45-465: The Commodity Futures Trading Commission ( CFTC ) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures , swaps , and certain kinds of options . The Commodity Exchange Act (CEA), 7 U.S.C. § 1 et seq. , prohibits fraudulent conduct in the trading of futures, swaps, and other derivatives. The stated mission of
90-616: A Cabinet secretary) and the Executive Office of the President . In a narrower sense, the term refers only to those independent agencies that, while considered part of the executive branch , have regulatory or rulemaking authority and are insulated from presidential control, usually because the president's power to dismiss the agency head or a member is limited. Established through separate statutes passed by Congress , each respective statutory grant of authority defines
135-448: A commission, board, or similar collegial body consisting of five to seven members who share power over the agency. (This is why many independent agencies include the word "Commission" or "Board" in their name.) The president appoints the commissioners or board members , subject to Senate confirmation, but they often serve terms that are staggered and longer than a four-year presidential term, meaning that most presidents will not have
180-526: A narrower sense, the term independent agency refers only to these independent regulatory agencies that, while considered part of the executive branch, have rulemaking authority and are insulated from presidential control, usually because the president's power to dismiss the agency head or a member is limited. Independent agencies can be distinguished from the federal executive departments and other executive agencies by their structural and functional characteristics. Their officers can be protected from removal by
225-487: Is $ 35 M less than the request for the previous year, and would fund "100 less employees than we need" per Chilton, who called the budget "woefully insufficient" for CFTC's more than 40-fold increased purview. In February 2014, Commissioner Scott D. O'Malia dissented from the FY 2014 spending plan saying that it did not allocate enough funding to new technology investments, but allocated too much to swap dealer oversight, duplicating
270-467: Is a futures and forwards exchange in London , United Kingdom with the world's largest market in standardised forward contracts , futures contracts and options on base metals . The exchange also offers contracts on ferrous metals and precious metals . The company also allows for cash trading. It offers hedging , worldwide reference pricing, and the option of physical delivery to settle contracts. It
315-488: Is confirmed, but not beyond the expiration of the next session of Congress subsequent to the expiration their term. 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 current CFTC commissioners as of September 21, 2024: President Biden has nominated
360-593: The $ 268 million appropriated for FY2019. Chairman Tarbert commented that this "fully matched" the CFTC's request, the first time that had happened in "nearly a decade." Independent agencies of the United States government [REDACTED] [REDACTED] In the United States government , independent agencies are agencies that exist outside the federal executive departments (those headed by
405-619: The Financial Conduct Authority , which supervises the London Metal Exchange . In 1998 CFTC chairperson Brooksley E. Born lobbied Congress and the President to give the CFTC oversight of 'off-exchange markets' for over-the-counter (OTC) derivatives in addition to its existing oversight of exchange-traded derivatives, but her warnings were opposed by other regulators. Two actions by the CFTC in 1998 led some market participants to express concerns that
450-908: The Securities and Exchange Commission , the Federal Reserve , the Commodity Futures Trading Commission , the Federal Deposit Insurance Corporation , and the Consumer Financial Protection Bureau . Generally, the heads of independent regulatory agencies can only be removed for cause, but Cabinet members and heads of independent executive agencies, such as the head of the Environmental Protection Agency , serve "at
495-418: The swaps markets . The swaps markets currently have a notional value of more than $ 400 trillion. The CFTC oversees the derivatives markets by encouraging their competitiveness and efficiency, ensuring their integrity, protecting market participants against manipulation, abusive trading practices, fraud, and ensuring the financial integrity of the clearing process . The CFTC generally does not directly regulate
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#1732765850092540-694: The CFTC (Commodity Futures and Trading Commission) Inspector General from 1990 until 2023. On May 3, 2023, the Wall Street Journal Reports that Mr. Lavik was suspended by the CFTC as the Inspector General after an oversight body alleging "Substantial Misconduct". Complaints of misconduct go back as far as late 2018. Allegations include: 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
585-532: The CFTC has expanded its efforts to civilly prosecute fraud and misappropriation in the digital asset markets. Based in Washington, D.C., the CFTC maintains regional offices in Chicago, New York and Kansas City, Missouri. The Commission consists of five Commissioners appointed by the President of the United States to serve staggered five-year terms. The commissioners may continue to serve until their successor
630-633: The CFTC in 1974 as an independent federal regulatory agency. The Commodity Futures Trading Commission Act of 1974 (P.L. 93-463) created the CFTC to replace the U.S. Department of Agriculture 's Commodity Exchange Authority . The Act made extensive changes to the Commodity Exchange Act (CEA) of 1936, which itself amended the original Grain Futures Act of 1922. (7 U.S.C. 1 et seq.). In 1975, the first members were selected, and John T. O'Hara became its first chairman. The CFTC's mandate
675-511: The CFTC is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation. 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. Futures contracts for agricultural commodities have been traded in
720-565: The CFTC might modify the "Swap Exemption" and attempt to impose new regulations on the swaps market. First, in a February 1998 comment letter addressing the SEC's "broker-dealer lite" proposal, the CFTC stated that the SEC's proposal would create the potential for conflict with the Commodity Exchange Act (CEA) to the extent that certain OTC derivative instruments fall within the ambit of the CEA and are subject to
