CFTC Staff Clarifies Scope of Swap Definition: CFTC’s Office of General Counsel Responds to Questions Regarding Certain Physical Commercial Agreements

Sullivan & Cromwell LLP - November 15, 2012

On November 14, 2012, the Officer of the General Counsel (the “OGC”) of the Commodity Futures Trading Commission (the “CFTC”) issued a response to frequently asked questions (the “FAQ”) in which it clarified the scope of the definition of the term “swap” in response to comments received on the CFTC’s August 13, 2012 final rules further defining that term. The FAQ clarifies that certain agreements for the use of a facility (such as electricity generation tolling agreements, terminal agreements, storage agreements, etc.) would not be commodity options subject to the definition of swap provided that these agreements satisfied certain criteria.