At a House Agriculture Committee Markup on January 25, six bills to amend Title VII of the Dodd-Frank Act were unanimously approved by voice vote. Ranking Member Collin Peterson (D-Minn.) provided opening remarks where he reiterated his belief that consideration of these bills is premature but that the Committee has the right to “lend their voices” on the measures before consideration is no longer an option. SIFMA sent letters of support for H.R. 1840, H.R. 2586, H.R. 2682, and H.R. 2779.
H.R. 1840 – (Approved by Voice Vote)
Introduced by Reps. Michael Conaway (R-Texas) and Mike Quigley (D-Ill.), H.R. 1840 would amend the Commodity Exchange Act to require the Commodity Futures Trading Commission (CFTC) to consider the costs and benefits of proposed rulemakings before promulgating any rule. The CFTC’s Office of Chief Economist would assess the proposed rules to make a determination that the benefits of the proposed rule justify its costs.
Rep. Leonard Boswell (D-Iowa) offered an amendment to include language related to H.R. 3665, which would require the CFTC to impose fees to offset the costs of funding the Commission. Boswell withdrew the amendment and voiced his hope for working out a cost efficient funding solution in the future.
H.R. 2586 – (Approved as amended by Voice Vote)
Chairman Frank Lucas (R-Okla.) offered a substitute amendment to H.R. 2586, introduced by Reps. Scott Garrett (R-N.J.) and Carolyn Maloney (D-N.Y.), that would require the CFTC and Securities and Exchange Commission (SEC) to promulgate swap execution facility (SEF) regulations that allow swaps markets to naturally evolve toward the best form of execution by prohibiting regulators from requiring a SEF to: having a minimum number of participants receive a bid or offer or respond to any method of trading functionality; delay bids or offers for any period of time; and limit any means of interstate commerce regarding the execution of swap transactions.
Peterson Amendment – (Approved by Voice Vote)
Peterson offered an amendment that would strike the provision prohibiting regulators from requiring bids or offers on a method of trading functionality operated by the SEF to interact with bids or offers an another trading functionality method by that SEF as well as strikes the words “display or” from clause (ii) regarding the “display or delay bids or offers for any period of time.”
H.R. 2682 – (Approved as amended by Voice Vote)
Lucas offered a substitute amendment to H.R. 2682, introduced by Reps. Michael Grimm (R-N.Y.) and Gary Peters (D-Mich.), that would clarify that initial and variation margin requirements will not apply to a swap in which one of the counterparties to the swap is not a financial entity, and qualifies for the end-user exemption under Title VII of the Dodd-Frank Act.
H.R. 2779 – (Approved as amended by Voice Vote)
Lucas offered a substitute amendment to H.R. 2779, introduced by Reps. Steve Stivers (R-Ohio) and Marcia Fudge (D-Ohio), that would exempt inter-affiliate swaps from clearing and margin requirements under Title VII of the Dodd-Frank Act but would subject the swaps to reporting requirements. The amendment preserves protections for insurance funds and includes anti-evasion measures.
Peterson Amendment – (Approved by Voice Vote)
The amendment would expedite implementation by excluding amendments made by the bill from the requirements of the Paperwork Reduction Act and from notice and comment requirements of the Administrative Procedure Act.
H.R. 3336 – (Approved as amended by Voice Vote)
Lucas offered a substitute amendment to H.R. 3336, introduced by Rep. Vicky Hartzler (R-Mo.), that would exempt any bank, savings association, farm credit system institution, credit union or non-profit cooperative lender controlled by electric cooperatives from being considered a “financial entity” if its aggregate swaps exposure is less than $1 billion. The bill would clarify that no bank or farm credit bank could be designated as a swap dealer if it enters into a swap with a customer who is using the swap to manage risk associated with an extension of credit from the same institution.
Rep. Bobby Schilling (R-Ill.) raised concern with the treatment of captive finance companies or the “90/90” language and asked to work with the Chairman to further clarify this language going forward to which the Chairman agreed.
H.R. 3527 – (Approved as amended by Voice Vote)
Lucas offered a substitute amendment to H.R. 3527, introduced by Reps. Randy Hultgren (R-Ill.) and Dan Boren (D-Okla.), that would amend the Commodity Exchange Act to clarify that no person may be designated as a “swap dealer” if that person enters into swaps for such person’s own account. Entities would not be designated as a “swap dealer” if it enters into swap transactions where the aggregate gross notional amount of those transactions does not exceed $3 billion, indexed to inflation, for that 12-month period. The bill gives the CFTC the authority to change the base amount “as market conditions warrant.” The bill also directs the CFTC to adopt standards distinguishing swap dealing activities from trading of swaps.
All of the bills will now be sent to the House floor for full consideration.
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