It stands for exchange of futures for physicals. By definition, it is a transaction that involves simultaneously taking a cash position and futures position on the same underlying. That means, a position taken in the underlying is traded for a futures position. With this transaction, the long and short position holders agree to delivery terms different from the terms set out in the futures contract, where the buyer of a cash commodity hands over to the seller an equivalent amount of long futures, or receives from the seller an equivalent amount of short futures at a negotiated price difference. That has the effect of closing out the opposite hedges in futures held by both parties.

The EFP transaction is also called a cash futures swap, against actuals, exchange of futures for cash, Ex-Pit Transaction.