Commodity Futures Trading Commission


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Commodity Futures Trading Commission

The Commodity Futures Trading Commission (CFTC), the federal regulatory agency for futures trading, was established by the Commodity Futures Trading Commission Act of 1974 (88 Stat. 1389; 7 U.S.C.A. 4a), approved October 23, 1974. The commission began operation in April 1975 and its authority to regulate futures trading was renewed by Congress in 1978. Its authority was again renewed with the Commodity Futures Modernization Act of 2000, which also mandated major reforms of the commission. The CFTC maintains a comprehensive web site at <http://www.cftc.gov>.

The CFTC consists of five commissioners who are appointed by the president with the advice and consent of the Senate. The commissioners serve staggered five-year terms and by law no more than three commissioners can belong to the same political party. One commissioner is designated by the president to serve as chairperson. The chair's staff includes the Office of the Inspector General and the Office of International Affairs.

To comply with the requirements of the Modernization Act, the commission underwent a restructuring in 2002. As a result, it consists of six major operating units: the Division of Clearing and Intermediary Oversight, the Division of Market Oversight, the Division of Enforcement, the Office of the Chief Economist, the Office of the General Counsel, and the Office of the Executive Director.

The CFTC regulates trading on the 11 U.S. futures exchanges, which offer numerous kinds of futures contracts. It also regulates the activities of some three thousand commodity exchange members, 360 public brokerage houses (futures commission merchants), about 38,000 commission-registered futures industry salespeople and associated persons, and 2,500 commodity trading advisers and commodity pool operators. Some off-exchange transactions involving instruments similar in nature to futures contracts also fall under CFTC jurisdiction.

The commission's regulatory and enforcement efforts are designed to ensure that the futures trading process is fair and that it protects both the rights of customers and the financial integrity of the marketplace. The CFTC approves the rules under which an exchange proposes to operate and monitors exchange enforcement of those rules. It reviews the terms of proposed futures contracts and registers companies and individuals who handle customer funds or give trading advice. The commission also protects the public by enforcing rules that require that customer funds be kept in bank accounts separate from accounts maintained by firms for their own use, and that such customer accounts be marked to present market value at the close of trading each day.

Futures contracts for agricultural commodities were traded in the United States for more than one hundred years before futures trading was diversified to include trading in contracts for precious metals, raw materials, foreign currencies, commercial interest rates, and U.S. government and mortgage Securities. Contract diversification has grown in exchange trading volume, a growth not limited to the newer commodities.

The CFTC maintains large regional offices in Chicago and New York, cities in which eight of the nation's 11 futures exchanges are located. Smaller regional offices are located in Kansas City and San Francisco, and there is a suboffice of the Chicago regional office in Minneapolis.

Further readings

Commodity Futures Trading Commision. 2002 Annual Report. Available online at <www.cftc.gov/files/anr/anr2002.pdf> (accessed June 1, 2003).

References in periodicals archive ?
If adopted into law by Congress, this bill would provide much needed direct oversight of electronic over-the-counter energy trading in significant price discovery contracts (SPDCs), which are currently exempt from Commodity Futures Trading Commission (CFTC) authority.
The President intends to nominate Sharon Brown-Hruska, of Virginia, to be a Commissioner of the Commodity Futures Trading Commission for a five-year term expiring April 13, 2009.
WOODLAND HILLS - The Commodity Futures Trading Commission is filing a lawsuit against a Woodland Hills man, alleging he falsely claimed that customers would reap large profits from trading commodity options.
Hong Kong, made its first appearance in the United States District Court in San Francisco to respond to a civil suit filed by the Commodity Futures Trading Commission and the California Commissioner of Corporations charging that Frankwell's spot trading activity violated federal and state laws regulating commodity futures.
The GLB agencies are the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Department of the Treasury, the Offices of the Comptroller of the Currency and of Thrift Supervision, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, and the Securities and Exchange Commission.
SEC filings also show that ``Trade Your Way To Riches,'' a video Genesis used to market, is being investigated by the Commodity Futures Trading Commission, a regulatory agency.
Commodity Futures Trading Commission (CFTC) announced an agreement has been reached to settle charges of fraudulent solicitation and illegal operation against National Investment Consultants, Inc.
To be sure, the Commodity Futures Trading Commission (CFTC) has recently proposed issuing regulatory exemptions that would reduce legal uncertainty about the enforceability of over-the-counter (OTC) derivatives transactions and would conform the regulation of futures exchanges to the realities of today's marketplace.
But prices began to slide in late December and tumbled further last week amid speculation that the Commodity Futures Trading Commission, the industry regulating body for futures and options, has launched an investigation into possible manipulation of the silver market.
6, 1994, is to familiarize participants with current financial and regulatory reporting issues including Commodity Futures Trading Commission (CFTC) reporting requirements, performance tables, fund structures and off-shore funds.
Thus, if an exclusion of privately negotiated transactions from the CEA were conditioned on government supervision or regulation of any centralized clearing facility, the Board believes that supervision of the clearing facility by one of the federal banking agencies, by the SEC, or by the Commodity Futures Trading Commission should be sufficient for exclusion.
Bills pending in the House and Senate would result in less government regulation than most other exchanges worldwide, said Brooksley Born, chairwoman of the Commodity Futures Trading Commission.

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