(Archived Content)
To provide for the study of over the counter derivatives and hybrid instruments, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That
SECTION 1. FINDINGS.
- The Congress finds that--
- (1) The markets for over-the-counter derivatives and hybrid instruments are large and important global markets.
- (2) Swap transactions have been entered into in part in reliance on guidance provided by the Commodity Futures Trading Commission (CFTC), including the Statement of Policy published on July 17, 1989, in which the CFTC acknowledged that qualifying swaps are not appropriately regulated under the Commodity Exchange Act (CEA) and identified a non-exclusive safe harbor for swap transactions that would not be regulated as futures or commodity option transactions.
- (3) Transactions involving hybrid instruments have been entered into in part in reliance on guidance provided by the CFTC, including the Statutory Interpretation Concerning Hybrid Instruments published on April 11, 1990, in which the CFTC stated its view that certain categories of hybrid instruments are not within the coverage of the CEA or CFTC regulations.
- (4) Qualifying swap transactions and transactions involving hybrid instruments also have been entered into in part in reliance on exemptions under Part 34 and Part 35 of the CFTC's regulations, which were promulgated by the CFTC to provide legal certainty for such transactions.
- (5) Since 1989, the markets for over-the-counter derivatives and hybrid instruments have continued to grow dramatically in both volume and variety of products offered.
- (6) Given the size, importance and competitive position of U.S. firms in these markets, any changes in the regulatory environment for these transactions raise important public policy issues that should be dealt with by the entire financial regulatory community working with Congress and should be carried out after careful study and consideration of these issues in a manner that enhances certainty as to the legal status of such transactions and the competitive position of the U.S. market in the global economy.
SEC. 2. STUDY OF OTC DERIVATIVES AND HYBRID INSTRUMENTS.
- (a) The President's Working Group on Financial Markets shall--
- (1) conduct a study of over-the-counter derivatives, including swaps, as well as hybrid instruments;
- (2) develop such recommendations as may be appropriate for changes, if any, in statutes, regulations, and policies to improve operation of the markets for these products and to enhance legal certainty for swap agreements and hybrid instruments; and
- (3) submit a report to Congress not later than one year after the date of enactment of this Act describing the study and any recommendations, which report may include, as appropriate, separately stated views of any member of the Working Group.
SEC 3. STANDSTILL OF CFTC ACTION; NON-EXEMPT SECURITIES DERIVATIVES.
- Notwithstanding any other provision of law:
- (1) Prior to the enactment of legislation authorizing appropriations for the CFTC for any year after the year 2000, the CFTC shall not propose or promulgate any rule, regulation or order, or issue any interpretative or policy statement, that restricts or regulates activity in any hybrid instrument or swap agreement that is eligible for exemption under Part 34 or Part 35 of title 17, Code of Federal Regulations (as in effect on January 1, 1998).
- (2) No hybrid instrument or swap agreement that satisfies the definitions and conditions for exemption under Part 34 or Part 35 of title 17, Code of Federal Regulations (as in effect on January 1, 1998), and that is or has been entered into at any time before the date of enactment of legislation authorizing appropriations for the CFTC for any year after the year 2000, shall be deemed to violate section 2(a)(1)(B)(v) of the Commodity Exchange Act.
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