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The stated mission of the CFTC is to foster open, transparent, competitive, and financially sound markets, to avoid systemic risk, and to protect the 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.
Futures contracts for agricultural commodities have been traded in the U. Since the s,  trading in futures contracts has expanded rapidly beyond traditional physical and agricultural commodities into a vast array of financial instruments, including foreign currencies, U.
Congress created the CFTC in as an independent agency with the mandate to regulate. Department of Agriculture 's Commodity Exchange Authority as the independent federal agency responsible for regulating commodity futures and option markets in the United States. As of the growth in the value of swaps had exploded since their introduction in the late s. In , the Dodd-Frank Act , expanded the CFTC's authority into the swaps markets , to prohibit the reckless use of manipulative schemes without -as in the past- having to prove the specific intent of the accused to affect prices and the existence of an artificial price.
The CFTC assures utility of the futures markets by encouraging their competitiveness and efficiency, ensuring their integrity, protecting market participants against manipulation, abusive trading practices, and fraud, and ensuring the financial integrity of the clearing process. The CFTC like the SEC, does not directly regulate the safety and soundness of individual firms, with the exception of newly regulated swap dealers and major swap participants, for whom it sets capital standards pursuant to Dodd-Frank.
As of the CFTC oversees 'designated contract markets' DCMs or exchanges , swap execution facilities SEFs , derivatives clearing organizations , swap data repository , swap dealers, futures commission merchants , commodity pool operators and other intermediaries. Two actions by the CFTC in led some market participants to express concerns that the CFTC might modify the "Swap Exemption" and attempt to impose new regulations on the swap market.
In May the CFTC issued a 'concept release' requesting comment on whether regulation of OTC derivatives markets was appropriate and, if so, what form such regulation should take. Since the CFTC has given secret exemptions from hedging regulations to 19 major banks and market participants, allowing them to accumulate essentially unlimited positions.
A trader or bank granted an exemption as a bona-fide hedger can affect the price of a commodity without being either its producer or consumer. In December during the subprime mortgage crisis , the CFTC began investigating transportation, storage and trading of U. On June 25, Speaker Pelosi sent a letter to President Bush calling on him to direct the CFTC to use its emergency powers to take immediate action to curb excessive speculation in energy markets, to investigate all energy contracts and that despite growing reports of excessive speculation in energy markets, the CFTC refused to take actions they have taken in the past.
In a campaign speech August presidential candidate Barack Obama argued that loopholes in CFTC regulations contributed to skyrocketing prices and lack of transparency on oil markets. In April Reuters reported that of the "40 major figures in the oil industry, including traders and analysts at some of the largest banks, trading houses and oil companies" interviewed, the vast majority 73 percent thought increased speculation boosted prices beyond what supply and demand fundamentals dictated.
Mark Wetjen wrote in an OpEd by the WSJ afterwards that ["bitcoin] could play a fascinating role in the derivatives markets as well as financial services. Based in Washington, D. The Commission consists of five Commissioners appointed by the President of the United States to serve staggered five-year terms. The President, with the consent of the United States 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. The Chairman's staff has responsibility for providing information about the Commission, interacting with other entities and for the preparation and dissemination of Commission documents. The Chairman's staff includes the Office of the Inspector General , which conducts audits of CFTC programs and operations, and the Office of International Affairs, the focal point for the Commission's global regulatory coordination efforts.
The Office of External Affairs OEA is the Commission's liaison with news media, producer and market user groups, educational groups, and the general public. OEA provides information about the regulatory mandate, the economic role of the futures markets, new market instruments, market regulation, enforcement actions, and customer protection initiatives. The Division of Swap Dealer and Intermediary Oversight oversees the registration, compliance, and business conduct standards of intermediaries, swap dealers and major swap participants.
The functions of the Division of Clearing and Intermediary Oversight include oversight of derivatives clearing organizations. The Division of Market Oversight has regulatory responsibility for initial recognition and continuing oversight of trade execution facilities, including new registered futures exchanges and derivatives transaction execution facilities. The regulatory functions of the Division include, among other things, market surveillance , trade practice reviews and investigations, rule enforcement reviews, review of product-related and market-related rule amendments, and associated product and market-related studies.
