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 ?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed last year, includes financial regulations designed to limit speculation, but the Commodity Futures Trading Commission, which regulates trading, has not yet implemented them, despite a deadline that has come and gone.
The SEC and Commodity Futures Trading Commission are moving forward to identify agency overlaps even as some in the credit union industry continue to speak out against a consolidated financial services regulator.
The Commodity Futures Trading Commission is looking into that practice.
These excerpts of US General Accounting Office reports review changes in energy markets that potentially affect prices and the efforts of the Commodity Futures Trading Commission (CFTC), to various degrees of success, to oversee trading in crude oil, unleaded gasoline, natural gas and heating oil.
The Financial Services Authority is to cooperate with a US Commodity Futures Trading Commission probe into potential oil market abuses under existing information sharing agreements.
In the price-manipulation inquiry, the Commodity Futures Trading Commission is looking into whether DFA sought to drive up the price of milk through its trading of cheese contracts at the Chicago Mercantile Exchange.
To prepare for a crisis, Paulson has activated a financial working group whose key members are the Fed's Bernanke, Securities and Exchange Commission head Chris Cox, NEC director Hubbard, and Reuben Jeffrey of the Commodity Futures Trading Commission. Paulson is in charge and has assigned Emil Henry, Assistant Treasury Secretary for Financial Institutions, as the hands-on director of the group.
Investment and speculative fund holdings of exchange-traded precious metals, as measured by the Commodity Futures Trading Commission, have grown significantly.
CBOT noted that it is awaiting certification on the new contract from the Commodity Futures Trading Commission.
The ANPR was developed jointly by the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.
The accounts were reportedly frozen at the request of the American Commodity Futures Trading Commission.
Commodity Futures Trading Commission (CFTC) has issued a ''no-action letter'' to the Osaka Securities Exchange (OSE), allowing U.S.

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