H. Rept. 115-3 - PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 78) TO IMPROVE THE CONSIDERATION BY THE SECURITIES AND EXCHANGE COMMISSION OF THE COSTS AND BENEFITS OF ITS REGULATIONS AND ORDERS; PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 238) TO REAUTHORIZE THE COMMODITY FUTURES TRADING COMMISSION, TO BETTER PROTECT FUTURES CUSTOMERS, TO PROVIDE END-USERS WITH MARKET CERTAINTY, TO MAKE BASIC REFORMS TO ENSURE TRANSPARENCY AND ACCOUNTABILITY AT THE COMMISSION, TO HELP FARMERS, RANCHERS, AND END- USERS MANAGE RISKS, TO HELP KEEP CONSUMER COSTS LOW, AND FOR OTHER115th Congress (2017-2018)
Committee Report
Hide Overview icon-hideReport text available as:
- TXT
(PDF provides a complete and accurate display of this text.) Tip?
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-3
======================================================================
PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 78) TO IMPROVE THE
CONSIDERATION BY THE SECURITIES AND EXCHANGE COMMISSION OF THE COSTS
AND BENEFITS OF ITS REGULATIONS AND ORDERS; PROVIDING FOR CONSIDERATION
OF THE BILL (H.R. 238) TO REAUTHORIZE THE COMMODITY FUTURES TRADING
COMMISSION, TO BETTER PROTECT FUTURES CUSTOMERS, TO PROVIDE END-USERS
WITH MARKET CERTAINTY, TO MAKE BASIC REFORMS TO ENSURE TRANSPARENCY AND
ACCOUNTABILITY AT THE COMMISSION, TO HELP FARMERS, RANCHERS, AND END-
USERS MANAGE RISKS, TO HELP KEEP CONSUMER COSTS LOW, AND FOR OTHER
PURPOSES; AND FOR OTHER PURPOSES
_______
January 10, 2017.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Newhouse, from the Committee on Rules,
submitted the following
R E P O R T
[To accompany H. Res. 40]
The Committee on Rules, having had under consideration
House Resolution 40, by a nonrecord vote, report the same to
the House with the recommendation that the resolution be
adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for consideration of H.R. 78, the
SEC Regulatory Accountability Act, under a structured rule. The
resolution provides one hour of general debate equally divided
and controlled by the chair and ranking minority member of the
Committee on Financial Services or their respective designees.
The resolution waives all points of order against consideration
of the bill. The resolution provides that the bill shall be
considered as read. The resolution waives all points of order
against provisions in the bill. The resolution makes in order
only those amendments printed in part A of this report. Each
such amendment may be offered only in the order printed in this
report, may be offered only by a Member designated in this
report, shall be considered as read, shall be debatable for the
time specified in this report equally divided and controlled by
the proponent and an opponent, shall not be subject to
amendment, and shall not be subject to a demand for division of
the question in the House or in the Committee of the Whole. The
resolution waives all points of order against the amendments
printed in part A of this report. The resolution provides one
motion to recommit with or without instructions.
Section 2 of the resolution provides for consideration of
H.R. 238, the Commodity End-User Relief Act, under a structured
rule. The resolution provides one hour of general debate
equally divided and controlled by the Majority Leader and the
Minority Leader or their respective designees. The resolution
waives all points of order against consideration of the bill.
The resolution makes in order as original text for the purpose
of amendment an amendment in the nature of a substitute
consisting of the text of the Rules Committee Print 115-2, and
provides that it shall be considered as read. The resolution
waives all points of order against that amendment in the nature
of a substitute. The resolution makes in order only those
further amendments printed in part B of this report. Each such
amendment may be offered only in the order printed in this
report, may be offered only by a Member designated in this
report, shall be considered as read, shall be debatable for the
time specified in this report equally divided and controlled by
the proponent and an opponent, shall not be subject to
amendment, and shall not be subject to a demand for division of
the question in the House or in the Committee of the Whole. The
resolution waives all points of order against the amendments
printed in part B of this report. The resolution provides one
motion to recommit with or without instructions.
Section 3 of the resolution provides that on any
legislative day during the period from January 16, 2017,
through January 20, 2017: the Journal of the proceedings of the
previous day shall be considered as approved; and the Chair may
at any time declare the House adjourned to meet at a date and
time to be announced by the Chair in declaring the adjournment.
Section 4 of the resolution provides that the Speaker may
appoint Members to perform the duties of the Chair for the
duration of the period addressed by section 3 of the resolution
as though under clause 8(a) of rule I.
