Without futures exchanges, there is no way
for individual investors to buy and sell their stakes on the market values of
various commodities. Moreover, oftentimes without futures brokers and brokerage firms,
there is no connection to the exchanges themselves.
In a perfect world, all such professionals
would hold themselves to ethical and moral standards alongside their outward
professionalism. With the idea that not everybody is so considerate in light of
potential gains they may make, though, as risky as futures trading is, it may
become all the more so with a crooked broker-dealer.
The U.S. Commodity Futures Trading
Commission (CFTC) is loosely
affiliated with the Federal Government. The CFTC was created by act of Congress
in 1974 as an independent entity designed to bring a sense of regulation and
standardization to the trading of futures and options. The CFTC is
dedicated to promoting level competition in the marketplace (as opposed to
oligarchic monopolization by a large-scale brokerage firm or other entity),
while at the same time not slowing down the rate of trade.
A critical component to this mission of the CFTC is investigations into allegations of fraud in
buyer-seller relations, as well as abusive practices of broker-dealers in
managing their clients’ monies. In addition, the CFTC encourages the free (legal) flow of information on
trading futures, demanding transparency in essential details such
as commodity price and relative risk of certain
Though the CFTC is primarily concerned with futures
exchanges on a domestic front, it also realizes the interrelatedness
of the global community and economy. Concordantly, alongside its oversight of
the industry and its regular reports on the state of the futures market, the
Commission has undertaken initiatives to address derivative contract regulation
on an international level.
For one, the CFTC is an associate member of the
International Organization of Securities Commission (IOSCO), and thus, upholds
IOSCO’s pledge to foster a spirit of cooperation amongst the world’s nations in
keeping securities exchanges safe and sound for consumers and producers alike.
Fairly recently, the CFTC has paired with the Committee of European
Securities Regulators (CESR) to establish a Task Force that would facilitate
futures trading across continents.