DEFINITION of 'Commodity Futures Modernization Act - CFMA'

An act passed in 2000 by the U.S Government that reaffirmed the authority of the Commodity Futures Trading Commission for five years as the regulatory body of the American futures markets. The most significant outcome from this act was the allowance for the trading of single stock futures.

BREAKING DOWN 'Commodity Futures Modernization Act - CFMA'

Up until the CFMA was passed, it was illegal for traders to trade single stock futures even though they were being traded in other parts of the world. The amount of leverage provided by these financial instruments has given professional traders a new way to obtain exposure to the equity markets.

RELATED TERMS
  1. Commodity Exchange Act - CEA

    An act passed in 1936 by the U.S. Government that provides federal ...
  2. Commodity Futures Trading Commission ...

    An independent U.S. federal agency established by the Commodity ...
  3. Futures Industry Association - ...

    An association of futures commission merchants, banks and trading ...
  4. Grain Futures Act of 1922

    A federal statute passed in 1922 by the U.S Government that established ...
  5. Futures Exchange

    Traditionally, a term referring to a central marketplace where ...
  6. Commercial Trader

    A classification used by the Commodity Futures Trading Commission ...
Related Articles
  1. Trading

    Advantages Of Trading Futures Over Stocks (APPL)

    We look at the top eight advantages of trading futures over stocks.
  2. Investing

    How To Invest In Commodities

    Find out which futures, options or funds will be your perfect commodity portfolio fit.
  3. Trading

    Tips For Getting Into Futures Trading

    The futures markets can seem daunting, but these explanations and strategies will help you trade like a pro.
  4. Investing

    DBC: PowerShares DB Commodity Tracking ETF

    Find out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts.
  5. Investing

    What Does Contango Mean?

    Contango‚Äč is when the futures price of a commodity is higher than the expected future spot price.
  6. Trading

    The History Of Options Contracts

    Options and futures didn't originate with Wall Street power brokers. In fact, it all started with rice.
  7. Trading

    Are You Ready To Trade Futures?

    If you want to trade futures in the hopes that you'll become rich, you'll have to answer some questions first.
  8. Trading

    Using Index Futures To Predict The Future

    Want to know whether the stock market will open up or down? Check out the index futures.
  9. Trading

    How to Trade Dow Jones Future Contracts

    Learn about the Dow Jones Index futures contracts available and obtain step-by-step instruction on how to trade the stock index futures.
  10. Trading

    Five Advantages of Futures Over Options

    Futures have a number of advantages over options such as fixed upfront trading costs, lack of time decay and liquidity.
RELATED FAQS
  1. How have futures performed historically?

    See how futures products have historically performed and why they tend to perform best at specific times during a normal ... Read Answer >>
  2. What types of items can you buy futures for?

    Learn what items futures may be purchased for, what a futures contract is and discover how the futures markets have greatly ... Read Answer >>
  3. What types of futures contracts are typically sold on an exchange?

    Explore the wide variety of available futures contracts traded on exchanges, which range from agricultural commodities to ... Read Answer >>
  4. Who sets the price of commodities?

    Commodities are extremely important as they are essential factors in the production of other goods. A wide of array of commodities ... Read Answer >>
  5. Which of the following would be considered a short hedge ...

    The correct answer is a) Long the commodity and short the futures Read Answer >>
  6. How risky are futures?

    Understand how futures contracts are trading and learn what aspect of futures trading poses potentially greater risk than ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center