As a general matter, commodity swaps and options on commodities, whether or not physically settled, are subject to regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act. This is because the definition of "swap" contained in the Commodities Exchange Act (CEA) includes any agreement commonly known as an energy swap, an emissions swap or a commodity swap and any option on any such agreement. In addition, the term "swap" includes an "option of any kind that is for the purchase or sale, based on the value of 1 or more commodities."
However, there are exclusions from the definition of "swap," including an exclusion for any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled (the "forward contract exclusion").
READ: Searching For Swap Regulation Relief Under Dodd-Frank