On May 12, 2015, the US Commodity Futures Trading Commission and the US Securities and Exchange Commission, after consultation with the US Board of Governors of the Federal Reserve System, jointly issued an interpretation concerning forward contracts with embedded volumetric optionality. The interpretation clarifies certain aspects of the original CFTC proposal made in November 2014 and identifies when an agreement, contract or transaction would fall within the forward contract exclusions from the “swap” and “future delivery” definitions in the Commodity Exchange Act, allowing for forward contracts that provide for variations in delivery amount (i.e., contains “embedded volumetric optionality”).

Although the interpretation was issued jointly, it is solely an interpretation of the CFTC and does not apply to the exclusion from the swap and security-based swap definitions for security forwards or to the distinction between security forwards and security futures products.

The CFTC’s Final Interpretation is available at: http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2015- 11946a.pdf and the ‘Fact Sheet’ providing a summary of the interpretation is available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/volumetric_factsheet051215.pdf