We can take the oil futures markets as an example. Futures contracts are agreements to buy or sell a specified quantity of a commodity at a future date, at a price agreed upon when entering the contract, the futures price.
The first objective-making sure financial institutions manage their material risks-is one of the central functions of a bank supervisor, and is fundamental to safety and soundness. But it is equally clear that the second objective-influencing a bank to make certain credit allocation decisions-is not the role of a banking regulator.