text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``National Cheese Exchange Oversight 
  and Improvement Act of 1997''.
  
  SEC. 2. FINDINGS.
  
      The Congress finds that the operation of the National Cheese 
  Exchange and other cash markets is of national concern and in need of 
  Federal oversight because of the following:
              (1) The National Cheese Exchange, located in Green Bay, 
          Wisconsin, is the dominant cash market for bulk cheese in the 
          United States.
              (2) While less than 1 percent of the cheese produced in the 
          United States is sold on the National Cheese Exchange, the 
          price determined by the National Cheese Exchange acts as a 
          reference price for as much as 95 percent of the commercial 
          cheese transactions conducted in the United States.
              (3) A 3-year federally funded investigation into the 
          activities of the National Cheese Exchange determined that the 
          National Cheese Exchange is very thinly traded, highly 
          concentrated, completely unregulated, and subject to 
          manipulation.
              (4) The Coffee, Sugar, and Cocoa Exchange in New York, an 
          exchange regulated by the Commodity Futures Trading Commission, 
          trades futures contracts for cheese.
              (5) The low volume in trading of cheese futures contracts 
          on the Coffee, Sugar, and Cocoa Exchange is partially related 
          to concerns about the lack of viability, and potential for 
          manipulation, in the dominant cash market for cheese, the 
          National Cheese Exchange.
              (6) The National Cheese Exchange is completely unregulated 
          by any Federal or State agency.
              (7) The Commodity Futures Trading Commission claims a lack 
          of authority to regulate or oversee the National Cheese 
          Exchange and similar cash markets.
  
  SEC. 3. COMMODITY FUTURES TRADING COMMISSION REGULATION OF NATIONAL 
                CHEESE EXCHANGE AND SIMILAR CASH MARKETS.
  
      The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by 
  inserting after section 20 (7 U.S.C. 24) the following new section:
  
  ``SEC. 21. COMMISSION REGULATION OF NATIONAL CHEESE EXCHANGE AND 
                SIMILAR CASH MARKETS.
  
      ``(a) Definition of Concentrated Cash Market.--In this section, the 
  term `concentrated cash market' means--
              ``(1) the National Cheese Exchange located in Green Bay, 
          Wisconsin; and
              ``(2) a cash market for a commodity if the Commission 
          determines that--
                      ``(A) the cash market is geographically centralized 
                  in the form of a market or exchange;
                      ``(B) the cash market is very thinly traded or 
                  highly illiquid;
                      ``(C) the price established by the cash market 
                  functions as a reference price for a majority of 
                  commercial transactions off the cash market for the 
                  commodity being traded;
                      ``(D) trading in the cash market is concentrated 
                  among relatively few buyers and sellers;
                      ``(E) the cash market is substantially unregulated 
                  by any other regulatory structure (including State 
                  regulation or self-regulation);
                      ``(F) a futures market regulated under this Act 
                  also exists for the commodity that is being traded on 
                  the cash market; and
                      ``(G) the instability, illiquidity, or potential 
                  for manipulation for on the cash market could be a 
                  deterrent to the use of the futures market for that 
                  commodity.
      ``(b) Regulation of Concentrated Cash Markets.--In consultation 
  with the Secretary of Agriculture, the Commission shall regulate a 
  concentrated cash market under this Act until such time as the 
  Commission determines that the concentrated cash market is not 
  functioning as a reference price for a majority of commercial 
  transactions off the cash market for the commodity being traded on the 
  concentrated cash market.
      ``(c) Submission and Review of Operating Rules.--The Commission 
  shall require a cash market that is subject to this section to--
              ``(1) Submission required.--The Commission shall require a 
          concentrated cash market subject to regulation under subsection 
          (b) to submit to the Commission for approval a set of rules 
          governing the operation of the concentrated cash market; and
              ``(2) Time for submission.--In the case of the National 
          Cheese Exchange, the operating rules required under this 
          subsection shall be submitted not later than 90 days after the 
          date of enactment of this section. In the case of other 
          concentrated cash markets, the operating rules shall be 
          submitted not later than 90 days after the date on which the 
          Commission notifies the concentrated cash market that it is 
          subject to regulation under this section.
              ``(3) Notification of commission action.--The Commission 
          shall promptly review operating rules submitted by a 
          concentrated cash market under this subsection to determine 
          whether the rules are sufficient to govern the operation of the 
          concentrated cash market. Not later than 60 days after 
          receiving the rules from a concentrated cash market, the 
          Commission shall notify the concentrated cash market of the 
          result of the review, including whether the rules are approved 
          or disapproved. If disapproved, the Commission shall provide 
          such recommendations regarding changes to the rules as the 
          Commission considers necessary to secure approval and provide a 
          schedule for resubmission of the rules.
              ``(4) Subsequent rule changes.--A concentrated cash market 
          may not change approved operating rules unless the proposed 
          change is also submitted to the Commission for review and the 
          Commission approves the change in the manner provided in 
          paragraph (3).
      ``(d) Effect of Failure To Submit or Receive Approval of Rules.--
  Beginning 1 year after the date of the enactment of this section, the 
  National Cheese Exchange may operate only in accordance with rules 
  approved by the Commission under subsection (c). In the case of other 
  concentrated cash markets, beginning 1 year after the date on which the 
  concentrated cash market is notified that it is subject to regulation 
  under this section, the concentrated cash market may operate only in 
  accordance with rules approved by the Commission under subsection 
  (c).''.
target: National Cheese Exchange Oversight and Improvement Act of 1997 - Amends the Commodity Exchange Act to direct the Commodity Futures Trading Commission to regulate a concentrated cash market (as defined by this Act), including the National Cheese Exchange in Green Bay, Wisconsin, until the Commission determines that the market is not functioning as a reference price for off-market transactions of the commodity being traded on such market.
feat_title: National Cheese Exchange Oversight and Improvement Act of 1997