H.R. 238 authorizes appropriations to operate the Commodity Futures Trading Commission (CFTC) through 2021 and make changes in some of the agency’s operating procedures. The bill also would amend the Commodity Exchange Act (CEA) to provide greater protections for customer funds held by entities that broker transactions in commodity futures and make important changes to the CEA to reduce regulatory burdens on end-users who use futures and swaps transactions to efficiently manage business risks.
Title I is designed to better protect farmers and ranchers and other end-users who use futures markets by providing for new customer protection provisions.
Title II reforms the Commission’s rule-making process and makes certain reforms to enhance oversight and accountability within the Commission.
Title III provides relief for end-users who have faced burdensome and unintended costs utilizing derivatives since the implementation of the Dodd-Frank Act. End-users are typically not commodity investors or speculators, and played little or no part in the 2008 financial crisis. Major economic sectors with end-users who utilize derivatives include: agricultural producers and processors, commodity producers and manufacturers, and utility and energy companies.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Jan 4, 2017.
Commodity End User Relief Act
This bill reauthorizes through FY2021, and revises provisions related to, operations of the Commodity Futures Trading Commission (CFTC).
In addition, the bill amends the Commodity Exchange Act to direct registered futures associations to require their futures commission merchant members to meet certain procedural and reporting requirements.
The CFTC is authorized to require that certain property of the bankruptcy estate of a commodity broker who is a debtor in Chapter 7 bankruptcy (also known as "liquidation" bankruptcy) be included in customer property to the extent that such property is insufficient to satisfy the net equity claims of the broker's public customers.
Before promulgating a regulation or issuing an order, the CFTC must publish an assessment of the costs and benefits of the action.
The heads of the CFTC's administrative units shall serve at the pleasure of the CFTC.
The bill establishes, within the CFTC, the Office of the Chief Economist.
The duration of an omnibus order of investigation (authorizing the CFTC to issue subpoenas to multiple persons in relation to a particular subject matter area) shall not be indefinite.
The bill exempts specified entities from certain clearing requirements applicable to swaps.
With respect to swap dealer registration requirements, the bill: (1) prohibits the CFTC from modifying, except by affirmative rule or regulation, the threshold for de minimus (minor in quantity) swap dealing; (2) under certain circumstances, allows the use of specified financial models with respect to calculating capital requirements; and (3) modifies other provisions.
The bill exempts certain swap activities involving non-U.S. persons from U.S. swaps requirements.