[Congressional Record (Bound Edition), Volume 160 (2014), Part 12]
[Senate]
[Page 16653]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. COLLINS (for herself and Ms. Klobuchar):
  S. 2976. A bill to amend the Commodity Exchange Act and the 
Securities Exchange Act of 1934 to specify how clearing requirements 
apply to certain affiliate transactions, and for other purposes; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Ms. COLLINS. Mr. President, today Senator Klobuchar and I are 
introducing legislation to clarify that commercial companies that 
execute swaps to manage their business risk through ``centralized 
treasury units'' are entitled to the end-user clearing exemption 
provided by Congress as part of the Dodd-Frank Act.
  The Dodd-Frank Act requires financial entities to clear and trade 
their derivatives contracts on regulated exchanges. The point of this 
reform is to cut down on the systemic risk posed by financial 
speculators who invest in volatile derivatives contracts. It was not 
intended to restrict the ability of non-financial ``end-users'' to 
hedge commercial risks that are part of their normal business 
operations. For that reason, the Dodd-Frank Act provided end-users with 
an exemption from the act's clearing requirements.
  Many non-financial end-users use subsidiaries called ``centralized 
treasury units'' to manage their derivatives contracts. These 
centralized treasury units allow corporations to consolidate their 
hedging expertise in one subsidiary. Unfortunately, because these 
subsidiaries are not technically ``end-users'' themselves, the end-user 
exemption provided by Dodd-Frank does not apply to them, even though 
they execute derivatives for other end-users within the corporate 
family, and are considered a best-practice among corporate treasurers.
  Our legislation fixes the end-user exemption to clarify that it 
applies to swaps between a centralized treasury unit and an external 
counterparty, so long as the swap hedges the risks of a commercial 
affiliate. The language of our bill is substantially the same as that 
of H.R. 5471, offered by Representatives Moore, Stivers, Gibson, and 
Fudge, that passed the House by voice vote yesterday.
  I urge my colleagues to support the common sense clarification 
proposed in this bipartisan legislation.

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