What is the CFTC?

The CFTC and SEC are regulatory authorities in the United States. How are they dissimilar? Why is the forex market regulated by the CFTC instead of the SEC?

The purpose of the Commodity Futures Trading Commission (CFTC) is to promote the integrity, resiliency, and vitality of the United States’ derivatives markets through good regulation. The Commodity Futures Trading Commission (CFTC) was established in 1974, replacing the Commodity Exchange Authority, whose jurisdiction was limited to agricultural commodities. In contrast, the CFTC is authorized to regulate futures, swaps, and options markets for all commodities. The mission of the CTFC is to safeguard investors from manipulation, unethical trading techniques, and fraud.

Let’s begin with the fundamentals. The “C” in CTFC represents Commodity, whereas the “S” in SEC represents Securities. The CTFC supervises commodities, whereas the SEC regulates securities. That should be the case, correct?

Obviously, these two names have different meanings, but for the sake of clarity, let’s examine their legal definitions.