Commodity Futures Trading CommissionCFTC
The Commodity Futures Trading Commission (CFTC) is the US federal agency that regulates derivatives markets — futures, options on futures and swaps. Created in 1974, it aims to keep those markets sound and protect participants from fraud and manipulation.
If the SEC watches stocks, the CFTC watches derivatives. Futures on oil, wheat, interest rates and bitcoin, plus much of the swaps market, fall under its oversight. It also polices retail forex dealers and has pursued many crypto fraud cases. This entry explains what the CFTC does, how it works with the NFA and why traders should care.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- US CFTC, Futures regulator, Derivatives regulator
- Updated
The CFTC in plain words
The CFTC was created in 1974 by the Commodity Futures Trading Commission Act, when most futures trading was agricultural.1
Its vision is to be the global standard for sound derivatives regulation.1
Forex can be traded on exchanges regulated by the CFTC, and the SEC and CFTC have both brought forex fraud cases.2
How the CFTC oversees markets, step by step
Registers participants
Brokers and advisers, often via NFA. See National Futures Association.
Oversees exchanges
Futures exchanges and clearing houses. See Futures Contract.
Sets position limits
To curb manipulation. See Position Limits.
Monitors trading
Publishes Commitments of Traders data. See Commitments of Traders Report.
Enforces the law
Fraud and manipulation cases.
Regulates swaps
Since the Dodd-Frank reforms. See Swap.
Worked examples
Example 1 — Oil futures
CFTC oversightA refiner hedges with crude oil futures on a US exchange.
| Regulator | CFTC |
Futures markets, from farm products to energy, fall under the CFTC.1 See Commodities.
Example 2 — Forex scam
Likely fraudAn unregistered firm promises 10% a month from forex trading.
| Red flag | Unrealistic returns |
| Who acts | CFTC and SEC fraud actions |
Regulators have brought actions alleging fraud in forex investment programs.2
Example 3 — Bitcoin futures
Regulated venueA trader uses CME bitcoin futures instead of an offshore exchange.
| Venue | CFTC-regulated exchange |
Using regulated venues adds oversight and clearing protections. See Futures Contract.
CFTC vs SEC
| Aspect | CFTC | SEC |
|---|---|---|
| Covers | Futures, options on futures, swaps | Stocks, bonds, funds |
| Founded | 1974 | 1934 |
| Industry SRO | NFA | FINRA |
| See also | Commodity markets | Securities and Exchange Commission |
Why traders care about the CFTC
Futures trading
Exchange and broker rules. See Futures Commission Merchant.
Forex brokers
US retail forex rules. See Broker Regulation.
Market data
Commitments of Traders reports. See Commitments of Traders Report.
Crypto derivatives
Bitcoin and ether futures.
Advantages and disadvantages
Advantages
- Oversight of large derivatives markets.
- Fraud enforcement.
- Public market data.
Disadvantages
- Smaller than the SEC.
- Boundaries with the SEC can be unclear.
- Offshore platforms escape oversight.
Going deeper
Read as far as you need. Each level builds on the one before it.
From farms to finance
Beginner
When the CFTC began in 1974, most futures were agricultural; today financial futures dominate.1
Working with the NFA
Intermediate
The NFA is the CFTC-designated registered futures association that oversees industry members day to day.3 See National Futures Association.
Swaps after 2008
Advanced
Post-crisis reforms brought much of the swaps market under CFTC oversight, requiring clearing and reporting. See Central Counterparty.
Common mistakes
Trading with unregistered brokers
Check registration first.
Assuming offshore = protected
US rules may not apply.
Confusing CFTC and SEC roles
Different products.
Ignoring COT data
It's free positioning information.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- The CFTC regulates US derivatives markets.
- It was created in 1974.
- It oversees futures, options on futures and swaps.
- The NFA handles day-to-day member oversight.
- It pursues forex and crypto fraud.
Frequently asked questions
Does the CFTC regulate crypto?
How do I check a futures broker?
Is the CFTC part of the SEC?
Further learning
- National Futures Association
The futures industry SRO.
- Securities and Exchange Commission
The securities regulator.
- Futures Contract
What the CFTC oversees.
- Swap
Post-2008 oversight.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CFTC. The Commission (opens in a new tab) Checked .
- Investor.gov (SEC). Foreign Currency Exchange (Forex) Trading For Individual Investors (opens in a new tab) Checked .
- National Futures Association. About NFA (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.