Definition
The term Commodity Futures Trading Commission refers to an organization responsible for fostering open, transparent, competitive, and financially sound markets. The Commodity Futures Trading Commission is an independent governmental organization.
Explanation
Also referred to as the CFTC, the Commodity Futures Trading Commission is an independent governmental organization responsible for regulating the futures and options industries in the United States. While the history of futures contracts date back to the 1860s, the CFTC was established in 1974 as a result of the Commodity Futures Trading Commission Act.
The mission of the Commodity Futures Trading Commission is:
"... to foster open, transparent, competitive, and financially sound markets. By working to avoid systemic risk, the Commission aims to protect market users and their funds, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act (CEA)."
Responsibilities of the CFTC include:
Promoting market integrity by policing the derivatives markets for various abuses.
Lowering risk in the futures and swaps markets to the public and the overall economy of the United States.
Overseeing individuals and organizations, including swap execution facilities, derivatives clearing organizations, designated contract markets, swap data repositories, swap dealers, futures commission merchants, and commodity pool operators.
Related Terms
The term commodity refers to any mass-produced, unspecialized product which is oftentimes used as a raw material when creating a more specialized product. While the quality of a particular commodity may have specifications, its production oftentimes spans many suppliers.
Moneyzine EditorJanuary 11th, 2024
The term commodity trading advisor refers to an individual or organization that provides advice to a pool of investors in futures contracts and commodity options. Commodity trading advisors are regulated by the Commodity Futures Trading Commission as well as the National Futures Association.Moneyzine EditorJanuary 11th, 2024
The term commodity pool refers to an enterprise consisting of individual investors combining their funds to trade in futures contracts and options as a single entity. Commodity pools allow investors to gain leverage while reducing risk.Moneyzine EditorJanuary 11th, 2024
The term commodity pool operator refers to an individual or organization that is responsible for soliciting funds and investing those funds in futures and options contracts. Participating in commodity pools allows investors to gain leverage while reducing risk.Moneyzine EditorJanuary 11th, 2024
