EFS transactions work similarly to exchange of futures for physical (EFP) transactions. Two parties are allowed to privately negotiate the execution of an integrated swaps and related futures transaction on pricing terms agreed upon by the involved parties. The transaction must involve approximately equal but opposite side-of-market quantities of futures and swap exposures in the same or related commodities. EFS transactions are permitted to liquidate, initiate, and transfer futures market positions between the two parties involved in the transaction. The clearing member representing each party is responsible to notify the Exchange of the amount and type of futures contracts involved, the price at which the futures transaction should be cleared, and the identity of the parties involved.
The Exchange also permits EFS transactions in NYMEX Division natural gas, electricity, and Brent crude oil futures and for a slate of natural gas, crude oil and refined products, electricity, and coal contracts offered for trading on the NYMEX ClearPortsm trading platform.
Exchange President J. Robert Collins, Jr., said, "With the explosive growth in our copper market this year, industry participants will be able to use this tool to expand their flexibility in managing price risk while taking advantage of the Exchange's protection against counterparty credit risk."
