Reference Price Law and Legal Definition

According to 17 CFR 34.2 [Title 17 -- Commodity and Securities Exchanges; Chapter I -- Commodity Futures Trading Commission; Part 34 -- Regulation of Hybrid Instruments], reference price means “a price nearest the current spot or forward price, whichever is used to price instrument, at which a commodity-dependent payment becomes non-zero, or, in the case where two potential reference prices exist, the price that results in the greatest commodity-dependent value.”