§8307 — Title 15 Commerce and Trade | U.S. Code

Summary

The Commodity Futures Trading Commission must study whether new position limits cause too much speculation and whether trading moves from U.S. exchanges to foreign venues. The CFTC must work with designated contract markets and send a report to Congress within 12 months after those position limits take effect. Within 30 legislative days after that report, the House Agriculture Committee must hold a hearing. The CFTC Chair must also send Congress reports every two years on whether derivatives markets are growing or shrinking, why, how well rules manage systemic risk, how current compliance costs compare to December 2008, and the quality of available data. The Chair must ask market participants, regulators, legislators, and others for their views when writing those reports. The Securities and Exchange Commission and the CFTC must do several joint studies. They must study whether the derivatives industry should use standardized computer-readable algorithm descriptions to describe complex contracts and calculate exposures, making them usable by traders, clearinghouses/exchanges/platforms, trade repositories and regulators, and systemic risk monitors; they must coordinate internationally and submit a report within 8 months after July 21, 2010 to the listed House and Senate committees. They must also study swap and clearing rules in the United States, Asia, and Europe and report not later than 18 months after July 21, 2010, identifying major exchanges, clearinghouses, contracts, volumes, clearing methods, and margin systems. Finally, within 15 months after July 21, 2010 the SEC and CFTC must decide whether stable value contracts are swaps, consulting the Department of Labor, the Department of the Treasury, and state regulators; if they are, the agencies must decide if an exemption is appropriate and issue rules, and until those rules take effect existing stable value contracts are not treated as swaps. Defined term: Stable value contract — a contract that gives a crediting interest rate and a guarantee or promise of liquidity at contract or book value before maturity, offered by a bank, insurance company, or other regulated financial institution for certain employee benefit plans, eligible deferred compensation plans, 403(b) arrangements, or qualified tuition programs.

Title 15, §8307

Commerce and Trade — Source: USLM XML via OLRC

(a)(1)The Commodity Futures Trading Commission, in consultation with each entity that is a designated contract market under the Commodity Exchange Act [7 U.S.C. 1 et seq.], shall conduct a study of the effects (if any) of the position limits imposed pursuant to the other provisions of this title 11 See References in Text note below. on excessive speculation and on the movement of transactions from exchanges in the United States to trading venues outside the United States.

(2)Within 12 months after the imposition of position limits pursuant to the other provisions of this title,1 the Commodity Futures Trading Commission, in consultation with each entity that is a designated contract market under the Commodity Exchange Act, shall submit to the Congress a report on the matters described in paragraph (1).

(3)Within 30 legislative days after the submission to the Congress of the report described in paragraph (2), the Committee on Agriculture of the House of Representatives shall hold a hearing examining the findings of the report.

(4)In addition to the study required in paragraph (1), the Chairman of the Commodity Futures Trading Commission shall prepare and submit to the Congress biennial reports on the growth or decline of the derivatives markets in the United States and abroad, which shall include assessments of the causes of any such growth or decline, the effectiveness of regulatory regimes in managing systemic risk, a comparison of the costs of compliance at the time of the report for market participants subject to regulation by the United States with the costs of compliance in December 2008 for the market participants, and the quality of the available data. In preparing the report, the Chairman shall solicit the views of, consult with, and address the concerns raised by, market participants, regulators, legislators, and other interested parties.

(b)(1)The Securities and Exchange Commission and the Commodity Futures Trading Commission shall conduct a joint study of the feasibility of requiring the derivatives industry to adopt standardized computer-readable algorithmic descriptions which may be used to describe complex and standardized financial derivatives.

(2)The algorithmic descriptions defined in the study shall be designed to facilitate computerized analysis of individual derivative contracts and to calculate net exposures to complex derivatives. The algorithmic descriptions shall be optimized for simultaneous use by—

(A)commercial users and traders of derivatives;

(B)derivative clearing houses, exchanges and electronic trading platforms;

(C)trade repositories and regulator investigations of market activities; and

(D)systemic risk regulators.

