Good morning, sir.
You know, recently I’ve re-read the previous part and caught the thought that I
know nothing about regulators and what to do if something bad ever happens.
Right, let’s shed
some lights on this question.
CFTC is the Commodity Futures Trading Commission. It was
founded in 1974 started its functioning in 1975 and its major task was to
protect and to serve individuals in trading on futures and commodities markets.
While almost at the same time currency futures were initiated, CFTC has become
responsible for them as well. By the way, we already have discussed the CFTC
when talked about the COT report, remember? The CFTC is responsible for that,
since traders provide reports to CFTC.
Since its foundation, the CFTC changed many times and
developed as any other government authority. According to “West's Encyclopedia
of American Law, edition 2. Copyright 2008 The Gale Group, Inc. (All rights
reserved)”:
The CFTC consists of five commissioners who are appointed by
the president with the advice and consent of the Senate. The commissioners
serve staggered five-year terms and by law no more than three commissioners can
belong to the same political party. One commissioner is designated by the
president to serve as chairperson. The chair's staff includes the Office of the
Inspector General and the Office of International Affairs.
To comply with the requirements of the Modernization Act,
the commission underwent a restructuring in 2002. As a result, it consists of
six major operating units: the Division of Clearing and Intermediary Oversight,
the Division of Market Oversight, the Division of Enforcement, the Office of
the Chief Economist, the Office of the General Counsel, and the Office of the
Executive Director.
The CFTC regulates trading on the 11 U.S. futures exchanges,
which offer numerous kinds of futures contracts. It also regulates the
activities of some three thousand commodity exchange members, 360 public
brokerage houses (futures commission merchants), about 38,000
commission-registered futures industry salespeople and associated persons, and
2,500 commodity trading advisers and commodity pool operators. Some
off-exchange transactions involving instruments similar in nature to futures
contracts also fall under CFTC jurisdiction.
The CFTC maintains large regional offices in Chicago and New
York, cities in which eight of the nation's 11 futures exchanges are located.
Smaller regional offices are located in Kansas City and San Francisco, and
there is a sub-office of the Chicago regional office in Minneapolis.
Wow. That sounds
impressive. I can imagine what could happen if there was no CFTC. How we could
stand against frauds and scam? There would be too much.
In general you’re
right, absence of regulators such as the CFTC could give scammers wide space to
act and there could be many more frauds in this case. In fact to take investors
money will be simpler than taking candy from a baby.
So, the major mission of the CFTC is to protect market
participants from different kind of frauds, illegal manipulations on the
market, mostly on commodities, futures and options markets. Although the forex
market is over-the-counter, the CFTC is very useful here as well, since it
could give you information about reliable or non-reliable brokers. The CFTC has
its own website: U.S. Commodity Futures Trading Commission
If want to file a report on some suspicious broker,
manipulation or authority, you may contact CFTC from here:
File Complaint or Report Suspicious Activities - CFTC
NFA - National Futures Association
Pips: But that is not
all yet. As we’ve said in 1974 Congress established the CFTC. Under the
Commodity Exchange Act, Congress gave it jurisdiction over commodity and
futures trading, and allowed the futures industry to create a national
self-regulatory organization, which in 1982 would create the National Futures
Association (NFA). In 1998 the NFA created online access to the Background
Affiliation Status Information Center (BASIC). BASIC, provides current and
historical registration information, disciplinary actions of all current and
former NFA registrants.
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