A commodity exchange is an exchange for buying and selling commodities for future delivery. The exchange is the actual workplace where the buying and selling happens. Note that exchanges are open only to members.
There are a significant number of different kinds of commodities that are bought and sold each day in an exchange. Because of this, there is a particular part of the exchange dedicated to a particular commodity. This part of floor area is called the pit.
In cases where commodities are bought and sold for immediate delivery or at least delivery in the near future, the exchange is instead called a spot market instead.
Commodity exchange in the United States is regulated by the Commodity Futures Trading Commission (CFTC), an independent agency of the US government whose mission is “to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.”
The CFTC was created in 1974 as part of the Commodity Exchange Act to prevent fraud in the exchange of future contracts. As regulatory body of a very volatile industry the CFTC’s mandate has undergone revision several times, one of the latest is cited in the Commodity Futures Modernization Act of 2000, which instructs the Securities and Exchange Commission and CFTC to jointly regulate single-stock futures.