What are commodity futures?

A commodity futures is a standardized contract that obliges the buyer to purchase some underlying commodity (or the seller to sell it) at a predetermined future price and date. Commodity futures can be used to hedge or protect a position in commodities; for instance, a grain producer against adverse price movements between planting and harvest.

What is a commodity broker?

A commodity broker is an individual broker or brokerage firm that handles commodity trades on behalf of its clients. Commodities are tangible goods sold and traded throughout the world; these include agricultural products, industrial metals, and energy sources such as crude oil.

What is a commodity trader?

A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial derivatives. Clients who trade commodity contracts are either hedgers using the derivatives markets to manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit.

What is the role of the commodities futures trading commission?

The Commodities Futures Trading Commission regulates them. 4 Buyers and sellers must register with the CFTC. The role of the exchange is important in providing a safer trade. The contracts go through the exchange's clearinghouse. Technically, the clearinghouse buys and sells all contracts.