WSPP Dodd-Frank Presentation

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Overview of the Swap Regulations (cont.) • Trade Option Exemption – CFTC says all commodity options are swaps, but some (trade options) are exempt where: 1. the seller is either an eligible contract participant (generally a financial house) or a producer, processor, commercial user, etc. of the commodity and is entering into the transaction solely for purposes related to its business 2. the buyer of the commodity option is producer, processor, commercial user, etc. of the commodity and is entering into the transaction solely for purposes related to its business 3. both parties intend that the commodity option be physically settled, so that, if exercised, the option would result in delivery
Overview of the Swap Regulations (cont.) • End-User Exception – CFTC says the clearing requirement for swaps will not apply where one of the counterparties to the swap: 1. is not a financial entity 2. is using the swap to hedge or mitigate commercial risk 3. notifies CFTC how it generally meets its financial obligations associated with entering into the noncleared swaps
Page 1 and 2: Dodd-Frank Swap Regulations and the
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Page 11 and 12: WSPP Agreement Transaction As Forwa
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WSPP Dodd-Frank Presentation

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