr. Speaker, I rise today in support of H.R. 4541, the Commodity 
Futures Modernization Act of 2000. Being from Illinois, with all the 
Chicago interests involved, you should know that it has been my intent 
to develop a level and fair playing field for all involved.
  When this bill was in the Commerce Committee, I offered an amendment 
in the nature of a substitute that eventually resulted in the version 
the Commerce Committee reported. We knew when we reported the bill that 
there was still a lot of work to be done. For that reason, I am pleased 
to see a final product on the House floor today. I want to thank my 
good friend from Illinois, Mr. Ewing, for the leadership he and his 
staff have taken on this issue. In your retirement, you will be missed 
by the Illinois delegation, as well as this entire body. I also want to 
thank Chairman Bliley, Subcommittee Chairman Oxley, the ranking 
Members, Mr. Rush of Illinois, and their staffs; as well as the Members 
and staff of the Banking Committee. They need to be recognized for 
their tireless efforts, persistence and cooperation to bring this 
compromise to the House floor.
  Finally, I want to thank the Chicago Board Options Exchange, the 
Chicago Mercantile Exchange and the Chicago Board of Trade for their 
efforts to compromise and for their patience with us as we worked 
through the legislative process. As you know, this legislation will do 
three things: It modernizes the regulation of exchange-traded futures; 
establishes legal certainty for over-the-counter derivatives products; 
and reforms the Shad-Johnson Accord.
  The Shad-Johnson portion of this legislation has been the most 
controversial, but yet the most exciting section of this bill. If this 
bill becomes law, we will lift an 18-year ``temporary'' ban on single 
stock futures and allow U.S. investors access to these products. In our 
global economy, we need to stay competitive, and I believe that lifting 
this ban will help us achieve that goal.
  This is historic legislation and a vote for U.S. investors and 
markets. Please join me in voting in favor of H.R. 4541.
  Ms. SLAUGHTER. Mr. Speaker, I yield 4 minutes to the gentleman from 
Texas (Mr. Bentsen).

[[Page H10414]]

  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I rise in strong support of the rule and in 
strong support of one of the bills that will be considered under the 
rule, the Commodities Futures Modernization Act of 2000, H.R. 4541.
  I want to associate myself with the remarks of the previous speaker, 
the gentleman from New York (Mr. LaFalce), the ranking Democrat on the 
House Committee on Banking.
  As a member of that committee, I worked with both the chairman, the 
gentleman from Iowa (Mr. Leach), and the gentleman from New York (Mr. 
LaFalce) in helping to craft this legislation. I think that it is a 
very good forward approach to moving the United States' regulatory 
scheme over-the-counter derivatives markets in the right direction. And 
I think all three committees which had jurisdiction over this, the 
Committee on Banking, the Committee on Agriculture, and the Committee 
on Commerce did very good work.
  This otherwise complicated measure will repeal the Shad-Johnson 
Accord and bring legal certainty to the over-the-counter derivatives 
and swaps market. That is something that, as that market has grown and 
developed in the United States, needs to be done. We need to codify a 
regulatory regime, as opposed to having an understanding between two 
Federal agencies. And it is done in a way which brings the regulatory 
expertise of both the Commodities Future Trading Commission and the 
Securities and Exchange Commission together. I think that is why we 
have found this legislation is also being supported by the Treasury 
Department.