765-840: The Division include, among other things, rule enforcement reviews, reviews of new products and product- and market-related rule amendments, and associated product and market-related studies. The Division was previously responsible for market and trade practice surveillance. Formerly known as the Division of Swap Dealer and Intermediary Oversight, the Market Participants Division (MPD) primarily oversees derivatives market intermediaries, including commodity pool operators, commodity trading advisors, futures commission merchants, introducing brokers, major swap participants, retail foreign exchange dealers, and swap dealers, as well as designated self-regulatory organizations. MPD conducts
810-707: The LBMA. The LME launched an electronic platform called LME Select launched in February 2001. This was developed by a Swedish software house Cinnober. The platform is a FIX-based trading platform, and now handles a majority of the total LME business. LME Clear is the clearing house for the London Metal Exchange. Launched in 2014 it was designed and built in consultation with the market to provide cost-efficient, EMIR compliant clearing and settlement services, using cutting-edge technology. LME Clear has announced
855-591: The U.S. for more than 150 years and have been under federal regulation since the 1920s. 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.). Since the 1970s, trading in futures contracts has rapidly expanded beyond traditional physical and agricultural commodities into a vast array of financial instruments, including foreign currencies, U.S. and foreign government securities, and U.S. and foreign stock indices. Congress created
900-806: The agency's administrative law judges or in the U.S. District Courts . 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.S. Attorneys' Offices, other Federal and state regulators, and international authorities. The Division of Market Oversight (DMO) has regulatory responsibility for initial recognition and continuing oversight of trade execution facilities, including new registered futures exchanges, swap execution facilities, and swap data repositories. The regulatory functions of
945-580: The appointment of David Warren as Chairman effective July 20, 2023. David will succeed Marco Strimer, who will step down as chairman at the end of his term of office. In March 2022, LME was sued by Elliott Management , an American hedge fund. The hedge fund sued for $ 456 million, claiming that LME acted "unreasonably and irrationally" when it canceled nickel trades made on March 8, 2022. Jane Street Global Trading also sued LME for $ 15.3 million over its cancelled nickel trades in March. Both lawsuits were filed in
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#1732765850092990-403: The clearing of futures, options on futures, and swaps by DCOs, assesses DCO compliance with Commission regulations, and conducts risk assessment and surveillance. DCR also makes recommendations on DCO applications and eligibility, rule submissions, and which types of swaps should be cleared. As of 2019, Clark Hutchison serves as Director of the Division of Clearing and Risk. Roy Lavik served as
1035-613: The commissioners – the Appointments Clause of the Constitution vests that power in the president. The Senate does participate, however, in appointments through " advice and consent ", which occurs through confirmation hearings and votes on the president's nominees. These agencies are not represented in the cabinet and are not part of the Executive Office of the president: Although not officially part of
1080-585: The exclusive statutory authority of the CFTC. 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. 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
1125-465: The executive branch, these agencies are required by federal statute to release certain information about their programs and activities into the Federal Register , the daily journal of government activities: [REDACTED] This article incorporates public domain material from Independent Agencies . USA.gov . London Metal Exchange The London Metal Exchange ( LME )
1170-416: The failure of Long-Term Capital Management and the subsequent bailout as being indicative what she had been trying to prevent. In March 2014 the CFTC acknowledged it was considering the regulation of Bitcoin. The CFTC has since taken the position that Bitcoin is a commodity under the CEA. In October 2019, former CFTC Chairman Heath Tarbert, now Chief Legal Officer of Citadel Securities , declared that ether
1215-435: The following to fill a seat on the commission. They await Senate confirmation. The Division of Enforcement (DOE) investigates and prosecutes alleged violations of the Commodity Exchange Act and CFTC regulations. 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
1260-651: The goals the agency must work towards, as well as what substantive areas, if any, over which it may have the power of rulemaking. These agency rules (or regulations), when in force, have the power of federal law. Independent agencies exist outside the federal executive departments (those headed by a Cabinet secretary) and the Executive Office of the President. There is a further distinction between independent executive agencies and independent regulatory agencies, which have been assigned rulemaking responsibilities or authorities by Congress. The Paperwork Reduction Act lists 19 enumerated "independent regulatory agencies", such as
1305-415: The governing statute, but the functional differences have more legal significance. In reality, the high turnover rate among these commissioners or board members means that most presidents have the opportunity to fill enough vacancies to constitute a voting majority on each independent agency commission within the first two years of the first term as president. In some famous instances, presidents have found
1350-499: The government shut down in October 2013, SEC and Federal Reserve stayed open, but "futures and most swaps markets were left with essentially no cop on the beat". In 2007, the CFTC's budget was $ 98 million and it had 437 full-time equivalent employees (FTEs). After 2008, funding increased by 80% to $ 205 million and 687 FTEs for fiscal year (FY) 2012, but was cut to $ 180.4 million and 682 FTEs for FY 2013. In 2013 CFTC's performance
