CFTC Issues Interpretation Of The Term "Actual Delivery" For Retail Commodity Transactions

In response to a perceived gap in coverage, Section 742(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") granted the U.S. Commodity Futures Trading Commission ("CFTC") broad jurisdiction over retail commodity transactions, including those that take the form of spot contracts but function as futures contracts (so-called rolling spot contracts). On December 2, 2011, the CFTC issued an interpretation ("Interpretation") of the term "actual delivery" as used in section 742(a).¹ The Interpretation provides guidance on how the CFTC will apply the "actual delivery" exception to its jurisdiction over retail commodity transactions.

Background

For many years prior to the enactment of Dodd-Frank, participants in the retail commodity markets avoided CFTC regulation by using so-called rolling spot contracts. These contracts nominally required delivery of the underlying commodity within three days. In practice, however, a customer's