Commodity Futures Trading Commission February 3, 2011 – Federal Register Recent Federal Regulation Documents

The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is charged with proposing rules to implement new statutory provisions enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank Act''). The Dodd-Frank Act provides that swaps in an agricultural commodity (as defined by the Commission) are prohibited unless entered into pursuant to a rule, regulation or order of the Commission adopted pursuant to Commodity Exchange Act (``CEA'' or ``Act''). The Dodd-Frank Act also includes options (other than an option on a futures contract) in its definition of swaps. Broadly speaking, the rules proposed herein would implement regulations whereby swaps in agricultural commodities and all commodity options (including options on both agricultural and non-agricultural commodities), other than options on futures, may transact subject to the same rules as all other swaps. The proposed rules for swaps in an agricultural commodity would repeal and replace the Commission's regulations concerning the exemption of swap agreements. Because the Dodd-Frank Act defines commodity options (other than options on futures) as swaps, the proposed rules for options would substantially amend the Commission's regulations regarding commodity option transactions. Also, current regulations on domestic exchange-traded commodity option transactions applies not only to exchange-traded options on futures (which are excluded from the Dodd-Frank definition of a swap), but also to exchange-traded options on physical commodities (which are within the Dodd-Frank swap definition). Therefore, the proposed rules would remove references to options on physical commodities from the Commission's regulations for exchange-traded options on futures.