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HOUSE FINANCIAL
6 [Explanation: The amendments below provide that where no exchange or ASEF lists a cleared
7 swap for trading, swaps in most commodities may be traded bilaterally, except for cleared swaps
8 in agricultural commodities which may only be traded bilaterally to the extent permitted - and
9 subject to any conditions imposed - by the CFTC. These amendments also permit swaps (such
10 as voice brokered swaps) to be traded on or through the facilities ofan exchange or ASEF
12 industry with respect to transactions that, for various reasons, are executed off-exchange but are
13 reported, recorded, or cleared through the central marketplace. All references are to the
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CFTC-CREW-0674
1 market under section 5, or on or through an alternative swap execution facility registered
4 no designated contract market or alternative swap execution facility lists the swap for
5 trading.
6 "(3) AGRICULTURAL SWAPs.-No person shall offer to enter into, enter into or
7 confirm the execution of, any swap in an agricultural commodity that is subject to
8 paragraph (2) except pursuant to a rule or regulation of the Commission allowing the
9 swap under such terms and conditions as the Commission shall prescribe.".
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14 "( 1) An alternative swap execution facility that is registered under subsection (a)
16 "(2) RULES FOR TRADING THROUGH THE FACILITY.-Not later than 180 days after
17 the date of enactment of the Over-the-Counter Derivatives Markets Act of2009, the
18 Commission shall adopt rules to allow a swap to be traded through the facilities of a
19 designated contract market or an alternative swap execution facility. Such rules shall
22 accordance with the rules of the designated contract market or alternative swap execution
23 facility." .
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CFTC-CREW-0675
1 On page 135, strike line 7 through page 137, line 2, and insert the following:
5 swap execution facility registered under section 3B, that lists the security-based swap for trading.
7 swap if no exchange or alternative swap execution facility lists the security-based swap for
8 trading. " .
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15 "(2) RULES FOR TRADING THROUGH THE FACILITY.-Not later than 180 days after
16 the date of enactment of the Over-the-Counter Derivatives Markets Act of2009, the
17 Commission shall adopt rules to allow a security-based swap to be traded through the
18 facilities of an exchange or an alternative swap execution facility. Such rules shall permit
21 confirmed in accordance with the rules of the exchange or alternative swap execution
22 facility." .
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CFTC-CREW-0676
1 ISSUE #2: DEFINITION OF "MAJOR SWAP PARTICIPANT"
2 On page 12, strike line 17 through page 14, line 17 and insert the following:
4 "(A) The term 'major swap participant' means any person that is not a swap dealer
5 and-
8 "(ii) whose failure to perform under the terms of a swap would have a
10 "(B) The Commission and the Securities and Exchange Commission shall jointly
11 implement this definition by rule or regulation in a manner that is prudent for the
12 effective monitoring, management and oversight of the financial system. In the event
13 the agencies are unable to agree upon a rule or regulation within 180 days of the
15 the Treasury shall implement this definition by rule or regulation, which shall be
19 "(A) The term 'major security-based swap participant' means any person that is
CFTC-CREW-0677
1 "(i) that maintains a substantial net position in outstanding security-based
5 security-based swap.
6 "(B) The Commission and the Commodity Futures Trading Commission shall
7 jointly implement this definition by rule or regulation in a manner that is prudent for
8 the effective monitoring, management and oversight of the financial system. In the
9 event the agencies are unable to agree upon a rule or regulation within 180 days of the
11 the Treasury shall implement this definition by rule or regulation, which shall be
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CFTC-CREW-0678
1 ISSUE #3: CLEARING REQUIREMENT FOR END-USERS
3 PREFERRED APPROACH:
6 [Explanation: The following amendments would: i) eliminate the exception from mandatory
7 clearing where one counterparty is not a swap dealer or major swap participant; and ii) provide
8 for the use ofnon-cash collateral and individualized credit arrangements for margin payments
9 by a swap counterparty that is not a swap dealer or major swap participant. Parallel
10 amendments also are includedfor the securities side with respect to security-based swaps. ]
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12 On page 29, strike lines 11 through 18, and insert the following:
14 the requirements of subsection 0)(1), a swap dealer or major swap participant may accept from a
15 counterparty to the swap that is not a swap dealer or major swap participant margin in forms
16 other than cash, or may provide credit or other financing arrangements to enable such
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21 swap dealer or major swap participant, margin requirements for swaps set by the Prudential
22 Regulators, the Commission, and the Securities and Exchange Commission under this subsection
23 shall provide for the use of margin in forms other than cash, or shall permit such counterparty to
CFTC-CREW-0679
1 enter into credit and or other financing arrangements with a swap dealer or major swap
2 participant." .
6 swap that is not a security-based swap dealer or major security-based swap participant, margin
7 requirements for security-based swaps set by the Prudential Regulators, the Commission, and the
8 Securities and Exchange Commission under this subsection shall provide for the use of margin in
9 forms other than cash, or shall permit such counterparty to enter into credit and or other
11 participant." .
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13 ALTERNATIVE APPROACH:
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CFTC-CREW-0680