1395-712: The independent agencies more loyal and in lockstep with the president's wishes and policy objectives than some dissenters among the executive agency political appointments . Although Congress can pass statutes limiting the circumstances under which the president can remove commissioners of independent agencies, if the independent agency exercises any executive powers like enforcement, and most of them do, Congress cannot reserve removal power over executive officers to itself. Constitutionally, Congress can only remove officers through impeachment proceedings. Members of Congress cannot serve as commissioners on independent agencies that have executive powers, nor can Congress itself appoint
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1440-442: The opportunity to appoint all the commissioners of a given independent agency. In addition, most independent agencies have a statutory requirement of bipartisan membership on the commission, so the president cannot simply fill vacancies with members of his own political party. The president can normally designate which commissioner will serve as the chairperson. Congress can designate certain agencies explicitly as "independent" in
1485-419: The pleasure of the president" and can be removed without cause. The degree to which the President has the power to use executive orders to set policy for independent executive agencies is disputed. Many orders specifically exempt independent agencies, but some do not. Executive Order 12866 has been a particular matter of controversy; it requires cost-benefit analysis for certain regulatory actions. In
1530-483: The power to remove officials from agencies that were "an arm or an eye of the executive", it upheld statutory limitations on the president's power to remove officers of administrative bodies that performed quasi-legislative or quasi-judicial functions, such as the Federal Trade Commission. Presidents normally do have the authority to remove regular executive agency heads at will , but they must meet
1575-638: 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'. 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". Shortly after Congress had passed this legislation prohibiting CFTC from regulating derivatives, Born resigned. She later commented
1620-466: The president, they can be controlled by a board that cannot be appointed all at once, and the board can be required to be bipartisan. Presidential attempts to remove independent agency officials have generated most of the important Supreme Court legal opinions in this area. In 1935, the Supreme Court in the case of Humphrey's Executor v. United States decided that although the president had
1665-456: The registration, compliance, and business conduct standards of intermediaries, swap dealers and major swap participants. The division also oversees the agency's customer education initiatives. The Division of Clearing and Risk (DCR) oversees derivatives clearing organizations (DCOs) and other market participants in the clearing process. These include futures commission merchants, swap dealers, major swap participants, and large traders. DCR monitors
1710-572: The ring reopened in September of the same year after resistance from members. In addition to the 9 companies that have exclusive rights to trade in the ring, around 100 companies are involved in the LME in total. The LME used, however, to provide trade matching and clearing services to the London bullion market and distributes gold, silver, and gold IRS ( interest rate swaps ) forward rates on behalf of
1755-689: 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. Through oversight, the CFTC enables the derivatives markets to serve the function of price discovery and offsetting price risk. As of 2014 the CFTC oversees 'designated contract markets' (DCMs) or exchanges , swap execution facilities (SEFs), derivatives clearing organizations , swap data repositories (SDRs), swap dealers, futures commission merchants , commodity pool operators and other intermediaries. The CFTC coordinates its work with foreign regulators, such as its UK counterpart,
1800-409: The statutory requirements for removal of commissioners of independent agencies, such as demonstrating incapacity, neglect of duty , malfeasance , or other good cause . While most executive agencies have a single director, administrator, or secretary appointed by the president of the United States , independent agencies (in the narrower sense of being outside presidential control) almost always have
1845-444: The work of the self-regulatory National Futures Association . In March he dissented from the FY 2015 budget request stating CFTC "makes an unrealistic request for new staff and funding in this budget request without a firm understanding of its mission priorities, specific goals, and corresponding personnel and technology needs." In December 2019, the CFTC secured funding of $ 284 million for FY2020, an increase of nearly 6 percent from
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1890-525: Was also a commodity under the CEA. In 2015, the CFTC ruled that for purposes of trading, cryptocurrencies were legally classified as commodities. However, in view of market volatility and other factors, the CFTC noted several risks associated with trading virtual currencies. In 2017, the CFTC cited the US SEC's warning against digital token sales and initial coin offerings (ICOs) that can "improperly entice investors with promises of high returns". In recent years,
1935-519: Was purchased by Hong Kong Exchanges and Clearing in 2012. Trading times are 11:40 to 17:00 GMT . The LME is the last exchange in Europe where open-outcry trading takes place. The ring was temporarily closed in March 2020 due to the COVID-19 pandemic . In January 2021, LME proposed closing the ring, Europe's last open-outcry trading floor, and moving permanently to an electronic system. However,
1980-633: Was renewed and expanded in December 2000 when Congress passed the Commodity Futures Modernization Act of 2000 , which instructed the Securities and Exchange Commission (SEC) and the CFTC to develop a joint regulatory regime for single-stock futures , the products of which began trading in November 2002. In 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act expanded the CFTC's regulatory authority into
2025-417: Was severely affected by limited resources and had to delay cases. The current, FY 2014 funding of $ 215 M did not keep up with CFTC's increasing swaps market oversight and regulation, equivalent to tens of trillions of dollars in formerly dark market trading, according to outgoing Commissioner Bart Chilton in his last speech. The Obama administration's latest budget proposal for FY 2015 requested $ 280 M , which
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