1 TRANSPARENCY FOR SWAPS THAT ARE CLEARABLE,

2 BUT NOT REQUIRED TO BE CLEARED

3 [Explanation: Under the House Agriculture Committee's draft substitute, a swap is "clearable"
4 ifa registered DCO will accept it for clearing and has received CFTC approvalfor that clearing
5 to occur. However, the swap need not be cleared if: 1) one of the counterparties is not a swap
6 dealer or major swap participant and demonstrates to the CFTC how it generally meets its
7 financial obligations associated with entering into non-cleared swaps; and 2) none ofthe
8 counterparties to the swap is a Tier 1 financial holding company. But although the swap is not
9 cleared, public transparency into transactions that would have been cleared, but for the nature
1° ofthe counterparties, remains important. The amendments below wouldprovide such
11 transparency by requiring that such swaps be traded on or though an ASEF.j

12

13 On page 33, after line 6, insert the following:

14 "(3) SWAPSEXCEPTEDFROMCLEARING.-

15 "(A) A swap subject to section 20)(8) shall be traded on or through an

16 alternative swap execution facility registered under section 5h that lists the swap

17 for trading.

18 "(B) The requirement of subparagraph (A) shall not apply to a swap ifno

19 alternative swap execution facility lists the swap for trading.".

20 On page 33, line 7, strike "(3)" and insert "(4)".

21

22 On page 138, line 15, strike "3B" and insert "3C."

23 On page 138, after line 20, insert the following:

24 "(3) SECURITY-BASED SWAPS EXCEPTED FROM CLEARING.-

25 "(A) A security-based swap subject to section 3B(a)(8) shall be traded on

26 or through an alternative swap execution facility registered under section 3C that

27 lists the swap for trading.

CFTC-CREW-0654
1 "(B) The requirement of subparagraph (A) shall not apply to a security-

2 based swap if no alternative swap execution facility lists the security-based swap

3 for trading.".

CFTC-CREW-0655
 1 NON-CASH COLLATERAL AND INDIVIDUALIZED CREDIT ARRANGEMENTS
2 FOR SWAPS INVOLVING TIER 1 FINANCIAL HOLDING COMPANIES

3
4 [Explanation: Thefollowing amendments wouldprovide for the use ofnon-cash collateral and

5 individualized credit or other financing arrangements for margin payments by a swap

6 counterparty that is not a swap dealer or major swap participant, where the counterparty to the

7 swap is a Tier 1financial holding company. ]

9 On page 61, after line 22, insert the following:

10 "(C) ALTERNATIVE MARGIN ARRANGEMENTS.-For a swap in which one of the parties to

11 the swap is not a swap dealer or major swap participant and the counterparty to the swap is a Tier

12 1 financial holding company, margin requirements for swaps set by the Prudential Regulators

13 and the Commission under this paragraph shall provide for the use of margin in forms other than

14 cash, or shall permit the use of credit or other financing arrangements by a counterparty that is

15 not a swap dealer or major swap participant.".

16

17 On page 168, after line 25, insert the following:

18 "(C) ALTERNATIVE MARGIN ARRANGEMENTS.-For a security-based swap in which one

19 of the parties to the security-based swap is not a security-based swap dealer or major security-

20 based swap participant and the counterparty to the security-based swap is a Tier 1 financial

21 holding company, margin requirements for security-based swaps set by the Prudential Regulators

22 and the Commission under this paragraph shall provide for the use of margin in forms other than

23 cash, or shall permit the use of credit or other financing arrangements by a counterparty that is

24 not a security-based swap dealer or major security-based swap participant.".

CFTC-CREW-0656