Case: 25-7516, 01/23/2026, DktEntry: 33.1, Page 25 of 110
In 1974, Congress expanded the CEA to cover nearly all commodities,
including non-agricultural commodities, and to cover other derivatives, in-
cluding “options.” Pub. L. No. 93-463, § 201(b), 88 Stat. 1389 (1974). A
“derivative” is a contract whose value depends on the performance of an
underlying asset, such as a commodity. Black’s Law Dictionary (12th ed.
2024). An “option” is a contract that “grants to the purchaser the right, for
a specified period of time, to either buy or sell the subject of the option at a
predetermined price.” CFTC v. White Pine Tr. Corp. , 574 F.3d 1219, 1226
(9th Cir. 2009) (internal quotation marks omitted).
Also in 1974, Congress created the CFTC “to consolidate federal reg-
ulation of commodity futures trading” in one agency. Merrill Lynch, Pierce,
Fenner & Smith, Inc. v. Curran , 456 U.S. 353, 386-87 (1982). To that end,
Congress gave the CFTC “exclusive jurisdiction” over futures and options
that are traded on DCMs or other markets. Id. ; see 7 U.S.C. § 2(a) (1974).
In 2010, Congress enacted the Dodd-Frank Act, which expanded the
CEA to cover “swaps.” Pub. L. No. 111-203, pt. II, 124 Stat. 1376, 1658-754
(2010). A “swap” is an agreement between two parties to exchange (or swap)
cash flows on financial obligations (such as interest payments), to hedge risk
on those obligations. Thrifty Oil Co. v. Bank of Am. Nat’l Tr. & Sav. Ass’n ,
322 F.3d 1039, 1042-43 (9th Cir. 2003). Congress added “swaps” to the CEA
because certain swaps, known as “credit default swaps,” had exacerbated
the financial crisis. Cong. Rsch. Serv., R41350, The Dodd-Frank Wall Street
7
Made with FlippingBook - Online catalogs