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Ask the Analysts: How are commodity markets regulated?

posted on July 22, 2014


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How are commodity markets regulated? In each Ask the Analyst segment, experienced commodity market analysts provide thoughtful insight on trading skills, price trends, and strategies to help students and producers better understand how the markets work.

How are commodity market regulated?

Sue Martin: Well, there's, you have the National Futures Association, which is underneath, it's the governing body for all brokers and clearing firms. And then you have above them the main governing body, the Commodity Futures Trading Commission. They oversee and regulate. 

Don Roose: And they make sure that everybody is protected, they make sure that all of the systems are in place that are correct and that you're working with scrupulous people. And so I would say it is really the government regulation that kind of keeps everything in line. 

Darin Newsom: The government has the CFTC, the Commodity Futures Trading Commission. It's, you know, I'm not going to say it's like the Keystone Kops, some would, but it is what it is. It's a government agency. The CME has its own, or the Exchange has its own regulators as well. They kind of keep an eye, supposedly they keep an eye on what things are going on. So each level -- those are the two big ones, the Exchange itself and the government has the CFTC. Those are the big watchdogs in the industry. 

Naomi Blohm: Well, it's like having your parents right there with you the whole time. It's so regulated. If I make a phone call, if I send out an e-mail, if I'm texting someone, it has to all be recorded. And so there's two regulating bodies that are Big Brother, Mother Hen, worse than your mom on curfew night and we are regulated. 

John Roach: And those rules continue to become more and more complex every year and with the new regulations and so forth we're I would say watched very closely by the regulatory people. 

Mark Gold: Every major clearing house today, clearing firms, Goldman Sachs, R.J. O'Brien, all the clearing firms, they all have their compliance and oversight committees and teams that are watching the brokers and what they do very carefully. So at the hint of anything wrong they're right on top of it long before it should get to the FIA. And all of these things combine to help make the integrity of the market what it is today. 

 

Tags: agriculture commodities education government markets news regulation