The House Agriculture Committee Wednesday approved by voice vote six bills that would slightly alter and clarify some controversial points in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

One of the bills (HR 3527) responds to end users’ concerns, making explicit an exemption from the mandatory clearing requirement under Dodd-Frank for those end-users that use derivatives to hedge commercial risk.

The Dodd-Frank law, which was passed in July 2010, had included that exemption, but end users had pushed for clarification. Also one of the House measures (H.R. 2682) approved Wednesday would ensure that end-users are not subject to margin requirements.

Under HR 3527, the Commodity Futures Trading Commission (CFTC) also has the authority to exempt from designating a party entering into transactions on behalf of its customers as a swap dealer if the aggregate gross notional amount of the swap dealing transactions entered into over the course of the preceding calendar year is less than $3 billion. This is considerably less than the $10 billion asset limit that the CFTC proposed in December 2010 on exceptions for small financial institutions, credit unions, including farm credit unions, pension funds and municipalities (see Daily GPI, Dec. 10, 2010).

The Dodd-Frank Act, which exempts end-users from mandated clearing, requires the CFTC to consider whether to exempt small banks, savings associations, farm credit institutions and credit unions from the definition of financial entity and its clearing regulation.

The Electric Power Supply Association (EPSA) touted the House agriculture measures, particularly the one protecting Main Street end-users from “excessive regulation” by the CFTC. “This legislation would help ensure [energy] suppliers and others managing commercial risks are not miscast as a ‘swap dealer’ under Title VII of the Dodd-Frank law,” said EPSA CEO John E. Shelk.

The committee’s action “sends yet another strong message to the Commodity Futures Trading Commission that Congress clearly does not intend [energy] suppliers and others managing commercial risks to be regulated in the costly fashion that would accompany an undeserved ‘swap dealer’ designation,” he noted.

The House panel also passed legislation (HR 1840), which would require the CFTC to conduct cost and benefit analyses on all the rules that it approves to implement Dodd-Frank.

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