The mission of the Commodity Futures Trading Commission (CFTC) is to protect market participants and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives – both futures and swaps – and to foster transparent, open, competitive and financially sound markets.
In carrying out this mission and to promote market integrity, the Commission polices the derivatives markets for various abuses and works to ensure the protection of customer funds. Further, the agency seeks to lower the risk of the futures and swaps markets to the economy and the public.
To fulfill these roles, the Commission oversees designated contract markets, swap execution facilities, derivatives clearing organizations, swap data repositories, swap dealers, futures commission merchants, commodity pool operators and other intermediaries.
The CFTC’s predecessors in the Department of Agriculture date back to the 1920s, but the Commission was formally created as an independent agency in 1974. The Commission historically has been charged by the Commodity Exchange Act (CEA) with regulatory authority over the commodity futures markets. These markets have existed since the 1860s, beginning with agricultural commodities, such as wheat, corn and cotton.
Over time, the markets regulated by the Commission have grown to include contracts on energy and metals commodities, such as crude oil, heating oil, gasoline, copper, gold and silver, and contracts on financial products, such as interest rates, stock indexes and foreign currency.
In the aftermath of the 2008 financial crisis – caused in part by the unregulated swaps market – President Obama and Congress charged the CFTC with reforming this market. The agency now also has regulatory oversight of the over $400 trillion swaps market, which is about a dozen times the size of the futures market.
The futures and swaps markets are essential to our economy and the way that businesses and investors manage risk. Farmers, ranchers, producers, commercial companies, municipalities, pension funds and others use these markets to lock in a price or a rate and focus on what they do best – innovating, producing goods and services for the economy, and creating jobs. The CFTC works to ensure these hedgers and other market participants can use these markets with confidence.