Who Is Running the Futures Market

Who Is Running the Futures Market

Like the stock market, the futures market is a highly synchronized regulated industry. Companies or individuals who handle futures money or give futures trading advice must apply for registration through the National Futures Association, a self-regulatory organization approved by the U.S. Commodity Futures Trading Commission, or CFTC.

In 1974, the Legislative body created the CFTC as an self-governing agency with the mandate to regulate commodity futures and options markets in the United States.

When the CFTC was created, the majority of futures trading took place in the agricultural division, which is why this industry is often referred to as the "commodities" industry. Today, the futures industry include a vast array of highly distinct specialties including agriculture, metals, consumer staples, currencies, financial indexes, stock equities, and more.

The CFTC assures the economic value of the futures markets by encouraging competitiveness and efficiency, protecting market participants against fraud, manipulation, abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC's assignment is to protect market users and the public from fraud, exploitation, and abusive practices related to the purchase and sale of commodity futures and financial futures and options, and to cultivate open, competitive, and financially sound futures and futures options markets. It my opinion unlike the stock market in the futures market it would be very difficult to create false reports that entice investors. 

The CFTC seeks to protect customers by:

• requiring companies and individuals to divulge market risks and past performance information to prospective customers,
• requiring that customer funds be kept in accounts separate from those maintained by the firm for its own use, and
• requiring customer accounts to be in sync with the current market value at the close of trading each day.

Dispute Resolution

If you have a dispute arising out of your commodity futures or options account, first try to resolve the problem with your broker and his or her supervisor at the firm that employs or guarantees the broker.

If that fails, commodity futures customers have several options for resolving disputes:

• The CFTC Reparations program
• NFA sponsored arbitration
• Civil court litigation

In selecting a particular method, you may want to think about the cost, length of time involved, and whether or not the assistance of an attorney is required.

Much of the above information was obtained from the CFTC's website at http://www.cftc.gov/aboutthecftc/index.htm