On June 29, 2016, US Senator Elizabeth Warren (D-Mass), along with US Senator Mark Warner (D-Va), introduced a new derivatives regulation bill. The Derivatives Oversight and Taxpayer Protection Act proposes to strengthen federal oversight of the derivatives market and ensure that big financial firms, instead of taxpayers, will be held responsible for derivative losses.

If enacted, Senator Warren’s bill would greatly expand the regulatory capacities and powers of the CFTC. It proposes to provide the CFTC with a stable funding stream and allows the agency to impose penalties large enough to impact the bottom lines of even the largest financial firms. The bill also proposes to place certain cross-border and foreign exchange swaps under CFTC jurisdiction, changes how derivatives are treated in bankruptcy, requires posting of initial margin for inter-affiliate swaps, limits the use of netting in calculating risk-based capital and leverage limits relating to derivatives transactions and requires regulators to review derivatives clearinghouses.

The text of the bill is available at: http://www.warren.senate.gov/files/documents/2016-6- 29_Derivatives_Oversight_and_Taxpayer_Protection_Act_Bill_Text.pdf