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The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts". [1] In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on ...
Vincent W. Kosuga (January 17, 1915 – January 19, 2001) [1] was an American onion farmer and commodity trader best known for manipulating the onion futures market.Public outcry over his practices led to the passing of the Onion Futures Act, which banned the trading of futures contracts on onions.
The collapse of onion prices drove many onion farmers into bankruptcy. [9] A public outcry ensued among onion farmers who were left with large amounts of worthless inventory. [8] Soon the Commodity Exchange Authority investigated and the Senate Committee on Agriculture held hearings on a proposed ban on onion futures trading. [10]
In the late 1950s, United States onion farmers alleged that Sam Seigel and Vincent Kosuga, Chicago Mercantile Exchange traders, were attempting to corner the market on onions. Their complaints resulted in the passage of the Onion Futures Act, which banned trading in onion futures in the United States and remains in effect as of 2024. [5]
Many of his articles continue to be widely used in courses on futures markets. He published a 1963 study concluding that the Onion Futures Act, which was designed to prevent market manipulation in onion prices by banning onion futures trading, had actually increased onion price volatility.
While futures and forward contracts are both contracts to deliver an asset on a future date at a prearranged price, they are different in two main respects: Futures are exchange-traded, while forwards are traded over-the-counter. Thus futures are standardized and face an exchange, while forwards are customized and face a non-exchange counterparty.
The Onion Futures Act bans the trading of futures contracts on onions in the United States, after speculators successfully cornered the market in the mid-1950s; it remains in effect as of 2021.
1986 Illinois gubernatorial election: ... Banned in Boston: ... Onion Futures Act: Why you can't buy any onion futures, but you can for corn, ...