Director as of is Vincent A. Violations may involve commodity futures or option trading on domestic commodity exchanges, or the improper marketing of commodity investments.
The Division may, at the direction of the Commission, file complaints before the agency's administrative law judges or in the U. Alleged criminal violations of the Commodity Exchange Act or violations of other Federal laws which involve commodity futures trading may be referred to the Justice Department for prosecution. The Division also provides expert help and technical assistance with case development and trials to U.
Attorneys' Offices, other Federal and state regulators, and international authorities. Lowe,  and is Aitan Goelman. The Office of the Chief Economist is an independent office with responsibility for providing expert economic advice to the Commission. Its functions include policy analysis, economic research, expert testimony, education, and training.
As of the office is held by Sayee Srinivasan. OGC staff represents the Commission in appellate litigation and certain trial-level cases, including bankruptcy proceedings which involve futures industry professionals.
As the Commission's legal advisor, OGC reviews all substantive regulatory, legislative, and administrative matters presented to it and advises the Commission on the application and interpretation of the Commodity Exchange Act and other administrative statutes.
OGC also assists the Commission in performing its adjudicatory functions. Head as of April is Jonathan L. The Office of the Executive Director OED formulates and implements the management and administrative policies and functions of the agency. OED staff formulate the agency's budget, supervise the allocation and use of agency resources, promote management controls and financial integrity, and develop and maintain the agency's automated information systems.
The Office of Proceedings, which is under the administrative direction of OED, provides an inexpensive and expeditious forum for handling customer complaints against people or firms registered with the National Futures Association NFA through its reparations program. The Office of Proceedings also hears and decides enforcement cases brought by the Commission. It is responsible for recording and monitoring the trading of futures contracts on United States futures exchanges.
The CFTC has the authority to fine, suspend, or sue the company or individual in a federal court in cases of misconduct, fraud , or if a rule breaking occurs. The CFTC publishes weekly reports containing details of holdings for market-segments, which have 20 or more reportable participants.
The reports are released every Friday including data from the previous Tuesday and contain data on open interest split by reportable and non-reportable open interest as well as commercial and non-commercial open interest. The CFTC is authorized to regulate commodity pools and commodity trading advisors.
Many hedge funds operate as commodity pools. In an address to the Securities Industry Association in , Sharon Brown-Hruska, acting director of the CFTC, said that 65 of the top hedge funds in were commodity pools, and 50 out of the largest hedge funds were CTAs in addition to being commodity pools.
I'm an enforcement guy and I did investigations and brought cases for a number of years. I understand what folks in enforcement are looking for. Whistleblower complaints have no intrinsic value. When they're just sitting here with me, they just don't mean anything. They're valuable to the enforcement division so that they can bring investigations. And continues to explain "The information, however, can be about conduct that happened at any time". A whistleblower may receive a reward of between percent of the total sanctions imposed.
Unlike the other four main financial regulators, the CFTC does not have self-funding. A transaction fee has been "requested" for several years but Congress has not taken any legislative action. During the government shut down in October , SEC and Federal Reserve stayed open, but "futures and most swaps markets were left with essentially no cop on the beat".
O'Malia dissented from the FY spending plan saying that it did not allocate enough funding to new technology investments, but allocated too much to swap dealer oversight, duplicating the work of the self-regulatory National Futures Association.
From Wikipedia, the free encyclopedia. Commodity Futures Trading Commission Official seal. Christopher Giancarlo , Chairman. Retrieved 23 April Olsen US 1 Journal of Futures Markets. Financial derivatives, liberal states and transformative capacity PDF. Retrieved 13 March An Overview of U. Retrieved 14 March Retrieved February 20, Rules to Curb Commodities Speculation".
Retrieved May 3, New energy for America" PDF. Archived from the original PDF on October 17, Retrieved 27 December Retrieved 11 March Zerega, Thomas Watterson March 12, Commodity Futures Trading Commission. Retrieved 9 August Lowe as Acting Director of Division of Enforcement". Marcus as General Counsel". A Primer for Regulators". Retrieved 24 February Global last year or J.