Commodity Futures Trading Commission

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Definition: Commodity Futures Trading Commission


Quick Summary of Commodity Futures Trading Commission


The Commodities Futures Trading Commission oversees various matters with commodities trading including disclosure, registration of trading firms and individual traders, fair trading practices, record keeping, and customer fund protection.




What is the dictionary definition of Commodity Futures Trading Commission?

Dictionary Definition


The Commodity Futures Trading Commission is an independent federal regulatory agency.

The Commodity Futures Trading Act of 1974 established the Commodity Futures Trading Commission to administer the Commodity Exchange Act.

The Commodity Futures Trading Commission regulates US commodity futures and option markets and protects market users and the public from fraud, manipulation, and abusive practices. Besides its Washington headquarters, the Commodity Futures Trading Commission has offices in New York, Chicago, Kansas City, and Minneapolis.

The Commodity Futures Trading Commission has five commissioners, appointed by the President for staggered five-year terms. The role of the commissioners of the Commodity Futures Trading Commission is to maintain fair and orderly markets, enforce market regulations, and protect customers from fraudulent or abusive trading practices.


Full Definition of Commodity Futures Trading Commission


Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and options markets in the United States. The agency’s mandate has been renewed and expanded several times since then, most recently by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In 1974 the majority of futures trading took place in the agricultural sector. The CFTC’s history demonstrates, among other things, how the futures industry has become increasingly varied over time and today encompasses a vast array of highly complex financial futures contracts.

Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC’s mission is to protect market users and the public from fraud, manipulation, abusive practices, and systemic risk related to derivatives that are subject to the Commodity Exchange Act, and to foster open, competitive, and financially sound markets.

The CFTC was formed in 1974 by the U.S. Congress.

Commissioners

The Commission consists of five commissioners appointed by the President, with the advice and consent of the Senate, to serve staggered five-year terms. The President, with the consent of the Senate, designates one of the commissioners to serve as Chairman. No more than three commissioners at any one time may be from the same political party.

Offices

Office Of The Inspector General

The Office of Inspector General (OIG) conducts and supervises audits and investigations of programs and operations of the CFTC and recommends policies to promote economy, efficiency and effectiveness in CFTC programs and operations and to prevent and detect fraud and abuse.

Chief Economist (OCE)

The Office of the Chief Economist provides economic support and advice to the Commission, conducts research on policy issues facing the Commission, and educates and trains Commission staff. The OCE plays an integral role in the implementation of new financial market regulations by providing economic expertise and cost-benefit considerations underlying those regulations.

Data And Technology (ODT)

The Office of Data and Technology provides technology and data management support for Commission market and financial oversight, surveillance, enforcement, legal support, and public transparency activities. ODT also provides general network, communication, storage, computing, and information management infrastructure and services.

Executive Director (OED)

The Executive Director ensures the Commission’s adaptation to the ever-changing markets it is charged with regulating, directs the allocation of CFTC resources, develops and implements management and administrative policy, and ensures program performance is measured and tracked Commission-wide. The OED also oversees the Commission’s Whistleblower and Consumer Affairs programs, and the Office of Diversity and Inclusion.

General Counsel (OGC)

The Office of General Counsel provides legal services and support to the Commission and all of its programs. These services include: representing the Commission in appellate, bankruptcy and other litigation; assisting in the performance of adjudicatory functions; providing legal advice and support for Commission programs; drafting and assisting in the preparation of Commission regulations; interpreting the CEA; and advising on legislative, regulatory, and operational issues.

Inspector General (OIG)

The Office of the Inspector General is an independent organizational unit at the CFTC. Its mission is to detect waste, fraud, and abuse and to promote integrity, economy, efficiency, and effectiveness in the CFTC’s programs and operations. As such it has the ability to review all of the Commission’s programs, activities, and records. In accordance with the Inspector General Act of 1978, the OIG issues semiannual reports detailing its activities, findings, and recommendations.

International Affairs (OIA)

The Office of International Affairs advises the Commission regarding international regulatory initiatives; provides guidance regarding international issues raised in Commission matters; represents the Commission in international organizations, such as the International Organization of Securities Commissions (IOSCO); coordinates Commission policy as it relates to international initiatives of the G20, Financial Stability Board and the US Treasury Department; and provides technical assistance to foreign market authorities.

Legislative Affairs (OLA)

  • The Office of Legislative Affairs is the Commission’s liaison with Congress. OLA coordinates the provision of reports, briefings and informational materials to Congressional offices and the testimony of agency officials before Congressional Committees. The office monitors legislative activities that affect the work of the Commission. It also manages the Commission’s response to inquiries on behalf of constituents and other communications from the legislative branch.

Public Affairs (OPA)

The Office of Public Affairs is the Commission’s liaison with the general public and news media. OPA issues press releases and media alerts, and maintains the Commission’s website and social media presence.