Section 5 of the resolution provides that it shall be in
order at any time on the legislative day of January 13, 2017,
for the Speaker to entertain motions that the House suspend the
rules as though under clause 1 of rule XV, and that the Speaker
or his designee shall consult with the Minority Leader or her
designee on the designation of any matter for consideration
pursuant to this section.
EXPLANATION OF WAIVERS
Although the resolution waives all points of order against
consideration of H.R. 78, the Committee is not aware of any
points of order. The waiver is prophylactic in nature.
Although the resolution waives all points of order against
provisions in H.R. 78, the Committee is not aware of any points
of order. The waiver is prophylactic in nature.
Although the resolution waives all points of order against
the amendments to H.R. 78 printed in part A of this report, the
Committee is not aware of any points of order. The waiver is
prophylactic in nature.
Although the resolution waives all points of order against
consideration of H.R. 238, the Committee is not aware of any
points of order. The waiver is prophylactic in nature.
Although the resolution waives all points of order against
the amendment in the nature of a substitute made in order as
original text, the Committee is not aware of any points of
order. The waiver is prophylactic in nature.
Although the resolution waives all points of order against
the amendments to H.R. 238 printed in part B of this report,
the Committee is not aware of any points of order. The waiver
is prophylactic in nature.
COMMITTEE VOTES
The results of each record vote on an amendment or motion
to report, together with the names of those voting for and
against, are printed below:
Rules Committee record vote No. 8
Motion by Mr. McGovern to report open rules for H.R. 78 and
H.R. 238.
Defeated: 4-8
----------------------------------------------------------------------------------------------------------------
Majority Members Vote Minority Members Vote
----------------------------------------------------------------------------------------------------------------
Mr. Cole........................................ Nay Ms. Slaughter..................... Yea
Mr. Woodall..................................... Nay Mr. McGovern...................... Yea
Mr. Burgess..................................... Nay Mr. Hastings of Florida........... Yea
Mr. Collins..................................... ............ Mr. Polis......................... Yea
Mr. Byrne....................................... Nay
Mr. Newhouse.................................... Nay
Mr. Buck........................................ Nay
Ms. Cheney...................................... Nay
Mr. Sessions, Chairman.......................... Nay
----------------------------------------------------------------------------------------------------------------
SUMMARY OF THE AMENDMENTS TO H.R. 78 IN PART A MADE IN ORDER
1. Waters (CA): Requires the SEC to identify, analyze and
address potential conflicts of interest related to its
rulemakings. (10 minutes)
2. Velazquez (NY): Requires the SEC consider the protection
of investors, in addition to promoting efficiency, competition,
and capital formation when conducting such a review and also
expressly instructs the SEC to consider the public interest,
the protection of investors as well as the promotion of
efficiency, competition, and capital formation when conducting
such a review of existing SEC regulations. (10 minutes)
3. Green, Al (TX): Exempts regulations promulgated to
maintain or support U.S. financial stability or prevent or
reduce systemic risk. (10 minutes)
4. DeSaulnier (CA): Requires the Chairman of the SEC and
his immediate family to divest from too-big-to-fail banks. (10
minutes)
5. Raskin (MD): Requires the Chairman of the Securities and
Exchange Commission to be trained on ethical standards and
codes of conduct to ensure all regulations enacted are not done
so with a conflict of interest, specifically regarding prior
employment and legal representation of too-big-to-fail banks.
(10 minutes)
SUMMARY OF THE AMENDMENTS TO H.R 238 IN PART B MADE IN ORDER
1. Aderholt (AL): Amends the Commodity Exchange Act to give
the Commodity Futures Trading Commission authority to designate
other agencies to manage its leases. (10 minutes)
2. Scott, Austin (GA): Reforms the Customer Protection Fund
at the CFTC to amend the size of the fund, annual expenditures
from the fund and return excess balance to the Treasury. (10
minutes)
