Commodity trading is regulated by the CFTC to mitigate fraud and risk

Commodity traders are most commonly 'hedgers' or 'speculators'

While hedgers often produce and consume physical commodities (like corn, copper, or natural gas) and use the markets to manage the price risk for those commodities, speculators provide liquidity by betting on commodity price changes.

Futures contracts are agreements to buy or sell a standardized asset at a specific future time

When it comes to commodity trading, these legally binding agreements tend to operate on a monthly basis. Futures contracts are typically traded on futures exchanges, like those operated by CME Group and the Intercontinental Exchange.

Prediction markets convinced regulators they're not gambling, but exchanging commodity futures contracts

Kalshi built a legal case that argues its yes/no bets on real-world events are futures contracts, and the relevant regulator—the Commodity Futures Trading Commission—agreed in 2020. Many states are now suing major prediction markets, arguing this legal case is faulty and obscures the true substance of the business: gambling.

Retail investors can get exposure to commodities via various financial vehicles

While retail investors likely won't go out and purchase a bushel of commodity wheat to trade, they can get exposure to the commodities market via commodity ETFs sold on traditional stock exchanges like the NYSE and Nasdaq and other financial vehicles. There are benefits to adding commodities to a retail investor portfolio (such as a hedge against inflation and a typically low correlation with more traditional asset prices), experts caution that commodities are usually volatile investments.

Over-the-counter markets are used to bypass traditional exchanges while trading

Commodities are regularly traded via OTC markets so that buyers and sellers can bypass central exchanges and negotiate terms more directly. Before the advent of formal exchanges, most assets were traded OTC.

How exchanges like the Chicago Mercantile act as trading referees

Chicago's Mercantile Exchange emphasizes futures contracts on commodities. This podcast episode breaks down how exchanges actually work, make money, and streamline the market.

It's tough to measure just how much the global commodities market is worth

That's partly because of all the different ways and places commodities are traded—such as futures exchanges, spot markets, and over-the-counter deals. Additionally, the same commodity can be traded multiple times in different markets, making it easy to risk duplicating trade values in calculations.

Commodities have to meet specific specifications to be classified as commodities

In the financial sense of the term, commodities must be uniform, interchangeable, and deliverable to meet the classification. That's partly why a crop grown in your backyard might not qualify as a commodity crop.

Why the SEC was started

The Securities and Exchange Commission was created during the Great Depression to restore public trust in financial markets after the 1929 crash. Established in 1934, it enforces transparency, investigates fraud, and protects investors by requiring companies to disclose accurate information and holding violators accountable.

How is credit reporting regulated in the US?

While the three main credit bureaus and the credit scoring companies aren't government entities, they are subject to certain US government regulations, such as the Fair Credit Reporting Act.

Read the Federal Trade Commission's legal definition of a monopoly

The Federal Trade Commission and the US Department of Justice (DOJ) Antitrust Division are the regulatory agencies responsible for overseeing antitrust laws. Before deeming any company a monopoly or acknowledging monopolistic power in a market, the FTC conducts thorough research into market competition, price, and even other competitors' business practices.

Annuities are regulated at the state level

However, certain types of annuities, like indexed annuities, are also nationally regulated by the SEC and the Financial Industry Regulatory Authority to protect investors.

The commerce clause gives the federal government authority to regulate interstate economic activity

This short constitutional provision has allowed Congress to regulate everything from wheat production to racial segregation, greatly expanding federal power by linking national authority to interstate economic activity.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

Want to begin trading in cryptocurrency? Check out these exchanges

Explore the current cryptocurrency market. CoinMarketCap tracks 242 spot exchanges where various cryptocurrencies are traded. Newbie and experienced traders will find timely exchange ranks and scores charted according to traffic, liquidity, and trading volumes. CoinMarketCap promises legitimacy in all trading volumes reported.

FTX, one of the world's largest crypto exchanges, collapsed in 2022

As crypto markets declined during the post-pandemic slowdown, Sam Bankman-Fried propped up the markets with billions he'd earned leading FTX, one of the largest crypto exchanges. Then, in one of the most rapid financial implosions in modern history, the exchange collapsed as investors rushed to withdraw money.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

A hedge funds timeline, from the 1940s onward

Since Alfred Winslow Jones formed the first hedge fund in 1949, traders have rolled out an increasingly complex array of investment strategies. They all aim to beat increasingly efficient markets and/or to provide ample downside protection against sell-offs.

The WTO is the global body that sets and enforces the rules of international trade

Founded in 1995, with 164 member countries, the WTO negotiates trade agreements, resolves disputes between nations, and aims to reduce barriers to international commerce.

Since the 1990s, banks have sold some of the credit risk of their accounts to external investors, known as SRTs, or synthetic risk transfers

This means if the account defaults, the outside investors assume most of the risk in return for some regular payments, freeing up the bank's ledger. It is a form of insurance used by banks to allow them to free up capital. In 2024, nearly $100B worth of SRT notes were sold.

