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| Long title | To reauthorize and amend the Commodity Exchange Act to promote legal certainty, enhance competition, and reduce systemic risk in markets for futures and over-the-counter derivatives, and for other purposes. |
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| Acronyms (colloquial) | CFMA |
| Enacted by | the 106th United States Congress |
| Effective | December 21, 2000 |
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The Commodity Futures Modernization Act of 2000 (CFMA) is a United States federal law that ensures that over-the-counter (OTC) derivatives remained unregulated.
The Commodity Futures Trading Commission (CFTC) had desired to have "functional regulation" of the market, but the CFMA rejected this approach. Instead, the CFTC continued to do "entity-based supervision of OTC derivatives dealers". The CFMA's handling of OTC derivatives, such as credit default swaps, has become controversial, as these derivatives played a major role in the 2008 financial crisis and the subsequent 2008–2012 global recession. The Commodity Futures Modernization Act (CFMA) of 2000 is a landmark piece of legislation in the United States that significantly altered the regulation of financial markets. Signed into law on December 21, 2000, the CFMA had several major impacts on the trading of derivatives, futures, and other financial instruments. Key Provisions:Deregulation of Over-the-Counter (OTC) Derivatives: One of the most significant features of the CFMA was that it removed the regulatory oversight of over-the-counter (OTC) derivatives, such as credit default swaps (CDS). Prior to this, derivatives had been subject to varying degrees of regulation. The CFMA clarified that these contracts were exempt from oversight by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).