15 U.S.C. § 8323: Rulemaking on conflict of…

Summary

The Commodity Futures Trading Commission must, within 180 days after July 21, 2010, create rules to limit how much control or voting power a person or company can have over firms that clear, post, or run trading venues for swaps. The rule targets very large bank holding companies with $50,000,000,000 or more in assets, nonbank financial companies supervised by the Board, their affiliates, swap dealers, major swap participants, and their related persons. The Commission must make rules if they are needed to improve governance, lower systemic risk, promote competition, or reduce conflicts of interest—especially when a swap dealer or major swap participant has a material debt or equity investment in the clearinghouse or trading venue. In making rules, the Commission must consider risks from how much equity one investor owns, who can vote or block votes, and how the clearinghouse or trading venue is governed.

Title 15, §8323

Commerce and Trade, Source: USLM XML via OLRC

(a)In general

In order to mitigate conflicts of interest, not later than 180 days after July 21, 2010, the Commodity Futures Trading Commission shall adopt rules which may include numerical limits on the control of, or the voting rights with respect to, any derivatives clearing organization that clears swaps, or swap execution facility or board of trade designated as a contract market that posts swaps or makes swaps available for trading, by a bank holding company (as defined in section 1841 of title 12) with total consolidated assets of $50,000,000,000 or more, a nonbank financial company (as defined in section 5311 of title 12) supervised by the Board, an affiliate of such a bank holding company or nonbank financial company, a swap dealer, major swap participant, or associated person of a swap dealer or major swap participant.

(b)Purposes

The Commission shall adopt rules if it determines, after the review described in subsection (a), that such rules are necessary or appropriate to improve the governance of, or to mitigate systemic risk, promote competition, or mitigate conflicts of interest in connection with a swap dealer or major swap participant’s conduct of business with, a derivatives clearing organization, contract market, or swap execution facility that clears or posts swaps or makes swaps available for trading and in which such swap dealer or major swap participant has a material debt or equity investment.

(c)Considerations

In adopting rules pursuant to this section, the Commodity Futures Trading Commission shall consider any conflicts of interest arising from the amount of equity owned by a single investor, the ability to vote, cause the vote of, or withhold votes entitled to be cast on any matters by the holders of the ownership interest, and the governance arrangements of any derivatives clearing organization that clears swaps, or swap execution facility or board of trade designated as a contract market that posts swaps or makes swaps available for trading.

Statutory Notes and Related Subsidiaries

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

§8323 Rulemaking on Conflict of Interest

Summary

Title 15, §8323

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Citations & Metadata