Release: #4479-00
For Release:     December 15, 2000

 

CONGRESS PASSES COMMODITY FUTURES MODERNIZATION ACT

CFTC Reauthorized for Five Years

    The Commodity Futures Modernization Act, as adopted, is a significant step forward for U.S. financial markets. This important new law creates a flexible structure for regulation of futures trading, codifies an agreement between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission to repeal the 18-year old ban on trading single stock futures and provides legal certainty for the over-the-counter derivatives markets. The law, which reauthorizes the CFTC for five years, also clarifies the Treasury Amendment exclusion and specifically grants the CFTC authority over retail foreign exchange trading.

    Congress, in passing this law, has effectively implemented the recommendations set forth in the President’s Working Group on Financial Markets’ Report on Over-the-Counter Derivatives Markets and the Commodity Exchange Act. The CFTC worked closely with Congress and the futures industry to help design a regulatory structure that is tailored to the specific products and participants of a given market, specifically taking into account the manipulability of the products and eligibility of the participants. This approach will provide U.S. financial markets the flexibility needed to maintain a leadership role in the global market arena. The CFTC will proceed promptly to conform its rules as necessary to the provisions contained in the new law.