CFTC Committees

The CFTC’s Advisory Committees were created to provide input and make recommendations to the Commission on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. The committees facilitate communication between the Commission and U.S. futures markets, trading firms, market participants, and end-users. The committees, governed by the provisions of the Federal Advisory Committee Act, currently include:

  • Agricultural Advisory Committee
  • Global Markets Advisory Committee
  • Energy and Environmental Markets Advisory Committee
  • Technology Advisory Committee
  • CFTC-SEC Joint Advisory Committee

History

  • October 23-24, 1974 – Congress passes the Commodity Futures Trading Commission Act of 1974, and it is signed by President Gerald Ford. The bill overhauls the Commodity Exchange Act and creates the Commodity Futures Trading Commission (CFTC or Commission), an independent agency with powers greater than those of its predecessor agency, the Commodity Exchange Authority. For example, while the Commodity Exchange Authority only regulated agricultural commodities enumerated in the Commodity Exchange Act, the 1974 act granted the CFTC exclusive jurisdiction over futures trading in all commodities.
  • April 15, 1975 – Four of the first five CFTC members, including the CFTC’s first Chairman, are sworn in.
  • April 21, 1975 – Authority for the regulation of futures trading is transferred from the Commodity Exchange Authority, an agency in the Department of Agriculture, to the CFTC.
  • July 18, 1975 – The CFTC authorizes exchanges to continue trading futures contracts on a number of commodities previously unregulated under the Commodity Exchange Act. Effectively, this action brings under Federal regulation all commodities for which a futures contract is actively traded.
  • September 11, 1975 – The CFTC approves the first futures contract on a financial instrument—the Chicago Board of Trade Government National Mortgage Association (Ginnie Mae) certificates futures contract.
  • November 26, 1975 – The CFTC approves the first futures contract on U.S. government debt—the Chicago Mercantile Exchange 90-Day U.S. Treasury bill futures contract.
  • May 25, 1976 – The New York Mercantile Exchange declares a default in its May Maine potato contract. After an extensive investigation, the CFTC brings manipulation charges against both the long and short position holders.
  • April 28, 1977 – The CFTC asks the U.S. District Court in Chicago to order seven members of the Hunt family of Dallas, and a related company, to liquidate positions that exceed the three million bushel speculative position limit for soybean futures on the Chicago Board of Trade.
  • January 11, 1983 – President Reagan signs the Futures Trading Act of 1982, renewing the CFTC’s mandate to regulate futures trading for four more years and clarifying Commission jurisdiction in a number of areas. Among other things, this act codified the Shad-Johnson Accord (which gave the CFTC jurisdiction over broad-based stock index futures and banned single-stock and narrow-based stock index futures) and required the CFTC to act on new contract proposals and rule amendments within specified time periods (365 days for new contracts and 180 days for rule amendments).
  • December 21, 2000 – President Clinton signs into law the Commodity Futures Modernization Act of 2000, which, among other things, reauthorizes the Commission for five years, overhauls the Commodity Exchange Act to create a flexible structure for the regulation of futures and options trading, clarifies Commission jurisdiction over certain retail foreign currency transactions, and repeals the 18-year-old ban on the trading of single stock futures.  On the same day, the CFTC withdraws most of the New Regulatory Framework; however, the amendments to Regulation 1.25 concerning the investment of customer funds by futures commission merchants and derivatives clearing organizations are made effective immediately with some technical corrections.  The amendments permit investment of customer funds in new types of instruments, such as money market mutual funds.
  • January 14, 2010 – The CFTC votes at an open meeting to publish in the Federal Register a proposal to set position limits for futures and options contracts in the major energy markets.
  • March 25, 2010 – The CFTC holds an open meeting to examine the trading of futures and options in the precious and base metals markets.
  • April 3, 2010 – The CFTC Launches a new website along with supporting web 2.0 components.
  • April 29, 2010 – The CFTC issues an order filing and simultaneously settling (for a civil monetary penalty of $25 million among other things) charges that Moore Capital Management, LP, and various affiliated companies attempted to manipulate the settlement prices of platinum and palladium futures contracts on the New York Mercantile Exchange.
  • May 6, 2010 – Major stock indexes and stock index futures experience a brief but severe drop in prices, falling more than 5% in a matter of minutes, only to recover a short time later. Some individual securities experience more volatility than the stock indexes.
  • May 18, 2010 – The staffs of the CFTC and the SEC release preliminary findings related to the unusual market events on May 6, 2010.
  • May 24, 2010 – The newly formed Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues holds its first meeting.
  • June 14, 2010 – The CFTC approves the first futures contracts based on motion picture box office receipts after finding that the terms and conditions of Media Derivatives, Inc.’s proposed Weekend Motion Picture Revenue futures and options contracts do not violate the Commodity Exchange Act or CFTC regulations. However, the Dodd-Frank Act contains provisions that ban futures contracts based on motion picture box office receipts.
  • July 21, 2010 – President Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Title VII of the Dodd-Frank Act amends the Commodity Exchange Act to establish a comprehensive new regulatory framework for swaps and security-based swaps. The legislation is enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: 1) providing for the registration and comprehensive regulation of swap dealers and major swap participants; 2) imposing clearing and trade execution requirements on standardized derivative products; 3) creating robust recordkeeping and real-time reporting regimes; and 4) enhancing the Commission’s rulemaking and enforcement authorities with respect to, among others, all registered entities and intermediaries subject to the Commission’s oversight. On the same day, the CFTC releases a list of 30 areas of rulemaking to implement the Dodd-Frank Act.
  • August 16, 2010 – The CFTC sanctions ConAgra Trade Group, Inc. (CTG) $12 Million for causing a non-bona fide price to be reported in the NYMEX Crude Oil futures contract. On January 2, 2008, CTG was the first to purchase NYMEX crude oil futures contracts at the then-historic price of $100. As a result of CTG’s effort to be the first to trade at the $100 level, CTG caused a non-bona fide price to be reported, according to the CFTC order.

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Definition Sources


Definitions for Commodity Futures Trading Commission are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th August, 2021 | 1 Views.