Exchange of Futures for Swaps
It is similar to ""exchange for physicals," "exchange for options," and is sometimes called "exchange for risk."
An EFP transaction involves a privately negotiated and simultaneous exchange of a futures position for a corresponding position in the underlying physical.
An EFS works similarly to an exchange of futures for physicals (EFP), except that an EFS allows market participants to exchange a position in a futures contract on a commodity for a cash-settled position instead of the physical commodity.
An EFS also gives market participants the ability to liquidate a swaps position in a market that may have limited liquidity, for example the over-the-counter (OTC) swaps market.
In May of 2013, the U.S. Commodity Futures Trading Commission initiated an investigation into EFS with a “special call” asking market participants to provide documents that their EFS transactions were legal. The CFTC requested information on EFSs executed after the passage of the Dodd-Frank financial reform law in 2010 until this year.