Co-written by David Mitchell
On December 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act of 2000 (CFMA),1 which overhauls the Commodity Exchange Act (CEA) and amends securities, banking and bankruptcy laws to update the regulatory structure and to clarify the legal status of derivative products. The CFMA provides greater legal certainty for over-the-counter (OTC) derivatives and creates a new, less burdensome regulatory framework for boards of trade that are regulated by the Commodity Futures Trading Commission (CFTC).
The general prohibition against trading a futures contract in the United States other than on a CFTC-regulated market is retained. However, the New Law also retains the CFTC's authority to provide exemptions from all or parts of the CEA and establishes specific exclusions and exemptions for OTC derivative products and transactions executed on electronic platforms between well-capitalized, institutional or commercial
