PRIA, Government Policy, Made Personal

Summary

Bank products that are officially identified as "identified banking products" are not covered by the Commodity Exchange Act and are not treated as security‑based swaps under the securities laws, unless one of two exceptions applies. First, a federal banking agency that oversees the bank can decide, after talking with the CFTC and the SEC, to make the product subject to those laws if the agency finds it really meets the legal tests for a swap or security‑based swap and the market treats it that way or it was designed to get around the commodity or securities laws. Second, if the bank is not supervised by a federal banking agency, the exclusion does not apply if the product meets the swap or security‑based swap definitions and is known or designed to evade those laws.

Title 7, §27a

Agriculture, Source: USLM XML via OLRC

(a)Exclusion

Except as provided in subsection (b) or (c)—

(1)the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall not apply to, and the Commodity Futures Trading Commission shall not exercise regulatory authority under the Commodity Exchange Act (7 U.S.C. 1 et seq.) with respect to, an identified banking product; and

(2)the definitions of “security-based swap” in section 3(a)(68) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(68)] and “security-based swap agreement” in section 1a(47)(A)(v) of the Commodity Exchange Act [7 U.S.C. 1a(47)(A)(v)] and section 3(a)(78) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(78)] do not include any identified bank product.

(b)Exception

An appropriate Federal banking agency may except an identified banking product of a bank under its regulatory jurisdiction from the exclusion in subsection (a) if the agency determines, in consultation with the Commodity Futures Trading Commission and the Securities and Exchange Commission, that the product—

(1)would meet the definition of a “swap” under section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a[47]) or a “security-based swap” under that section 3(a)(68) of the Securities Exchange Act of 1934; and

(2)has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

(c)Exception

The exclusions in subsection (a) shall not apply to an identified bank product that—

(1)is a product of a bank that is not under the regulatory jurisdiction of an appropriate Federal banking agency;

(2)meets the definition of swap in section 1a(47) of the Commodity Exchange Act or security-based swap in section 3(a)(68) of the Securities Exchange Act of 1934; and

(3)has become known to the trade as a swap or security-based swap, or otherwise has been structured as an identified banking product for the purpose of evading the provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Commodity Exchange Act, referred to in subsecs. (a)(1), (b)(2), and (c)(3), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to this chapter. For complete classification of this Act to the Code, see section 1 of this title and Tables. The Securities Act of 1933, referred to in subsecs. (b)(2) and (c)(3), is title I of act

May 27, 1933, ch. 38, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 77a of Title 15 and Tables. The Securities Exchange Act of 1934, referred to in subsecs. (b)(2) and (c)(3), is act

June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78a of Title 15 and Tables. Codification Section was enacted as part of the Legal Certainty for Bank Products Act of 2000, and also as part of the Commodity Futures Modernization Act of 2000, and not as part of the Commodity Exchange Act which comprises this chapter.

Amendments

2010—Pub. L. 111–203 amended section generally. Prior to amendment, text read as follows: “No provision of the Commodity Exchange Act shall apply to, and the Commodity Futures Trading Commission shall not exercise regulatory authority with respect to, an identified banking product if— “(1) an appropriate banking agency certifies that the product has been commonly offered, entered into, or provided in the United States by any bank on or before

December 5, 2000, under applicable banking law; and “(2) the product was not prohibited by the Commodity Exchange Act and not regulated by the Commodity Futures Trading Commission as a contract of sale of a commodity for future delivery (or an option on such a contract) or an option on a commodity, on or before

December 5, 2000.”

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A (§§ 711–754) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see section 754 of Pub. L. 111–203, set out as a note under section 1a of this title.

§27a Exclusion of Identified Banking Product