Commodity Futures, Swaps & CFTC

The Commodity Futures Trading Commission (CFTC) — established under the Commodity Exchange Act (CEA, 1936) as amended by 7 U.S.C. §§ 1–27f — regulates the U.S. derivatives markets: futures contracts, options on futures, and swaps across agricultural commodities (corn, wheat, soybeans, cattle), energy (crude oil, natural gas, gasoline), metals (gold, silver, copper), financial instruments (interest rates, stock indices, currencies), and increasingly, digital assets. The Dodd-Frank Act (2010) dramatically expanded the CFTC's jurisdiction by bringing standardized over-the-counter swaps — a U.S. swaps market the CFTC's FY2025 financial report sizes at roughly $352 trillion notional — under mandatory central clearing and exchange trading requirements, ending the pre-financial-crisis era of largely unregulated bilateral swap markets. The five-commissioner CFTC (appointed by the President, Senate-confirmed) enforces anti-manipulation and anti-fraud rules in markets that directly affect commodity prices paid by farmers, airlines, utilities, manufacturers, and consumers. The CFTC's jurisdiction over cryptocurrency is a live legal battleground: the CFTC asserts that Bitcoin and Ether are commodities (and thus within its jurisdiction for spot market manipulation), while the SEC argues many other crypto assets are securities. A 2023 federal court ruling affirmed CFTC jurisdiction over spot commodity manipulation in the crypto context, a decision with major implications for how crypto markets are regulated. Retail commodity trading (including forex and crypto spot markets) is subject to CFTC anti-fraud rules even absent futures contracts.

Current Law (2026)

Legal Authority

• 7 U.S.C. § 2 — CFTC jurisdiction (the Commission has exclusive jurisdiction over futures, options on futures, and swaps; jurisdiction over retail foreign exchange; shared jurisdiction with SEC over security-based swaps and mixed swaps)
• 7 U.S.C. § 6s — Registration and regulation of swap dealers and major swap participants (swap dealers must register with CFTC; comply with capital, margin, reporting, recordkeeping, business conduct, and documentation requirements)
• 7 U.S.C. § 7a-1 — Derivatives clearing organizations (central counterparties must register; subject to core principles including financial resources, risk management, participant eligibility, and default procedures)
• 7 U.S.C. § 9 — Prohibition on manipulation and false reporting (it is unlawful to manipulate or attempt to manipulate the price of any commodity; to make false or misleading statements of material fact to the CFTC; to engage in spoofing or disruptive trading practices)

Implementing Regulations

The CFTC's binding rules live across 17 CFR Parts 1–191. The clearing requirement — the central pillar of post-2008 swap regulation — is implemented at 17 CFR Part 50 — Clearing Requirement and Related Rules (4 subparts, 18 sections; authority 7 U.S.C. § 2):

• § 50.2 — Mandatory clearing: any swap the CFTC has determined is required to be cleared must be submitted for clearing by a registered derivatives clearing organization (DCO) by the end of the day of execution. The CFTC has issued clearing determinations covering most standardized interest-rate swaps (USD, EUR, GBP, JPY fixed-for-floating, basis, and overnight-index swaps) and credit default swaps on major indexes (CDX.NA.IG, CDX.NA.HY, iTraxx Europe).
• § 50.4 — Classes subject to clearing: lists the specific contract types within each cleared class (e.g., USD fixed-for-floating swaps with tenors of 28 days to 50 years referencing LIBOR replacements like SOFR).
• § 50.5 — Compliance schedule: phased compliance dates by counterparty category — Category 1 (swap dealers, major swap participants, and active funds) cleared first; Category 2 (commodity pools, private funds, persons predominantly engaged in financial activities) and Category 3 (third-party subaccount managers) followed.
• § 50.50 — End-user exception (Subpart C): non-financial commercial end users hedging or mitigating commercial risk may elect not to clear, but must notify the CFTC and have board-level authorization. This is the carve-out that lets a manufacturer hedge fuel costs or a utility hedge power prices without going through a clearinghouse.
• § 50.51 — Cooperative exemption: federally-chartered cooperatives may elect not to clear swaps that meet specified conditions.
• § 50.10 — Anti-evasion: knowingly evading the clearing requirement or abusing an exception is a separate violation. A swap structured to avoid clearing (e.g., by adding non-standard terms purely for that purpose) can be reclassified and treated as if it had been required to clear from the start.
• § 50.75 — Inter-affiliate exemption (Subpart D): swaps between majority-owned affiliates of the same corporate group may be excepted, provided the outward-facing swap is cleared and risk is appropriately documented.

The clearing requirement was the most consequential structural change Dodd-Frank made to derivatives markets — by forcing standardized swaps through central counterparties, it eliminated the bilateral counterparty-credit web that turned AIG's 2008 swap exposure into a systemic threat. Today most of the $300+ trillion swaps market clears at registered DCOs (LCH, CME, ICE Clear Credit), with end-users and inter-affiliate trades the principal exempted categories.

Recent rulemakings: 85 FR 76448 (December 2020) expanded clearing requirements to certain interest-rate swaps referencing alternative reference rates as part of the LIBOR transition; 87 FR 52216–52217 (August 2022) modernized compliance schedules and clarified end-user election procedures.

How It Works

The CFTC regulates the derivatives markets — financial instruments whose value is derived from underlying assets like agricultural commodities, energy, metals, interest rates, currencies, and stock indexes. These markets are enormous (over $300 trillion in notional value) and serve essential economic functions, but they also pose systemic risks, as the 2008 financial crisis demonstrated.

What Are Derivatives? A futures contract is an agreement to buy or sell a commodity or financial instrument at a specified price on a future date. Originally developed for agricultural commodities (farmers selling wheat forward to lock in prices), futures now cover everything from crude oil to Treasury bonds to stock indexes. An option gives the holder the right (but not the obligation) to buy or sell at a specified price. A swap is a private agreement to exchange cash flows — most commonly interest rate swaps (exchanging fixed for floating rates) and credit default swaps (insurance against default). Before Dodd-Frank, swaps were almost entirely unregulated.

The CFTC oversees the integrity of futures and swaps markets through four core functions: registration and oversight of market intermediaries (futures commission merchants, swap dealers, commodity trading advisors); market surveillance to detect manipulation and excessive speculation; enforcement against fraud, manipulation, and spoofing; and approval and oversight of exchanges (designated contract markets) and clearinghouses. The CFTC is relatively small (~700 employees) for the size of the markets it oversees, a persistent resource constraint.

Dodd-Frank Title VII brought the previously unregulated OTC swaps market — a $600+ trillion market with no central reporting, no mandatory clearing, and no capital requirements — under CFTC oversight for the first time, requiring mandatory clearing of standardized swaps through central counterparties, exchange trading on regulated swap execution facilities, reporting to swap data repositories, and capital/margin requirements for swap dealers. The CFTC aggressively enforces prohibitions against market manipulation, fraud, and spoofing (placing orders intended to be cancelled to create misleading supply/demand signals) — penalties can reach $1 million per violation plus disgorgement, and criminal referrals to DOJ carry up to 25 years imprisonment. The CFTC has also asserted jurisdiction over cryptocurrency derivatives (Bitcoin and Ether futures trade on CFTC-regulated exchanges) and brought enforcement actions for fraud and manipulation in crypto markets; the regulatory treatment of crypto spot markets remains contested between the CFTC and SEC, with legislation proposed to clarify jurisdictional lines.

