In finance,a derivative is a contract between a buyer and a seller. The derivative can take various forms,depending on the transaction,but every derivative has the following four elements:
- an item that can or must be bought or sold,
- a future act which must occur,
- a price at which the future transaction must take place,and
- a future date by which the act must take place.
A commodity market is a market that trades in the primary economic sector rather than manufactured products,such as cocoa,fruit and sugar. Hard commodities are mined,such as gold and oil. Futures contracts are the oldest way of investing in commodities. Commodity markets can include physical trading and derivatives trading using spot prices,forwards,futures,and options on futures. Farmers have used a simple form of derivative trading in the commodities market for centuries for price risk management.
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets,which includes futures,swaps,and certain kinds of options.
The Commodity Futures Modernization Act of 2000 (CFMA) is a United States federal law that ensures that over-the-counter (OTC) derivatives remained unregulated.
Gary S. Gensler is an American government official and former investment banker who served as the chair of the U.S. Securities and Exchange Commission (SEC) from 2021 to 2025. Gensler previously worked for Goldman Sachs and has led the Biden–Harris transition's Federal Reserve,Banking,and Securities Regulators agency review team. Prior to his appointment,he was professor of Practice of Global Economics and Management at the MIT Sloan School of Management.
Nancy Erickson is an American political aide who served as the 32nd Secretary of the United States Senate from 2007 to 2015. She began her term as Secretary on January 4,2007,in the 110th Congress. Erickson was appointed by Democratic and Majority Leader Harry Reid of Nevada.
Brooksley Elizabeth Born is an American attorney and former public official who,from August 26,1996,to June 1,1999,was chair of the Commodity Futures Trading Commission (CFTC),the federal agency which oversees the U.S. futures and commodity options markets. During her tenure on the CFTC,Born lobbied Congress and the President to give the CFTC oversight of off-exchange markets for derivatives,in addition to its role with respect to exchange-traded derivatives,but her warnings were ignored or dismissed,and her calls for reform resisted by other regulators. Born resigned as chairperson on June 1,1999,shortly after Congress passed legislation prohibiting her agency from regulating derivatives.
Jill E. Sommers was sworn in as a commissioner of the Commodity Futures Trading Commission on August 8,2007 to a term that expired April 13,2009. She was nominated on July 20,2009 by President Barack Obama to serve a five-year second term.,and confirmed by the United States Senate on October 8,2009.
Sean O'Brien Cota is an American businessman,energy market expert,financial commentator,and policy advisor on American energy and financial market transparency and reform measures. As the President of a third generation family-owned oil company,Cota &Cota Oil,Inc. in Bellows Falls,VT,whom he has worked for since 1977,he became extremely involved in energy commodity trading in 1988. In 2010,he was named Chairman of the Petroleum Marketers Association of America.
Bartholomew Hamilton Chilton was an American civil servant.
The Business Risk Mitigation and Price Stabilization Act of 2013 is a bill that passed the United States House of Representatives during the 113th United States Congress. The bill would exempt nonfinancial entities that enter into a swap or a security-based swap transaction from meeting certain margin requirements when the transaction is designed to offset losses or gains in other investments.
Richard Bookstaber is the author of A Demon Of Our Own Design,a book highlighting the fragility of the financial system that occurs from tight coupling and complexity. The book is noted for its foreshadowing of the financial crisis of 2007–08. He is also the author of The End of Theory,which critiques the applicability of economics in dealing with financial crises,and proposes an alternative paradigm using agent-based models.
The Customer Protection and End User Relief Act was a bill that would have reauthorized the Commodity Futures Trading Commission through 2018 and amended some provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act.
J. Christopher Giancarlo is an American attorney and former business executive who served as 13th chairman of the United States Commodity Futures Trading Commission (CFTC). Giancarlo was sworn in as a CFTC commissioner on June 16,2014,for a term expiring on April 13,2019. Starting on January 20,2017,with President Donald Trump's inauguration,Giancarlo began serving as acting chair of the CFTC. In March 2017,the president nominated Giancarlo to be full-time chair of the commission. Giancarlo was confirmed as chairman of the commission by the United States Senate on August 3,2017.
Securities market participants in the United States include corporations and governments issuing securities,persons and corporations buying and selling a security,the broker-dealers and exchanges which facilitate such trading,banks which safe keep assets,and regulators who monitor the markets' activities. Investors buy and sell through broker-dealers and have their assets retained by either their executing broker-dealer,a custodian bank or a prime broker. These transactions take place in the environment of equity and equity options exchanges,regulated by the U.S. Securities and Exchange Commission (SEC),or derivative exchanges,regulated by the Commodity Futures Trading Commission (CFTC). For transactions involving stocks and bonds,transfer agents assure that the ownership in each transaction is properly assigned to and held on behalf of each investor.
Heath Price Tarbert is an American lawyer and former government official who served as the 14th Chairman of the Commodity Futures Trading Commission (CFTC) from 2019 to 2021. He previously served as Assistant Secretary of the Treasury for International Markets and Development and as acting Under Secretary of the Treasury for International Affairs. As of 2023,he is Chief Legal Officer and Head of Corporate Affairs for Circle.
Robert Bruce Litterman is chairman of the Risk Committee and a founding partner of Kepos Capital in New York. Prior to Kepos Capital,Litterman spent 23 years at Goldman Sachs,where he was head of the Quantitative Resources Group in Goldman Sachs Asset Management for 11 years,starting in 1998. Prior to that position,Litterman headed the firm-wide risk department from 1994 to 1998,and prior to that he was the co-head of the model development group in the research department of Goldman Sachs' Fixed Income Division. Litterman received a Ph.D. in economics from the University of Minnesota in 1980.
Mark P. Wetjen is an American lawyer. In 2011,he was nominated by Barack Obama to serve a five-year term as a Commissioner of the Commodity Futures Trading Commission (CFTC). He also served for five months as acting chairman of the CFTC upon the departure of his predecessor,Gary Gensler.
Kalshi Inc. is an American financial exchange and prediction market based in Lower Manhattan,New York City,offering event contracts. Launched in July 2021,it offers a platform where both retail and institutional traders can place trades on various future events,including economic indicators,weather patterns,awards,as well as political and legislative outcomes. The platform enables users to trade on yes-or-no questions,with contracts priced based on the market's estimated probability of an event occurring. The exchange provides contracts that pay out $1 for correct selections. In October 2024,Kalshi received approval to reintroduce election markets,allowing users to wager on political outcomes,such as congressional control and presidential elections.
The Financial Innovation and Technology for the 21st Century Act (FIT21) is a bill in the U.S. Congress to explicitly address the treatment of digital assets under U.S. law.
