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1 AMENDMENT TO TITLE VII RE.

PERMITTING USE OF

2 NON-CASH COLLATERAL AND INDIVIDUAL CREDIT ARRANGEMENTS

3 [Explanation: The following amendments would: i) eliminate the exception from mandatory

4 clearing where one counterparty is not a swap dealer or major swap participant and does not

5 meet the eligibility requirements ofany DCO that clears the swap; and ii) provide for the use of

6 non-cash collateral and individualized credit arrangements for margin payments by a swap

7 counterparty that is not a swap dealer or major swap participant.]

9 On page 15, in line 20, strike "Except as provided in paragraph (8), it" and insert "It".

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lIOn page 18, line 4, strike "Except as provided in paragraph (8), a swap" and insert "A swap".

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13 On page 18, strike lines 7 through 14, and insert the following:

14 "(8) ALTERNATIVE MARGIN ARRANGEMENTS.-With respect to a swap that is subject to

15 the requirements of subsection 0)(1), a swap dealer or major swap participant may accept

16 arrangements such as posting non-cash collateral, or entering into credit or other financing

17 arrangements, for a swap counterparty that is not a swap dealer or major swap participant."

18

19 On page 40, insert after line 16 the following:

20 "(C) ALTERNATIVE MARGIN ARRANGEMENTs.-Margin requirements for swaps set by the

21 Prudential Regulators, the Commission, and the Securities and Exchange Commission under this

22 subsection shall provide for the use of alternative arrangements such as posting non-cash

23 collateral, or entering into credit or other financing arrangements, for a swap counterparty that is

24 not a swap dealer or major swap participant.

CFTC-CREW-0698
1 AMENDMENTS TO TITLE VII PROPOSED BY THE SEC

2 [Explanation: House Agriculture Committee staffhas asked CFTC staff to review certain of the

3 amendments to Title VII that have been proposed by the SEC, which we received on September

4 30. Of the proposed amendments that we were asked to review, CFTC staffis comfortable with

5 the SEC proposals set forth below (in some cases, with certain revisions as noted).]

7 Page 4, lines 1-12 (security forwards)

9 Page 40, lines 11-16 (voluntary registration of clearinghouses)

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11 Page 52, line 13 through page 53, line 25 (identified banking products), revised as follows:

12 i) Page 52, line 15: After "(7 US.C. 1, et seq.)" insert ", the Securities Act of 1933 (7

13 US.C. 77a, et seq.), or the Securities Exchange Act of 1934 (15 US.C. 78a, et seq.)".

14 ii) Page 52, line 17: Strike "the Commodity Exchange Act" and insert "such statutes".

15 iii) Page 53, line 7: In the heading, strike "Exception" and insert "Appropriate Federal

16 Banking Agency". 1

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18 Page 61, line 14 (clarifying change)

19

20 Page 62, lines 1-2 (clarifying change)

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22

1 This revision is suggested because, as drafted, the headings of paragraphs (b) and (c) are identical.

CFTC-CREW-0699
1 Page 62, line 20 through page 63, line 8 (CFTC and SEC authority to set capital requirements),

2 revised as follows:

3 i) Strike page 62, line 21 through page 63, line 1, and insert: "(i) of the Commission

4 to set capital requirements for a registered futures commission merchant or

5 introducing broker in accordance with section 4 f of this Act; or".

6 ii) Strike page 63, lines 2-5, and insert: "(ii) of the Securities and Exchange

7 Commission to set capital requirements for a broker or dealer registered in

8 accordance with section 15 of the Securities Exchange Act of 1934;".

9 iii) On page 63, line 6, strike "(iii)" and insert "(E)".

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11 Page 63, lines 12-13 and 15 (clarifying change)

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13 Page 108, lines 4-1 0 (voluntary registration of clearinghouses)

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CFTC-CREW-0700
1 REPEAL OF SECTION 2(h) OF THE COMMODITY EXCHANGE ACT

2 [Explanation: One method ofdealing with the issue ofhow to regulate trading platforms while

3 new regulations are being written is to postpone the repeal ofSection 2(h) - which governs

4 exempt commercial markets (ECMs) - until some period oftime after the final regulations for

5 the new alternative swap execution facilities (ASEFs) are in place. In this scenario, CFTC

6 would retain its current authorities over ECMs while the ASEF regulations are beingfinalized

7 Once the final regulations are promulgated, ECMs would have some period of time to conform

8 before current law is repealed If one wished, a provision such as the following could be added

9 to Title VII to allow ECMs to come into compliance with the new statutory scheme for ASEFs

10 before the new law is effective.]

11

12 "(a) Prior to the final effective dates in this Act, a person may petition the Commodity

13 Futures Trading Commission to be subject to the provisions of section 5h of the Commodity

14 Exchange Act.

15 "(b) The Commodity Futures Trading Commission shall consider any petition submitted

16 under subsection (a) in a prompt manner.".

17

18 [If one chooses to add the above provision, the effective dates provision should contain an

19 introduction that refers to the above provision as an exception to the general effective dates.]

20

CFTC-CREW-0701

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