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Commodity Exchange Act

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Commodity Exchange Act
Legislation in the United States, passed in 1936, that imposed regulations upon the trading of commodities as well as some futures and options. Among other things, the Act provides that any option on a commodity and all futures must occur on an exchange and not over-the-counter. This Act replaced the Grain Futures Act of 1922. See also: CFTC, New Deal, Onion Futures Act.


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Although the use of the futures markets by institutional investors to gain long-term exposure to commodities represents a new type of speculation, the Commodity Exchange Act (CEA)--the law governing futures trading--does not prohibit this activity.
Prior to an exchange listing a new futures or option contract for trading, it must declare that the contract complies with the requirements of the Commodity Exchange Act (CEA) and the Commission''s rules, including the condition that the contract provisions reflect commercial trading practices and that the contract not be readily vulnerable to manipulation.
The House Agriculture Committee, which oversees CFTC, slated three days of hearings, opening on Tuesday, to review legislation to amend the Commodity Exchange Act, the foundation of US control of the futures market.
 
 
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