CFTC History in the 1980s
January 6, 1980—In an emergency action, the CFTC orders the suspension of futures trading for two days for wheat, corn, oats, soybean meal, and soybean oil on four exchanges after President Carter announces an embargo on the sale of certain agricultural goods to the Soviet Union that includes substantial amounts of grain.
March 28, 1980—After careful consideration of a host of market factors, the CFTC votes not to use its emergency powers to order a suspension of trading in silver futures as prices plummet.
May 29, 1981—As required by Public Law 96-276, the CFTC transmits to Congress a report on events in the silver market during late 1979 and early 1980, and on issues involving futures contracts on financial instruments.
September 8, 1981—The CFTC adopts a comprehensive set of regulations to govern exchange-trading of options on futures contracts under a controlled and monitored three-year pilot program.
September 22, 1981—The CFTC grants registration to the National Futures Association as a self-regulatory futures association and approves its articles, bylaws, and rules. NFA begins to hire staff and commences operations on October 1, 1982.
October 16, 1981—The CFTC adopts Regulation 1.61 (now part of CFTC Regulation 150, 17 CFR 150) requiring exchanges to establish speculative position limits in all futures contracts.
December 7, 1981—The CFTC and the Securities and Exchange Commission jointly announce a basic jurisdictional agreement on the regulatory responsibility of each agency for a variety of financial instruments, in particular stock index futures. This agreement was known as the Shad-Johnson Accord and later became part of the Commodity Exchange Act.
December 8, 1981—The CFTC approves the first futures contract settled in cash at expiration, the Eurodollar contract on the Chicago Mercantile Exchange.
February 16, 1982—The CFTC approves the first futures contract based on a stock index, the Value Line Index Average traded on the Kansas City Board of Trade.
August 31, 1982—The CFTC approves the first options on futures contracts since its announcement of the exchange-traded options pilot program. The contracts include options on sugar futures on the Coffee Sugar and Cocoa Exchange; options on gold futures on the MidAmerica Commodity Exchange (later acquired and eventually closed by the Chicago Board of Trade) and Commodity Exchange, Inc. (now a part of the New York Mercantile Exchange); and options on Treasury bond futures on the Chicago Board of Trade.
January 6, 1983—The CFTC approves the first options based on stock index futures contracts: an option for the New York Stock Exchange Composite Index futures contract on the New York Futures Exchange, Inc. and an option on the Standard & Poor's 500 (S&P 500) Index futures contract on the Chicago Mercantile Exchange.
January 11, 1983—President Reagan signs the Futures Trading Act of 1982, renewing the CFTC's mandate to regulate futures trading for four more years and clarifying Commission jurisdiction in a number of areas. Among other things, this act codified the Shad-Johnson Accord (which gave the CFTC jurisdiction over broad-based stock index futures and banned single-stock and narrow-based stock index futures), and required the CFTC to act on new contract proposals and rule amendments within specified time periods (365 days for new contracts and 180 days for rule amendments).
July 29, 1983—The CFTC adopts final rules governing introducing brokers (IB) and associated persons (AP) of introducing brokers, commodity pool operators, and commodity trading advisors—new registrant categories created by the Futures Trading Act of 1982. Concurrently, the Commission authorizes the National Futures Association to perform registration processing functions for introducing brokers and their associated persons, the first time NFA is authorized to perform registration functions.
February 27, 1984—The CFTC adopts final rules to govern temporary licenses for associated persons and a new system of statutory disqualifications for all registrants. Concurrently, the National Futures Association is authorized to grant temporary licenses in appropriate cases. Effective September 30, 1985, following NFA’s adoption of rules in this area, the CFTC authorizes NFA to take adverse action against registrants, subject to appeal to the CFTC.
April 18, 1984—The CFTC’s Office of the General Counsel issues a letter to the Toronto Futures Exchange stating that the Commission will not take any enforcement action if the TFE’s stock index futures contract on the Toronto Stock Exchange Composite 300 Stock Index is offered and sold in the U.S. Since then, Commission staff has issued many similar letters regarding other foreign stock index futures contracts.
August 29, 1984—The CFTC approves amendments to Chicago Mercantile Exchange rules that allow it to establish a trading link with the Singapore International Monetary Exchange, the first trading and clearing link between a domestic and a foreign exchange.
September 28, 1984—The CFTC submits “A Study of the Nature, Extent and Effects of Futures Trading by Persons Possessing Material, Nonpublic Information” to its Congressional oversight committees.
October 28, 1984—The CFTC approves the first options on domestic agricultural commodity futures contracts on six exchanges.
December 3, 1984—The CFTC authorizes the National Futures Association to perform registration processing functions for futures commission merchants, commodity pool operators, commodity trading advisors, and their respective associated persons.
