Commodity Futures Trading Commission: Difference between revisions

The '''Commodity Futures Trading Commission''' ('''CFTC''') is an [[Independent agencies of the United States government|independent agency of the US government]] created in 1974 that regulates the U.S. derivatives markets, which includes [[futures contract|futures]], [[Swap (finance)|swaps]], and certain kinds of [[option (finance)|options]].

The [[Commodity Exchange Act]] (CEA), {{UnitedStatesCode|7|1}} ''et seq.'', prohibits fraudulent conduct in the trading of futures, swaps, and other derivatives.  The stated mission of the CFTC is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.<ref>{{Cite web|url=https://www.cftc.gov/About/MissionResponsibilities/index.htm|title=Mission & Responsibilities {{!}} U.S. COMMODITY FUTURES TRADING COMMISSION|website=cftc.gov|access-date=2019-10-20}}</ref> After the [[financial crisis of 2007–08]] and since 2010 with the [[Dodd–Frank Wall Street Reform and Consumer Protection Act]], the CFTC has been transitioning to bring more transparency and sound regulation to the multitrillion-dollar swaps market.<ref name=wsj>{{cite news |last1= Ackermann |first=Andrew |date=April 9, 2014 |title=Senate Panel Approves Three Nominees to CFTC – WSJ  |url=https://www.wsj.com/news/articles/SB20001424052702304819004579489384108138464 |archive-url=https://web.archive.org/web/20151019105655/https://www.wsj.com/news/articles/SB20001424052702304819004579489384108138464 |archive-date=October 19, 2015 |access-date=April 14, 2018|url-access=subscription }}</ref>

 

[[Futures contracts]] for agricultural [[commodities]] have been traded in the U.S. for more than 150 years and have been under federal regulation since the 1920s.<ref>''See'' the [[Futures Trading Act of 1921]], Declared unconstitutional in [[Hill v. Wallace]] 259 U.S. 44 (1922), the [[Grain Futures Act]] of 1922 and [[Board of Trade of City of Chicago v. Olsen]] 262 US 1 (1923).</ref> The [[Grain Futures Act]] of 1922 set the basic authority and was changed by the [[Commodity Exchange Act]] of 1936 (7 U.S.C. 1 et seq.).<ref name="CRS 2005">{{cite web |title=Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition |website=Congressional Research Service |url=https://crsreports.congress.gov/product/pdf/RL/97-905 |format=PDF |archive-url=https://web.archive.org/web/20210520110634/https://crsreports.congress.gov/product/pdf/RL/97-905 |archive-date=2021-05-20 |date=June 16, 2005}}</ref><ref name="auto">{{cite web |url=http://www.cftc.gov/cftc/cftchome.htm |publisher=CFTC |title=About}}</ref>

In May 1998 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.<ref>Over-the-Counter Derivatives, 63 Fed. Reg. 26,114 (May 12, 1998).</ref> Legislation enacted in 1999 at the request of the [[US Treasury]], the [[Federal Reserve Board]], and the SEC limited the CFTC's rulemaking authority with respect to swaps and hybrid instruments until March 30, 1999, and froze the pre-existing legal status of swap agreements and hybrid instruments entered into in reliance on the 'Swap Exemption', the 'Hybrid Instrument Rule', the 'Swap Policy Statement, or the 'Hybrid Interpretation'.<ref>{{cite web | url=http://www.gpo.gov/fdsys/pkg/PLAW-105publ277/html/PLAW-105publ277.htm | title= Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999, § 760, as enacted in Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, 112 Stat. 2681, 2681–35 (1998).}}</ref> The text of that act read: "...the Commission may not propose or issue any rule or regulation, or issue any interpretation or policy statement, that restricts or regulates activity in a qualifying hybrid instrument or swap agreement".{{citation needed|date=September 2024}}  Shortly after Congress had passed this legislation prohibiting CFTC from regulating derivatives, Born resigned.<ref name="the_warning"/> She later commented the failure of [[Long-Term Capital Management]] and the subsequent bailout as being indicative what she had been trying to prevent.<ref name="the_warning"/><ref group=notes>Born was the focus of an October 2009 Frontline documentary titled "The Warning" and was also chronicled in the documentary ''[[Inside Job (2010 film)|Inside Job]]''. The two films recount her attempts to investigate and regulate the OTC [[derivative (finance)|derivative]]s market (PBS Frontline The Warning)</ref>