The Commodity Exchange Act was passed in 1936 to regulate futures and commodity trading in the US, stabilizing the investment landscape and reducing illegal transactions. The act established a strong federal infrastructure and is still enforced by the Commodity Futures Trading Commission and National Futures Association.
The Commodity Exchange Act is a federal law that was passed and enacted by the United States government on June 15, 1936. Replacing the Grain Futures Act of 1922, the Commodity Exchange Act created a standard and oversight network for the regulation of any futures trading and commodity regulation with the country. Part of this rule was to require that all futures and commodity options trading occur on a recognized and legally functional exchange.
By establishing a standard for futures and commodity trading within the United States, the Commodity Exchange Act accomplished several important tasks. First, the Act helped stabilize the overall landscape for investments and investors, which was still very shaky after the stock market crash of 1929. Some of the provisions contained in the Act’s statutes were specifically aimed at qualifying prospective investors and thus avoid some of the factors that led to the earlier crash.
Second, the Commodity Exchange Act helped regulate the avenues that could be used for commodity trading. By ensuring that transactions were made through exchanges that were operating within the guidelines set forth by the federal government, it became possible to reduce the number of illegal transactions that were taking place at the time. The Act’s provisions were broad enough to allow the government to investigate any suspicious activity and often protect the best interests of legitimate investors.
Finally, the Commodity Exchange Act laid the foundation for creating a strong infrastructure at the federal level to administer the provisions found in the Act. While various organizations within the government worked together to enforce the provisions, the Commodity Exchange Commission Commodity Futures Trading was established in 1974 to centralize those efforts. The CFTC continues to administer the Commodity Exchange Act today. To assist in the process, the CFTC created the National Futures Association in 1982. Between the efforts of the two entities, all options and futures contracts are traded on organized commodity exchanges and are subject to review for compliance with the standards established by the Commodity Exchange. Act.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
