CFTC Proposes to Clarify Its Interpretation of Forward Contracts with Embedded Volumetric Optionality (Fed. Reg.)

The CFTC's proposed clarification of its interpretation of forward contracts with embedded volumetric optionality was published in the Federal Register.

The proposed interpretation clarifies when an agreement, contract or transaction that provides for variations in delivery amount (i.e., that contains embedded volumetric optionality) will be considered a forward contract and, thus, will be excluded from the "swap" and "future delivery" definitions in the Commodity Exchange Act.

The interpretation was issued jointly by the CFTC, the SEC and the Board of Governors of the Federal Reserve System. Comments must be received by December 22, 2014.

See: 79 FR 69073.Related news: CFTC Approves Rule Proposals and Product Interpretation (with Delta Strategy Group Summary and Lofchie Comment) (November 3, 2014).