The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) significantly expanded the CFTC's jurisdiction to include over-the-counter (OTC) derivatives, also called swaps. The CFTC Reauthorization Process

The CEA, the statute governing futures and swaps markets in which the CFTC administers, contains a sunset provision. This means Congress must periodically reauthorize appropriations to carry out the CEA. However, if an explicit authorization of appropriations for a program or activity is present—as in the CEA—and it expires, the underlying authority in the statute to administer such a program or engage in such an activity does not. In other words, the CFTC continues functioning and administering the CEA even if its authorization has expired—which has been the case since the last CFTC reauthorization expired on September 30, 2013. It has not been uncommon for Congress to pass CFTC reauthorization bills several years after the prior authorization had expired. Historically, the reauthorization process has often been one of the principal vehicles for modifying the CFTC's regulatory authority and evaluating the efficacy of its regulatory programs. The current CFTC reauthorization process is the first since the Dodd-Frank Act's passage brought the more than $400 trillion U.S. swaps market under regulatory oversight. 2289 , the Commodity End-User Relief Act, on June 9, 2015, by a vote of 246 to 171. Among other changes to the CEA, H.R. The Obama Administration threatened to veto H.R. 2289 , stating that the bill "undermines the efficient functioning of the CFTC by imposing a number of organizational and procedural changes and would undercut efforts taken by the CFTC over the last year to address end-user concerns." On April 14, 2016, the Senate Committee on Agriculture, Nutrition, and Forestry marked up and ordered to be reported a CFTC reauthorization bill, S. 2917 . In addition, Section 202 adds a requirement that the CFTC conduct quantitative as well as qualitative assessments of costs and benefits. The requirement for quantitative cost-benefit analysis appears to mark a change from previous practice. 2289 , taken together, would expand the exception from certain Dodd-Frank swaps trading and clearing requirements granted to nonfinancial companies. H.R. (H.R. 2289 as passed by the House would modify the definition of a financial entity, potentially enabling a wider range of companies to claim the end-user exception to the clearing requirement in the Dodd-Frank Act. H.R. S. 2917 takes a different approach to modifying the definition of a financial entity. Instead, S. 2917 adds a requirement at the end of Section 2(h)(7)(C) directing the CFTC to issue a new rule defining the term predominantly engaged in financial activities. Changes to Definition of Bona Fide Hedging (H.R. 2289, S. 2917)

Section 313 of H.R. Language in the two bills on this topic is substantially the same. This change could potentially broaden the bona fide hedging definition so as to allow anticipated, as well as current, risks. H.R. H.R. 1256 , the current bill mandates that, starting 18 months from its enactment, the swaps regulatory requirements of the eight largest foreign swaps markets must be considered comparable to those of the United States—unless the CFTC issues a rule or order finding that any of those foreign jurisdictions' requirements are not comparable to or as comprehensive as those of the United States. 2289 would overturn it. 2289 would remove a requirement added in the Dodd-Frank Act's Title VII that foreign regulators indemnify a U.S.-based swap data repository (SDR) and the Commodity Futures Trading Commission (CFTC) for any expenses arising from litigation related to a request for market data. Indemnification generally refers to compensating someone for harm or loss. The provision in H.R. 2289 in Section 104, would essentially codify the deadline for FCMs to deposit any capital to cover residual interest as no earlier than 6:00 p.m. on the following business day.
The Commodity Futures Trading Commission (CFTC), created in 1974, regulates futures, most options, and swaps markets. The CFTC administers the Commodity Exchange Act (CEA; P.L. 74-765, 7 U.S.C. §1 et seq) enacted in 1936 to monitor trading in certain derivatives markets. The CEA contains a sunset provision, meaning Congress periodically reauthorizes appropriations to carry out the CEA. If an explicit authorization of appropriations for a program or activity is present—as in the CEA—and it expires, the underlying authority in the statute to administer such a program does not, however. Thus, the CFTC continues functioning and administering the CEA even if its authorization has expired—which has been the case since the last CFTC reauthorization expired on September 30, 2013. It has not been uncommon for Congress to pass CFTC reauthorization bills several years after the prior authorization had expired.
The current CFTC reauthorization process is the first since the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank; P.L. 111-203) brought the roughly $400 trillion U.S. swaps market under regulatory oversight. Historically, the reauthorization process has often been one of the principal vehicles for modifying the CFTC's regulatory authority and evaluating the efficacy of its regulatory programs. The House passed a CFTC reauthorization bill, H.R. 2289, the Commodity End-User Relief Act, on June 9, 2015, by a 246 to 171 vote. The Senate Committee on Agriculture, Nutrition and Forestry marked up and ordered to be reported an identically titled bill, S. 2917, which would also reauthorize such appropriations, as well as making other changes to the CEA. The Obama Administration threatened to veto H.R. 2289, stating that the bill " ... undermines the efficient functioning of the CFTC by imposing a number of organizational and procedural changes and would undercut efforts taken by the CFTC over the last year to address end-user concerns." A number of the provisions in H.R. 2289 discussed in this report do not appear in S. 2917. This report examines the following selected major provisions of H.R. 2289, and S. 2917, which have generally garnered the most attention:
H.R. 2289 expands the current 5 cost-benefit analysis provisions in the CEA to 12. It adds a requirement that the CFTC conduct quantitative as well as qualitative assessments, which appears to mark a change from previous practice. H.R. 2289 includes a provision that would extend an exemption from certain Dodd-Frank swaps trading and clearing requirements granted to nonfinancial companies so as to also include certain of their affiliates. H.R. 2289 would modify the definition of a "financial entity," potentially enabling a wider range of companies to claim certain exemptions from the Dodd-Frank derivatives requirements. S. 2917 takes a different approach to modifying this definition. It directs the CFTC to issue a new rule defining the term predominantly engaged in financial activities to exclude hedging transactions. H.R. 2289 and S. 2917 would potentially broaden the bona fide hedging definition to allow anticipated, as well as current, risks to be hedged, which might increase the number of swaps that qualify as hedges. Bona fide hedging is often used to determine which swaps count toward registration requirements, position limits, large trader reporting, and other regulatory requirements. Language in the two bills on this topic is substantially the same. H.R. 2289 mandates that, starting 18 months from enactment, the swaps regulatory requirements of the eight largest foreign swaps markets must be considered comparable to those of the United States—unless the CFTC issued a rule finding that any of those foreign jurisdictions' requirements were not comparable to U.S. requirements. S. 2917 and H.R. 2289 would essentially codify the deadline for a futures commission merchant (FCM) to deposit any capital to cover residual interest as no earlier than 6:00 p.m. on the following business day. H.R. 2289 would remove a requirement in Dodd-Frank that foreign regulators indemnify a U.S.-based swap data repository for any expenses arising from litigation related to a request for market data. Indemnification generally refers to compensating someone for harm or loss.