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Financial Markets Reassurance Act of 1998
To limit the authority of the Commodity Futures Trading Commission to alter the regulation of certain hybrid instruments and swap agreements under the Commodity Exchange Act.
Summary
- Limits the Commodity Futures Trading Commission's authority to create new regulations for certain financial instruments called hybrid instruments and swap agreements through September 30, 1999.
- Applies the regulatory freeze only to instruments that were already exempt or had safe harbors under existing rules as of January 1, 1998.
- Allows the CFTC to continue enforcing existing regulations and handling enforcement actions, exemptive petitions, and market emergencies during the freeze period.
- Specifies that recent CFTC proposals and comment letters regarding financial derivatives do not change the legal status of the frozen instruments.
- The freeze ends early if Congress passes new appropriations for the CFTC for any fiscal year after 2000.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
- Rep. Smith, Robert (R-OR) [#2]
2 cosponsors
- Rep. Combest, Larry (R-TX) [#19]
- Rep. Ewing, Thomas W. (R-IL) [#15]
Actions (3)
- Aug 27, 1998 Referred to the Subcommittee on Risk Management and Specialty Crops. · house
- Aug 6, 1998 Referred to the House Committee on Agriculture. · house
- Aug 6, 1998 Introduced in House
Full text
IN THE HOUSE OF REPRESENTATIVES
August 6, 1998
Mr. Smith of Oregon (for himself, Mr. Combest, and Mr. Ewing) introduced the following bill; which was referred to the Committee on Agriculture
A BILL
To limit the authority of the Commodity Futures Trading Commission to alter the regulation of certain hybrid instruments and swap agreements under the Commodity Exchange Act.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Financial Markets Reassurance Act of 1998”.
SEC. 2. REGULATORY RESTRAINT ON QUALIFYING HYBRID INSTRUMENTS AND SWAP AGREEMENTS.
(a) Definitions.—In this section:
(1) Commission.—The term “Commission” means the Commodity Futures Trading Commission.
(2) Qualifying hybrid instrument or swap agreement.—The term “qualifying hybrid instrument or swap agreement” means a hybrid instrument or swap agreement that—
(A) was entered into before the start of the restraint period or is entered into during the restraint period; and
(B) is exempt under part 34 or part 35 of title 17, Code of Federal Regulations (as in effect on January 1, 1998), qualifies for the safe harbor contained in the Policy Statement of the Commission regarding swap agreements published in the Federal Register on July 21, 1989 (54 Fed. Reg. 30694), or qualifies for the exclusion set forth in the Statutory Interpretation of the Commission concerning certain hybrid instruments published in the Federal Register on April 11, 1990 (55 Fed. Reg. 13582).
(3) Restraint period.—The term “restraint period” means the period—
(A) beginning on the date of the enactment of this Act; and
(B) ending on September 30, 1999, or the first date on which legislation is enacted that authorizes appropriations for the Commission for a fiscal year after fiscal year 2000, whichever occurs first.
(b) Limitation on Regulatory Changes.—During the restraint period, the Commission may not propose or issue any rule or regulation, or issue any interpretation or policy statement, that restricts or regulates activity in a qualifying hybrid instrument or swap agreement.
(c) Exceptions.—Notwithstanding subsection (b), during the restraint period, the Commission may—
(1) act on a petition for exemptive relief under section 4(c) of the Commodity Exchange Act (7 U.S.C. 6(c));
(2) enter such cease and desist orders and take such enforcement action, including the imposition of sanctions, as the Commission considers necessary to enforce any provision of the Commodity Exchange Act (7 U.S.C. 1 et seq.) or title 17, Code of Federal Regulations, in connection with a qualifying hybrid instrument or swap agreement, to the extent such provision is otherwise applicable to that qualifying hybrid instrument or swap agreement or a transaction involving that qualifying hybrid instrument or swap agreement;
(3) take such action as the Commission considers appropriate with regard to agricultural trade options; and
(4) take such action as the Commission considers appropriate to respond to a market emergency.
(d) Relation to Certain Commission Documents.—The legal status of contracts involving a qualifying hybrid instrument or swap agreement shall not differ from the legal status afforded such contracts during the period beginning on July 21, 1989, which was the date on which the Commission adopted a Policy Statement regarding swap agreements (54 Fed. Reg. 30694), and ending on January 1, 1998. Neither the comment letter of the Commission submitted on February 26, 1998, to the Securities and Exchange Commission regarding the proposal known as “Broker-Dealer Lite”, nor the Concept Release of the Commission regarding over-the-counter derivatives published in the Federal Register on May 12, 1998 (63 Fed. Reg. 26114), shall alter or affect the legal status of a qualifying hybrid instrument or swap agreement under the Commodity Exchange Act (7 U.S.C. 1 et seq.).
(e) Rule of Construction.—Nothing in this section shall be construed as reflecting or implying a determination that a qualifying hybrid instrument or swap agreement, or a transaction involving a qualifying hybrid instrument or swap agreement, is subject to the Commodity Exchange Act (7 U.S.C. 1 et seq.). <all>
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