Extract
Who patrols the money? The regulation of off-exchange foreign currency options: Dunn v. Commodity Futures Trading Commission.
I. INTRODUCTION
Money drives the world, and investing money provides the opportunity to increase one's financial position on the road. As hybrid forms of financial investing instruments are created, and as the methods of investing in these instruments increase, more funds are being driven into the markets. But at what cost? Originally, the stock exchange provided a medium for investors and sellers to trade their assets and hope for profitable results.(1) As increased profits were realized, speculators derived additional investing schemes hoping for financial success.(2) Today these schemes have evolved into highly sophisticated trading opportunities, derivative instruments, and markets of exchange.(3) In short, the unsophisticated and naive investor needs help negotiating the highway of financial investing. The government began regulating these trades soon after their inception to promote price and supply stability, broker accountability, and risk control.(4) These regulations reflected the public policy of protecting the investor and his investments.(5) As investment opportunities expanded,(6) the government found several investment areas which could be exempted from regulations(7) and passed legislation protecting these transactions from regulatory controls.(8) Thus evolved questions of which transactions were originally intended to be unregulated, and whether marketplace changes created a need to regulate some transactions previously exempted from regulation.(9) For example, the Commodity Exchange Act (CEA)(10) generally requires that options be traded on designated exchanges.(11) However, certain types of options are excluded from CEA regulation by the Treasury Amendment.(12) In two recent Courts of Appeals decisions, the Second and Fourth Circuits rendered conflicting opinions as to whether off-exchange options in foreign currency are within the Treasury Amendment exception to CEA regulation.(13) In Dunn v. Commodity Futures Trading Commission,(14) the U.S. Supreme Court granted certiorari to resolve the conflict among the Circuits(15) and held the Treasury Amendment includes off-e...See the full content of this document
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