U.S. Commodity Futures Trading Commission Definition and History
Commodities Futures Trading Commission Overview
The Commodities Futures Trading Commission (CFTC) was founded in 1975 and is empowered by the U.S. government to monitor and regulate trading of futures contracts. The CTFC is tasked with protecting American citizens from scams and abusive practices that take place in the futures industry.
Mission of the CTFC
The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.
History of CTFC
The CTFC was established as an independent agency in 1974 by the United States government. Prior to the formation of the CTFC, there was little regulation around the trading of commodities in the U.S. There were some regulations established in the 1920s but these were setup to primarily monitor the trading of agricultural contracts (wheat, corn, etc.). As the financial world has continued to expand, there are a number of additional investment vehicles traded, such as foreign currencies and foreign stock indices. This expansion ultimately lead to the formation of the CTFC as their needed to be more regulation and insight surrounding this multitude of trading activity.
Commodities Futures Trading Commission Organizational Structure
The CTFC consists of three primary components: (1) Commissioners, (2) Offices of the Chairman, and (3) Operating Units.
The Commission consists of five Commissioners appointed by the President and serve a staggered five-year terms. The President selects which Commissioner acts as the chairman. Out of the total five Commissioners there can be no more than three that have the same political party affiliation.
Offices of the Chairman
The Offices of the Chairman consists of a number of groups that handle media relations, provides information about the CTFC, and spearheads customer protection initiatives. The main component of the Offices of the Chairman is the Office of External Affairs.
The CTFC is comprised of a number of operating units. There are six primary operating units. The operating units are broken out into two subgroups. The first subgroup is responsible for monitoring and enforcing regulations and consists of the following three units: (1) Division of Clearing and Intermediary Oversight, (2) Division of Market Oversight, and (3) Division of Enforcement. The second subgroup is responsible for legal and overall leadership and consists of the following three units: (1) Office of Chief Economist, (2) Office of the General Counsel and (3) Office of the Executive Director.