Futures trading and the problem of commodity exchange in the. Be it enacted by the senate and house of representatives of the united states of america in congress assembled, section 1. 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. Commodity futures modernization amends the commodity exchange act to authorize. Overthecounter derivatives markets and the commodity exchange act pdf. Commodity futures modernization act of 2000 gallery great commodities prc vote image here, check it out beautiful photography of prc vote oil at work here i loved this image of vote oil repeal see why oil repeal pdf will be trending in 2016 as well as 2015 great new summary of repeal pdf. Commodity futures trading commission regulations implementing. Instead, trading activity in these contracts must follow general. Previously, these products were prohibited from being offered in the united. The commodity futures modernization act of 2000 cfma enacted the most sweeping amendments to derivatives law since the creation of the commodity futures trading commission. Dec 21, 2000 analysis of commodity futures modernization act 2000 isda archived 20908 at the wayback machine.
The commodity futures modernization act and single stock. Be it enacted by the senate and house of representatives of the. Sep 08, 2005 testimony of patrick parkinson deputy director, division of research and statistics commodity futures modernization act of 2000 before the committee on banking, housing, and urban affairs, u. Commodity futures modernization act of 2000 wikipedia. The commodity futures modernization act of 2000 stroock. At its top level, it divides the world of legislation into fifty topicallyorganized titles, and each title is. Commodity futures markets executive summary since the passage of the commodity futures modernization act of 2000, new institutional noncommercial investors have entered the commodities futures market.
Commodity futures modernization and financial contract netting improvement act of 2000 as ordered reported by the house committee on banking and financial services on july 27, 2000 summary h. If you had to pick a single government move that did more than any other to muck things up, it was probably this bill, passed by a republican congress and signed into law by lameduck president bill clinton in december 2000. Commodity futures modernization amends the commodity exchange act to authorize appropriations for authorities and activities under such act. Commodity futures modernization act of 2000 us law. Commodity futures modernization act cfma definition cfma is a law in the us that was enacted in 2000 and deregulated under the derivatives of the otc overthecounter. On october 23, 2001, new rules relating to intermediaries, including futures. Order code rl30434 report for congress received through the crs web the commodity futures modernization act of 2000. Unlike other futures contracts, however, the cfma provides that security futures products are securities as well as futures. Commodity futures modernization act credit default. The commodity futures modernization act of 2000 cfma, which was signed into law on december 21, 2000, amended the commodity exchange act cea to lift the ban on singlestock futures and narrow. Introduced in house 12142000 commodity futures modernization act of 2000 title i. The last act of the 106th congress was to pass an omnibus bill that included the commodity futures modernization act h. Final report of commodity futures trading commission.
Derivatives markets and the commodity exchange act pdf. The commodity futures modernization act of 2000 cfma is united states federal legislation that officially ensured modernized regulation of financial products known as overthecounter otc derivatives. Derivative financial instruments are those that gain or lose value as some underlying rate, price, or other economic variable changes. Testimony, parkinsoncommodity futures modernization act. Supervisors performance management toolkit auburn university. The commodity futures modernization act of 2000 cfma is united states federal legislation that officially ensured the deregulation of financial products known as overthecounter derivatives. The commodity futures modernization act of 2000 cfma, which was signed into law on december 21, 2000, lifts the 18year ban on singlestock futures and narrowbased security indices security futures products.
Apr 19, 2020 the commodity futures modernization act was passed by congress and signed into law by president bill clinton in december 2000. Provisions included major changes in the commodity exchange act cea regarding the regulation of exchangetraded futures contracts, overthecounter otc derivatives, and security futures, contracts. Commodity futures modernization act of 2000 title i. Pdf pdf provides a complete and accurate display of this text. The commodity futures modernization act and single stock futures.
The law enables the sophisticated parties to enter into trade contracts without inspection as stated by the commodities exchange act of 1936. Commodity futures markets executive summary since the passage of the commodity futures modernization act of 2000, new institutional noncommercial investors have entered the commodities. The cfma removed a longstanding ban2 on trading futures on single securities and narrowbased security indexes3 in the united states. Before the committee on banking, housing, and urban affairs, u. I am pleased to testify today on behalf of the securities and exchange commission sec or commission as you consider s.
Anticipating that single stock futures will begin trading in the u. Commodity futures modernization act definition the. A more general argument is that stringent regulation of. Commodity futures modernization act the financial crisis. The term security future does not include any agreement, contract, or transaction excluded from this act under section 2c, 2d, 2f, or 2g of this act as in effect on the date of the. To his credit, weisberg candidly admits that he cant point to a smoking gun. Federal register membership in a registered futures.
Commodity futures modernization act cfma definition. The commodity futures modernization act and single stock futures the financial information forum fif was founded in 1996 to address the issues of its component groups exchanges, brokerdealers. May 28, 2018 commodity futures modernization act cfma. This act may be cited as the commodity futures modernization act of 2000. However, ncoil continues to believe that cdswhich are most often defined as insurance against negative credit eventsshould be regulated as insurance.
