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Commodity Futures Trading Commission

Commodity Futures Trading Commission

Without futures exchanges, there is no way for individual investors to buy and sell their stakes on the market values of various commodities. Moreover, oftentimes without futures brokers and brokerage firms, there is no connection to the exchanges themselves.

In a perfect world, all such professionals would hold themselves to ethical and moral standards alongside their outward professionalism. With the idea that not everybody is so considerate in light of potential gains they may make, though, as risky as futures trading is, it may become all the more so with a crooked broker-dealer.

The U.S. Commodity Futures Trading Commission (CFTC) is loosely affiliated with the Federal Government. The CFTC was created by act of Congress in 1974 as an independent entity designed to bring a sense of regulation and standardization to the trading of futures and options. The CFTC is dedicated to promoting level competition in the marketplace (as opposed to oligarchic monopolization by a large-scale brokerage firm or other entity), while at the same time not slowing down the rate of trade.

A critical component to this mission of the CFTC is investigations into allegations of fraud in buyer-seller relations, as well as abusive practices of broker-dealers in managing their clients' monies. In addition, the CFTC encourages the free (legal) flow of information on trading futures, demanding transparency in essential details such as commodity price and relative risk of certain contracts.

Though the CFTC is primarily concerned with futures exchanges on a domestic front, it also realizes the interrelatedness of the global community and economy. Concordantly, alongside its oversight of the industry and its regular reports on the state of the futures market, the Commission has undertaken initiatives to address derivative contract regulation on an international level.

For one, the CFTC is an associate member of the International Organization of Securities Commission (IOSCO), and thus, upholds IOSCO's pledge to foster a spirit of cooperation amongst the world's nations in keeping securities exchanges safe and sound for consumers and producers alike. Fairly recently, the CFTC has paired with the Committee of European Securities Regulators (CESR) to establish a Task Force that would facilitate futures trading across continents.

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