Commodity Futures Modernization Act - CFMA

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.