Commodity Exchange Act

Commodity Exchange Act passed by the Federal government in the United States of America in the year 1936. The Act substituted the Grain Futures Act passed in the year 1922. As part of the implementation of the Act, the CFTC or Commodity Futures Trading Commission was established in the year 1974.
Another organization whose foundation was laid as part of the implementation of the Act was the NFA or the National Futures Association in the year 1982.

The Act regulates activities pertaining to commodity trading or futures contract and it also demands that the commodity trading ought to be carried out in commodity exchanges that function in an organized manner.

CFTC or Commodity Futures Trading Commission:
As part of the Commodity Exchange Act, set up in the year 1974, the Commodity Futures Trading Commission prevents fraudulent activities pertaining to futures contracts. The Commodity Exchange Authority was replaced by the Commodity Futures Trading Commission.

Objectives of the CFTC:
Established as a measure for preventing fraudulent activities in the commodity trading market, the main aim of the Commission is to safeguard customers, investors, traders and different categories of people involved in the commodity trading market. Also taken care of by the Commission is to stop manipulation, abusive activities related to commodity sale and procurements in the futures markets.
NFA or National Futures Association:
The Commodity Exchange Act also gave rise to another organization, which was entrusted with the job of keeping a close watch on the commodity markets. The association is self regulated. The main responsibility of NFA is to protect traders in the commodity exchanges and prevent any fraudulent activities in the United States of America. Arbitration as well as mediation are two other responsibilities of the NFA.

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Last Updated on : 27th June 2013

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