As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the US Commodity Futures Trading Commission (CFTC) promulgated rules to regulate the swaps marketplace, securities trades that were previously unregulated and a contributing factor in the 2008 financial crisis.  The CFTC oversees the commodity derivatives markets in the USA and has dramatically increased regulations and enforcement as a result of Dodd-Frank.  As of January 2016, the CFTC finalized Dodd-Frank Rules  exemptive orders and guidance actions. Commodity derivatives market participants, whether acting as a commercial hedger, speculator, trading venue, intermediary or adviser, face increased regulatory requirements including:

  • Swap Dealer Regulation such as  De Minimis Exceptions, new capital and margin requirements to lower risk in the system, heightened  business conduct standards to lower risk and promote market integrity, and increase record-keeping and reporting requirements so that regulators can police the markets.
  • Derivative Transparency and Pricing such as regulating exchanges of standardized derivatives  to increase competition, information and arbitrage on price. 
  • Establishing Derivative Clearinghouses for standardized derivatives to regulate and lower counter party risks

The full list of CFTC Dodd Frank rulemaking areas is available here. In conjunction with the new regulations, the CFTC has stepped up enforcement actions according to a 2015 CFTC  enforcement report detailing 69 enforcement actions for the year.  Through these enforcement actions, the CFTC collected $2.8 billion in fines (outpacing SEC collections of $2 billion with a much larger agency budget and enforcement docket).


The CFTC summarized its enforcement actions as:

In FY 2015, the CFTC took a number of significant actions enforcing the new authorities granted by Congress in the Dodd-Frank Act. This includes enforcement of the Commodity Exchange Act’s (CEA) anti-spoofing clause, including its action, along with the U.S. Department of Justice (DOJ), against Navinder Sarao; use of the CEA’s new anti-manipulation authority; and enforcement actions against swaps markets intermediaries to ensure their compliance with supervision and reporting obligations, which are critical to the smooth running of the markets and the CFTC’s ability to detect and address potential misconduct. The CFTC also continued its prosecution of benchmark rate manipulation cases, imposing the largest monetary penalty in CFTC history ($800 million) against Deutsche Bank for manipulation of LIBOR, as well as bringing and settling the first cases charging attempted manipulation of forex exchange benchmark rates and the ISDAFix rate, both benchmark rates are used by individuals and firms across the globe.

To contextualize this summary, anti-spoofing is  bidding or offering with the intent to cancel the bid or offer before execution and you can access additional information on anti-manipulation rules targeting price fraud and see an example of a recent benchmark rate manipulation settlement and fine against Barclays in 2015.  The CFTC website also provides a comprehensive list of the CFTC disciplinary actions and enforcement actions.

In thinking about market regulators, actions and influences, the CFTC's critical role in our market structure is becoming  increasingly apparent.  An SSRN search demonstrates the folks are writing about the CFTC, but not to the extent that the expanded agency powers probably justify. The CFTC is an area of growing scholarly importance.  I will also be thinking about how to introduce students to the CFTC in the basic Corporations course and reinforce it in upper level classes.  

-Anne Tucker