FOREIGN BOARDS OF TRADE.

SEC. 738. FOREIGN BOARDS OF TRADE.(a) In General.—Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is amended—(1) in the first sentence, by striking “The Commission” and inserting the following:“(2) Persons located in the united states.—“(A) In general.—The Commission”;(2) in the second sentence, by striking “Such rules and regulations” and inserting the following:“(B) Different requirements.—Rules and regulations described in subparagraph (A)”;(3) in the third sentence—(A) by striking “No rule or regulation” and inserting the following:“(C) Prohibition.—Except as provided in paragraphs (1) and (2), no rule or regulation”;(B) by striking “that (1) requires” and inserting the following: “that—“(i) requires”; and(C) by striking “market, or (2) governs” and inserting the following: “market; or“(ii) governs”; and(4) by inserting before paragraph (2) (as designated by paragraph (1)) the following:“(1) Foreign boards of trade.—“(A) Registration.—The Commission may adopt rules and regulations requiring registration with the Commission for a foreign board of trade that provides the members of the foreign board of trade or other participants located in the United States with direct access to the electronic trading and order matching system of the foreign board of trade, including rules and regulations prescribing procedures and requirements applicable to the registration of such foreign boards of trade. For purposes of this paragraph, ‘direct access’ refers to an explicit grant of authority by a foreign board of trade to an identified member or other participant located in the United States to enter trades directly into the trade matching system of the foreign board of trade. In adopting such rules and regulations, the commission shall consider—“(i) whether any such foreign board of trade is subject to comparable, comprehensive supervision and regulation by the appropriate governmental authorities in the foreign board of trade’s home country; and“(ii) any previous commission findings that the foreign board of trade is subject to comparable comprehensive supervision and regulation by the appropriate government authorities in the foreign board of trade’s home country.“(B) Linked contracts.—The Commission may not permit a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States direct access to the electronic trading and order-matching system of the foreign board of trade with respect to an agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on 124 STAT. 1727 a registered entity, unless the Commission determines that—“(i) the foreign board of trade makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and“(ii) the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)—“(I) adopts position limits (including related hedge exemption provisions) for the agreement, contract, or transaction that are comparable to the position limits (including related hedge exemption provisions) adopted by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles;“(II) has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process;“(III) agrees to promptly notify the Commission, with regard to the agreement, contract, or transaction that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, of any change regarding—“(aa) the information that the foreign board of trade will make publicly available;“(bb) the position limits that the foreign board of trade or foreign futures authority will adopt and enforce;“(cc) the position reductions required to prevent manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process; and“(dd) any other area of interest expressed by the Commission to the foreign board of trade or foreign futures authority;“(IV) provides information to the Commission regarding large trader positions in the agreement, contract, or transaction that is comparable to the large trader position information collected by the Commission for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and“(V) provides the Commission such information as is necessary to publish reports on aggregate 124 STAT. 1728 trader positions for the agreement, contract, or transaction traded on the foreign board of trade that are comparable to such reports on aggregate trader positions for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles.“(C) Existing foreign boards of trade.—Subparagraphs (A) and (B) shall not be effective with respect to any foreign board of trade to which, prior to the date of enactment of this paragraph, the Commission granted direct access permission until the date that is 180 days after that date of enactment.”.(b) Liability of Registered Persons Trading on a Foreign Board of Trade.—Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended—(1) in subsection (a), in the matter preceding paragraph (1), by inserting “or by subsection (e)” after “Unless exempted by the Commission pursuant to subsection (c)”; and(2) by adding at the end the following:“(e) Liability of Registered Persons Trading on a Foreign Board of Trade.—“(1) In general.—A person registered with the Commission, or exempt from registration by the Commission, under this Act may not be found to have violated subsection (a) with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person—“(A) has reason to believe that the transaction and the contract is made on or subject to the rules of a foreign board of trade that is—“(i) legally organized under the laws of a foreign country;“(ii) authorized to act as a board of trade by a foreign futures authority; and“(iii) subject to regulation by the foreign futures authority; and“(B) has not been determined by the Commission to be operating in violation of subsection (a).“(2) Rule of construction.—Nothing in this subsection shall be construed as implying or creating any presumption that a board of trade, exchange, or market is located outside the United States, or its territories or possessions, for purposes of subsection (a).”.(c) Contract Enforcement for Foreign Futures Contracts.—Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) (as amended by section 739) is amended by adding at the end the following:“(6) Contract Enforcement for Foreign Futures Contracts.—A contract of sale of a commodity for future delivery traded or executed on or through the facilities of a board of trade, exchange, or market located outside the United States for purposes of section 4(a) shall not be void, voidable, or unenforceable, and a party to such a contract shall not be entitled to rescind or recover any payment made with respect to the contract, based on the failure of the foreign board of trade to comply with any provision of this Act.”.124 STAT. 1729