March 31, 2015


March 31, 2015

March 30, 2015

Commodity Futures Trading Commission (CFTC) Issues Interpretation of “Actual Delivery”

On August 23, the Commodity Futures Trading Commission issued an interpretation of the phrase “actual delivery” as it relates to the CFTC’s jurisdiction over retail commodity transactions. Section 2(c)(2) of the Commodity Exchange Act (CEA) grants the CFTC jurisdiction over retail commodity transactions, which are effectively defined as any agreement, contract or transaction in any commodity that is entered into with, or offered to, a person that is not an eligible contract participant or eligible commercial entity on a leveraged, margined or counterparty-financed basis. The CEA provides an exception for contracts that result in actual delivery within 28 days.  

The interpretive statement indicates that the CFTC will employ a functional approach to determining whether a particular contract, agreement or transaction is actually delivered. The CFTC stated that, instead of relying solely upon the language used by the parties, it will examine how an agreement, contract or transaction is marketed, managed and performed by considering the following factors: ownership, possession, title and physical location of the commodity purchased or sold, both before and after execution, including all related documentation; the nature of the relationship between the buyer, seller and possessor of the commodity purchased or sold; and the manner in which the purchase or sale is recorded and completed. 

The CFTC’s interpretation is available here.

©2015 Katten Muchin Rosenman LLP


About this Author

Kevin M. Foley, Finance Attorney, Katten Muchin law Firm

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

Blake J. Brockway, Finance Attorney, Katten Muchin Law Firm

Blake J. Brockway concentrates his practice in financial service matters.

Mr. Brockway received his Bachelor of Science, with distinction, from Iowa State University in 2005. He received his Juris Doctor, magna cum laude, from DePaul University College of Law in 2009, where he was selected to the Order of the Coif. During law school, Mr. Brockway served a research staff member of the DePaul Business and Commercial Law Journal and his comment, "Applying Federal Securities Laws to Chapter 11 Claim Conversions," was published in Volume 7, Issue 4...