December 31, 1984—The Federal Reserve Board, the Securities and Exchange Commission, and the CFTC submit to Congress “A Study of the Effects on the Economy of Trading in Futures and Options.”
February 15, 1985—The CFTC approves the first option on a physical commodity—Amex Commodity Corporation's physical gold bullion option contract.
February 28, 1985—The CFTC ends its silver investigation, alleging that Nelson Bunker Hunt, William Herbert Hunt, and other individuals and firms manipulated and attempted to manipulate silver prices in 1979 and 1980.
March 20, 1985—Volume Investors, Inc., a clearing member at COMEX, defaults on a margin call on options on gold futures. The default affects the funds of 100 customers, mostly local traders, and causes the Commission to consider numerous changes to its rules. Ultimately, improved surveillance, early warning, and margining procedures are developed.
April 17, 1985—The CFTC adopts Regulation 4.5, 17 CFR 4.5, which excludes certain otherwise regulated persons from the commodity pool operator definition upon the filing of a notice of eligibility, subject to certain limits on trading. Effective August 8, 2003, trading limits have been removed. Most of the notices filed under the regulation are filed by registered investment companies.
April 29, 1986—The CFTC terminates the pilot program started in 1981 for exchange-traded commodity option contracts not based on domestic agricultural commodities. With the successful completion of the pilot program, non-agricultural options continue to trade according to CFTC regulations.
September 23, 1986—The CFTC, the Securities and Exchange Commission, and the United Kingdom Department of Trade and Industry announce the signing of a Memorandum of Understanding (MOU), which will enhance cooperation and mutual assistance in securing compliance with and enforcement of securities and commodities laws in both countries. Since then, the Commission has entered into information-sharing and enforcement MOUs with many other foreign regulators.
November 10, 1986—President Reagan signs the Futures Trading Act of 1986, reauthorizing the CFTC for three years.
January 6, 1987—The CFTC votes to end the pilot program in options on agricultural futures contracts and physical commodities, and to continue to allow trading of options on futures in those commodities.
July 23, 1987—The CFTC adopts final rules to permit the offer and sale of foreign futures and options in the U.S. and to apply the same customer protection rules to the offer and sale of foreign futures and options as to the offer and sale of domestic futures and options. These rules include a requirement (repealed on March 12, 1996) that foreign options trading must be approved on a case-by-case basis.
October 19, 1987—In the biggest one-day price plunge in stock market history, no CFTC-regulated systems fail and no firms default on obligations.
November 9, 1987—The CFTC releases an interim report on stock index futures and related stock market activity during October 1987; a follow-up report was released on January 8, 1988, and a final staff report on February 1, 1988.
May 16, 1988—The President's Working Group on Financial Markets (Working Group), composed of the CFTC, the Securities and Exchange Commission, the Treasury Department, and the Federal Reserve Board, presents its report on the October 1987 stock market break to President Reagan.
July 20, 1988—The CFTC approves the offer and sale of the first foreign option contracts in the U.S.—options to be traded on the SIMEX, the SFE, and the Montreal Exchange.
August 25, 1988—The CFTC approves the ACC gold bullion warrants—options on physical gold bullion, the first warrants contract approved by the CFTC.
October 18, 1988—The CFTC approves proposals to amend daily price limits and trading halt provisions for stock index futures and option contracts traded on the Chicago Mercantile Exchange, the Chicago Board of Trade, the Kansas City Board of Trade, and the New York Futures Exchange. These proposals were based on recommendations by the Working Group.
November 22, 1988—The CFTC approves the Chicago Board of Trade futures contracts in long-term U.K. gilts, the Japanese Stock Index (TOPIX), and long-term Japanese government bonds, and the Chicago Mercantile Exchange Nikkei Stock Average futures contract. These are the first domestic futures contracts based on foreign stock indices and foreign government debt instruments.
January 20, 1989—The news media report the disclosure of a two-year undercover investigation of the Chicago trading pits conducted by the Federal Bureau of investigation in cooperation with the CFTC and the Department of Justice. The CFTC takes a number of market integrity actions in the following months.
February 2, 1989—The CFTC unanimously approves rules proposed by the Chicago Mercantile Exchange for the basic Globex system, the first international electronic trading system. Trading begins in June 1992.
July 11, 1989—The Chicago Board of Trade institutes an emergency action concerning the July 1989 CBOT soybean futures contract. CBOT requires all large traders to reduce their positions prior to the expiration of the July contract. The contract expires in an orderly manner.
July 17, 1989—The CFTC approves final rules addressing the regulation of hybrid instruments that combine characteristics of commodity options with debt, preferred equity, or depository interests and, at the same time, approves a policy statement concerning swap transactions and rules establishing an exemptive framework for certain hybrid instruments with limited commodity option components.
November 17, 1989—The CFTC releases a major economic analysis of "dual trading" prepared by its Division of Economic Analysis.