                              {time}  1745

  I also want to say that I think this bill is correct in its exemption 
or exclusion of the energy derivatives market. This is a new market. A 
lot of it is being conducted out of my area of the country, and I think 
it is fair to say that the energy market in the United States is among 
the most transparent in the world. I think it would be premature for 
the Congress or the regulatory authorities to engage in some new form 
of regulation in those markets, particularly in the derivatives market, 
absent some form of national or global energy deregulation which 
obviously this Congress is not going to take up and it will not be 
taken up until the next Congress at the earliest date. So I think this 
is a very good bill that moves us forward.
  Finally, let me say one other item. In the Committee on Banking and 
Financial Services, we considered the issue of whether or not to expand 
the ability to market swaps and derivatives over the counter to the 
retail public, and I think the committee very wisely chose not to 
follow that path. I do not think we have the regulatory regime in place 
to safely allow such products to be sold to the retail public, and if 
that were in this bill I would have a very hard time supporting it. So 
I think that Members need to understand that this is not a retail 
instrument.
  I think the Members need to understand that we have ensured that 
there is no retail component in this bill. I think that is something 
that is subject to a great deal more study before we move in that 
direction, and so I would encourage the Members to support this bill. I 
would also hope that the other body across the rotunda will adopt this 
bill as well. It would be a shame if this Congress were to adjourn 
without enacting this compromise legislation and providing legal 
certainty to the markets.
  I want to again reiterate what the gentleman from New York (Mr. 
LaFalce) said. Without this legislation, it is very likely we could be 
pushing certain sectors of the U.S. financial markets abroad, and I 
think that would be to our detriment.
  I rise in strong support of the rule and the bill.
  Mr. Speaker, I rise today in strong support of the Commodity Futures 
Modernization Act of 2000 (H.R. 4541). This legislation will provide 
the legal certainty for Over The Counter (OTC) derivatives. Derivatives 
are sophisticated financial instruments which help companies to manage 
risk.
  As a member of the House Banking Committee, I believe that providing 
this legal certainty is necessary. First, legal certainty will ensure 
that these instruments continue to be available and sold in the United 
States. We have an economic interest in keeping these instruments here 
in the United States. There is growing concern that some trading 
operations will move overseas without this clarification. Second, the 
President's Working Group on Financial Markets has also recommended 
that approving legislation is the only practical way to provide this 
legal certainty.
  This legislation would also exclude certain hybrid instruments for 
the Commodity Exchange Act. As a result, these hybrid instruments can 
be sold on non-CEA regulated markets. As the representatives for one of 
the largest energy-related trading markets, I am particularly pleased 
that this legislation includes a provision that would ensure that 
energy-based OTC derivatives will be exempt from the CEA.
  This legislation would also ensure that single stock futures and 
narrow-based stock index futures can be sold. As a result, the Shad-
Johnson Accord would be repealed. This language was developed in 
cooperation with the Securities and Exchange Commission (SEC) and the 
Commodity Futures Trading Commission (CFTC) who helped to negotiate 
this language. Under this bill, these products could be sold on 
existing or yet to be established commodities and securities exchanges. 
Trading of securities futures would be delayed for one year from 
enactment. Options on futures would be permitted three years after 
enactment after the SEC and CFTC have jointly determined whether to 
permit such trading and jointly studied the framework needed for such 
options. By requiring joint rulemaking for the CFTC and SEC, we are 
ensuring that both the securities and commodities regulators will be 
working together to set up a framework for the sale of these products. 
I am also pleased that these provisions would ensure that the retail 
public cannot purchase these products. I am not yet convinced that 
selling stock futures to the retail public is appropriate and requires 
more study.
  This bill also reauthorizes the Commodity and Exchange Act. On 
October 1, 2000, the CEA expired and the CFTC is currently working 
without its authorization. Reauthorization is necessary to ensure that 
our commodity markets are being reviewed and overseen by a federal 
regulator.
  Mrs. MYRICK. Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I yield 5\1/2\ minutes to the gentleman 
from North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Speaker, I thank the gentlewoman from 
New York (Ms. Slaughter) for yielding me this time.
  Mr. Speaker, I am going to rise in reluctant opposition to the rule 
under which these bills are being considered, because the rule provides 
that these bills will come here under suspension, which means that the 
bills cannot be amended in any way. It deprives us of the opportunity 
to offer an amendment to one of these bills, H.R. 4541, which a number 
of us have worked on throughout this process.
  Now I want to say at the outset that I am not going to vote against 
H.R. 4541, because I think it is a marginal improvement in the law. It 
is important to pass this bill, but we passed a bill out of the 
Committee on Banking and Financial Services, a version of this bill 
which was substantially better than the bill that is coming to the 
floor, in one important respect.
  We have heard a lot of discussion here about driving U.S. commercial 
ventures offshore. There is one provision that has been dropped from 
the bill from the Committee on Banking and Financial Services that I 
believe will have the effect quite possibly of driving a commercial 
venture that is currently located in my congressional district 
offshore. I represent a small company called D&I Holdings, which has a 
system, a proprietary communications and information system, over which 
the world's largest financial institutions negotiate and agree on 
certain types of swap transactions on an electronic basis. This company 
was founded in 1996 and is headquartered in my congressional district 
in Charlotte, North Carolina, and it has offices in London, New York 
and Tokyo.
  At the present time, there are 40 commercial and investment banks 
that use their system to effectuate swaps agreements which total over 
hundreds of millions of dollars per day. Their system, this small 
business' system, is the first and at the present time the only 
operational inter-dealer electronic system for this segment of the swap 
market. It has a number of patents, but it is essentially an electronic 
information system.

