2.—(1) For the purposes of the definition of “derivatives contract” in section 2(1) of the Act, a contract or arrangement for the sale and purchase of one or more commodities (called in this regulation underlying commodities) is prescribed not to be a derivatives contract if —| (a) | the contract or arrangement is for the purpose of fulfilling the needs of the day‑to‑day operations of the business of one or more of the parties to the contract or arrangement; and | | (b) | subject to any settlement option that may be agreed amongst the parties to the contract or arrangement —| (i) | the seller of the underlying commodities is required to deliver the underlying commodities; and | | (ii) | the buyer of the underlying commodities is required to take delivery of the underlying commodities. |
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| (2) In this regulation, “settlement option” means an option under which the parties to the contract or arrangement may settle part or all of the amounts owing by one party to the other party by payment of cash instead of delivery of the commodity or commodities, as the case may be. |
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