As with any other financial business responsible for handling people’s money, futures exchanges operate within very strict, very closely watched guidelines. This regulation comes from both outside and inside the exchange, ensuring that everything that happens at an exchange follows the letter and spirit of the law.
Outside the exchange
In the United States, the Commodity Futures Trading Commission (CFTC) regulates the nation’s futures and options markets. Its oversight protects market participants from fraud, manipulation and market abuse, and ensures the financial integrity of an exchange.
Inside the exchange
Futures exchanges are self-regulatory organizations, or SROs, meaning that they create and enforce rules and standards that comply with CFTC principles, protect market participants and promote integrity and equality throughout the industry. Typically, there is a formalized department that works within the exchange, running constant surveillance and compliance measures on each and every activity performed at an exchange.