How It Affects You

State Variations

• The Commodity Exchange Act broadly preempts state regulation of futures and swaps markets
• States retain authority over certain commodity fraud cases and retail commodity transactions
• State securities regulators may have jurisdiction over certain commodity pool offerings
• State attorneys general can bring cases for commodity fraud affecting state residents

Implementing Regulations (CFR)

• 17 CFR Part 3 — Registration (the CFTC's foundational registration rule governing who must register, how to apply, what grounds exist for denial, and what ongoing obligations apply to all CFTC registrants — futures commission merchants (FCMs), introducing brokers (IBs), commodity trading advisors (CTAs), commodity pool operators (CPOs), swap dealers (SDs), major swap participants (MSPs), floor brokers, floor traders, and retail foreign exchange dealers (RFEDs)):

  • § 3.10 — Registration of FCMs, IBs, CTAs, CPOs, SDs, MSPs, and RFEDs: any person who acts as an FCM, IB, CTA, CPO, SD, MSP, or RFED must register with the CFTC before beginning business; registration applications are filed with the National Futures Association (NFA), which processes applications and performs background checks on behalf of the CFTC; registration is effective only when NFA grants it (§ 3.2) — operating as an unregistered intermediary is a per se violation of the CEA subject to civil and criminal penalties
  • § 3.11 — Floor brokers and floor traders: registration of individuals who execute customer orders on exchange trading floors (floor brokers) or who trade for their own account (floor traders) on a designated contract market; floor broker and floor trader registration is also processed through NFA; the Dodd-Frank Act reduced the significance of floor broker/trader registration as electronic trading displaced open-outcry pit trading, but the registration category remains active for CME's remaining pit operations
  • § 3.12 — Associated persons (APs): any individual who solicits customers, supervises solicitation, or accepts customer orders on behalf of a registered firm must register as an associated person; AP registration requires passing the Series 3 (National Commodity Futures Examination) or equivalent FINRA exams; NFA performs background checks on all AP applicants using criminal records, financial history, and regulatory disciplinary history; a firm employing an AP who does not maintain current registration faces enforcement action — the AP registration requirement is the gateway for individual-level supervision and accountability within registered firms
  • § 3.31 — Disclosure of disciplinary history: every registration application must disclose criminal convictions, civil injunctions, regulatory sanctions, and material complaints from customers within the preceding 10 years; incomplete or false disclosure is an independent basis for registration denial or revocation; CFTC and NFA both publish registration status and disciplinary history publicly at nfa.futures.org — the first stop for any customer, counterparty, or due diligence team checking the standing of a commodity market participant
  • § 3.60 — Registration of swap dealers and major swap participants: Dodd-Frank Title VII added the SD and MSP registration categories for entities that deal in or hold large positions in over-the-counter swaps; SDs must register when their dealing activity exceeds the de minimis threshold (currently $8 billion in notional outstanding for most swap categories); MSPs must register when their non-hedging swap positions create "substantial counterparty exposure" that could threaten the stability of the U.S. financial system; as of 2026, approximately 104 SDs are registered with the CFTC — primarily U.S. and foreign banks, broker-dealers, and energy companies; the SD registration category is the gateway to all of CFTC's swap dealer business conduct, capital, margin, and reporting requirements under Title VII
  • § 3.70 — Exemptions from registration: certain limited trading activity is exempt from the registration requirement; notable exemptions include CTAs with 15 or fewer clients (the "small advisor" exemption), CPOs operating purely exempt pools (4.13(a)(3) pools) with fewer than 15 participants and no public solicitation, and certain foreign persons dealing exclusively with non-U.S. counterparties; these exemptions were significantly narrowed after 2012, when CFTC eliminated the de facto blanket exemption that had allowed many registered investment advisers to advise commodity pools without CPO registration

  The registration system is NFA-administered but CFTC-supervised: NFA reviews applications, conducts background checks, and makes initial registration decisions; the CFTC can appeal NFA denials or take independent action to revoke or restrict registrations. For customers, the NFA Background Affiliation Status Information Center (BASIC, at nfa.futures.org) is the definitive public database of every CFTC registrant — showing current registration status, disciplinary actions, arbitration awards against the firm, and financial reports for FCMs. Any customer dealing with a commodity broker, fund manager, or swap counterparty should verify registration status in BASIC before committing funds. The Dodd-Frank expansion of registration categories (SD, MSP) dramatically increased the number of CFTC registrants and the CFTC's compliance workload, driving the Commission's use of NFA as a front-line supervisor for examination and registration functions.

• 17 CFR Part 1 — General Regulations Under the Commodity Exchange Act (63 sections): the operational backbone of CFTC registration and customer protection. The most consequential provisions govern customer fund segregation — the rule that requires every FCM to hold customer money separately from firm money, and that failed most visibly in the MF Global collapse. Key provisions:

  • § 1.10 — Financial reports: FCMs must file monthly and annual financial reports with the CFTC and their designated self-regulatory organization; annual reports must be certified by an independent public accountant; reports are submitted electronically and reviewed by CFTC and NFA examiners for capital adequacy
  • § 1.11 — Risk Management Program: each FCM must maintain and enforce a written risk management program covering market risk, credit risk, liquidity risk, foreign currency risk, legal risk, operational risk, settlement risk, and segregation risk — explicitly requiring FCMs to monitor the risk that customer funds might be improperly commingled; the program must be approved by senior management and reviewed at least annually
  • § 1.12 — Maintenance of minimum financial requirements: FCMs must immediately notify the CFTC and their designated self-regulatory organization if their net capital falls below required minimums; the notification is immediate (same business day), not after a grace period — giving regulators early warning before a firm's capital deteriorates to insolvency
  • § 1.17 — Minimum financial requirements: FCMs must maintain adjusted net capital of at least the greater of $1 million or 8% of customer risk maintenance margin requirements; introducing brokers must maintain $45,000 minimum; these floors ensure firms can meet obligations and absorb losses without touching customer funds
  • § 1.20 — Customer fund segregation (the core consumer protection): every FCM must separately account for all futures customer funds and hold them in segregated accounts identifiable as belonging to customers; the FCM's own money may not be deposited in segregated accounts except to meet a margin call or to meet withdrawal requests; segregated funds may be held at a bank, trust company, clearing organization, or another FCM — but the account must be titled to make clear the funds belong to customers, not the FCM. This section is what MF Global violated in 2011 when it used approximately $1.6 billion in customer segregated funds to meet the firm's own margin calls on European sovereign debt positions
  • § 1.22 — Restricted use of customer funds: an FCM may not use one customer's funds to margin, guarantee, or settle the trades of any other person — each customer's money may only be used for that customer's own positions; this prevents the "sweep and concentrate" schemes where a failing firm raids small accounts to prop up larger ones
  • § 1.25 — Permitted investments of customer funds: FCMs may invest segregated customer funds only in a narrow list of approved instruments — U.S. Treasury obligations, agency securities, money market mutual funds (limited to government funds), commercial paper (investment grade, maturity ≤ 9 months), and certificates of deposit (FDIC-insured institutions); investments must be liquid and low-risk to ensure customer funds remain immediately accessible; the permitted investment list was tightened after MF Global
  • § 1.32 — Daily segregation reporting: each FCM must compute as of the close of every business day the total customer funds on deposit, the total funds required to be on deposit, and whether there is a surplus or deficit; if the FCM has a segregation deficit at any point during the day, it must immediately notify the CFTC and its self-regulatory organization — there is no cure period
  • § 1.33 — Monthly and confirmation statements: FCMs must send each customer a written statement monthly (or upon request) showing all open positions, all funds on deposit, net unrealized profit or loss, and all ledger entries for the period; confirmations must go out promptly after each trade

  The customer fund segregation framework (§§ 1.20–1.32) is CFTC's most important consumer protection mechanism. After the MF Global bankruptcy revealed that segregation rules could be violated for months before regulators detected the shortfall, the CFTC strengthened the daily reporting requirement and tightened the permitted investments list. Today, FCMs must certify their segregated account computations daily and submit them electronically to their designated self-regulatory organization. An FCM that discovers a segregation deficit — even a temporary intraday deficit — must report it immediately, triggering regulatory review. The 2018 rulemaking (83 FR 7995) updated certain segregation and financial reporting requirements, and the 2020 amendments (85 FR 4850) modernized the financial reporting forms to improve risk monitoring.

