S 3131 ISCommentsClose CommentsPermalink

To amend the Commodity Exchange Act to ensure the application of speculation limits to speculators in energy markets, and for other purposes.CommentsClose CommentsPermalink

June 12, 2008CommentsClose CommentsPermalink

Mrs. FEINSTEIN (for herself and Mr. STEVENS) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and ForestryCommentsClose CommentsPermalink

To amend the Commodity Exchange Act to ensure the application of speculation limits to speculators in energy markets, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Oil Speculation Control Act of 2008’.CommentsClose CommentsPermalink

SEC. 2. DEFINITION OF INSTITUTIONAL INVESTOR.

(a) Definition- Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--CommentsClose CommentsPermalink





(1) by redesignating paragraphs (22) through (34) as paragraphs (23) through (35), respectively; andCommentsClose CommentsPermalink





(2) by inserting after paragraph (21) the following:CommentsClose CommentsPermalink





‘(22) INSTITUTIONAL INVESTOR- The term ‘institutional investor’ means a long-term investor in financial markets (including pension funds, endowments, and foundations) that--CommentsClose CommentsPermalink





‘(A) invests in energy commodities as an asset class in a portfolio of financial investments; andCommentsClose CommentsPermalink





‘(B) does not take or make physical delivery of energy commodities on a frequent basis, as determined by the Commission.’.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 13106(b)(1) of the Food, Conservation, and Energy Act of 2008 is amended by striking ‘section 1a(32)’ and inserting ‘section 1a’.CommentsClose CommentsPermalink





(2) Section 402(d)(1)(B) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(d)(1)(B)) is amended by striking ‘section 1a(33)’ and inserting ‘section 1a’.CommentsClose CommentsPermalink

SEC. 3. INSPECTOR GENERAL.

Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(13) INSPECTOR GENERAL-CommentsClose CommentsPermalink





‘(A) OFFICE- There shall be in the Commission, as an independent office, an Office of the Inspector General.CommentsClose CommentsPermalink





‘(B) APPOINTMENT- The Office shall be headed by an Inspector General, appointed in accordance with the Inspector General Act of 1978 (5 U.S.C. App.).CommentsClose CommentsPermalink





‘(C) COMPENSATION- The Inspector General shall be compensated at the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code.CommentsClose CommentsPermalink





‘(D) ADMINISTRATION- The Inspector General shall exert independent control of the budget allocations, expenditures, and staffing levels, personnel decisions and processes, procurement, and other administrative and management functions of the Office.’.CommentsClose CommentsPermalink

SEC. 4. TRADING PRACTICES REVIEW WITH RESPECT TO INDEX TRADERS, SWAP DEALERS, AND INSTITUTIONAL INVESTORS.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(e) Trading Practices Review With Respect to Index Traders, Swap Dealers, and Institutional Investors-CommentsClose CommentsPermalink





‘(1) REVIEW-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Not later than 30 days after the date of enactment of this subsection, the Commission shall carry out a review of the trading practices of index traders, swap dealers, and institutional investors in markets under the jurisdiction of the Commission--CommentsClose CommentsPermalink





‘(i) to ensure that index trading is not adversely impacting the price discovery process;CommentsClose CommentsPermalink





‘(ii) to determine whether different practices or regulations should be implemented; andCommentsClose CommentsPermalink





‘(iii) to gather data for use in proposing regulations to limit the size and influence of institutional investor positions in commodity markets.CommentsClose CommentsPermalink





‘(B) EMERGENCY AUTHORITY- For the 60-day period described in subparagraph (A), in accordance with each applicable rule adopted under section 5(d)(6), the Commission shall exercise the emergency authority of the Commission to prevent institutional investors from increasing the positions of the institutional investors in--CommentsClose CommentsPermalink





‘(i) energy commodity futures; andCommentsClose CommentsPermalink





‘(ii) commodity future index funds.CommentsClose CommentsPermalink





‘(2) REPORT- Not later than 30 days after the date described in paragraph (1)(A), the Commission shall submit to the appropriate committees of Congress a report that contains recommendations for such legislation as the Commission determines to be necessary to limit the size and influence of institutional investor positions in commodity markets.’.CommentsClose CommentsPermalink

SEC. 5. BONA FIDE HEDGING TRANSACTIONS OR POSITIONS.

Section 4a(c) of the Commodity Exchange Act (7 U.S.C. 6a(c)) is amended by striking ‘(c) No rule’ and inserting the following:CommentsClose CommentsPermalink





‘(c) Bona Fide Hedging Transactions or Positions-CommentsClose CommentsPermalink





‘(1) DEFINITION OF BONA FIDE HEDGING TRANSACTION OR POSITION- The term ‘bona fide hedging transaction or position’ means a transaction or position that represents a hedge against price risk exposure relating to physical transactions involving an energy commodity.CommentsClose CommentsPermalink





‘(2) APPLICATION WITH RESPECT TO BONA FIDE HEDGING TRANSACTIONS OR POSITIONS- No rule’.CommentsClose CommentsPermalink

SEC. 6. SPECULATION LIMITS RELATING TO SPECULATORS IN ENERGY MARKETS.

Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(f) Speculation Limits Relating to Speculators in Energy Markets-CommentsClose CommentsPermalink





‘(1) DEFINITION OF SPECULATOR- In this subsection, the term ‘speculator’ includes any institutional investor or investor of an investment fund that holds a position through an intermediary broker or dealer.CommentsClose CommentsPermalink





‘(2) ENFORCEMENT OF SPECULATION LIMITS- The Commission shall enforce speculation limits with respect to speculators in energy markets.’.CommentsClose CommentsPermalink

SEC. 7. LARGE TRADER REPORTING WITH RESPECT TO INDEX TRADERS, SWAP DEALERS, AND INSTITUTIONAL INVESTORS.

Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) is amended by adding at the end the following:CommentsClose CommentsPermalink





‘(g) Large Trader Reporting With Respect to Index Traders, Swap Dealers, and Institutional Investors-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Each recordkeeping and reporting requirement under this section relating to large trader transactions and positions shall apply to index traders, swaps dealers, and institutional investors in markets under the jurisdiction of the Commission.CommentsClose CommentsPermalink





‘(2) PROMULGATION OF REGULATIONS- As soon as practicable after the date of enactment of this subsection, the Commission shall promulgate regulations to establish separate classifications for index traders, swaps dealers, and institutional investors--CommentsClose CommentsPermalink





‘(A) to enforce the recordkeeping and reporting requirements described in paragraph (1); andCommentsClose CommentsPermalink





‘(B) to enforce position limits and position accountability levels with respect to energy commodities under section 4a(f).’.CommentsClose CommentsPermalink

SEC. 8. INSTITUTIONAL INVESTOR SPECULATION LIMITS.

(a) Core Principles Applicable to Significant Price Discovery Contracts- Section 2(h)(7)(C)(ii)(IV) of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)(ii)(IV)) is amended by inserting after ‘speculators’ the following: ‘(including institutional investors that do not take delivery of energy commodities and that hold positions in energy commodities through swaps dealers or other third parties)’.CommentsClose CommentsPermalink





(b) Core Principles for Contract Markets- Section 5(d)(5) of the Commodity Exchange Act (7 U.S.C. 7(d)(5)) is amended by inserting after ‘speculators’ the following: ‘(including institutional investors that do not take delivery of energy commodities and that hold positions in energy commodities through swaps dealers or other third parties)’.CommentsClose CommentsPermalink