'The Great Onion Corner:' Hear how short-selling onions ended with a ban on onion futures

In the early 1950s, onion farmer and produce trader Vince Kosuga cornered the onion market, resulting in a 1958 ban on onion futures from Congress. After stockpiling onions and buying onion futures, Kosuga then began shorting them. Then, he released his accumulated surplus of onions, driving the price down to essentially zero, and cashed in his short positions.

Carbon markets incentivize companies to cut emissions but require high carbon prices

To reduce greenhouse gas emissions, a cap-and-trade system issues a limited number of emissions permits—carbon credits—that decrease each year, cutting into a company's profits if it does not reduce emissions and must buy permits from others. However, cheap permits and minimal fines for lacking permits have reduced the system's effectiveness.

Soybean oil fraud almost decimated American Express in 1963

A New York commodities trader who had defrauded the American government over uninspected meat for school lunches, Anthony "Tino" De Angelis, used American Express warehouses to sell soybean oil. However, Angelis had actually filled the tanks with water and placed just enough soybean oil on top of the tanks to pass inspection. American Express was liable for many of the tanks and its stock faced a huge downturn, opening the door for a then 33-year-old Warren Buffett to make his first purchase in the company.

Financial institutions use 'Know Your Client' standards to prevent money laundering

KYC standards include verifying customers' identities and conducting regular account checks for high-risk clients to avoid money laundering schemes. These standards obligate banks to report suspicious customers and activity.

The Federal Open Market Committee is a 12-member voting body that sits within the Fed

The committee meets every six weeks to decide whether to maintain, raise, or lower the federal funds rate, which determines all lending costs in the US. It consists of the seven permanent central board members, the president of the New York Fed, and four rotating heads of the other 11 regional banks.

The Office of Chemical Safety and Pollution Prevention regulates toxic substances

This office evaluates and manages risks from industrial chemicals and pesticides. It reviews new chemicals before they enter the market, restricts hazardous substances, and promotes safer alternatives to protect human health and the environment.

The process of electronic funds transfer was approved in the US in 1978

An electronic funds transfer is the transfering of money from one bank account to another via computer-based systems. When it was first introduced, it was revolutionary. A video from 1980 aimed to explain the value of electronic funds transfer to consumers at the time.

The US dollar is the most widely circulated currency in the world, and is involved in nearly 90% of global transactions

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

Chaos theory—informally known as the butterfly effect—is the reason why weather forecasts are presented with probabilities rather than certainties.

Despite being favored by 87% of Americans, Congress does not have term limits.

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

Jimmy Carter signed a 1978 bill that legalized home brewing, a move credited with kick-starting the craft beer industry.

At the beginning of the 20th century, a group of young men ate standard American food—replete with food additives like borax and formaldehyde—as part of government research to better understand food safety.

See this overview of the firework rules across all 50 states, ranging from a complete ban on non-professional fireworks in Massachusetts to states with more lax rules like Indiana.

Sunflowers have long been a symbol of nuclear disarmament because they can extract large amounts of radioactive cesium from soil.

Art theft is the third-largest source of criminal revenues worldwide, thanks in part to the subjective nature of valuing a work of art.

The price of gas is a composite made up of several different factors, with the federal gas tax making up less than 20% of what drivers pay at the pump.

Louisiana's 'Cancer Alley' is infamous for having some of the highest industrial pollution, toxic air emissions, and cancer risks in the US.

Telehealth demand for GLP-1s for weight loss is booming as consumers seek easier access.

The term 'algorithm' originated from the Latinized name of al-Khwārizmī, a 9th-century mathematician whose works introduced Arabic numerals and the decimal-based numeral system to Europe and whose treatise 'Al-Jabr' gave algebra its name.

70 years ago today, city officials in Santa Cruz, California, banned rock 'n' roll to protect its youth from corruption after witnessing a 'provocative' concert the night before.

The Brothers Grimm were lawyers before they were storytellers, and became interested in fairy tales as they began investigating how rules and customs had been passed down through cultures.

US intelligence allegedly pursued more than 600 schemes to assassinate Cuban revolutionary Fidel Castro.

Objects can be 3D printed with light by projecting 2D computerized tomography (CT) scans onto rotating cylinders of resin, which solidify upon exposure.

20,000 letters to the advice columnist 'Dear Abby' provide insight into prevailing sex, religion, and LGBTQ fears, anxieties, and concerns from the 1950s onward.

To reduce wrinkles in clothing, research recommends gentle wash cycles with more water and tumble drying with smaller loads and longer times.

Children are now three times more likely to say they want to be a YouTuber when they grow up than an astronaut, with some even attending 'YouTube camps' that teach kids how to create content for the platform.

Coral reefs get their colors from zooxanthellae—microorganisms that line corals' digestive tracts and provide them with sugars in exchange for a home within this protective tissue.

The identity of the Tank Man in the iconic photo from the 1989 Tiananmen Square protests remains unknown and was possibly killed.