• 17 CFR Part 12 — Rules Relating to Reparations (75 sections — the CFTC's built-in civil adjudicatory process for customers who have been defrauded or harmed by a CFTC registrant; an alternative to federal lawsuit). Key provisions:

  • § 12.1 — Scope: reparations proceedings cover any person who claims damages from a violation of the CEA or CFTC rules by a registered entity — futures commission merchants, commodity pool operators, commodity trading advisors, swap dealers, introducing brokers; the registrant must be registered at the time of the alleged violation
  • § 12.13 — Complaint and election of procedure: complainants choose between two tracks at filing — (1) voluntary procedure (simplified, documentary-only, faster) or (2) formal procedure (full adversarial hearing before an administrative judge); the election must be made at filing and generally cannot be changed; complainants seeking amounts under a certain threshold ($30,000) are encouraged to use voluntary procedure
  • § 12.100 — Formal proceedings: governed by administrative law judges appointed by the CFTC; formal reparations are the only track for larger claims or cases requiring witness testimony and cross-examination
  • § 12.101 — Administrative judge role: the ALJ is responsible for fair and expeditious conduct of proceedings; they may request additional documentation, hold prehearing conferences, and rule on motions; the judge is not an advocate for either party and does not defer to agency enforcement staff
  • § 12.106 — Final decision: the ALJ issues a written final decision and order specifying any damages awarded; the prevailing complainant may receive actual damages plus interest; the respondent must pay within a specified period or face CFTC license suspension — a significant collection tool unavailable in federal court

  The reparations program's key advantage over private litigation is that CFTC license suspension backs up the award: a registered firm that refuses to pay a reparations judgment faces suspension of its CFTC registration, effectively shutting down its business. This makes collection far more reliable than a civil court judgment against a broker who may be judgment-proof. Filing fees are modest ($125 for voluntary, $250 for formal proceedings as of recent years). No major Part 12 amendments in the last 5 years — the reparations framework has been stable since its establishment.

• 17 CFR Part 4 — Commodity Pool Operators and Commodity Trading Advisors (28 sections — the CFTC's registration, disclosure, and operational requirements for CPOs and CTAs):

  • § 4.10 — Key definitions: a "commodity pool" is any investment vehicle trading commodity interests on behalf of multiple participants; a "commodity pool operator" (CPO) manages such pools; a "commodity trading advisor" (CTA) advises on commodity trading for compensation; definitions are broad — many hedge funds, private equity funds, and family offices have undisclosed CPO/CTA registration obligations
  • §§ 4.12–4.14 — Exemptions: CPOs with fewer than 15 investors and less than $400,000 in invested capital qualify for a de minimis exemption (§ 4.13(a)(3)); CPOs serving only qualified eligible persons (large institutions) may use the sophisticated investor exemption (§ 4.13(a)(4)); CTAs advising 15 or fewer pools/clients may qualify for an exemption (§ 4.14(a)(8)); all exemptions require NFA notice filing
  • § 4.15 — Antifraud survives exemption: CPOs and CTAs operating under any exemption remain fully subject to the prohibition on fraud, deceit, and material misrepresentation; the exemptions only reduce compliance burden, not fraud accountability
  • § 4.20 — Prohibition on commingling: CPOs must not commingle pool assets with their own funds; all pool assets must be held in separately titled accounts; this is the fund-level parallel to Part 1's FCM segregation requirement
  • § 4.21 — Disclosure document: CPOs must provide prospective participants with a disclosure document (the CPO equivalent of a prospectus) before accepting funds; must disclose: background, trading program, risk factors, all fees (management, performance/carried interest, all charges), leverage, past performance, and conflicts; filed with NFA and updated within 21 days of material changes
  • § 4.22 — Periodic reporting: CPOs must provide quarterly account statements to participants and annual GAAP financial statements certified by an independent CPA; annual reports filed with NFA within 90 days of fiscal year end; quarterly Form CPO-PQR filed with CFTC disclosing pool assets, leverage, and liquidity
  • § 4.41 — Performance representations: CTAs must include prominent disclosures when showing hypothetical or simulated trading results explaining their inherent limitations; one of the most actively enforced Part 4 provisions against investment fraud

  Part 4 registration obligations catch many investment managers by surprise: hedge funds with commodity positions, volatility trading strategies, and even family offices may qualify as CPOs. The 2012 CFTC rule eliminating the "8.65% commodity test" caused many registered investment advisers to simultaneously need CPO/CTA registration with NFA. Managers who fail to register face enforcement action under CEA § 4(b). Recent rulemakings: 67 FR 77411 (December 2002) — major Part 4 revision.

• 17 CFR Part 5 — Off-Exchange Foreign Currency Transactions (CFTC, 25 sections — the comprehensive operational and customer protection rulebook for retail foreign exchange (forex) trading conducted by Futures Commission Merchants (FCMs) and Retail Foreign Exchange Dealers (RFEDs); authority: 7 U.S.C. § 2(c)(2)(B) (CEA § 2(c)(2)(B), added by the Dodd-Frank Act); Part 5 governs the CFTC-regulated segment of retail forex — currency trading offered to non-eligible contract participants (ordinary retail customers) on an off-exchange, principal-to-dealer basis, as distinguished from exchange-traded currency futures governed by Part 33):

  • § 5.2 — Prohibited transactions: no retail forex counterparty (FCM or RFED acting as principal) may engage in a retail forex transaction that violates CFTC rules; the prohibition covers fraudulent acts, misrepresentations, price manipulation, front-running customer orders with the firm's own trades, and bucket-shop operations (taking the other side of customer trades without any genuine market offset); the anti-fraud reach of § 5.2 parallels CEA § 4b's prohibition on commodity fraud but applies specifically in the retail forex context
  • § 5.10 — Risk assessment recordkeeping for RFEDs: a Retail Foreign Exchange Dealer must maintain records identifying all affiliates and subsidiaries that engage in financial activities, with financial statements and details sufficient to allow the CFTC to assess whether the RFED's financial condition and the financial activities of its affiliates could pose systemic risks; risk assessment records for affiliates must be updated annually and made available to the CFTC on request
  • § 5.13 — Monthly and confirmation statements to customers: FCMs and RFEDs must send each retail forex customer a written monthly account statement showing all open positions, unrealized profit/loss, account balance, and all fees charged during the period; trade confirmations must be sent promptly after each transaction; the monthly statement requirement is analogous to the Part 1 statement requirement for futures customers but adapted to the forex market's continuous, 24-hour trading model
  • § 5.14 — Recordkeeping: no person may be registered as an RFED unless they maintain complete records of all retail forex transactions including order tickets (with time of order receipt and execution), confirmations, account statements, promotional materials, and communications with customers; records must be preserved for at least 5 years; CFTC examiners may inspect all records during regular business hours
  • § 5.15 — Unlawful representations: it is unlawful for any RFED or FCM to represent to a retail forex customer that their currency predictions are accurate, that the customer is certain to profit, or that losses beyond a certain amount cannot occur; the prohibition targets the "can't lose" promotional tactics that characterize forex fraud schemes; the CFTC enforces this provision aggressively — promotional materials claiming high returns or guaranteed profits are prima facie evidence of § 5.15 violations
  • § 5.16 — Prohibition of guarantees against loss: no RFED or FCM may guarantee any retail forex customer against loss, directly or indirectly; the prohibition prevents practices where dealers agree to compensate customers for a defined portion of losses in exchange for higher trading volumes — the economic equivalent of a subsidy that conceals the true risk of leveraged forex trading
  • § 5.17 — Authorization to trade: FCMs and RFEDs may not trade in a customer's retail forex account unless specifically authorized in writing by the customer; unauthorized trading — placing trades in a customer's account without a documented trading authorization — is a per se violation of § 5.17 regardless of whether the trades were profitable; discretionary trading authority requires a separate written agreement specifying the scope of the authorization
  • § 5.18 — Trading and operational standards: each RFED must maintain and enforce adequate supervisory procedures for its retail forex business; prohibited practices include front-running (trading the RFED's own account ahead of a known customer order), price manipulation, and improper disclosure of customer trading information; the 50:1 maximum leverage limit for major currency pairs (e.g., EUR/USD, USD/JPY) and 20:1 for minor pairs represents the CFTC's most commercially significant forex rule — dramatically lower than the 100:1 or 500:1 leverage available from offshore unregulated platforms; the leverage cap reduces the size of a maximum-loss scenario from a small adverse move and protects retail customers from the account wipeouts that characterized unregulated forex
  • § 5.21 — Supervision: each FCM and RFED subject to Part 5 must establish and enforce written supervisory policies covering all persons involved in the firm's retail forex business; supervisory policies must address pre-opening review of new accounts, order flow monitoring, trade complaint handling, and detection of unusual trading patterns; the supervision requirement creates enterprise liability for misconduct — a firm cannot escape accountability for a rogue forex dealer by claiming inadequate monitoring