3. Conaway (TX): Makes technical and conforming changes.
(10 minutes)
4. Conaway (TX): Makes clear Congress's intent that the
Commission may impose and implement position limits as it finds
necessary, provided the Commission makes a finding prior to
imposing such limits. It makes no changes to the longstanding
federal position limits regime for the enumerated agricultural
commodities or the existing statutory requirements that
Designated Contract Markets impose position limits or
accountability levels on all contracts. (10 minutes)
5. Duffy (WI), Scott, David (GA): Prohibits the CFTC from
compelling the production of algorithmic trading source code
and similar intellectual property unless it has issued a
subpoena. (10 minutes)
6. LaMalfa (CA): Prevents a situation in which an end-user
loses its ability to rely on the end-user exception to the
clearing requirement due simply to the positive performance of
transactions entered into solely to mitigate the prospect of
falling revenues and asset values. (10 minutes)
7. Lucas (OK): Exempts all inter-affiliate transactions
from being regulated as ``swaps'' under the Dodd-Frank related
provisions of the Commodity Exchange Act (``CEA'') and
Commodity Futures Trading Commission (``CFTC'') regulations
promulgated thereunder. (10 minutes)
8. Hartzler (MO): Delays implementation of the CFTC
Ownership and Control Reports Rule until the Chairman
determines the rule has been amended by adjusting reporting
trading volume levels to 300 contracts per day, removing the
requirements for natural person controller data, and ensuring
the rule does not require entities to violate foreign privacy
laws. (10 minutes)
PART A--TEXT OF AMENDMENTS TO H.R. 78 MADE IN ORDER
1. An Amendment To Be Offered by Representative Waters of California or
Her Designee, Debatable for 10 Minutes
Page 3, line 3, strike ``and''.
Page 3, line 8, strike the period and insert ``; and''.
Page 3, after line 8, insert the following:
``(E) in consultation with the Office of
Ethics Counsel of the Commission, identify any
former nongovernmental employer of a
Commissioner, Director, Deputy Director,
Associate Director, or Assistant Director that
would receive direct or indirect benefit from a
rule or regulation, analyze the benefits to
such employer, and whether the regulation
should be amended to address any potential
conflict of interest or appearance of a
conflict of interest.''.
Page 6, after line 5, insert the following:
``(5) Conflicts of interest.--The Commission shall
identify the employers of any Commissioners, Directors,
Deputy Directors, Associate Directors, and Assistant
Directors who have left the Commission within five
years of the scheduled adoption of the final rule, and
whether such employers receive direct or indirect
benefits, and whether the Commission should amend the
rule to address the identified conflict of interest.''.
Page 7, line 19, insert after the period the following: ``The
assessment plan shall also include an analysis of whether and
how any former nongovernmental employer of a Commissioner,
Director, Deputy Director, Associate Director, or Assistant
Director, or the current employer of a former Commissioner,
Director, Deputy Director, Associate Director, or Assistant
Director who departed the Commission within five years of the
scheduled adoption of the regulation, directly and indirectly
benefits from the regulation, and a recommendation as to
whether such regulation should be amended to address the
identified conflict of interest.''.
----------
2. An Amendment To Be Offered by Representative Velazquez of New York
or Her Designee, Debatable for 10 Minutes
Page 4, line 1, insert after ``making'' the following: ``, in
addition to being in the interest of protecting investors,''.
Page 5, line 21, insert after the period the following:
``Whenever pursuant to this paragraph the Commission is engaged
in a review, it shall consider whether an action is necessary
or appropriate in the public interest, the protection of
investors, and whether the action will promote efficiency,
competition, and capital formation.''.
----------
3. An Amendment To Be Offered by Representative Green of Texas or His
Designee, Debatable for 10 Minutes
Page 10, line 16, strike ``and''.
Page 10, line 20, strike the first period and all that
follows and insert ``; and''.
Page 10, after line 20, insert the following:
``(iv) a regulation promulgated to
maintain or support U.S. financial
stability or prevent or reduce systemic
risk.''.
----------
4. An Amendment To Be Offered by Representative DeSaulnier of
California or His Designee, Debatable for 10 Minutes
At the end of the bill, add the following new section:
SEC. 5. DIVESTITURE REQUIREMENT.
The amendment made by section 2 shall not take effect until
the Chairman of the Securities and Exchange Commission, and all
immediate family members of the Chairman, divests all
securities owned by the Chairman and such immediate family
members of the Chairman from any financial institution
regulated by the Securities and Exchange Commission to ensure
that proper and fair rule-making is administered in accordance
with this Act.
----------
5. An Amendment To Be Offered by Representative Raskin of Maryland or
His Designee, Debatable for 10 Minutes
At the end of the bill, add the following new section:
SEC. 5. TRAINING REQUIREMENT FOR THE CHAIRMAN AND COMMISSIONERS OF THE
SEC.
The amendment made by section 2 shall not take effect until
the Chairman and each Commissioner of the Securities and
Exchange Commission undergoes effective training on conduct and
ethical standards to ensure all actions of the Commission are
done in a manner free of conflicts of interest, specifically
those related to prior employment at financial institutions and
prior legal representation of financial institutions.
