House approves CFTC Reauthorization bill
On Jan. 12, the U.S. House of Representatives passed the Commodity End-User Relief Act, a bill that would authorize the CFTC to operate through 2021. The bill, which was approved by a vote of 239 to 182, will need to be considered in the Senate before it can be enacted into law.
The bill includes several provisions exempting end- users from a range of Dodd-Frank requirements. The bill would exclude from the definition of swaps any forward contract resulting in the physical delivery of commodities as well as contracts with volumetric optionality. On position limits, the bill would require the CFTC to recognize bona fide hedging transactions as part of the exemption from limits. Lawmakers approved an amendment offered by House Agriculture Committee Chairman Mike Conaway (R-Texas) that restores the CFTC's authority for setting position limits as it existed before enactment of Dodd-Frank, with the exception that it would continue to be available for swaps.
A provision in the bill would prohibit the CFTC from requiring firms to turn over proprietary source code or similar intellectual property without a subpoena, effectively undoing a provision in the CFTC's proposed Reg AT that would allow the CFTC to request this information via a special call.
Lawmakers also approved an amendment that would exempt swap transactions between affiliated companies from certain Dodd-Frank requirements. The bill would set the de minimis threshold permanently at $8 billion for determining when swap dealers and major swap participants fall under a range of CFTC regulations. The CFTC would have to take an official regulatory action to change this threshold rather than automatically lowering the threshold, as set out under current regulations.
There are also several provisions in the bill that cover procedural issues at the CFTC. For example, the bill would require a public comment and notice period for commission statements or guidance that is voted on and issued by the CFTC. The bill also would require the CFTC to develop internal procedures for staff issuing exemptive, no-action or interpretive letters to the public.
