What is the primary purpose of the Commodity Exchange Act?

The primary purpose of the Commodity Exchange Act is to regulate commodity futures and options markets. This legislation was enacted to protect market participants from fraud and manipulative practices, ensuring fair trading practices in the commodity futures sector. By establishing a regulatory framework, the Act seeks to promote the integrity of the markets, thereby fostering confidence among investors and participants in commodity trading.

The Commodity Exchange Act established the Commodity Futures Trading Commission (CFTC), which oversees and enforces compliance with the provisions of the Act. This regulatory oversight is crucial for maintaining transparent and orderly market conditions, enabling price discovery, and allowing for effective risk management through the use of futures and options contracts.

Other choices such as providing insurance to commodity traders, promoting international trade in commodities, and establishing price ceilings on commodities do not align with the Act's focus on market regulation and oversight. Instead, the Act is specifically tailored to the mechanism of trading and the protection of participants within the futures and options markets.