  Part 5 was enacted to address the rapid growth of retail forex fraud in the early 2000s, when unregulated entities were offering spot currency trading to U.S. retail customers with extreme leverage, fraudulent pricing, and no regulatory oversight. The Commodity Exchange Act's pre-Dodd-Frank jurisdictional structure left spot forex in a regulatory gap — it wasn't a futures contract, so the CFTC argued it lacked jurisdiction, and states had limited reach over internet-based trading. The Dodd-Frank Act explicitly granted CFTC jurisdiction over retail forex in CEA § 2(c)(2)(B), and Part 5 implements that grant with a comprehensive conduct-of-business rulebook. The 50:1 leverage cap was the most contested provision — forex dealers argued it would push U.S. retail traders to offshore platforms, which is exactly what happened for some portion of the market. Most recent rulemaking: 75 FR 55410 (September 2010) — original Part 5 final rule implementing Dodd-Frank retail forex authority.

• 17 CFR Part 31 — Leverage Transactions (CFTC, 26 sections — the regulatory framework for leverage transaction merchants (LTMs): retail dealers who offer over-the-counter contracts in specific physical commodities — historically gold, silver, platinum, palladium, copper, and certain currencies — on leveraged terms, without the contract trading on a futures exchange; authority: 7 U.S.C. § 23 (CEA § 19); leverage contracts are a peculiar regulatory category: Congress created a specific regime for them in 1978 to bring retail precious metals dealers who were offering margin commodity contracts outside the regulated exchange system under some degree of CFTC oversight, without treating their contracts as exchange-traded futures):

  • § 31.10 — Repurchase and resale of leverage contracts by LTMs: an LTM must stand ready to repurchase its leverage contracts from customers at the LTM's current bid price; the LTM must also sell leverage contracts at its current ask price to any customer; the LTM sets its own bid/ask prices but must apply them consistently — it cannot refuse to repurchase from a customer while selling the same contract to another; this two-way market obligation is the primary liquidity guarantee to customers who have no exchange market to turn to for exit
  • § 31.11 — Disclosure: before opening a leverage account, an LTM must provide each customer a written disclosure statement describing the nature and risks of leverage transactions — including the risk of loss from price movements, the LTM's bid-ask spread (which represents an immediate cost at entry), carrying charges (interest on the financed portion of the contract), the LTM's right to call for additional margin, and the potential for margin calls leading to liquidation; the disclosure must be signed by the customer
  • § 31.12 — Segregation: an LTM must separately account for all leverage customer funds — funds deposited by customers as margin or security for leverage contracts — and hold them in segregated accounts at banks or trust companies; the LTM may not use customer leverage funds for the LTM's own account or to finance the LTM's operations; segregation is the core consumer protection, analogous to FCM segregation under Part 1 but adapted to the LTM-specific business model where the LTM acts as principal
  • § 31.13 — Financial reports of LTMs: each LTM must file annual audited financial statements with the CFTC (within 60 days of fiscal year end for smaller LTMs, 90 days for larger); interim financial reports must also be filed; the reports must disclose the LTM's net capital position relative to its regulatory minimum; undercapitalized LTMs cannot accept new customer accounts
  • § 31.14 — Recordkeeping: LTMs must maintain books and records of all leverage contracts entered into, all customer accounts, all funds received and disbursed, and all communications with customers; records must be retained for a minimum of 5 years; CFTC examiners may inspect records at any time during business hours; the records must be sufficient to trace every dollar of customer money from receipt to investment to return
  • § 31.15 — Reporting to leverage customers: LTMs must furnish each customer a written monthly statement showing all open contracts, current market values at the LTM's bid price, all funds on account, all carrying charges assessed, and all deposits and withdrawals during the period; the monthly statement is the customer's primary tool for monitoring their account's value and verifying the LTM's accurate accounting
  • § 31.18 — Margin calls: an LTM may not liquidate a customer's leverage contract for failure to meet a margin call unless the LTM has given the customer at least two business days notice by registered mail (or immediate notice by telephone followed by registered mail); this notice requirement protects customers from surprise same-day liquidations triggered by short-term price movements; LTMs cannot issue a margin call and immediately liquidate — the two-day minimum applies
  • § 31.22 — Prohibited trading in leverage contracts: futures commission merchants (FCMs) and introducing brokers (IBs) registered with the CFTC are prohibited from offering or selling leverage contracts; the prohibition prevents FCMs from using the looser LTM regulatory framework for products that should be regulated as futures — the LTM category is narrowly defined and cannot be used as an end-run around exchange trading requirements
  • § 31.23 — Limited right to rescind first leverage contract: a customer entering a first leverage contract with an LTM has a limited right to rescind — the customer may cancel the contract within 3 business days of receipt of the written confirmation and receive a full refund of all funds deposited; this first-contract rescission right applies only once per customer and is not available for subsequent contracts; it gives new customers a brief review period after receiving the formal disclosure materials

  Leverage transactions occupy a narrow regulatory space created by the 1974 Commodity Futures Trading Commission Act and subsequently codified at CEA § 19. Congress authorized the CFTC to regulate leverage contracts rather than prohibiting them — recognizing that some dealers were offering retail precious metals contracts on margin in a way that functioned economically like futures but without exchange clearing. The LTM regime imposed disclosure, segregation, and financial reporting requirements on these dealers while preserving their off-exchange business model. By the 1990s and 2000s, most legitimate precious metals dealers had transitioned to exchange-traded products (COMEX gold and silver futures), and the leverage transaction category has become less commercially significant. The Dodd-Frank Act did not significantly change the LTM framework. No major Part 31 amendments since the 1980s — the leverage transaction market has largely been displaced by exchange-traded alternatives.

