S3 2.1 & 2.2 Flashcards
When was the Commodity Exchange Act issued
1936
What is the objective of the Commodity Exchange Act?
Check on the integrity and financial responsibility of all market participants
Which 3 entities regulate the futures market?
CFTC, NFA and Futures Exchanges
What does the CFTC regulate and do?
1) Regulates commodity futures and futures on options
2) Prevents price distortion and price manipulation to protect customers
Are CFTC commissioners allowed to trade futures or options on futures?
Never
Who must always be registered with the CFTC?
All employees of a firm giving advice, handling client accounts and managing trades MUST register with the CFTC
What is another designation for a Futures Market?
Contract Market
What is a Contract Market?
Any exchange in which futures are traded that places limits on Maximum positions
How many years do CFTC registrants need to keep records?
5 years
What is the power of the CFTC?
If in violation of Exchange Act CFTC can take away trading privileges from anyone and everyone
Do all clients, including prospective ones, get a Disclosure document?
All do, and must be received BEFORE opening an account; clients must acknowledge having received this document
For the CFTC is a spread less risky than a single legged option?
They are equally risky
What do both the SEC and CFTC have jurisdiction on?
The SEC and CFTC both have jurisdiction in case of violations on Futures contracts
Requirements to be added as a Contract Market?
1) Have procedures to prevent price manipulation
2) Sufficient cash sales to reflect value
3) Agreement that trading a certain contract is not against public interest
What are the requirements for Agricultural Futures?
There are None
