Please note that the source of the following information is Dechert's Financial Services Group.
Prior to the new legislation, Section 4b of the Commodity Exchange Act (CEA), the core CEA anti-fraud provision, had in some circumstanced been construed to bar fraud only in futures transactions conducted on an agency basic by a broker or other intermediary. the CFTC Reauthorization Act amends Section 4b of the CEA to clarify that the CEA gives the CFTC authority to bring fraud action in off-exchange "principal-to-principal" futures transactions, including exempt commodity transactions in energy contracts under section 2(h) of the CEA and transactions on DTEFs. The CFTC Reauthorization Act also adds a new provision establishing that Section 4b of the CEA applies to all covered forex transactions as if such forex transactions were transactions in futures contracts.
The CFTC Reauthorization Act amends the CEA to increase both the civil and criminal penalties available for certain violations of the CEA such as manipulation, attempted manipulation, and false reporting. The maximum civil penalty for the specified violations is raised to $1 million, and the maximum criminal penalty for specified violations is raised to ten years' imprisonment.
The new registration requirements were established to give the CFTC enhanced oversight of the retail forex industry.