What did the Commodity Futures Modernization Act do?
The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives remained unregulated. It was signed into law on December 21, 2000 by President Bill Clinton.
When was the Commodity Futures Modernization Act?
2000
CFMA is a law in the US that was enacted in 2000 and deregulated under the derivatives of the OTC (over-the-counter). The law enables the “sophisticated parties to enter into trade contracts without inspection as stated by the Commodities Exchange Act of 1936.
Who deregulated derivatives?
the U.S. Congress’s
That’s because the roots of the catastrophe lay not in changes in the markets, but changes in the law. Perhaps the most important of those changes was the U.S. Congress’s decision to deregulate financial derivatives with the Commodity Futures Modernization Act (CFMA) of 2000.
What is commodity contract?
Commodity contracts are contracts used for the buying and selling of commodities, which are items such as energy products, food, and metals.
What did the Financial Services Modernization Act of 1999 do?
The Financial Services Modernization Act—or the Gramm-Leach-Bliley Act—is a law passed in 1999 that partially deregulates the financial industry. The law allowed banks, insurers, and securities firms to start offering each other’s products, as well as to affiliate with each other.
Are derivatives unregulated?
Interest rates and market indexes. Derivatives can be traded privately (over-the-counter, OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized.
Are derivatives legal?
Fourth, derivatives traditionally are regulated not through heavy-handed bans on trading, but through common-law contract rules that protect and enforce derivatives that are used for hedging purposes, while declaring purely speculative derivative contracts to be legally unenforceable wagers.
What is the difference between commodities and futures?
Commodities are things you can buy or sell — physical goods such as oil, grain or metals. Futures are contracts to buy and sell things in the future.
How does commodity Futures Trading Work?
A commodity futures contract is a standardized contract that obliges the buyer to purchase some underlying commodity (or the seller to sell it) at a predetermined future price and date. Commodity futures can be used to hedge or protect a position in commodities.
How does the Financial Services Modernization Act affect consumer privacy?
SUMMARY OF THE FINANCIAL SERVICES MODERNIZATION ACT The Act requires that banks and financial services provide an “opt-out” for customers to restrict the sale of personal information to third parties. But it gives no ability for customers to restrict the sharing of data between and among affiliates.