Regulatory Alerts2014-11-20 | 2014-27285Added
Forward Contracts With Embedded Volumetric Optionality
The Commodity Futures Trading Commission and the Securities and Exchange Commission jointly issued a proposed interpretation to clarify when forward contracts with embedded volumetric optionality fall within the statutory exclusion from the definition of 'swap.' The agencies propose seven specific criteria, including requirements for actual delivery intent, commercial party status, and the primary purpose of addressing physical or regulatory supply and demand uncertainties. This action invites public comment on the proposed clarification by December 22, 2014, to resolve market participant confusion regarding the distinction between excluded forward contracts and regulated trade options.
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