“Eligible contract participants” include foreign banks, foreign regulated broker- dealers, and entities the obligations of which are insured by a state-regulated insurance company. 7 U.S.C. § 1a(12), (15) (2007). The parties have stipulated that ABN was a foreign bank.

Futures contracts in exempt commodities (i.e., non-financial or non-agricultural commodities) such as electricity, were permitted to be traded on an ECM such as ICE ECM. See 7 U.S.C. §§ 1a(14) and 2(h)(3) (2006). Case 2:13-cv-02093-TLN-DAD Document 44 Filed 12/16/13 Page 39 of 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS 23 transaction.

A “financial institution” is defined by the Commodity Exchange Act as, among other things, “a foreign bank or a branch of or agency of a foreign bank (each as defined in section 3101 of Title 12 [International Banking Act of 1978]).” 7 U.S.C. § 1a(15) (2007). The International Bank Act of 1978 defines a “foreign bank” as, among other things, “any company organized under the laws of a foreign country . . . which engages in the business of banking.”

(R943-46.) In economic terms, BDC received the results of owning loans for the terms of the swaps and Barclays received payments corresponding to interest for providing financing for BDC’s acquisition of the 3 The definition of “swap” in the Securities Exchange Act and Commodities Exchange Act also includes various option contracts (see 7 USC § 1a[47][A]; 15 USC § 78c[a][69]), but option contracts are not relevant to this case. -12- loans.

....................................................................................................................... 9 STATUTES & RULES 17 C.F.R. § 160.3 (2014) ........................................................................................................... 42 17 C.F.R. § 180.1 (2014) ..................................................................................................... 36, 37 17 C.F.R. § 180.2 (2014) ..................................................................................................... 32, 34 7 U.S.C. § 1a (2006)...................................................................................................... 27, 28, 29 7 U.S.C. § 1a (2012).................................................................................................................. 29 7 U.S.C. § 2 (2006) ............................................................................................................. 27, 29 7 U.S.C. § 9 (2006) ............................................................................................................. 32, 34 Case 1:14-cv-07126-JMF Document 152 Filed 12/12/14 Page 9 of 72 ix 7 U.S.C. § 9 (2012) ................................................................................................. 32, 34, 36, 37 7 U.S.C. § 13 (2006) ........................................................................................................... 32, 34 7 U.S.C. § 13 (2012) ........................................................................................................... 32, 34 7 U.S.C. § 25 (2006) .................................................................................

7 The Court’s holding in USD LIBOR II that LIBOR is not a commodity for purposes of the CEA (USD LIBOR II, 2013 WL 4504769, at *3) also directly contradicts the CEA’s definition of “Excluded Commodity” which includes interest rates. See 7 U.S.C. § 1a(19)(formerly 1a(13)) (“The term ‘excluded commodity’ means (i) an interest rate, exchange rate, currency, security, security index, credit risk or measure, debt or equity instrument, index or measure of inflation, or other macroeconomic index or measure . . . .”). Excluded commodities are subject to all CFTC anti- manipulation rules, including Section 9(a)(2), which criminalizes the dissemination of false market information.

A “swap” is a contract that typically involves an exchange of one or more payments based on the underlying value of a notional amount of one or more commodities, or other financial or economic interest, and that transfers between the parties PROTECTED INFORMATION DELETED PURSUANT TO PROTECTIVE ORDER Case 1:13-cv-00523-BAH Document 13 Filed 05/02/13 Page 11 of 54 4 the risk of future change in that value without also transferring an ownership interest in the un- derlying asset or liability. See 7 U.S.C. § 1a(47); Further Definition of “Swap,” Security-Based Swap,” and “Security-Based Swap Agreement,” 77 Fed. Reg. 48,208 (Aug. 13, 2012).

1(e)(8)(D)(i) (including “swap” within the definition of a “qualified financial contract” (“QFC”) eligible for protections under the FDIA). The FDIA limits the ability to challenge swap agreements as fraudulent transfers, and also preserves swap participants’ rights of termination, liquidation, netting and offset in the event of default. See id. § 1821(e)(8)(A)-(C) (protecting rights of participants in QFCs and limiting the avoidability of transfers in connection with QFCs). Similarly underscoring the importance of protecting investors in swaps, the Dodd- Frank Act seeks to increase swap market transparency and reduce systemic risk in financial markets by giving both the Commodities Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) broad authority to regulate swap agreements. See Michael S. Barr, The Financial Crisis and the Path of Reform, 29 Yale J. on Reg. 91, 92 - 93 (Winter 2012) (discussing the objectives of the Dodd-Frank Act); 7 U.S.C. §§ 1a(4), 6s (giving the CFTC authority to regulate “swaps dealers” and “major swap participants”); 15 U.S.C. § 78o-10 (giving the SEC authority to regulate “security-based swap dealers” and “major security-based swap participants”). Thus, to maintain consistency with the purposes behind other statutes and regulations governing swaps, any uncertainties should be resolved in favor of protecting the swap markets from disruptive avoidance and recovery actions. B. The Trustee Has Not Alleged Facts Demonstrating That The Collateral Came From BLMIS Or If So That The Relevant Initial Transfers Occurred after December 11, 2006 The only claims arising from transfers from the Rye Funds that could survive section 546(g) would be for subsequent transfers of actually fraudulent initial transfers within two years of the bankruptcy filing.

See Michael S. Barr, The Financial Crisis and the Path of Reform, 29 Yale J. on Reg. 91, 92 - 93 (Winter 2012) (discussing the objectives of the Dodd-Frank Act); 7 U.S.C. §§ 1a, 6s (giving the CFTC authority to regulate “swaps dealers” and “major swap participants”); 15 U.S.C. § 78o-8 (giving the SEC authority to regulate “security-based swaps dealers” and “major security-based swaps participants”). Thus, to maintain consistency with the purposes Case 1:12-mc-00115-JSR Document 186 Filed 06/13/12 Page 19 of 23 15 behind other statutes and regulations governing swaps, any uncertainties should be resolved in favor of protecting the swap markets from disruptive avoidance and recovery actions.

Complaint at Ex. A. 7 In its motion to dismiss, BONY makes much of the fact that Sentinel might not have met the statutory definition of an FCM under 7 U.S.C. § 1a(20). In light of Sentinel’s conduct of a business that required it to register as an FCM and BONY’s written acknowledgment that it was receiving deposits of customer funds within the meaning of the CEA from Sentinel acting in the capacity of an FCM, we respectfully submit that whether Sentinel performed all of the functions of a conventional FCM should not be determinative of BONY’s statutory obligations in this case.