Commodity Futures Trading Commission

THE COMMODITY Futures Trading Commission is an independent agency of the federal government created by the Congress in 1974 to regulate commodity futures and option markets in the United States. The CFTC is responsible for ensuring market integrity and protecting market participants against manipulation, abusive trading practices, and fraud.

A futures contract is an agreement to buy or sell in the future a specific quantity of a commodity at a specific price. Most futures contracts contemplate that actual delivery of the commodity can take place to fulfill the contract. However, some futures contracts require cash settlement in lieu of delivery, and most contracts are liquidated before the delivery date. An option on a commodity futures contract gives the buyer of the option the right to convert ...