Commodity Futures Trading Commission (CFTC)

What Is Commodity Futures Trading Commission (CFTC)?

The Commodity Futures Trading Commission (CFTC) is a US-based federal regulatory organization that operates independently. It is in charge of promoting the integrity and resilience of the US derivatives market, which comprises futures, swaps, and some types of options. 

In addition, it makes fraudulent behavior in these markets illegal. With the passage of the Commodity Futures Trading Commissions Act in 1974, the CFTC was established. During this time, the majority of futures trading took place in the country's agricultural sector. 

Since then, the Commission's jurisdiction has had to diversify and modernize to encompass foreign currencies, along with national and international government securities and stock indices.

Mission of the Commodity Futures Trading Commission (CFTC)

The CFTC's declared aims and responsibilities are to ensure that the US derivatives markets operate efficiently. The Commodity Futures Trading Commission's (CFTC) aim is to promote open, transparent, competitive, and sound financial markets. 

By focusing on avoiding systemic risk, the Commission hopes to protect market participants and their funds, consumers, and the general public against fraud, manipulation, and illegal practices involving derivatives and other products covered by the Commodity Exchange Act (CEA).

Despite its focus on various industry areas, the CFTC and the Securities and Exchange Commission share identical goals (SEC). Both agencies are working to avoid market manipulation and fraud, such as Ponzi and pyramid schemes. 

As part of their plan, the so-called whistleblower programs compensate persons who submit important information regarding fraudulent operations. Since 2014, the CFTC Whistleblower program has awarded nearly $85 million. 

Despite its focus on various industry areas, the CFTC and the Securities and Exchange Commission share identical goals (SEC). Both agencies are working to avoid market manipulation and fraud, such as Ponzi and pyramid schemes. 

The so-called whistleblower programs, as part of their plan, compensate persons who submit important information regarding fraudulent operations. Since 2014, the CFTC Whistleblower program has awarded nearly $85 million. 

Following the 2008 financial crisis, Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gave the CFTC and SEC expanded authority, particularly over major derivatives trading.