Swaps End-User Update - CFTC Proposes Reporting And Recordkeeping Relief For Commodity Trade Options

On April 30, 2015, the U.S. Commodity Futures Trading Commission (CFTC) approved a notice of proposed rulemaking (Proposed Rules) to reduce reporting and recordkeeping obligations for end-users that use commodity trade options (CTOs). CTOs are contracts for the delivery of a physical commodity (i.e., an energy or agricultural commodity) with an option or embedded option¹ that meets three conditions: (1) the option is offered byeither an "eligible contract participant" or a commercial participant (a producer, processor or commercial user of, or merchant handling, the underlying physical commodity); (2) the option is offered toa commercial participant; and (3) the option is intended to be physically settledso that, if exercised, the option would result in the sale of an energy or agricultural commodity for immediate or deferred shipment or delivery. The Proposed Rules are intended to reduce reporting and recordkeeping requirements where end-users enter into CTOs with