[[Page H10415]]

  The problem is that this bill, in the haste to deal with trading 
facilities, has defined trading facilities in such a way that it brings 
this electronic system and information system that does no negotiating 
at all, the parties on each end of the system are doing the negotiating 
but now we have bought into the definition of trading facility an 
electronic system that should not be included in the Federal 
regulations. Now, my colleagues quite often are talking about how 
terrible it is to have Federal regulations regulating things that 
should not be regulated. I am here this time talking about one of those 
instances where we are regulating something that really should not be 
regulated.
  The parties on both ends of the transaction, I concede, should be 
regulated; and that is what this legislation should be about, but the 
electronic system in between the two negotiating parties should not be 
regulated. In the process of going through the conference and basically 
carving out language that the Committee on Banking and Financial 
Services had carefully considered that would have protected this small 
venture in my congressional district, they have overzealously, probably 
unintentionally, included an operation here that really should not be. 
And I think ultimately what is going to happen is we are running the 
risk that this small operation could be driven offshore because it can 
be done, this electronic operation can be done, in England or Tokyo or 
anywhere else in the world; but we want this business located here in 
the United States as we want every business located here.
  It is a clean, good, upstanding business, and there is no reason that 
we ought to be regulating it. If this bill were not on suspension, we 
would have the opportunity to offer an amendment to get back to the 
language of the Committee on Banking and Financial Services, and 
therefore I am going to vote against the rule, even though I will 
probably end up voting for the bill.
  Mrs. MYRICK. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois (Mr. Ewing).
  Mr. EWING. Mr. Speaker, I thank the gentlewoman from North Carolina 
(Mrs. Myrick) for yielding me this time.
  To the gentlewoman's colleague, the gentleman from North Carolina 
(Mr. Watt), who just spoke, I would like to respond to him. I think the 
issue the gentleman brings up is a very important issue and as the 
sponsor of the bill I want to let the gentleman know where we are with 
this legislation. Number one, the Blackbird Institution is not 
regulated by this bill. It is not regulated now. We believe that this 
bill exempts them from any regulation so long as they are trading in 
the manner in which they have indicated they are. The issue here is so 
long as they do not act as an organized exchange and do not do retail 
trades, they will be exempt under this bill and exempt from regulation. 
The idea, of course, is that if they decide to do otherwise then, of 
course, they will come under regulation like every other exchange, 
every other trader with retail interests.
  Mr. WATT of North Carolina. Mr. Speaker, will the gentleman yield?
  Mr. EWING. I yield to the gentleman from North Carolina.
  Mr. WATT of North Carolina. Mr. Speaker, what I would like to do with 
the gentleman's permission is perhaps come back during the debate on 
the main bill and actually have a colloquy so that at least we can 
create a legislative record that specifically indicates that the 
gentleman's interpretation is that this bill does not cover this 
Blackbird system, because their interpretation is entirely different 
than the gentleman's, and I think it would be helpful at least to have 
that legislative record developed. I am not sure we can do it as a part 
of the rule. So if the gentleman would be so kind.
  Mr. EWING. Reclaiming my time, I would be more than happy to engage 
in that colloquy.
  Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from 
New York (Mr. Engel).
  Mr. ENGEL. Mr. Speaker, I thank the gentlewoman from New York (Ms. 
Slaughter) for yielding me this time.
  Mr. Speaker, I want to comment on one of the bills that everyone else 
seems to be commenting on, that is H.R. 4541, the Commodities Futures 
Modernization Act. I support the bill. The legislation reauthorizes the 
Commodities Futures Trading Commission, streamlines regulation of the 
futures markets and provides legal certainty to over-the-counter 
derivatives.
  As we know, the President's Working Group on Financial Markets has 
testified that securing legal certainty for financial derivatives is 
imperative to reducing risk within America's financial system. This 
legislation, while a compromise on many points, is not only an 
important step toward achieving the legal certainty our financial 
markets need but it will foster continued American innovation in the 
increasingly important realm of derivative financial products.
  Moreover, it will help prevent the flight of our domestic financial 
derivatives business abroad. This makes H.R. 4541 particularly 
important to my State, Mr. Speaker, New York, where much of our 
Nation's financial trading takes place. The legislation has broad-based 
backing. It is supported by the Department of the Treasury, the SEC, 
the CFTC, as well as the major financial institutions. I would, 
however, like to raise one note of concern, Mr. Speaker.
  The process through which H.R. 4541 was developed was not completely 
fair or open. At times Democrats were not sufficiently included in the 
negotiations, and the ranking member on the Committee on Commerce, on 
which I serve, the gentleman from Michigan (Mr. Dingell), has expressed 
concerns which I share about the process, the fact that the Committee 
on Commerce was not sufficiently involved in the process, and that is 
wrong and things were put into this bill at the last minute just the 
other day, and there really has been no time to discuss it or 
deliberate on it; and I think that is wrong as well.
  I would hope that some of these issues can be resolved when the bill 
finally comes back.
  While the process was not satisfactory, overall the final bill moves 
forward and is worthy of passage by the House. Once again, I express my 
support for the Commodity Futures Modernization Act and I urge my 
colleagues to support the bill.
  Ms. SLAUGHTER. Mr. Speaker, I have no further requests for time, and 
I yield back the balance of my time.
  Mrs. MYRICK. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.

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