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Explanation:
The Consumer Financial Protection Agency Act of 2009 ("CFP A Act") as proposed 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) 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:
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1) Retail Foreign Exchange Dealers - a new category ofCFTC registrant created by the
"Farm Bill" of 2008 specifically to enable the CFTC to regulate and prosecute retail
fraud involving foreign currency contracts sold by such entities."
2) Futures Exchanges and Clearinghouses - including floor brokers, who deal with
individuals trading futures and commodity options;' and
3) New Categories ofCFTC Registrants - the possibility that future legislation could
create new categories of CFTC registrants.
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;
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.
Recommendation:
(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 parallel to the corresponding definition of a
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"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.
4 The term "registered entity" is defined in the Commodity Exchange Act to include futures
exchanges, derivatives clearing organizations, and certain electronic trading facilities provided
for in the statute. The proposed "Over-the-Counter Derivatives Markets Act of2009" also
would define an alternative swap execution facility as a "registered entity" as well.
3
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