The CFTC: The Federal Regulator
The Commodity Futures Trading Commission was created by Congress in 1974 to oversee the U.S. derivatives markets — futures, options on futures, and later swaps. It writes the rules exchanges and intermediaries must follow, polices manipulation and fraud, approves new contracts, and publishes market data such as the weekly Commitments of Traders report.
Think of the CFTC as the futures industry's counterpart to the SEC in securities. It has enforcement authority, brings civil actions, and can refer criminal matters to the Department of Justice.
The NFA: The Industry's Own Watchdog
The National Futures Association is a self-regulatory organization authorized by Congress and overseen by the CFTC. Nearly everyone who solicits futures business in the U.S. — brokers, introducing brokers, commodity trading advisors, commodity pool operators — must be an NFA member. The NFA screens registrations, audits member firms, enforces conduct rules, and arbitrates customer disputes.
The NFA also runs BASIC (Background Affiliation Status Information Center), a free public database where you can look up any firm or individual's registration status and disciplinary history. We encourage every prospective client to check us there — that is what it is for.
What This Means for You as a Customer
- Registration is mandatory. An unregistered person soliciting futures business is a red flag, full stop.
- Rules on conduct. NFA rules govern sales practices, disclosure documents, promotional material, and supervision.
- Dispute resolution. Customers can bring claims through NFA arbitration instead of court.
- Limits exist. Regulation polices fraud and conduct; it does not protect you from market losses. Futures trading involves substantial risk of loss and is not suitable for all investors.
It is also worth knowing how the system is funded. The NFA runs on membership dues and small assessment fees on trades, not taxpayer money, which keeps the watchdog close to the industry it polices — a design that works because the CFTC sits above it. Customers see the system most directly in the risk disclosure documents every firm must deliver before an account opens, and in the disciplinary records available to anyone who bothers to look. Neither agency endorses any firm or product; registration is permission to operate, not a seal of approval on the firm or its products.