This bill amends the Commodity Exchange Act to change how derivatives clearing organizations choose and approve depositories that store precious metals used for futures contracts. Clearing organizations must create and publish clear, objective rules for selecting depositories and give depositories a formal way to apply. When choosing depositories, the organizations must consider geographic diversity, competition, risk management, storage costs, and systemic risk. The bill requires at least two approved depositories in each U.S. time zone (Eastern, Central, Mountain, Pacific). It also requires clearing organizations to periodically check how easy it is for market participants to access physical deliveries and to include application conditions for metal service providers such as depositories.
No publicly available information on costs or budgetary effects is provided in the bill text.
The bill's findings say that storing precious metals near a single location creates systemic risk and reduces liquidity. Proponents argue that increasing the number and geographic spread of depositories can lower storage costs, increase competition and market access, and improve market resiliency. They also say clearing organizations should use clear and transparent selection processes.
No publicly available information on opponents' views is provided in the bill text.