• 17 CFR Part 50 — Clearing Requirement and Related Rules: the CFTC's implementing regulation for Dodd-Frank Title VII's mandatory clearing requirement — the post-2008 financial crisis reform that requires standardized over-the-counter swaps to be cleared through registered central counterparties (clearinghouses). The mandatory clearing requirement was the most consequential structural change to the derivatives market since the Commodity Exchange Act:

  • § 50.2 — General clearing requirement: all persons executing a swap that (1) is subject to mandatory clearing and (2) is not subject to an exception must clear the swap through a registered derivatives clearing organization (DCO); the clearing must occur "as soon as technologically practicable" after execution — generally by the end of the trading day; for SEF-executed swaps, the trade is submitted to the DCO in real-time
  • CFTC clearing determination process: CFTC determines which swap classes must be cleared through a formal rulemaking process; a DCO may also self-certify that a new product is subject to mandatory clearing; as of 2026, mandatory clearing applies to: (1) interest rate swaps in specified currencies and maturities (the largest category by notional volume); and (2) credit default swaps on certain indices (CDX.NA.IG and iTraxx); other swap classes have not yet been made subject to mandatory clearing
  • § 50.50–50.52 — End-user exception: commercial entities using swaps to hedge genuine commercial risk — airlines hedging fuel costs, manufacturers hedging raw material prices, utilities hedging energy prices — may elect an exception from the mandatory clearing requirement if (a) the entity is not a financial entity (a swap dealer, MSP, bank, hedge fund, private fund, commodity pool, or employee benefit plan), (b) the swap is used to hedge commercial risk, and (c) the entity reports information about how it uses the exception to the CFTC; the exception is elective per-swap, not a blanket exemption
  • § 50.10 — Anti-evasion: it is unlawful to structure a swap for the purpose of evading the clearing requirement; splitting standardized swap into components, using off-market pricing, or other techniques to avoid mandatory clearing trigger this prohibition
  • Phase-in and compliance schedule (§ 50.25): the mandatory clearing requirement was phased in over three compliance categories — category 1 (large swap dealers and active funds), category 2 (active funds and pooled investment vehicles), and category 3 (all other entities) — at intervals from March through June 2013; this phase-in allowed smaller market participants time to establish clearing relationships with DCOs and FCMs that provide clearing access

  The mandatory clearing requirement directly implements the G20 Pittsburgh Summit commitment (September 2009) to clear all standardized OTC derivatives through central counterparties — a commitment made after AIG's near-failure illustrated how bilateral uncleared swap exposures could cascade into systemic collapse. The DCOs that clear swaps — primarily CME Group, LCH (London Clearing House), and ICE Clear Credit — become the central counterparty to both sides of every cleared trade, guaranteeing performance and managing default through a waterfall of margin, default funds, and DCO capital. Recent rulemakings: 84 FR 35022 (July 2019) — revised clearing determination procedures; 87 FR 61424 (October 2022) — additional interest rate swap classes subject to mandatory clearing.

• 17 CFR Part 150 — Limits on Positions: the CFTC's speculative position limits rule, implementing Sections 4a and 4e of the Commodity Exchange Act (CEA). Position limits cap how large a speculative position any single trader may hold in a physical commodity derivative, preventing corners, squeezes, and undue market influence. Key provisions:

  • § 150.2 — Federal speculative position limits: the CFTC sets hard limits on spot-month positions (the highest-risk period when physical delivery is imminent) separately for physical-delivery contracts and cash-settled contracts; during the spot month, position limits are enforced per exchange and per commodity to prevent any trader from controlling enough of the deliverable supply to manipulate prices; all-months-combined limits cap a trader's aggregate position across all contract months for a given commodity; the CFTC-designated "legacy" agricultural commodities (corn, wheat, soybeans, oats, cotton, live cattle, feeder cattle, lean hogs, and others) have had exchange-set limits for decades; the 2021 final rule (86 FR 3472) extended federal limits to 25 core physical commodity derivatives that were previously exchange-set
  • § 150.3 — Exemptions: the most important exemption is bona fide hedging — a commercial entity that holds a position that is genuinely offsetting actual price risk in a physical commodity (a grain elevator hedging its purchase commitments, an airline hedging fuel costs, a producer hedging crop revenue) may exceed speculative limits; the exemption is limited to positions that represent actual commercial risk exposure, not speculative positions camouflaged as hedging; other exemptions apply to certain spread positions, arbitrage positions, and CCP risk management positions
  • § 150.4 — Aggregation of positions: a trader must aggregate all accounts and positions over which they have trading control or in which they hold a 10% or greater ownership interest, preventing evasion by splitting positions among controlled entities; the aggregation rule is the key anti-avoidance provision — a hedge fund with multiple separately named subsidiaries must count all their positions together against the limit
  • § 150.5 — Exchange-set limits: for commodity derivatives subject to federal limits under § 150.2, exchanges (CME, ICE, CBOE) must set their own limits that are no higher than the federal limits; exchanges set the day-to-day operational limits and grant hedge exemptions; traders who receive exemptions from exchange-set limits remain subject to any tighter federal limits; for commodities not subject to federal limits, exchanges must still maintain "reasonable" limits under their self-regulatory obligation
  • § 150.9 — Non-enumerated bona fide hedging recognition: traders seeking to exceed limits based on a hedging transaction that doesn't fit CFTC's pre-specified categories may apply to the CFTC for a "recognition" determination; the CFTC evaluates whether the position genuinely offsets commercial risk; this process addresses evolving commercial hedging needs that don't fit existing regulatory categories

  Position limits are among the most contested provisions in U.S. commodity law. Congress mandated them in the 2010 Dodd-Frank Act; the CFTC's first attempt at implementing them was vacated by a federal court in 2012 (ISDA v. CFTC) for failure to make required findings; the CFTC's 2020 final rule (finalized 2021, 86 FR 3472) survived legal challenge and is now in effect. The limits for the 25 core physical commodities are set at 25% of the estimated deliverable supply for spot month limits — a threshold designed to prevent any trader from controlling enough of the market to squeeze short sellers. The primary opponents are financial trading firms who argue position limits reduce market liquidity; proponents argue limits prevent price spikes in food and energy commodities driven by speculation rather than supply/demand fundamentals. Recent rulemakings: 86 FR 3472 (January 2021) — final rule extending limits to 25 physical commodity derivatives; 82 FR 28770 (June 2017) — proposed rule that preceded the 2021 final.

• 17 CFR Part 166 — Customer Protection Rules: the CFTC's core conduct-of-business requirements binding all CFTC registrants — futures commission merchants (FCMs), introducing brokers (IBs), commodity pool operators (CPOs), commodity trading advisors (CTAs), and retail foreign exchange dealers (RFEDs) — in their dealings with customers. Key provisions:

  • § 166.2 — Authorization to trade: no FCM, RFED, IB, or associated person may effect any transaction in a commodity interest for a customer account unless — before the transaction — the customer (or their designated account controller) has: (a) specifically authorized that particular transaction in writing; or (b) granted the registrant written discretionary authority to execute trades without prior authorization for each trade; discretionary authority must be documented before any discretionary trading begins; this prevents "unauthorized trading" — one of the most common customer complaints in CFTC enforcement
  • § 166.3 — Supervision: every CFTC registrant with supervisory responsibilities must diligently supervise the handling by its partners, officers, employees, and agents of all commodity interest accounts and all activities subject to CFTC jurisdiction; this is a continuous obligation — not a one-time compliance check; the supervision standard is "diligence," meaning supervisors must actively monitor for irregularities, not merely respond to customer complaints; failure to supervise is an independent CFTC violation, separate from any underlying misconduct by the supervised employee
  • § 166.4 — Branch office identity: branch offices must hold themselves out to the public under the full name of the parent firm — not a truncated or trade name that obscures the firm's identity; an introducing broker branch operating as "XYZ Financial" while affiliated with "ABC Commodities Corp" must use the firm name for all public communications; this prevents fragmented accountability where branch offices operate as independent-seeming entities without the parent's regulatory obligations appearing visible
  • § 166.5 — Dispute settlement procedures: CFTC registrants may offer customers arbitration or other dispute resolution procedures — but only if the procedures are fair, efficient, and accessible; registrants must provide customers with a written explanation of available dispute settlement procedures before or at the time of account opening; procedures that require customers to waive CFTC reparations rights, or that impose prohibitively high arbitration fees, do not meet the standard; customers may not be compelled to use a firm-sponsored procedure as their exclusive remedy

  Part 166 is the behavioral counterpart to Part 1's financial requirements: while Part 1 governs the financial safeguards (segregated funds, capital, reporting), Part 166 governs how registered firms must treat customers operationally. The authorization-to-trade requirement (§ 166.2) directly addresses the "churning" and "unauthorized trading" schemes that account for a large fraction of retail customer complaints. The supervision requirement (§ 166.3) creates enterprise-wide liability for misconduct: a firm that fails to supervise a rogue broker cannot escape liability by claiming the individual acted without authorization if the firm lacked adequate monitoring systems. Together with the reparations program (17 CFR Part 12) and the anti-fraud provisions of CEA § 4b, Part 166 forms the retail customer protection framework in commodity markets.

