COMMODITY FUTURES TRADING COMMISSION
The Commodity Futures Trading Commission
(CFTC), the federal regulatory agency for
futures trading, was established by the Com-
modity Futures Trading Commission Act of
1974 (88 Stat. 1389; 7 U.S.C.A. 4a), approved
October 23, 1974. The commission began oper-
ation 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 compre-
hensive 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 commis-
sioners serve staggered five-year terms and by
law no more than three commissioners can
belong to the same political party. One commis-
sioner is designated by the president to serve as
chairperson. The chair’s staff includes the Office
of the Inspector General and the Office of Inter-
national 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 Clear-
ing 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 Exec-
utive 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 commis-
sion-registered futures industry salespeople and
associated persons, and 2,500 commodity trad-
ing advisers and commodity pool operators.
Some off-exchange transactions involving
instruments similar in nature to futures con-
tracts also fall under CFTC jurisdiction.
The commission’s regulatory and enforce-
ment 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 com-
panies 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 (accessed June 1, 2003).
