About the CFTC and Enforcement
The U.S. Commodity Futures Trading Commission is an independent U.S. government agency that regulates the U.S. derivatives markets, including futures, options, and swaps. The mission of the CFTC is to foster open, transparent, competitive, and financially sound markets; detect and reduce systemic risk; promote market integrity; and protect the market users, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products that are subject to the Commodity Exchange Act.
In carrying out this mission, the Commission polices the derivatives markets for various abuses and works to ensure the protection of customer funds. Further, the agency seeks to reduce the risk of the futures and swaps markets to protect the economy and the public.
To fulfill these roles, the Commission oversees designated contract markets, swap execution facilities, derivatives clearing organizations, swap data repositories, swap dealers, futures commission merchants, commodity pool operators, and other intermediaries.
The markets overseen by the Commission profoundly affect the U.S. economy and the prices individuals in the United States pay for food, energy, transportation, and most other goods and services bought each day. A wide variety of businesses—such as manufacturers, retailers, farmers, and ranchers—uses these markets to manage routine commercial risk. For example, derivatives enable farmers to lock in a price for their crops, and utility companies or airlines to hedge the costs of fuel. Derivatives also enable exporters and importers to manage fluctuations in foreign currency exchange rates, and businesses of all types to lock in their borrowing costs. In the simplest terms, derivatives markets enable businesses of all kinds to manage risk. For more information about the Commission and what it does, please visit the CFTC website.
CFTC Enforcement Overview
The Commission, through its Division of Enforcement, investigates violations of the Commodity Exchange Act (CEA) and the CFTC Regulations. Violations can be certain actions or behavior in connection with futures, options, and swaps and in connection for a contract of sale of any commodity in interstate commerce. In general, violations of the CEA include, among other things:
- Fraud (for example, fraudulent solicitation, misappropriation of customer funds, issuing false customer account statements, mishandling customer funds, Ponzi schemes, affinity schemes)
- Market manipulation, including attempted market manipulation and disruptive trading practices (for example, fictitious and non-competitive transactions, illicit trading strategies designed to manipulate or attempt to manipulate prices, and spoofing, which is defined as entering an order with the intent to cancel it before it is consummated in a complete transaction)
- Trade practice violations (for example, wash sales, fictitious sales, noncompetitive transactions, violation of position limits, noncompetitive exchange of futures for physical transactions opposite each other, unauthorized swap transactions, inadequate oversight of traders, undercapitalization, improper controls and supervision, improper handling and/or segregation of customer funds, failing to comply with applicable record-keeping and audit trail rules, and creating after the fact trading records containing fictitious information that were submitted for clearing)
The Commission regularly investigates matters involving violations described above. Some examples of the context in which the Commission has brought successful enforcement actions include, but are not limited to:
- Manipulation or fixing of benchmark rates such as LIBOR, ISDAFIX and global foreign exchange rates
- Illegal, off-exchange precious metals transactions
- Disruptive trading of futures or swaps, including spoofing—bidding or offering with the intent to cancel the bid or offer before execution
- False statements to the CFTC or the National Futures Association
- Forex trading scams
- Violating prior CFTC orders
The Commission also engages in cooperative enforcement work with state, federal and international regulatory and criminal authorities. The CFTC has enforcement teams in Washington, D.C., New York, Kansas City, and Chicago.
The Division of Enforcement bases investigations on information it receives from members of the public, including tips and complaints submitted to the Commission; other divisions of the Commission; industry self-regulatory associations; state, federal, and international authorities; and information it develops independently. For more information about CFTC Enforcement, please visit the Enforcement Actions page on the CFTC website.