• 17 CFR Part 38 — Designated Contract Markets (89 sections across 20 subparts structured around 23 Core Principles — the statutory requirements from CEA § 5(d) that every DCM must demonstrate ongoing compliance with as a condition of its designation; Part 38 implements the exchange registration and self-regulatory framework for the CME Group, ICE Futures U.S., CBOE Futures Exchange, and the other ~17 designated contract markets):

  • § 38.100 — Core Principle 1 (compliance): every DCM must comply with all applicable core principles and with any CFTC rules; a DCM has flexibility in how it achieves compliance (principles-based regulation), but must document how its rules and systems satisfy each principle
  • Core Principle 2 (compliance with rules): DCMs must monitor trading to ensure compliance with their own rules, using real-time surveillance systems; the DCM must have the authority and willingness to discipline members, including suspension and expulsion
  • Core Principle 3 (contracts not readily subject to manipulation): new contract terms must include design features preventing excessive manipulation risk — delivery points, position limits, last-day-of-trading provisions; CFTC must approve new contracts and can require modifications to listing terms
  • Core Principle 5 (position limitations or accountability): DCMs must adopt position limits or position accountability for contracts with finite deliverable supplies to prevent corners, squeezes, and excessive market concentration; limits for spot-month periods are most critical because delivery risk is highest when contracts approach settlement
  • Core Principles 7–8 (financial integrity of transactions): DCMs must ensure trades are executed fairly, reported promptly, and that all contracts are guaranteed by a CFTC-registered derivatives clearing organization (DCO); no clearinghouse-backed trade can be left unsettled — the DCO guarantee is the mechanism preventing systemic contagion when a member fails
  • Core Principle 9 (system safeguards): DCMs must maintain business continuity/disaster recovery systems capable of resuming trading within specified recovery time objectives; automated systems must be tested, audited, and protected against cybersecurity intrusions; the CFTC may review system safeguards through technology audits
  • Core Principle 14 (complaints): DCMs must maintain an accessible and impartial procedure for receiving, processing, and arbitrating complaints from market participants; trade practice complaints are a primary source of market abuse detection
  • Core Principle 15 (disciplinary procedures): DCMs must establish an adequate, fair, and effective disciplinary system, including written notice of charges, opportunity to be heard, and written findings; penalties must match misconduct severity; disciplinary records are maintained and accessible to the CFTC

  Part 38's Core Principles structure reflects the CFTC's principles-based approach to exchange regulation: rather than prescribing the exact rules each DCM must adopt, the CFTC sets the outcome each principle must achieve, and DCMs demonstrate compliance through their own rulemaking, surveillance technology, and disciplinary systems. CME Group's NYMEX, CBOT, CME, and COMEX exchanges are individually designated contract markets — each with separate Part 38 designation letters listing their approved product lines. When CME Group wants to list a new contract (say, a new cryptocurrency futures contract), it must notify the CFTC under § 38.100 and demonstrate the contract's terms comply with the manipulation-resistance core principle, among others.

• 17 CFR Part 170 — Registered Futures Associations (CFTC — the registration standards and ongoing requirements that the National Futures Association (NFA) and any other futures association seeking recognition must meet, implementing 7 U.S.C. § 17 of the Commodity Exchange Act (CEA)):

  • § 170.1 — Demonstration of purposes: to be registered by the CFTC as a futures association, the association must demonstrate it will carry out CEA § 17's purposes — particularly that it will regulate the practices of its members; the core test is whether the association has the institutional capacity (governance, rules, enforcement mechanisms) to function as a meaningful self-regulatory body rather than a nominal shell
  • § 170.2 — Membership restrictions: the CFTC may require or permit an association to restrict its membership to persons registered in specific categories (e.g., FCMs only) if restriction would promote the public interest; conversely, if an association restricts membership in ways that the CFTC finds harm competition or market access, the CFTC may require broader membership
  • § 170.3 — Fair and equitable representation: association governance must ensure fair and equitable representation of all member views — the association cannot be dominated by large FCMs to the exclusion of smaller introducing brokers or trading advisors; governance procedures for rule-making, elections, and policy must give all member categories meaningful voice
  • § 170.4 — Dues allocation: association dues must be equitably allocated among members and cannot be structured to create barriers to entry for persons seeking to engage in commodity-related business; a dues structure that priced out smaller CTAs or new market entrants would violate this standard
  • § 170.5 — Fraud and manipulation prevention: the association must establish a program protecting customers from fraudulent and manipulative practices, including rules governing how members handle customer funds and prohibiting practices that expose customers to unauthorized trading, misappropriation, or account churning
  • § 170.6 — Disciplinary proceedings: the association must have fair and orderly procedures for disciplinary actions against members — due process guarantees including notice, opportunity to respond, hearing rights, and proportionate sanctions; disciplinary rules must specify the conduct subject to sanction and the range of penalties (fines, suspension, expulsion)
  • § 170.7 — Membership denial: applicants denied membership have the right to a fair procedure for contesting denial, including the right to submit evidence; the association cannot arbitrarily exclude persons who meet the eligibility criteria
  • § 170.8 — Customer dispute resolution: the association must have capacity to process customer complaints and provide arbitration or other dispute resolution — an accessible, equitable, and expeditious procedure for resolving disagreements between customers and association members
  • § 170.10 — Proficiency examinations: associations may require different training standards and proficiency examinations for persons registered in different capacities (e.g., FCM associated persons vs. CPO associated persons); the NFA's Series 3 (National Commodity Futures Exam), Series 31 (Futures Managed Funds Exam), and Series 34 (Retail Off-Exchange Forex Exam) are the primary NFA proficiency examinations
  • §§ 170.15–170.17 — Mandatory membership: every person registered as an FCM must join at least one registered futures association (§ 170.15); every swap dealer and major swap participant must join at least one registered futures association (§ 170.16); every introducing broker, CPO, and CTA must join at least one registered futures association (§ 170.17); mandatory membership ensures that all CFTC registrants operating in the futures and swaps markets are subject to SRO oversight, not just to direct CFTC regulation; in practice, the NFA is the only registered futures association — all covered registrants belong to the NFA

  Part 170 and Part 171 together constitute the CFTC's framework for futures association self-regulation. Part 170 sets the standards that an association must meet to be registered and maintain registration; Part 171 establishes the CFTC's review authority over association decisions. The NFA is the exclusive registered futures association and serves as the front-line regulator for approximately 50,000 commodity professionals. NFA's registration, compliance, and enforcement activities — funded by membership fees and assessments — handle the regulatory burden that would otherwise require a vastly larger CFTC staff. The mandatory membership requirement ensures no CFTC registrant operates outside the SRO framework.

