Who regulates the commodity futures and options business?
Commodity futures and options are regulated at the Federal level by the Commodity Futures Trading Commission (CFTC). The CFTC is responsible for protecting customers who use these markets and monitoring such markets to detect and prevent commodity price distortions and market manipulations. Futures contracts may be bought and sold legally only on exchanges licensed by the CFTC.
In addition, the Chicago based National Futures Association (NFA) is the industry's congressionally authorized self-regulator, and plays a role in the commodities markets subject to the CFTC similar to that the National Association of Securities Dealers, Inc. plays in the securities markets subject to the SEC .
The NFA complements Federal regulation with extensive rules and regulations governing the conduct of their members: floor brokers, floor traders and member firms.
Firms and individuals who wish to handle customer funds for the purpose of buying or selling futures or options on futures, must apply for registration and membership with the NFA. The same holds true for those firms and individuals who wish to engage in the business of offering futures trading advice.
As a self-regulatory organization authorized by the CFTC, the NFA has extensive rules governing the conduct of its Members: Futures Commission Merchants, Introducing Brokers, Commodity Pool Operators, Commodity Trading Advisors and their Associated Persons.
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