Bill > S876

This bill amends the Commodity Exchange Act, a law that regulates the trading of commodity futures and options, to clarify how clearing requirements apply to certain transactions between affiliated companies. Specifically, it modifies rules regarding when an affiliate of a company can qualify for an exception to clearing requirements for financial derivatives known as "swaps." The bill states that an affiliate can only qualify for this exception if the swap it enters into is used to hedge or mitigate the commercial risk of the original company or another non-financial affiliate. Furthermore, if this hedging is done through a swap with a "swap dealer" (a firm that deals in swaps) or a "major swap participant" (a firm with significant swap activity), then an appropriate credit support measure, like collateral, or another mechanism must be used to protect against risk. This change also applies to similar "security-based swaps" under the Securities Exchange Act of 1934. Importantly, these new credit support requirements will not apply to swaps entered into before the bill becomes law.