The CFTC has released its interpretation of the term “actual delivery,” as well as notes on how the Commission will decide if an actual delivery exemption applies to a given transaction. This interpretive statement relates to the anti-fraud authority invested in the CFTC by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Since the matter has been voted on and settled, it is no longer on the agenda for the December 5th Commission meeting. However, it is still open for public comment for sixty days after publication to the Federal Register.
The Dodd-Frank Act amends the CEA to include a section entitled “Retail Commodity Transactions,” which applies to any agreement, contract, or transaction in any commodity entered into with or offered to retail clients on a leveraged, margined, or financed basis. The section mandates that agreements with retail clients be executed on a regulated exchange and submit to the CFTC’s anti-fraud authority. The only transactions exempt from this provision are those that are “actually delivered” within 28 days.” The recent interpretive notice addresses the specific characteristics of “actual delivery.”
“In this Section of the Dodd-Frank Act, Congress provided the CFTC with added authority to prosecute ponzi schemes and other frauds that are perpetrated in the retail commodities markets, such as scams by people acting as legitimate providers of investments in precious metals like gold and silver. We will use this authority aggressively to protect investors and the markets, ” explains CFTC Director of the Division of Enforcement David Meister.