Web Trader MT5
The U.S. federal agency that oversees markets for commodity futures, options, and swaps. It was created in 1974, and its scope has grown significantly. The majority of the global derivatives market in interest rates, currencies, and energy is regulated by it when US participants are involved, or US markets are included.
The CFTC is not a part of the SEC. The general distinction: SEC regulates stocks, bonds, and options on securities; CFTC regulates derivatives on commodities, currencies, interest rates, and, more recently, crypto assets, which is one of the things they dispute with each other about.
There are three basic functions: exchange and clearing house rulemaking, exchange and clearing house enforcement, and publication of data (including the COT report, which is one of the most widely used series used in futures markets). Since the passage of the Dodd-Frank Act in 2008, the CFTC’s requirements have expanded to include previously unregulated OTC swaps, which must now be cleared through a central clearinghouse.
Example: A commodity trading company builds up futures positions in a grain contract in excess of the CFTC’s speculative position limits without having a valid hedging exemption in place. The CFTC conducts investigations, imposes hefty fines, and publishes the names of the firms. The damage to a firm’s reputation when clients start to reconsider the firm’s risk management culture is more expensive than the financial cost.
