To ensure compliance with Commodity Futures Trading Commission (CFTC) regulations, the American Gas Association (AGA) has asked the agency to clarify the extent to which non-financial contracts for the physical delivery of natural gas are within the scope of the Dodd-Frank Wall Street Reform Act’s regulation of “swaps.”

“The current lack of regulatory certainty as to the treatment of physical natural gas transactions has created immense confusion in the industry, resulting in enormous compliance challenges and serious impacts on the physical natural gas market,” said AGA’s Andrew Soto, senior managing counsel for regulatory affairs.

“We hope the agency will provide clarity on the scope of the definition of ‘swaps’ and the requirements for reporting ‘trade options’ so that natural gas utilities can determine which of their physical gas contracts are subject to the Dodd-Frank regulations and how they must be reported. We urge the CFTC to take action before next Wednesday (April 10), to issue temporary no-action relief from compliance with the ‘swap’ reporting and recordkeeping requirements until the clarity is provided,” Soto said.

AGA commended CFTC Commissioner Bart Chilton’s decision not to support an enforcement action against an end-user, exchange, or anyone else on an issue deserving clarity that is the subject of an outstanding request for interpretive guidance.

Chilton issued an “End-User Bill of Rights” Wednesday, which pointed out that the industry was one week away from an important date in Dodd-Frank implementation: the April 10 compliance date for Dodd-Frank swap reporting rules for end-users. The date represents the first major compliance date for the end-user community, a class of market participants that includes many who have not been regulated by the CFTC until now, he said.

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