Commodity Futures Trading Commission (CFTC) is the government regulatory agency of the United States that regulates the trading of oil, grain, and other commodities on the Chicago Board of Trade (CBOE). The CFTC administers the market in which futures trading takes place. The CFTC regulates both the CBOE and the National Futures Association (NFA) which act as the international counterpart to the CFTC.
The CFTC is governed by an Independent Board that appoints members to the Futures Exchange Advisory Committee. Members of the CFTC are the principal traders in the commodity derivatives markets.
The CFTC has a section dedicated to reviewing the policies of the futures exchange while its counterpart in the U.S. government oversees the legal conduct of CFTC member firms.
The CFTC’s mission is to provide a marketplace for participants to trade in contracts for future delivery of commodities or indices, by means of bids, offers, and transactions. The CFTC also supervises market participants that interact with derivatives and the physical trading of commodities.
The Federal Reserve System regulates the banks that deal in the Commodity Future Trading Arrangement (CFT), the part of the CFTC. To ensure that members of the organization follow all CFTC regulations, the Board has opened and reviewed the procedures governing the members’ activities.
The CFTC has enacted statutes to prevent fraud and abuse in the organization. The statutes include the Commodity Exchange Act (CEA), the Commodity Exchange Act (CEA) [see cce-37.26] and the Federal Information Processing Standards (FIPS).
The CFTC has promulgated the Commodity Exchange Act to regulate the markets in commodities. It has been amended many times, especially since passage of the CEA in 1975.
The CEA was passed to protect consumers from unfair practices and take protective measures against fraud. It was amended in 1987 to add the Securities Exchange Act and the Food, Drug, and Cosmetic Act (FDCA). In addition, the CEA includes provisions to protect investors and the value of trading on the exchanges.
A variety of services are provided by the CFTC to facilitate trade. One of these services is the National Futures Association.
The NFA is a subsidiary of the CFTC. It provides a forum for market participants to engage in commercial and business transactions. Participants can transact with each other through publication and distribution of messages, electronic funds transfer, and other specialized services.
The NFA also provides an avenue for registration and approval of exchanges. The NFA offers reports that describe the new operations that have come into effect. These reports contain information on open operations, procedures, policies, and rules.
The Federal Insurance Office (FIO) is an agency of the CFTC. The FIO ensures that the organization’s charter and regulatory requirements are adhered to.