(3)In conducting the study, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall coordinate the study with international financial institutions and regulators as appropriate and practical.

(4)Within 8 months after July 21, 2010, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall jointly submit to the Committees on Agriculture and on Financial Services of the House of Representatives and the Committees on Agriculture, Nutrition, and Forestry and on Banking, Housing, and Urban Affairs of the Senate a written report which contains the results of the study required by paragraphs (1) through (3).

(c)(1)The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly conduct a study—

(A)relating to—

(i)swap regulation in the United States, Asia, and Europe; and

(ii)clearing house and clearing agency regulation in the United States, Asia, and Europe; and

(B)that identifies areas of regulation that are similar in the United States, Asia and Europe and other areas of regulation that could be harmonized 22 So in original. Probably should be followed by a period.

(2)Not later than 18 months after July 21, 2010, the Commodity Futures Trading Commission and the Securities and Exchange Commission shall submit to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Agriculture and the Committee on Financial Services of the House of Representatives a report that includes a description of the results of the study under subsection (a), including—

(A)identification of the major exchanges and their regulator in each geographic area for the trading of swaps and security-based swaps including a listing of the major contracts and their trading volumes and notional values as well as identification of the major swap dealers participating in such markets;

(B)identification of the major clearing houses and clearing agencies and their regulator in each geographic area for the clearing of swaps and security-based swaps, including a listing of the major contracts and the clearing volumes and notional values as well as identification of the major clearing members of such clearing houses and clearing agencies in such markets;

(C)a description of the comparative methods of clearing swaps in the United States, Asia, and Europe; and

(D)a description of the various systems used for establishing margin on individual swaps, security-based swaps, and swap portfolios.

(d)(1)(A)Not later than 15 months after July 21, 2010, the Securities and Exchange Commission and the Commodity Futures Trading Commission shall, jointly, conduct a study to determine whether stable value contracts fall within the definition of a swap. In making the determination required under this subparagraph, the Commissions jointly shall consult with the Department of Labor, the Department of the Treasury, and the State entities that regulate the issuers of stable value contracts.

(B)If the Commissions determine that stable value contracts fall within the definition of a swap, the Commissions jointly shall determine if an exemption for stable value contracts from the definition of swap is appropriate and in the public interest. The Commissions shall issue regulations implementing the determinations required under this paragraph. Until the effective date of such regulations, and notwithstanding any other provision of this title,1 the requirements of this title 1 shall not apply to stable value contracts.

(C)Stable value contracts in effect prior to the effective date of the regulations described in subparagraph (B) shall not be considered swaps.

(2)For purposes of this subsection, the term “stable value contract” means any contract, agreement, or transaction that provides a crediting interest rate and guaranty or financial assurance of liquidity at contract or book value prior to maturity offered by a bank, insurance company, or other State or federally regulated financial institution for the benefit of any individual or commingled fund available as an investment in an employee benefit plan (as defined in section 1002(3) of title 29, including plans described in section 1002(32) of title 29) subject to participant direction, an eligible deferred compensation plan (as defined in section 457(b) of title 26) that is maintained by an eligible employer described in section 457(e)(1)(A) of title 26, an arrangement described in section 403(b) of title 26, or a qualified tuition program (as defined in section 529 of title 26).

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Commodity Exchange Act, referred to in subsec. (a)(1), (2), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. This title, referred to in subsecs. (a)(1), (2), and (d)(1)(B), is title VII of Pub. L. 111–203, July 21, 2010, 124 Stat. 1641, known as the Wall Street Transparency and Accountability Act of 2010, which enacted this chapter and enacted and amended numerous other sections and notes in the Code. For complete classification of title VII to the Code, see

Short Title

note set out under section 8301 of this title and Tables.

Statutory Notes and Related Subsidiaries

Definitions For definitions of terms used in this section, see section 5301 of Title 12, Banks and Banking.

§8307 Studies