Editing Commodity Futures Trading Commission (section)

==Regulated markets==
{{more citations needed section|date=September 2024}}
The CFTC oversees the derivatives markets by encouraging their competitiveness and efficiency, ensuring their integrity, protecting market participants against manipulation, abusive trading practices, fraud, and ensuring the financial integrity of the [[Clearing (finance)|clearing process]].{{citation needed|date=September 2024}} The CFTC generally does not directly regulate the safety and soundness of individual firms, with the exception of newly regulated swap dealers and major swap participants, for whom it sets capital standards pursuant to Dodd–Frank.<ref name="murphy">{{cite web|last=Murphy|first=Edward V|title=Who Regulates Whom and How? An Overview of U.S. Financial Regulatory Policy for Banking and Securities Markets |url=https://www.fas.org/sgp/crs/misc/R43087.pdf |publisher=Congressional Research Service|access-date=March 14, 2014|pages=51|format=CRS Report for Congress,7-5700|date=May 28, 2013}}</ref> Through oversight, the CFTC enables the derivatives markets to serve the function of [[price discovery]] and offsetting price risk.{{citation needed|date=September 2024}}

As of 2014 the CFTC oversees 'designated contract markets' (DCMs) or [[exchange (organized market)|exchanges]], [[Swap Execution Facility|swap execution facilities]] (SEFs), derivatives [[Clearing house (finance)|clearing organizations]], [[Trade Repository|swap data repositories]] (SDRs), [[derivative (finance)|swap]] dealers, [[futures commission merchant]]s, [[commodity pool operator]]s and other intermediaries.{{citation needed|date=September 2024}} The CFTC coordinates its work with foreign regulators, such as its UK counterpart, the [[Financial Conduct Authority]], which supervises the [[London Metal Exchange]].<ref name=McGonagle>{{cite web|title=Testimony of Vincent McGonagle, Director Division of Market Oversight, Commodity Futures Trading Commission Before the Financial Institutions and Consumer Protection Subcommittee Senate Committee on Banking, Housing, and Urban Affairs |url=https://www.cftc.gov/PressRoom/SpeechesTestimony/opamcgonagle011514|date=January 15, 2014|access-date=March 13, 2014}}</ref>

===Over-the-counter derivatives===
[[File:Brooksley Born.jpg|thumb|upright|[[Brooksley Born]]]]
In 1998 CFTC chairperson [[Brooksley Born|Brooksley E. Born]] lobbied Congress and the President<ref name=Hirsh20101213>{{cite news|url=https://archive.org/details/capitaloffenseho00/page/352|title=Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street|pages=[https://archive.org/details/capitaloffenseho00/page/352 352 pages]|date=December 13, 2010|author=Michael Hirsh|isbn=978-0470520673|access-date=February 20, 2013|newspaper=The New York Times|url-access=registration}}</ref>{{page needed|date=January 2015}}<ref name="the_warning">{{citation |title= The Warning | publisher=[[Public Broadcasting Service|PBS]] | work= [[Frontline (U.S. TV series)|Frontline]]}}</ref> to give the CFTC oversight of 'off-exchange markets' for [[Over the counter (finance)|over-the-counter]] (OTC) [[Derivative (finance)|derivatives]] in addition to its existing oversight of exchange-traded derivatives,<ref name="conceptrelease">[http://www.cftc.gov/opa/press98/opamntn.htm "Concept Release Concerning Over-The-Counter Derivatives market"], CFTC Release #4142-98, May 7, 1998.</ref> but her warnings were opposed by other regulators.<ref name="nytimes">{{cite news|last=Goodman|first=Peter S.|url=https://archive.nytimes.com/www.nytimes.com/2008/10/09/business/economy/09greenspan.html|title=Taking Hard New Look at a Greenspan Legacy|work=The New York Times|date=October 9, 2008|page=A1|access-date=February 15, 2025}}</ref>

Two actions by the CFTC in 1998 led some market participants to express concerns that the CFTC might modify the "Swap Exemption" and attempt to impose new regulations on the swaps market.<ref name="wg_otc_deriv">{{citation|title=Over-the-Counter Derivatives Markets and the Commodity Exchange Act |url=http://www.ustreas.gov/press/releases/reports/otcact.pdf |publisher=President's [[Working Group on Financial Markets]] |work=press release |archive-url=https://web.archive.org/web/20101013165049/http://www.ustreas.gov/press/releases/reports/otcact.pdf |archive-date=October 13, 2010 }}</ref> First, in a February 1998 comment letter addressing the SEC's "broker-dealer lite" proposal, the CFTC stated that the SEC's proposal would create the potential for conflict with the Commodity Exchange Act (CEA) to the extent that certain OTC derivative instruments fall within the ambit of the CEA and are subject to the exclusive statutory authority of the CFTC.<ref>Letter from Jean A. Webb, Secretary, CFTC, to Jonathan G. Katz, Secretary, SEC (February 26, 1998).</ref>

