Fiduciary Duties under the Commodity Exchange Act

73 Pages Posted: 7 Nov 2010

See all articles by Jerry W. Markham

Jerry W. Markham

Florida International University (FIU) - College of Law

Date Written: November 1, 2010


Much commentary has been directed to the role of fiduciary duties in commercial contexts, particularly under corporate and federal securities laws. An important area of commerce that has not attracted comparable attention is the trading of commodity futures contracts. This is unfortunate. As evidenced by such events as the Stock Market Crash of 1987, the futures industry plays an important role in the economy and is becoming critical to the efficient operation of the securities markets. Moreover, recent judicial and administrative decisions have left the law of fiduciary duties in the futures industry in an uncertain and confusing condition. This too is unfortunate, as well as unfair, to market participants.

This Article reviews the nature and background of the fiduciary duty concept, focusing on its traditional application under the law of trusts and its expansion into other fields. The Article examines the important economic role being played by the futures markets. It then explores the nature of the participants in those markets as a prelude to an analysis of their need for the protective umbrella of fiduciary duties. The Article also reviews governmental efforts to impose fiduciary duties on the futures industry and the less than enthusiastic reception of the courts to those efforts.

Finally, the Article proposes the abandonment of further attempts at applying across-the-board fiduciary duties in the futures industry. To date, those duties have been so amorphous and uncertain in nature as to be of little benefit to those supposedly being protected. The uncertainty of their scope has also placed an unnecessary burden on commodity professionals charged with such duties. The Article advocates that specific rules be promulgated to impose certain, special duties on commodity professionals in order to benefit the limited class of customers who need such protection.

Keywords: Fiduciary Duty, Commodity Exchange Act (CEA), Trading, Commodity Futures Contracts, Stock Market Crash of 1987, Securities, Futures Markets, Trusts, Futures Industry, Traders, ERISA, Protected Customers

Suggested Citation

Markham, Jerry W., Fiduciary Duties under the Commodity Exchange Act (November 1, 2010). Notre Dame Law Review, Vol. 68, No. 2, 1992, Florida International University Legal Studies Research Paper No. 10-34, Available at SSRN:

Jerry W. Markham (Contact Author)

Florida International University (FIU) - College of Law ( email )

11200 SW 8th St.
RDB Hall 1097
Miami, FL 33199
United States

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