----------
PART B--TEXT OF AMENDMENTS TO H.R. 238 MADE IN ORDER
1. An Amendment To Be Offered by Representative Aderholt of Alabama or
His Designee, Debatable for 10 Minutes
Add at the end of title II the following:
SEC. 213. ELIMINATION OF CERTAIN LEASING AUTHORITY OF THE COMMISSION.
Section 12(b)(3) of the Commodity Exchange Act (7 U.S.C.
16(b)(3)) is amended--
(1) by striking ``including, but not limited to,''
and inserting ``excluding''; and
(2) by adding at the end the following new sentence:
``In the case of an existing lease contract entered
into under this paragraph, the Commission may not
extend the lease term, but may agree to any other
contract modification that does not result in any
additional cost to the Federal Government.''.
----------
2. An Amendment To Be Offered by Representative Scott of Georgia or His
Designee, Debatable for 10 Minutes
At the end of title II, add the following:
SEC. 213. REFORM OF THE CUSTOMER PROTECTION FUND.
Section 23(g) of the Commodity Exchange Act (7 U.S.C. 26(g))
is amended--
(1) in paragraph (2)--
(A) in the matter preceding subparagraph (A),
by striking ``or fiscal year limitation'';
(B) in subparagraph (A), by striking ``;
and'' and inserting ``, without fiscal year
limitation;''; and
(C) in subparagraph (B), by striking
``thereunder.'' and inserting ``, the total
amount of which shall not exceed $5,000,000 per
fiscal year.'';
(2) in paragraph (3)(A), by striking ``unless the
balance of the Fund at the time the monetary judgment
is collected exceeds $100,000,000'' and inserting ``,
but only to the extent that the resulting balance of
the Fund does not exceed $50,000,000''; and
(3) by redesignating paragraph (5) as paragraph (6)
and inserting after paragraph (4) the following:
``(5) Reversion to treasury.--Notwithstanding the
preceding provisions of this subsection, to the extent
the balance of the Fund exceeds $50,000,000, the excess
amount shall be deposited in the Treasury of the United
States as miscellaneous receipts.''.
----------
3. An Amendment To Be Offered by Representative Conaway of Texas or His
Designee, Debatable for 10 Minutes
Page 32, after line 3, insert the following:
(L) Section 3a(68)(A)(i) of the Securities
Exchange Act of 1934 (15 U.S.C.
78c(a)(68)(A)(i)) is amended by striking
``(47)(B)(x)'' and inserting ``(48)(B)(x)''.
(M) Section 3C(g)(3)(A)(v) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c-
3(g)(3)(A)(v)) is amended by striking
``1a(10)'' and inserting ``1a(11)''.
(N) Section 6(g)(5)(B)(i) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(g)(5)(B)(i)) is amended--
(i) in sublcause (I), by striking
``1a(18)(B)(ii)'' and inserting
``1a(19)(B)(ii)''; and
(ii) in subclause (II), by striking
``1a(18)'' and inserting ``1a(19)''.
(O) Section 15F(h)(5)(A)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-
10(h)(5)(A)(i)) is amended by striking
``1a(18)'' and inserting ``1a(19)''.
Page 50, line 21, strike ``1a(10)(C)'' and insert
``1a(11)(C)''.
----------
4. An Amendment To Be Offered by Representative Conaway of Texas or His
Designee, Debatable for 10 Minutes
Page 40, line 4, strike ``paragraphs (2) and (5) of
subsection (a)'' and insert ``paragraph (1)''.
Add at the end of title III the following:
SEC. 318. REQUIREMENTS RELATED TO POSITION LIMITS.
(a) In General.--Section 4a(a) of the Commodity Exchange Act
(7 U.S.C. 6a(a)) is amended--
(1) by striking paragraphs (2), (3), (5), and (6);
and
(2) by redesignating paragraphs (4) and (7) as
paragraphs (2) and (3), respectively.
(b) Bona Fide Hedging Transaction Definition.--Section
4a(c)(2)(A)(i) of such Act (7 U.S.C. 6a(c)(2)(A)(i)) is amended
by inserting ``normally'' before ``represents''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this section.
----------
5. An Amendment To Be Offered by Representative Duffy of Wisconsin or
His Designee, Debatable for 10 Minutes
Add at the end of title III the following:
SEC. 318. PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4t the following:
``SEC. 4U. PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.
