Dodd-Frank Update: CFTC Proposes To Reduce Trade Option Obligations For End Users

On April 30, 2015, the Commodity Futures Trading Commission ("CFTC") issued a notice of proposed rulemaking ("NOPR") proposing to reduce certain reporting and recordkeeping requirements for end users. Notably, the NOPR proposes to eliminate the Form TO filing requirement and the Part 45 swap reporting requirement for end users in connection with trade options, while requiring end users to notify the CFTC if their trade option transactions have, or, alternatively, are expected to have, an aggregate notional value in excess of $1 billion in any calendar year.

Background

Pursuant to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") and the CFTC's incorporating rules and regulations, commodity options generally are subject to regulation as swaps (unless such options are excluded – such as certain forward contracts with embedded volumetric optionality). In 2012, the CFTC issued an interim final rule providing for light-handed regulation