Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 12 of 36
Notably, the 1974 amendments did not give the CFTC exclusive jurisdiction over “swaps”
or “event contracts.” Rather, by adopting the 1974 amendments, Congress affirmed the CEA’s
core concern to regulate “[f]utures trading” – “purchase s and sales of contracts for delivery at some
future date of certain quantities of specified commodities at fixed prices.” S. Rep. No. 93 -1131,
1974 U.S.C.C.A.N. 5843, 5856 (1974); see, e.g., Futures Contract, Black’s Law Dictionary (12th
ed. 2024) (“An agreement to buy or sell a standardized asset (such as a commodity, stock, or
foreign currency) at a fixed price at a future time, usu. during a particular time of a month.”)
Commodity futures are a type of derivative. A derivative is a financial instrument or
contra ct whose price is “directly dependent upon (i.e.[,] derived from)” the value of one or more
underlying assets — for example, commodities (like corn and wheat), securities, or debt
instruments. See Futures Glossary: A Guide to the Language of the Futures Industry , CFTC,
https://perma.cc/63HY-DD7E (last visited May 9, 2025) . Derivatives “provide a way to transfer
market risk or credit risk between two counterparties.” Inv. Co. Inst. v. U.S. Commodity Futures
Trading Comm'n , 891 F. Supp. 2d 162, 168 n.3 (D.D.C. 2012) (citations omitted).
Commodity futures are traded on a DCM, the statutory name for a registered futures
exchange. All contracts on a DCM are required to be “cleared,” which generally means that,
following a transaction in the contract, a central counterparty assumes the obligations of both
parties to the contract, thereby assuming associated credit risk. Cf. 7 U.S.C. § 1a(15). The
requirements to list contracts on DCMs have changed over time. From 1974 to 2000, the CEA
required DCMs to demonstrate to the CFTC that their contracts satisfied an “economic purpose
test, ” and were not contrary to the public interest before they could trade their contracts. See Pub.
L. No. 93-463, § 207, 88 Stat. 1389, 1400 (1974) (codified at 7 U.S.C. § 7(7) (1994)); Contract
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