• 17 CFR Part 171 — Rules Relating to Review of National Futures Association Decisions (CFTC — the Commission's appellate review framework for NFA disciplinary, membership denial, registration, and member responsibility actions under the Commodity Exchange Act, 7 U.S.C. § 4a):

  • § 171.21 — Notice of final NFA decision: the National Futures Association must serve all parties with notice of its final disciplinary decision simultaneously; the notice triggers the appeal clock; NFA decisions cover suspensions, expulsions, fines, and trading prohibitions against NFA members and associated persons (commodity pool operators, commodity trading advisors, introducing brokers, floor brokers)
  • § 171.22 — Effective date of NFA decisions: a final NFA disciplinary decision becomes effective 30 days after service of notice on all parties, unless an appeal is filed with the CFTC or the CFTC on its own initiative initiates review; the 30-day stay prevents NFA sanctions from taking effect while the CFTC reviews; for membership denial or registration denial cases, the decision takes effect on the date the Commission issues its order or declines to review
  • § 171.23 — Notice of appeal: any party aggrieved by a final NFA decision may appeal to the CFTC by filing a notice of appeal within 30 days of service; the notice must identify the NFA decision being appealed and a brief statement of the grounds; the CFTC's Proceedings Clerk dockets the appeal
  • § 171.1 — Commission own-initiative review: the CFTC may review any NFA final decision on its own motion within 30 days without waiting for a party to appeal — the Commission's supervisory check on NFA to ensure the registered futures association is meeting its Congressional mandate to enforce CEA requirements and NFA rules among its members
  • §§ 171.10–171.12 — Motions, sanctions, and settlement: any party may file motions during CFTC review proceedings; the Commission may impose sanctions for noncompliance with procedural rules; parties may seek dismissal by settlement at any time before the Commission reaches a final determination

  The NFA is the largest registered futures association in the U.S. — a self-regulatory organization (SRO) that registers commodity professionals (FCMs, CPOs, CTAs, IBs, and their associated persons), adopts and enforces compliance rules, and disciplines members for violations. The CFTC oversees the NFA but does not conduct primary regulation of NFA members directly — the SRO model depends on the NFA enforcing standards, with CFTC review under Part 171 serving as the accountability backstop. Approximately 50,000+ registrants are subject to NFA rules. NFA disciplinary actions (fines, suspensions, expulsions) are published on NFA BASIC (Background Affiliation Status Information Center) — the public searchable database at nfa.futures.org used by investors, employers, and clearing firms to vet commodity professionals.

• 17 CFR Part 9 — Review of Exchange Disciplinary, Access Denial, and Other Adverse Actions (23 sections — the CFTC's appellate review process for disciplinary and access denial actions taken by designated contract markets (DCMs) against their members and participants, implementing CEA § 8c, 7 U.S.C. § 12): commodity exchanges like CME Group, ICE Futures U.S., and Cboe Futures Exchange are self-regulatory organizations — they have their own rules, compliance programs, and disciplinary processes for members who violate exchange rules. Part 9 creates the CFTC's supervisory backstop: when an exchange suspends, expels, or otherwise disciplines a trader or member, or denies a person access to the exchange, that person can appeal to the CFTC. The CFTC's review ensures that exchange self-regulation meets the standards mandated by the CEA — exchanges cannot arbitrarily bar competitors or impose disproportionate sanctions without CFTC accountability.

  • § 9.1 — Scope: Part 9 governs CFTC review of any suspension, expulsion, fine, or other disciplinary action by a DCM against a member or market participant, and any access denial (refusal to allow a person to trade on or through the exchange); exchanges must notify the CFTC of all disciplinary and access denial actions
  • §§ 9.11–9.13 — Notice requirements: when an exchange takes a disciplinary or access denial action, it must deliver written notice to the affected party explaining the action, the grounds, and the right to appeal; the exchange must simultaneously notify the CFTC and publish the action pursuant to the exchange's own transparency requirements; the public notice requirement means exchange disciplinary actions become part of the public record, searchable through CFTC databases
  • § 9.12 — Effective date: a disciplinary or access denial action generally takes effect 30 days after the exchange serves notice, unless the person appeals to the CFTC before that date — the 30-day stay prevents exchanges from immediately removing traders while appeals are pending
  • §§ 9.20–9.24 — Appeal process: an aggrieved person files a notice of appeal with the CFTC within 30 days; the exchange must file the complete record of its proceeding within 30 days of the appeal notice; the appellant then files an appeal brief, followed by the exchange's answering brief; a petition for stay (§ 9.24) may request that the action be held in abeyance while the CFTC reviews
  • § 9.30 — Scope of CFTC review: the Commission reviews whether the exchange's action was supported by the record, consistent with the CEA and CFTC regulations, and not arbitrary or capricious; the Commission may affirm, modify, set aside, or remand; the CFTC's review is deferential to the exchange's factual findings but reviews legal determinations de novo
  • § 9.31 — Own-initiative Commission review: the CFTC may initiate review of any exchange disciplinary action on its own motion, without waiting for an appeal — a supervisory authority that allows the Commission to intervene in exchange actions that raise systemic concerns even if the affected trader does not appeal

  Part 9 and Part 171 (NFA review) form parallel frameworks for the two types of frontline SROs in commodity markets: exchanges (DCMs) subject to Part 9, and the NFA subject to Part 171. The two tracks reflect that exchanges regulate their own membership and market access conditions, while the NFA regulates the business conduct of commodity professionals. Both SRO review tracks provide CFTC accountability over private regulatory decisions that have significant economic consequences for traders and market participants — a trader expelled from CME Group cannot trade in the world's largest futures markets; a trading advisor suspended by NFA cannot legally solicit clients.

• 17 CFR Part 40 — Provisions Common to Registered Entities: the general rules governing how CFTC-registered entities (DCMs, SEFs, and DCOs) bring new contracts to market and adopt new operating rules — the procedural framework that applies across all CFTC-registered exchanges and clearinghouses:

  • § 40.2 — Listing products by self-certification: a DCM or SEF may list a new futures contract, option, or swap by certification — self-certifying compliance with the CEA and CFTC regulations, and filing the contract terms with the CFTC the business day before listing; the CFTC has 10 business days to stay the listing if it believes the product does not comply; self-certification enables rapid product innovation — CME Group can list new energy, agricultural, or financial futures without waiting for explicit CFTC approval in routine cases
  • § 40.3 — Voluntary pre-approval: a registered entity may alternatively submit a new product for pre-approval review — a slower but more certain path producing an explicit CFTC determination; pre-approval is often sought for novel or controversial products where the entity wants CFTC backing before investing in market infrastructure
  • § 40.10 — Systemically important DCOs: the largest clearinghouses (designated as systemically important by FSOC) must provide the CFTC and the Federal Reserve 60 days advance notice before implementing risk management rule changes — rather than the standard self-certification timeline; this heightened review reflects the systemic importance of DCO default management rules to broader financial stability
  • § 40.11 — Event contracts: establishes a categorical prohibition on DCMs and SEFs listing any contract involving or referencing a specific government action, including an election outcome; contracts involving acts of terrorism, assassination, war, gaming, or unlawful activities are also prohibited. This provision is the center of intense regulatory debate about prediction markets and political event contracts:
    • In 2024, CFTC staff issued an informal determination that Kalshi's proposed election contracts were prohibited event contracts — Kalshi challenged this in federal court; the D.C. Circuit remanded the issue, creating uncertainty about the categorical nature of the prohibition
    • The Trump administration's CFTC has expressed interest in facilitating prediction markets; in 2025, Kalshi and PredictIt obtained expanded operations under temporary CFTC positions permitting election-related products
    • The legal status of election betting markets on CFTC-registered platforms remained contested through early 2026, with the § 40.11 prohibition's scope — particularly what constitutes a "gaming" activity versus a legitimate information-discovery market — subject to ongoing proceedings
  • § 40.12 — Novel derivative products: for products that may implicate jurisdiction disputes (CFTC vs. SEC over new hybrid instruments), Part 40 provides a procedure for an expedited jurisdictional determination before listing; this prevents exchanges from inadvertently listing products that are actually securities subject to SEC jurisdiction

  Part 40's certification process is the operational backbone of the CFTC's principles-based exchange regulation: instead of requiring advance approval for every new futures contract, Congress created a self-certification system that keeps markets innovative while maintaining CFTC oversight through the 10-day review window. The § 40.11 event contract prohibition has become one of the CFTC's most contested regulatory provisions as political prediction markets have grown into multi-billion dollar platforms. HR 8148 and HR 7942 in the 119th Congress both propose modifications to the event contract framework — reflecting Congress's interest in clarifying what the CFTC may or may not regulate in the prediction market space.

