The Commodity Futures Trading Commission (CFTC)
The commodity Futures Trading commission is the federal agency created by Congress to regulate futures trading. The commodity Exchange Act of 1974 became effective April 21, 1975. Previously, futures trading had been regulated by the commodity Exchange Authority of the USDA. |
Similar financial terms
Cash commodityThe actual physical commodity, as distinguished from a futures contract.
Commodity
A commodity is food, metal, or another physical substance that investors buy or sell, usually via futures contracts.
Underlying Commodity
The commodity or futures contract on which a commodity option is based, and which must be accepted or delivered if the option is exercised. Also, the cash commodity underlying a futures contract.
Commodity Pool
An investment trust, syndicate or similar form of enterprise operated for the purpose of trading commodity futures or option contracts.
Commodity Price Index
Index or average, which may be weighted, of selected commodity prices, intended to be representative of the markets in general or a specific subset of commodities (for example, grains or livestock).
Theoretical futures price
Also called the fair price, the equilibrium futures price.
Spot futures parity theorem
Describes the theoretically correct relationship between spot and futures prices. Violation of the parity relationship gives rise to arbitrage opportunities.
Next futures contract
The contract settling immediately after the nearby futures contract.
Nearby futures contract
When several futures contracts are considered, the contract with the closest settlement date is called the nearby futures contract. The next futures contract is the one that settles just after the nearby futures contract. The contract farthest away in time from settlement is called the most distant futures contract.
National Futures Association (NFA)
The futures industry self regulatory organization established in 1982.
Most distant futures contract
When several futures contracts are considered, the contract settling last.
London International Financial Futures Exchange
London International Financial Futures Exchange (LIFFE) is a London exchange where Eurodollar futures as well as futures-style options are traded.
Synthetic Futures
A position created by combining call and put options. A synthetic long futures position is created by combining a long call option and a short put option for the same expiration date and the same strike price. A synthetic short futures is created by combining a long put and a short call with the same expiration date and the same strike price.
Trading Halt
The temporary suspension of trading in a quoted security, usually for 30 minutes, while material news from the issuer is being disseminated over the news wires. A trading halt gives all investors equal opportunity to evaluate news and make buy, sell, or hold decisions on that basis. A trading halt may also be imposed for purely regulatory reasons, either by the SEC, the FSA, any index or other regulatory body.
Daytrading
Refers to trading in securities were positions are opened and closed on the same day.
Trading range
The difference between the high and low prices traded during a period of time; with commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.
Trading posts
The posts on the floor of a stock exchange where the specialists stand and securities are traded.
Trading paper
CDs purchased by accounts that are likely to resell them. The term is commonly used in the Euromarket.
Trading costs
Costs of buying and selling marketable securities and borrowing. Trading costs include commissions, slippage, and the bid/ask spread. See: transaction costs.
Program trading
Trades based on signals from computer programs, usually entered directly from the trader's computer to the market's computer system and executed automatically.
Last trading day
The final day under an exchange's rules during which trading may take place in a particular futures or options contract. Contracts outstanding at the end of the last trading day must be settled by delivery of underlying physical commodities or financial instruments, or by agreement for monetary settlement depending upon futures contract specifications.
Insider Trading
Insider trading is the trading (buying or selling) of shares in a company by an insider - i.e. a senior manager, director, or person who owns more than 10% of the shares of a company. Insider trading is not illegal. But, if insiders trade on material privileged information - before it becomes known to the general public - that is a problem! This is perfectly legal except when trading takes place using privileged information which has not yet been released to the public. We often hear of insider ...
Separate Trading of Registered Interest (STRIPS)
Separate Trading of Registered Interest and Principal Securities (STRIPS) are securities that have their periodic interest payments separated from the final maturity payment and the two cash flows are sold to different investors.
Fictitious Trading
Wash trading, bucketing, cross trading, or other schemes which give the appearance of trading. Actually, no bona fide, competitive trade has occurred.
Volatility Quote Trading
Refers to the quoting of bids and offers on option contracts in terms of their implied volatilities rather than as prices.
Ginzy Trading
A trade practice in which a floor broker, in executing an order -- particularly a large order -- will fill a portion of the order at one price and the remainder of the order at another price to avoid an exchange's rule against trading at fractional increments or "split ticks." In In re Murphy, [1984-86 Transfer Binder] Comm. Fut L. Rep. (CCH) at pp. 31,353-4 (Sept. 25, 1985), the Commission found that ginzy trading was a noncompetitive trading practice in violation of section 4c(a)(B) of the Com ...
Commission
The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or their dollar value. In 1975, deregulation led to the creation of discount brokers, who charge lower commissions than full service brokers. Full service brokers offer advice and usually have a full staff of analysts who follow specific industries. Discount brokers simply execute a client's order -- and usually do not offer an opinion on a stock. Also known as a round-turn.
Commission broker
A broker on the floor of an exchange acts as agent for a particular brokerage house and who buys and sells stocks for the brokerage house on a commission basis.
Commission house
A firm which buys and sells future contracts for customer accounts.
