A Study of Regulations of Commodity Futures Trading Commission (CFTC) to Control Market Manipulation in Energy Futures Contract (Case Study: The US)

Amani, Masoud; Kohan Hoshnejad, Rouhollah

doi:10.22066/cilamag.2014.15801

A Study of Regulations of Commodity Futures Trading Commission (CFTC) to Control Market Manipulation in Energy Futures Contract (Case Study: The US)

Authors

Masoud Amani

Rouhollah Kohan Hoshnejad

10.22066/cilamag.2014.15801

Abstract

A “derivative” is a financial instrument whose value is derived from the value of its underlying asset. “Futures” is a derivative which is exclusively traded in exchanges as a standard contract and it is heavily under regulation. Today, the Commodity Futures Trading Commission (CFTC) is responsible for Futures regulation in the US. CFTC was established to prevent the large scale price manipulation. Manipulation means creating an artificial price through forces other than legitimate supply and demand forces. While price manipulation will materialize in all commodity markets, it has a momentus effect on energy market. Legal cases and judicial procedure of CFTC show that manipulation generally takes place in three forms: market corner, market squeeze and determination of settlement price. CFTC fights against these kinds of manipulation through complicated cases.

Keywords

Derivatives

futures

the U.S

Commodity Futures Trading Commission (CFTC)

Price Manipulation

Energy Markets