United States Commodity Futures Trading Commission 1974-1979

By: Sarah Carlye

In 1974 the CFTC (Commodity Futures Trading Commission) was created. President Gerald Ford signed the Commodity Futures Trading Commission Act that was passed by congress. In addition to creating the CFTC, it overhauled the Commodity Exchange Act. With the Commodity Futures Trading Commission Act came exclusive jurisdiction over all commodity futures trading regulations, not just agricultural futures trading regulations.

1975-Four of the first five CFTC members (including the CFTC’s first Chairman) are sworn in. Authority is transferred from the Commodity Exchange Authority, a Department of Agriculture agency, to the CFTC to regulate futures trading.

The CFTC authorizes exchanges to continue trading futures contracts on previously unregulated commodities under the Commodity Exchange Act. September 11, 1975—The CFTC approves the first futures contract on a financial instrument—the Chicago Board of Trade Government National Mortgage Association (Ginnie Mae) certificates futures contract with the approval of the CFT.

1976-The New York Mercantile Exchange declares a default in its May Maine potato contract and the CFTC brings manipulation charges against both the long and short position holders.

1977-The CFTC asks the U.S. District Court in Chicago to order seven members of the Hunt family of Dallas, and a related company, to liquidate positions that exceed the three million bushel speculative position limit for soybean futures on the Chicago Board of Trade. The first futures on long-term U.S. government debt contract is approved by the CFTC approves the first futures contract. It was the Chicago Board of Trade U.S. Treasury bond futures contract. CFTC declares a market emergency in the December coffee “C” futures contract on the New York Coffee and Sugar Exchange, which results in an orderly reduction of the open interest in that contract.

1978-Most commodity options transactions in the U.S. are suspended by the CFTC because of pervasive fraud in so-called “London options” and dealer options on physical commodities. President Carter signs the Futures Trading Act of 1978 into law. The act renews the CFTC’s regulatory authority for four years, requires the CFTC to maintain communication with the Securities and Exchange Commission, the Department of the Treasury, and the Federal Reserve Board, and makes some technical changes to the Commodity Exchange Act.

1979-The first rules to govern the operations of commodity pool operators (CPO) and commodity-trading advisors (CTA) is adopted by the CFTC in a new Part 4 of its rules. A temporary moratorium on entry into the leverage contract business in gold and silver bullion and bulk coins is announced by the CFTC. In an emergency action, the CFTC votes to prohibit further trading in the Chicago Board of Trade March wheat futures contract. This is the first time the Commission orders a market closed to prevent a price manipulation. The U.S. Court of Appeals for the Seventh Circuit, affirms the CFTC’s authority to act during market emergencies

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