This article was authored by Kathryn Trkla for the Futures Industry Association Law & Compliance Conference held on April 28-30, 2021.
This paper provides a general overview of the markets for futures and options on futures (“futures markets”) and regulation of those markets in the U.S. under the Commodity Exchange Act (“CEA”) and the rules of the Commodity Futures Trading Commission (“CFTC”). Although this paper focuses on the futures markets, for context, it also briefly covers swaps and other transactions regulated under the CEA.
As this paper is for a “101” level panel on futures, it describes the futures markets and how they are regulated in basic terms. Things are more complicated than the high-level descriptions convey. The statutory provisions and CFTC rules governing futures exchanges and clearing houses, futures industry professionals, and futures market users are detailed in the obligations they impose, may contain exclusions or exemptions, and can raise issues of interpretation, which are beyond the scope of this paper. In addition, the exchanges, clearing houses and National Futures Association, as self-regulatory organizations, have rules that are also part of the overall CEA regulatory framework. FIA L&C 2021-V is offering other panels that cover in greater depth a number of the topics touched on in the Futures 101 panel and this paper.
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