``The Commission is not authorized to compel persons to
produce or furnish algorithmic trading source code or similar
intellectual property to the Commission, unless the Commission
first issues a subpoena.''.
----------
6. An Amendment To Be Offered by Representative LaMalfa of California
or His Designee, Debatable for 10 Minutes
At the end of title III, insert the following:
SEC. ___. DETERMINATION OF PREDOMINANT ENGAGEMENT.
Section 2(h)(7)(C) of the Commodity Exchange Act (7 U.S.C.
2(h)(7)(C)), as amended by section 314 of this Act, is amended
by adding at the end the following:
``(v) In determining whether a person
is predominantly engaged in a business
or activity for purposes of clause
(i)(VIII), there shall be excluded
revenues and assets that are, or result
from, any transaction that is entered
into solely for purposes of hedging or
mitigating commercial risk (as defined
by the Commission for purposes of
subparagraph (A)(ii)).''.
----------
7. An Amendment To Be Offered by Representative Lucas of Oklahoma or
His Designee, Debatable for 10 Minutes
At the end of title III, insert the following:
SEC. ___. TREATMENT OF TRANSACTIONS BETWEEN AFFILIATES.
Section 1a(48) of the Commodity Exchange Act (7 U.S.C.
1a(47)), as so redesignated by section 304(b)(1) of this Act,
is amended by adding at the end the following:
``(G) Treatment of transactions between
affiliates.--
``(i) Exemption from swap rules.--An
agreement, contract, or transaction
described in subparagraphs (A) through
(F) shall not be regulated as a swap
under this Act if all of the following
apply with respect to the agreement,
contract, or transaction:
``(I) Affiliation.--1
counterparty, directly or
indirectly, holds a majority
ownership interest in the other
counterparty, or a third party,
directly or indirectly, holds a
majority ownership interest in
both counterparties.
``(II) Financial
statements.--The affiliated
counterparty that holds the
majority interest in the other
counterparty or the third party
that, directly or indirectly,
holds the majority interests in
both affiliated counterparties,
reports its financial
statements on a consolidated
basis under generally accepted
accounting principles or
International Financial
Reporting Standards, or other
similar standards, and the
financial statements include
the financial results of the
majority-owned affiliated
counterparty or counterparties.
``(ii) Reporting requirement.--If at
least 1 counterparty to an agreement,
contract, or transaction that meets the
requirements of clause (i) is a swap
dealer or major swap participant, that
counterparty shall report the
agreement, contract, or transaction
pursuant to section 4r, within such
time period as the Commission may by
rule or regulation prescribe--
``(I) to a swap data
repository; or
``(II) if there is no swap
data repository that would
accept the agreement, contract
or transaction, to the
Commission.
``(iii) Risk management
requirement.--If at least 1
counterparty to an agreement, contract,
or transaction that meets the
requirements of clause (i) is a swap
dealer or major swap participant, the
agreement, contract, or transaction
shall be subject to a centralized risk
management program pursuant to section
4s(j) that is reasonably designed to
monitor and to manage the risks
associated with the agreement,
contract, or transaction.
``(iv) Variation margin
requirement.--Affiliated counterparties
to an agreement, contract, or
transaction that meets the requirements
of clause (i) shall exchange variation
margin to the extent prescribed under
any rule promulgated by the Commission
or any prudential regulator pursuant to
section 4s(e).
``(v) Anti-evasion requirement.--An
agreement, contract, or transaction
that meets the requirements of clause
(i) shall not be structured to evade
the Dodd-Frank Wall Street Reform and
Consumer Protection Act in violation of
any rule promulgated by the Commission
pursuant to section 721(c) of such
Act.''.
----------
8. An Amendment To Be Offered by Representative Hartzler of Missouri or
Her Designee, Debatable for 10 Minutes
At the end of the bill, add the following:
SEC. ___. DELAY IN FULL IMPLEMENTATION OF THE FINAL RULE ON OWNERSHIP
AND CONTROL REPORTING.
The Commodity Futures Trading Commission may not enforce non-
compliance with the final rule titled ``Ownership and Control
Reports, Forms 102/2S, 40/40S, and 71'' (78 FR 69178; November
18, 2013) until the Commission votes to approve a final rule
that has been amended to--
(1) provide that the reportable trading volume level
shall be at least 300 contracts;
(2) provide that the reporting entity shall not be
required to provide natural person controller data; and
(3) provide that the reporting entity is not
obligated to supply data that violates foreign privacy
laws.
[all]