Proposed Rule on Agricultural Swaps and Commodity Options

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Gavel.png FINAL RULE: This page refers to the proposed rulemaking on agricultural swaps and commodity options. The CFTC final rule on agricultural swaps was issued at its August 4, 2011 open meeting. The final rule on commodity options was approved at the CFTC Open Meeting, April 18, 2012.
Dodd-Frank Timeline, Commodity Options and Agricultural Swaps
Final Rule-Swaps Effective Date - Swaps Effective Date-Options
August 10, 2011 December 31, 2011 June 26, 2012
Dodd-Frank Timeline, Agricultural Swaps
Final Rule Issue Effective Date No-action Deadline
August 10, 2011 December 31, 2011 December 31, 2012
Dodd-Frank Timeline, Agricultural Commodities Definition
Proposal Date Final Rule Effective/Compliance Date
October 26,2010 July 13, 2011, September 12, 2011

The CFTC proposed a set of rules regarding commodity options and agricultural swaps at its January 20, 2011 open meeting. The rules appeared in the Federal Register on February 3, 2011. Under the proposal, commodity options and swaps on agricultural commodities (as defined by an earlier proposal, Agricultural Commodities Definition), in the same manner as other swap products, and subject to the same regulatory treatment under other provisions in the Dodd-Frank Act. This definition of "swap" would also include agricultural "options." Some exceptions, such as for options on a futures contract traded on a designated contract market (DCM), will remain in place. The public comment period was April 4, 2011. Related documents from the January 20, 2011 meeting can be found below.

According to the CFTC, the definition of "agricultural commodity" includes the following commodities that are currently the subject of derivatives trading, whether listed for trading on a futures exchange or traded bilaterally OTC: (1) The enumerated commodities that are listed in current § 1a(4) of the CEA (e.g., corn, wheat, soybeans, livestock, cotton); (2) the international "soft commodities' (e.g., coffee, sugar, cocoa); (3) lumber, plywood and similar wood-derived commodities; (4) contracts based on underlying commodities listed in (1)-(3) (e.g., corn and wheat basis swaps and calendar swaps); and (5) other commodities derived from living organisms, including plant, animal or aquatic life, that are used for human food, animal feed or fiber, and that currently are the subject of derivatives trading.[1]

Related Documents: Agricultural Swaps Rule Proposal, Fact Sheet, and Q&A

References

  1. Agricultural Swaps. Federal Register. Retrieved on January 24, 2011.

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