Legal Definitions - Commodity Futures Trading Commission

The Commodity Futures Trading Commission (CFTC) is a federal commission made up of five members. Its main job is to regulate trading in futures and options contracts. It also keeps an eye on the activities of people and companies involved in the commodity-exchange industry, such as brokerage houses and salespeople who are registered with the commission.

The CFTC was established in April 1975 and is abbreviated as CFTC.

Let's say you want to buy a futures contract for corn. The CFTC would be responsible for making sure that the contract is traded fairly and that the seller of the contract has the corn to deliver when the contract expires. The CFTC would also monitor the activities of the brokerage firm that you use to buy the contract to make sure they are following the rules.

Another example would be if a company wanted to offer a new type of futures contract that hasn't been traded before. The CFTC would review the contract to make sure it's fair and doesn't violate any rules before allowing it to be traded.

These examples illustrate how the CFTC regulates and monitors the commodity futures trading industry to protect investors and ensure fair trading practices.