The US Commodity Futures Trading Commission (CFTC) has announced an Interpretation concerning its authority over retail commodity transactions, as provided by Section 2(c)(2)(D) of the Commodity Exchange Act (CEA).
Today’s Interpretation clarifies the CFTC’s view of the meaning of "actual delivery" under Section 2(c)(2)(D).
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Section 742(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the CEA to add Section 2(c)(2)(D), entitled "Retail Commodity Transactions." Section 2(c)(2)(D) broadly applies to any agreement, contract, or transaction in any commodity that is entered into with, or offered to, a non-eligible contract participant or non-eligible commercial entity on a leveraged, margined, or financed basis. The Section requires such agreements, contracts, and transactions to be conducted on a regulated exchange and subjects them to the CFTC’s anti-fraud authority. However, the Section does not apply if "actual delivery" of the commodity is made within 28 days.
On December 14, 2011, the CFTC issued in the Federal Register an Interpretation concerning the CFTC’s view of the meaning of "actual delivery" under Section 2(c)(2)(D) and requested public comment on the Interpretation. Today’s Interpretation clarifies the CFTC’s view of the meaning of "actual delivery" in response to the public comments received and provides guidance on how the CFTC will determine if a transaction involves actual delivery.
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