• 17 CFR Part 33 — Regulation of Commodity Option Transactions on Contract Markets: the CFTC's rules governing options on futures contracts — listed options on futures, such as options on corn futures, crude oil futures, or Treasury bond futures, as distinguished from off-exchange OTC commodity options and from security options (which are regulated by SEC). Part 33 applies to DCMs (designated contract markets) that have been designated by the CFTC to list options on futures contracts:

  • § 33.2 — Applicability and scope: Part 33 applies to every board of trade that is, or is applying to be, designated as a contract market for commodity options; it also applies to FCMs, their employees, and floor brokers who offer or handle commodity option transactions; options governed by Part 33 are specifically options on contracts of sale of a commodity for future delivery (i.e., options on exchange-traded futures) — not spot commodity options, which are covered under separate CFTC authority
  • § 33.3 — Unlawful commodity option transactions: no person may offer or enter into any commodity option transaction other than in compliance with Part 33; this prohibition is the foundational rule — it requires that commodity options be listed on a CFTC-designated contract market and traded under Part 33's rules; off-exchange commodity options not qualifying for another exemption are presumptively unlawful; the prohibition gives the exchange-based framework its force by preventing dealers from offering non-exchange options outside this regulatory structure
  • § 33.4 — Designation as a contract market for options: the CFTC may designate any board of trade located in the United States as a contract market for the trading of options on futures when it finds the exchange has the contractual and operational ability to comply with CEA requirements for options trading; designation is option-specific — an exchange designated for options on corn futures is not automatically authorized to list options on other commodities; exchanges must separately demonstrate their ability to list each option type
  • § 33.7 — Disclosure requirements: prior to entering into a commodity option transaction, each FCM and introducing broker must provide the prospective customer with a risk disclosure statement explaining the nature and risks of options trading; the disclosure must be signed or acknowledged by the customer; the required disclosures cover: the risk of loss of the premium paid, the possibility of the option expiring worthless, the mechanics of exercise and assignment, and the obligation to pay margin on short option positions; the FCM must retain the signed disclosure for 3 years
  • § 33.10 — Fraud prohibition: it is unlawful for any person directly or indirectly to cheat, defraud, or deceive any other person in connection with any commodity option transaction; to make any false report, statement, or representation; or to embezzle, steal, or misappropriate any funds, securities, or property in connection with commodity options; the anti-fraud provision parallels CEA § 4b's general commodity fraud prohibition and creates independent CFTC enforcement jurisdiction over options fraud even where underlying futures fraud statutes might be construed differently
  • § 33.11 — Exemptions: the CFTC may exempt persons, conditionally or unconditionally, from any Part 33 requirement other than the anti-fraud provisions (§§ 33.9 and 33.10); exemptions are available for novel trading arrangements, cross-border situations, or circumstances where literal compliance would be unduly burdensome without regulatory benefit; the anti-fraud provisions are deliberately non-exemptable — CFTC has no authority to grant exemptions from the core fraud prohibitions, ensuring universal applicability of the basic honesty requirements

  Part 33 provides the regulatory underpinning for the listed options markets at CME Group, ICE, and CBOE/C2 for commodity products — exchange-traded options on futures in energy, agriculture, metals, rates, and currencies. These markets collectively represent trillions of dollars in notional exposure. For options market participants, Part 33's anti-fraud provision is the baseline protection — it applies to exchanges, FCMs, floor brokers, and any person participating in the options market. The pre-trade disclosure requirement (§ 33.7) is enforced actively against FCMs who onboard new options traders without documented disclosure compliance.

• 17 CFR Part 10 — CFTC Rules of Practice for Adjudicatory Proceedings (59 sections across 5 subparts): the procedural framework governing formal enforcement cases brought by the CFTC against registrants and other persons — the administrative law judge (ALJ) proceedings that result in orders to cease and desist, monetary penalties, and permanent disbarment from registration. Part 10 governs the CFTC's internal adjudicative system; it is distinct from the reparations program (Part 12), which handles customer complaints against registrants. Key provisions:

  • § 10.1 — Scope: Part 10 applies to all adjudicatory proceedings before the Commission (not including reparations); covers CFTC enforcement actions for CEA violations by FCMs, CPOs, CTAs, swap dealers, DCMs, and other registrants; the Commission's ALJs are appointed employees who conduct hearings under CFTC authority
  • § 10.10 — Ex parte communications prohibition: no party or CFTC staff may communicate with Commission decisional employees (including Commissioners and their staff) about the merits of a pending case outside the official record; this prohibition — analogous to federal court rules — protects the integrity of Commission adjudications and prevents enforcement staff from improperly influencing the outcome after a case goes to hearing
  • §§ 10.100–10.103 — Commission review: either party may appeal an ALJ initial decision to the full Commission; the Commission conducts de novo review of legal questions and reviews factual findings under a substantial evidence standard; parties may request oral argument; Commission review decisions are published as official CFTC orders and become precedent for future proceedings
  • §§ 10.60–10.70 — Prehearing procedures: the ALJ may hold prehearing conferences to narrow issues, set briefing schedules, and require exchanges of exhibits; discovery is more limited than in federal court — depositions are not routinely available, but document requests and interrogatories may be permitted; the ALJ controls the pace of the proceeding and may set firm hearing dates
  • Sanctions available: the Commission may impose civil monetary penalties up to the greater of $1 million per violation or three times the monetary gain from the violation; permanent disqualification from registration; trading prohibitions; disgorgement of profits; and cease-and-desist orders; in the most serious cases (fraud, manipulation), the Commission refers to DOJ for criminal prosecution under 7 U.S.C. § 13(a)

  Part 10 proceedings are the administrative backbone of CFTC enforcement. When a major manipulation case (like the 2012 LIBOR scandal's CME futures dimension or the 2020 precious metals spoofing cases) results in CFTC charges against registered firms, the formal adjudication unfolds under Part 10 before an ALJ. In practice, most CFTC enforcement actions resolve through consent orders negotiated before a formal complaint is filed — the CFTC Division of Enforcement and the respondent agree to findings and penalties, and the Commission approves. Part 10 proceedings go to full hearing primarily when a registrant contests liability. Recent rulemaking: 82 FR 29505 (June 2017) — Part 10 revision modernizing hearing procedures and addressing electronic filing.

Pending Legislation

• S 4064 — CFTC-led framework to regulate digital commodities: registration, custody, exchange rules, $150M startup. Status: Introduced.
• HR 8148 — Reaffirm CFTC authority to enforce prohibited activity on prediction markets. Status: Introduced.
• HR 7942 — Bar exchanges from listing derivatives tied to terrorism, assassination, war, or death. Status: Introduced.
• S 4035 — Ban exchanges from listing war/terrorism/death derivatives. Status: Introduced.
• HR 7488 — Create CFTC Office of the Chief Economist for analysis and cost-benefit review. Status: Introduced.
• HR 6899 — Formalize CFTC advisory committees under Federal Advisory Committee Act. Status: Introduced.
• HR 6598 — CFTC R&D program with non-contract "other transactions," 2031 sunset. Status: Introduced.
• HR 6655 — Let charities and small advisers provide commodity advice under narrow exemptions. Status: Introduced.

Recent Developments

• Cryptocurrency regulation remains the CFTC's most prominent jurisdictional frontier, with debates about whether the CFTC or SEC should regulate crypto spot markets
• Climate-related financial derivatives (carbon credits, weather derivatives) are growing, raising new regulatory questions
• CFTC enforcement has increased, with record penalties for spoofing, manipulation, and fraud
• Cross-border regulation of derivatives remains complex, with ongoing coordination between the CFTC and international regulators
• Algorithmic and high-frequency trading continue to challenge market surveillance capabilities
• In February 2026, the CFTC announced extension of its information collection on registration of foreign boards of trade under the Paperwork Reduction Act.