The Commodity Futures Trading Commission is a US government sponsored independent body
that is tasked to monitor and record futures contracts trading activities that occur on futures
exchanges in the United States. It was formed by the US Congress in 1974, and has the power
to suspend, fine and impose legal sanctions on an individual or a firm in the event of fraud,
misconduct or other cases of rule violations.
The agency is also responsible for publishing weekly updates on the holdings of the over twenty
market segments in existence today.
These reports, called the 'commitments of traders report' or the COTR are handed out at the
end of each week, usually every Friday. They contain information on open interest splits by nonreportable
and reportable open interest and non-commercial and commercial open interest.
To make things short, the aim of the Commodity Futures Trading Commission is to protect the
public and market participants from abusive and manipulative practices related to the sale of
financial futures, options and commodities, and to make sure that all transactions are conducted
in a transparent, financially viable and competitive manner.
During its inception, the CFTC was merely tasked to regulated options and commodity futures
markets in the US. However, with the introduction of the Commodity Futures Modernization Act
of 2000, or CFMA, the CFTC's duties have been expanded.
Via effective oversight, the agency makes sure that the futures market is able to provide market
participants a means toward offsetting pricing risks and price discovery.
The CFTC has five commissioners, each of whom is appointed the president and serve in fiveyear
intervals. One of the five commissioners is named chairman, with the approval of the
senate, with rules stipulating that not more than three commissioners should be sourced from
the same political party, to provide fairness.
The agency is headquartered in Washington, but it also holds offices in key cities that have
futures exchanges, like Chicago, New York, Minneapolis and Kansas.
The CFTC has six key operating units: The Division of Clearing and Intermediary Oversight, the
Division of Market Oversight, the Division of Enforcement, the Office of Chief Economist, the
Office of the General Counsel and the Office of the Executive Director.
Each unit has a specific function, all of which sharing the goal of making sure that all
transactions conducted under it satisfy regulations and are in the best interests of market
participants.
There is a wealth of information about how to properly trade futures in the CFTC website, which
can be found at www.cftc.gov. Check the site for further details.