What is the Commodity Futures Modernization Act?
The Commodity Futures Modernization Act was passed by Congress and signed into law by President Bill Clinton in December 2000. It was an attempt to solve a dispute between the Securities Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) that arose in the early 1980s. At that time, Congress had enacted legislation to expand the scope of what was defined as a commodity. This resulted in some overlap between the regulatory scope of the SEC and the CFTC. Originally, commodities were typically agricultural products and raw materials. Things like pork bellies, corn, wheat, and oil are common commodities. Markets developed for these products, and standard contracts were developed, and then bought and sold. For instance, on the Chicago Board of Trade, it is possible in May 2006 to purchase a contract for 5,000 bushels of wheat for delivery in December of 2006. There are two types of buyers in this market: the end user, such as a flour mill, and the investor. The e