In May 1998 the CFTC issued a 'concept release' requesting comment on whether regulation of OTC derivatives markets was appropriate and, if so, what form such regulation should take.<ref>Over-the-Counter Derivatives, 63 Fed. Reg. 26,114 (May 12, 1998).</ref> Legislation enacted in 1999 at the request of the [[US Treasury]], the [[Federal Reserve Board]], and the SEC limited the CFTC's rulemaking authority with respect to swaps and hybrid instruments until March 30, 1999, and froze the pre-existing legal status of swap agreements and hybrid instruments entered into in reliance on the 'Swap Exemption', the 'Hybrid Instrument Rule', the 'Swap Policy Statement, or the 'Hybrid Interpretation'.<ref>{{cite web | url=http://www.gpo.gov/fdsys/pkg/PLAW-105publ277/html/PLAW-105publ277.htm | title= Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999, § 760, as enacted in Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, 112 Stat. 2681, 2681–35 (1998).}}</ref> The text of that act read: "...the Commission may not propose or issue any rule or regulation, or issue any interpretation or policy statement, that restricts or regulates activity in a qualifying hybrid instrument or swap agreement".{{citation needed|date=September 2024}}  Shortly after Congress had passed this legislation prohibiting CFTC from regulating derivatives, Born resigned.<ref name="the_warning"/> She later commented the failure of [[Long-Term Capital Management]] and the subsequent bailout as being indicative what she had been trying to prevent.<ref name="the_warning"/><ref group=notes>Born was the focus of an October 2009 Frontline documentary titled "The Warning" and was also chronicled in the documentary ''[[Inside Job (2010 film)|Inside Job]]''. The two films recount her attempts to investigate and regulate the OTC [[derivative (finance)|derivative]]s market (PBS Frontline The Warning)</ref>

===Regulating digital currencies===
In March 2014 the CFTC acknowledged it was considering the regulation of Bitcoin.<ref>{{cite news|title=U.S. swaps watchdog says considering bitcoin regulation|url=https://www.reuters.com/article/us-bitcoin-regulation-idUSBREA2A1W020140311 |access-date=March 11, 2014|newspaper=Reuters.com|date=March 11, 2014}}</ref> The CFTC has since taken the position that Bitcoin is a commodity under the CEA.{{citation needed|date=September 2024}} In October 2019, former CFTC Chairman Heath Tarbert, now Chief Legal Officer of [[Citadel Securities]], declared that ether was also a commodity under the CEA.<ref>{{Cite web|url=https://finance.yahoo.com/news/cftc-says-cryptocurrency-ether-is-a-commodity-and-is-open-to-ether-derivatives-133455545.html|title=CFTC says cryptocurrency ether is a commodity, and ether futures are next|website=finance.yahoo.com|language=en-US|access-date=2019-10-20}}</ref>

In 2015, the CFTC ruled that for purposes of trading, cryptocurrencies were legally classified as commodities.<ref>{{cite web |title=A CFTC Primer on Virtual Currencies |url=https://www.cftc.gov/sites/default/files/idc/groups/public/documents/file/labcftc_primercurrencies100417.pdf |website=U.S. Consumer Commodities Trading Commission |publisher=U.S. Government |access-date=7 February 2019}}</ref> However, in view of market volatility and other factors, the CFTC noted several risks associated with trading virtual currencies.<ref>{{cite web |title=Understand the Risks of Virtual Currency Trading |url=https://www.cftc.gov/sites/default/files/idc/groups/public/@customerprotection/documents/file/customeradvisory_urvct121517.pdf |website=Commodities Futures Trading Commission |access-date=16 November 2018}}</ref> In 2017, the CFTC cited the US SEC's warning against digital token sales and initial coin offerings (ICOs) that can "improperly entice investors with promises of high returns".<ref>{{cite web |title=Investor Bulletin: Initial Coin Offerings |url=https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings |publisher=US Securities and Exchange Commission |access-date=16 November 2018}}</ref> In recent years, the CFTC has expanded its efforts to civilly prosecute fraud and misappropriation in the digital asset markets.{{citation needed|date=September 2024}}