The CFTC (Commodity Futures Trading Commission) is an autonomous US body that oversees trading in derivatives like futures and options across a wide range of asset classes, such as commodities, energy and fixed income. It was created by the US Congress in 1974 when the majority of futures trading was in the agricultural sector. As financial markets have grown more complex it has seen its mandate expand repeatedly – most recently by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In February 2011 a joint CFTC-SEC advisory committee created to investigate the May 2010 flash crash prompted an outcry among users of off-exchange trading venues by proposing changes that would benefit public exchanges at the expense of the off-exchange venues. The committee argued in a report that the use of such venues can deny critical liquidity to the public markets at times of stress, such as occurred during the flash crash.
In June 2012 the chairman of the CFTC, Gary Gensler addressed Congress and launched a bristling attack on the integrity of the UK financial services industry. The comments raised hackles across the banking industry and were widely interpreted as a power grab by the CFTC. The CFTC led efforts in 2012 to look into possible Libor rate manipulation.
In November 2012, the US Commodity Futures Trading Commission finalised key rules that are set to push more of the vast but opaque $640tn over-the-counter swaps market onto transparent trading venues.