1. The CFTC’s Mission
The CFTC is an independent agency of the United States federal government that regulates the futures, options and swaps markets (generally, the derivatives). Established in 1974, the CFTC’s role is to “foster open, transparent, competitive, and financially sound markets [and to] protect market users and their funds, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products.” Originally tasked with regulating the futures market for agricultural commodities, the Commission’s jurisdiction has expanded dramatically over the years to include futures (and from 2010 – swaps and options) markets for virtually all derivative products and services, including energy and metals, foreign exchange, various indices, interest rates and credit defaults, and digital assets – all of which are broadly included in the definition of a “commodity.”
The CEA broadly prohibits fraud and manipulation in connection with any transaction involving a “commodity” that is subject to the CFTC’s jurisdiction. Specifically, it is a violation of the CEA to intentionally or recklessly employ any manipulative device, scheme or artifice to defraud in connection with a swap, an option, or a commodity future (i.e., a derivative) as well as in connection with any commodity transaction, including those traded on spot or on a forward basis. Therefore, the CEA gives the CFTC broad authority to police abusive and fraudulent trade practices in derivatives, as well as cash commodity markets.