Swap Trading Improvement Act

I ★ 116TH CONGRESS 1ST SESSION H. R. 4717 To improve swap execution facility administration, swap entity compliance, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 17, 2019 Mr. CRAWFORD (for himself and Mr. AUSTIN SCOTT of Georgia) introduced the following bill; which was referred to the Committee on Agriculture A BILL To improve swap execution facility administration, swap entity compliance, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Swap Trading Im- 4 provement Act’’. 5 SEC. 2. SIMPLIFICATION OF SWAP DATA AGGREGATION RE- 6 QUIREMENTS. 7 (a) OBLIGATIONS FOR DESIGNATED CONTRACT MAR- 8 KETS.—Section 5(d)(5) of the Commodity Exchange Act 9 (7 U.S.C. 7(d)(5)) is amended— 10 VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS 2 HR 4717 IH1S (1) in subparagraph (A), by inserting ‘‘that is 1 not a swap contract’’ after ‘‘for each contract of the 2 board of trade’’; and 3 (2) in subparagraph (B), by inserting ‘‘that is 4 not a swap contract’’ after ‘‘contract’’. 5 (b) OBLIGATIONS FOR SWAP EXECUTION FACILI- 6 TIES.—Section 5h(f)(4)(B) of such Act (7 U.S.C. 7b– 7 3(f)(4)(B)) is amended by striking ‘‘in swaps’’ and insert- 8 ing ‘‘activity in swaps occurring on the swap execution fa- 9 cility’’. 10 (c) CROSS-FACILITY DATA AGGREGATION RELIEF.— 11 Section 5h(f) of such Act (7 U.S.C. 7b–3(f)) is amended 12 by striking paragraph (6). 13 SEC. 3. SWAP ENTITY ADMINISTRATIVE IMPROVEMENTS. 14 (a) AUTHORITY OF REGISTERED ENTITIES TO USE 15 THIRD-PARTY SERVICE PROVIDERS.—Section 5c(b) of the 16 Commodity Exchange Act (7 U.S.C. 7a–2(b)) is amended 17 to read as follows: 18 ‘‘(b) DELEGATION OF FUNCTIONS UNDER CORE 19 PRINCIPLES.— 20 ‘‘(1) IN GENERAL.—A registered entity may 21 comply with any applicable core principle through 22 delegation of any relevant function to a third-party 23 service provider. 24 VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS 3 HR 4717 IH1S ‘‘(2) RESPONSIBILITY.—A registered entity that 1 delegates a function under paragraph (1) shall re- 2 main responsible for carrying out the function. 3 ‘‘(3) NONCOMPLIANCE.—If a registered entity 4 that delegates a function under paragraph (1) be- 5 comes aware that the function is not being per- 6 formed as required under this Act, the registered en- 7 tity shall promptly take steps to address the non- 8 compliance.’’. 9 (b) REGISTRATION OF SWAP EXECUTION FACILI- 10 TIES.—Section 5h(a)(1) of such Act (7 U.S.C. 7b–3(a)(1)) 11 is amended by striking ‘‘or processing’’. 12 (c) CORE PRINCIPLES FOR SWAP EXECUTION FA- 13 CILITIES.— 14 (1) MODIFICATION OF EMERGENCY AUTHORITY 15 REQUIREMENTS.—Section 5h(f)(8) of such Act (7 16 U.S.C. 7b–3(f)(8)) is amended by striking all that 17 follows ‘‘cooperation with the Commission’’ and in- 18 serting ‘‘or other registered entities, as is necessary 19 and appropriate, to facilitate the liquidation or 20 transfer of open positions in any swap, or to suspend 21 or curtail trading in a swap.’’. 22 (2) REDUCTION OF OPERATING CAPITAL RE- 23 QUIREMENT.—Section 5h(f)(13)(B) of such Act (7 24 U.S.C. 7b–3(f)(13)(B)) is amended by striking ‘‘1- 25 VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS 4 HR 4717 IH1S year period, as calculated on a rolling basis,’’ and in- 1 serting ‘‘90-day period, as calculated on a rolling 2 basis, or conduct an orderly wind-down of its oper- 3 ations, whichever is greater.’’. 4 SEC. 4. SIMPLIFICATION OF SWAP EXECUTION FACILITY 5 CHIEF COMPLIANCE OFFICER OBLIGATIONS. 6 Section 5h(f)(15) of the Commodity Exchange Act (7 7 U.S.C. 7b–3(f)(15)) is amended— 8 (1) in subparagraph (A), by adding at the end 9 the following: ‘‘The individual may also perform 10 other responsibilities for the swap execution facil- 11 ity.’’; 12 (2) in subparagraph (B)— 13 (A) in clause (i), by inserting ‘‘, to a com- 14 mittee of the board,’’ after ‘‘directly to the 15 board’’; 16 (B) by striking clauses (iii) through (v) 17 and inserting the following: 18 ‘‘(iii) establish and administer policies 19 and procedures that are reasonably de- 20 signed to resolve any conflicts of interest 21 that may arise; 22 ‘‘(iv) establish and administer policies 23 and procedures that reasonably ensure 24 compliance with this Act and the rules and 25 VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS 5 HR 4717 IH1S regulations issued under this Act, includ- 1 ing rules prescribed by the Commission 2 pursuant to this section; and’’; and 3 (C) by redesignating clause (vi) as clause 4 (v); 5 (3) in subparagraph (C), by striking ‘‘(B)(vi)’’ 6 and inserting ‘‘(B)(v)’’; and 7 (4) in subparagraph (D)— 8 (A) in clause (i)— 9 (i) by striking ‘‘In accordance with 10 rules prescribed by the Commission, the’’ 11 and inserting ‘‘The’’; and 12 (ii) by striking ‘‘and sign’’; and 13 (B) in clause (ii)— 14 (i) in the matter preceding subclause 15 (I), by inserting ‘‘or senior officer’’ after 16 ‘‘officer’’; 17 (ii) by amending subclause (I) to read 18 as follows: 19 ‘‘(I) submit each report described 20 in clause (i) to the Commission; and’’; 21 and 22 (iii) in subclause (II), by inserting 23 ‘‘materially’’ before ‘‘accurate’’. 24 VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS 6 HR 4717 IH1S SEC. 5. CLARIFICATION OF CFTC AUTHORITY OVER SWAPS 1 ENTITIES. 2 (a) Section 6b of the Commodity Exchange Act (7 3 U.S.C. 13a) is amended by inserting ‘‘or section 5h’’ after 4 ‘‘sections 5 through 5c’’. 5 (b) Section 8a of such Act (7 U.S.C. 12a) is amend- 6 ed— 7 (1) in paragraph (7)(A), by inserting ‘‘or swap 8 contracts’’ after ‘‘contracts of sale’’; and 9 (2) in paragraph (9), by striking ‘‘futures con- 10 tract’’ and inserting ‘‘contract of sale for future de- 11 livery or swap contract’’ each place it occurs. 12 (c) Section 15(b) of such Act (7 U.S.C. 19(b)) is 13 amended by striking ‘‘contract market’’ and inserting 14 ‘‘registered entity’’. 15 SEC. 6. TECHNICAL CORRECTION. 16 Section 5h(h) of the Commodity Exchange Act (7 17 U.S.C. 7b–3)(h)) is amended by striking ‘‘alternative’’. 18 Æ VerDate Sep 11 2014 19:28 Dec 30, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H4717.IH H4717 pamtmann on DSKBC07HB2PROD with BILLS