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Explanation:
The Consumer Financial Protection Agency Act of 2009 ("CFP A Act") as proposed in the
Committee Print released by the Senate Committee on Banking, Housing & Urban Affairs would
vest the new consumer protection agency ("Consumer Agency") with a very broad mandate. In
its White Paper on Financial Regulatory Reform, the Treasury Department addressed the
potential jurisdictional overlap between such a Consumer Agency and the CFTC: "We propose
the creation of a single federal agency, the Consumer Financial Protection Agency, dedicated to
protecting consumers in the financial products and services markets, exceptfor investment
products and services already regulated by the SEC or CFTC."l To effectuate this purpose, with
respect to CFTC-regulated entities, Section 1024(h)(1) of the CFPA Act (page 917, lines 4-15 2 )
provides the following exclusion for persons regulated by the CFTC:
However, the definition of a "person regulated by the Commodity Futures Trading Commission"
in Section 1002(21) of the CFPA Act (page 857, lines 9-18) is restricted to an exclusive list of 4
categories of specifically enumerated CFTC registrants:
2All page and line numbers herein refer to the Committee Print posted on the Committee's
website.
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1) Retail Foreign Exchange Dealers - a new category ofCFTC registrant created by the
"Farm Bill" of 2008 to enable the CFTC to regulate and prosecute violations
involving foreign currency contracts sold to retail customers by such entities;'
2) Futures Exchanges and Clearinghouses - including floor brokers, who deal with
individuals trading futures and commodity options; 4 and
3) New categories ofCFTC registrants created by future legislation, such as the OTC
derivatives reform legislation currently under consideration in Congress.
Also, the CFPA Act's definition of a "person regulated by" the CFTC is more limited than its
corresponding definition in Section 1002(22) of a "person regulated by" the SEC (page 857, line
19 through page 858, line 23), as follows:
1) A "person regulated by" the SEC includes securities exchanges and clearinghouses,
whereas futures exchanges and clearinghouses are not included in the definition of a
"person regulated by" the CFTC; and
2) The definition of a "person regulated by" the SEC includes employees, agents, and
contractors, whereas the definition of a "person regulated by" the CFTC does not.
Recommendations:
(a) CFTC staff suggests a technical change to the wording of the definition of a "person
regulated by the Commodity Futures Trading Commission" in the CFPA Act to delete the
references to specifically enumerated entities. This could be accomplished by amending
the definition (page 857, lines 9-18) as follows:
(b) Alternatively, CFTC staff suggests that the definition of a "person regulated by"
the CFTC in the CFPA Act be made more parallel to the corresponding definition
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of a "person regulated by" the SEC. This could be accomplished by amending the
definition (page 857, lines 9-18) as follows:
The proposed amendment, in either alternative, would preserve the CFTC's jurisdiction over
entities covered by the Commodity Exchange Act. This would fulfill the objective of ensuring
that the respective jurisdictions of the CFTC and the new Consumer Agency do not overlap.
5 The term "registered entity" is defined in Section 1a(29) of the Commodity Exchange Act, 7
U.S.C. 1a(29), to include futures exchanges, derivatives clearing organizations, and certain
electronic trading facilities provided for in the statute.
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