The commodity futures modernization act of 2000 cfma is united states federal legislation that ensured financial products known as overthecounter otc derivatives are unregulated, accelerating the collapses of major financial companies. It was signed into law on december 21, 2000 by president bill clinton. The law allows sophisticated parties to trade the contracts without scrutiny under the commodity exchange act of 1936. The commodity futures modernization act of 2000 cfma, which was signed into law on december 21, 2000, amended the commodity exchange act cea to lift the ban on singlestock futures and narrowbased security indices security futures products.
As amended by the cfma, in order for a dcm to list. S government that reaffirmed the authority of the commodity futures trading commission for five. The term security future does not include any agreement, contract, or transaction excluded from this act under section 2c, 2d, 2f, or 2g of this act as in effect on the date of the enactment of the commodity futures modernization act of 2000 or title iv of the commodity futures modernization act of 2000. Cfma is a law in the us that was enacted in 2000 and deregulated under the derivatives of the otc overthecounter the law enables the. Analysis of commodity futures modernization act 2000 isda archived 20908 at the wayback machine. Previously, these products were prohibited from being offered in the united states. S government that reaffirmed the authority of the commodity futures trading commission for five years as the regulatory. However, ncoil continues to believe that cdswhich are most often defined as insurance against negative credit. The grammleachbliley act glba, also known as the financial services modernization act of 1999, pub. Signed into law by president clinton on december 21, 2000, the commodity futures modernization act of 2000 the cfma transforms the regulatory framework covering exchangetraded futures, overthe.
Commodity futures modernization act of 2000 be it enacted by the senate and house of representatives of the united states of america in congress assembled, section 1. The commodity futures modernization act brought the united states into a global market of the single stock futures that included great britain, spain, south africa, india, and other countries. What is the commodity futures modernization act cfma. Testimony, parkinsoncommodity futures modernization. This legislation would provide legal certainty that overthecounter otc. The commodity exchange act the act, through core principles added by the commodity futures modernization act of 2000 cfma and otherwise, imposes upon trading facilities designated contract markets or dcms and derivatives transaction execution facilities or dtefs. The only two concrete examples i have seen are the gradual repeal of glasssteagall throughout the 1990s and the commodity futures modernization act in 2000. The commodity futures modernization act of 2000 cfma is united states federal legislation. The commodity futures modernization act and single stock futures the financial information forum fif was founded in 1996 to address the issues of its component groups exchanges, brokerdealers, futures commission merchants fcm and vendors. Commodity futures modernization act definition the business. The commodity futures modernization act was passed by congress and signed into law by president bill clinton in december 2000. Signed into law by president clinton on december 21, 2000, the commodity futures modernization act of 2000 the cfma transforms the regulatory framework covering exchangetraded futures, overthecounter derivatives, and futures options.
This article provides background information on the act, an analysis of the changes to the derivative and commodities markets and a summary of speci c provisions. You should probably read this about commodity futures. Commodity futures modernization and financial contract. Mar 02, 2009 the only two concrete examples i have seen are the gradual repeal of glasssteagall throughout the 1990s and the commodity futures modernization act in 2000. Commodity futures modernization act credit default insurance. The commodity futures modernization act of 2000 cfma, which was signed into law on december 21, 2000, lifts the 18year ban on singlestock futures and narrowbased security indices security futures. The united states code is meant to be an organized, logical compilation of the laws passed by congress. Derivatives regulation reconsidered showing 14 of 17 pages in this report. Leachbliley act glba and the commodity futures modernization act of 2000 cfma removed barriers to risktaking by commercial and investment banks, while others contend that these statutes. Jun 21, 2000 i am pleased to testify today on behalf of the securities and exchange commission sec or commission as you consider s. Leachbliley act glba and the commodity futures modernization act of 2000 cfma removed barriers to risktaking by commercial and investment banks, while others contend that these statutes limited regulators ability to respond to changing market conditions.
This term refers to a group of institutional investors that own commodities futures. Did deregulated derivatives cause the financial crisis. Testimony of patrick parkinson deputy director, division of research and statistics commodity futures modernization act of 2000 before the committee on banking, housing, and urban. Summers on the commodity futures modernization act to the senate agriculture and banking committee june 21, 2000 chairman lugar, chairman. Observations on repealing the commodity futures modernization.
The south african market has traditionally been the largest of the single stock futures marketplaces. The commodity futures modernization act of 2000 cfma enacted the most sweeping amendments to derivatives law since the creation of the commodity futures trading commission cftc in 1974. On december 21, 2000, the commodity futures modernization act cfma became law and amended the commodity exchange act cea. On october 23, 2001, new rules relating to intermediaries, including futures commission merchants fcms, introducing brokers ibs, commodity trading advisors ctas and commodity pool operators. Commodity futures modernization act of 2000 wikimili, the. The commodity futures modernization act of 2000 cfma lifted the ban on trading of futures contracts based on single stocks. The bills principal focus is on lifting the ban on single stock futures and the much needed modernization of our futures laws as well as the provision for legal. If you had to pick a single government move that did more than any other to muck things up, it was probably this bill, passed by a republican congress and. Commodity futures modernization act title fraser st. It was an attempt to solve a dispute between the securities. The bill is scheduled for consideration by the house of representatives on october 19, 2000. Urging support for the commodity futures modernization act. The commodity exchange act the act, through core principles added by the. It clarified the law so most otc derivative transactions between.
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