Commodity Futures Trading Commission Definition. The Commodity Futures Trading Commission (CFTC) is an independent agency of the U.S. government, charged with regulating commodity, currency, derivatives, and financial futures and options. The stated mission of the CFTC is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets. The CFTC has been instrumental in the fight to eliminate fraud in the forex trading industry by helping to police fraudulent forex brokers and advising consumers of common forex scams. The off-exchange retail currency market, or forex market had been unregulated within the United States, but that changed when the CFTC Reauthorization Act of 2008. The act sought to clarify and enhance the CFTC’s jurisdiction over forex trading, and since then the CFTC has enacted a number of new regulations on the forex market. In 2009, the CFTC eliminated hedging, restricted margin to 100:1 and enforced first-in-first-out (FIFO) order execution. The CFTC has recently proposed new capital and registration requirements for all domestic forex brokers. However, a new proposal to reduce limit leverage to 10:1 has met stiff resistance from the industry. The CFTC has maintained its independence, even though rumors have suggested a merger with the SEC is imminent.
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