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C.F.T.C.'s 2012 Budget Proposal

C.F.T.C.'s 2012 Budget Proposal

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Published by DealBook
The proposed budget for the Commodity Futures Trading Commission.
The proposed budget for the Commodity Futures Trading Commission.

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Categories:Types, Business/Law
Published by: DealBook on Feb 14, 2011
Copyright:Attribution Non-commercial

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10/11/2012

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F       
 ical 
 Y  
 ea 
 
 2012 
Cmdty utr Tang Cmson 
President’s Budget andPerformance Plan
P
rePared
 
for
 
the
C
ommittee
 
on
a
PProPriations
f
ebruary
2011
 
u.s.
CommodityFuturesTradingCommission
ThreeLafayetteCentre,115521stStreet,NW,Washington,DC20581
lVlVlV.
cftc.gov
GaryGenslerChairman
Chairman'sTransmittalLetter
February14,2011
(202)418-5050(202)418-5533Facsimileggensler@cftc.gOY
TheHonorableDaniel
K.
InouyeChairmanCommitteeonAppropriationsU.S.SenateS-128CapitolBuildingWashington,
D.
C.
20510TheHonorableHaroldRogersChairmanCommitteeonAppropriationsU.S.House
of
RepresentativesH-128CapitolBuildingWashington,
D.
C.
20515TheHonorableThadCochranViceChairmanCommitteeonAppropriationsU.S.SenateS-128CapitolBuildingWashington,D.
C.
20510TheHonorableNormDicksRankingMemberCommitteeonAppropriationsU.S.House
of
RepresentativesWashington,
D.C.
20515DearSenatorsInouyeandCochranandRepresentativesRogersandDicks:Twoyearsago,thefinancialsystemandthefinancialregulatorysystemfailed.Lastsummer,theAdministrationandtheCongressrespondedbyenactingtheDodd-FrankWallStreetReformandConsumerProtectionAct(Dodd-FrankAct).TheDodd-FrankAct
will-
forthefirst
time
bringcomprehensiveregulationtotheswapsmarketplace.Derivativesdealerswillbesubject
to
robustoversight.Standardizedderivativeswillberequiredtotradeonopenplatformsandbesubmittedforclearingtocentralcounterparties,all
of
whichwillbesubjecttoFederalregulationandsupervision.TheCommodityFuturesTradingCommission(CFTC)looksforward
to
implementingtheDodd-FrankActtohelplowerrisk,promotetransparencyandprotecttheAmericanpublic.Toimplementthesereforms,theCommissionwillrequireincreasedfunding.
 
PageTwoFebmary14,2011TheCFTCanditspredecessoragencieshaveregulatedderivativessincethe1920s.Thefirstderivatives-calledfutures-begantradingatthetime
ofthe
CivilWar,whengrainmerchantscametogetherandcreatedthisnewmarketplace.
It
tooknearly
60
yearsuntilCongressfirstregulatedthefuturesmarkets.PresidentFranklinRooseveltandtheCongresssignificantlystrengthenedthisregulatoryregimewiththepassage
of
theCommodityExchangeAct(CEA)in1936.TheCFTCcurrentlyensuresthatfuturesandcommodityoptionsexchangeshaveprocedurestoprotectmarketparticipantsandensurefairandorderlytradingthatisfreefromfraud,manipulationandotherabuses.TheCFTCregistersandoverseesfuturesClearinghouses,knownasderivativesclearingorganizations(DCOs),toensurethattheyhaveappropriateriskmanagementstandards.TheCommissionhaswide-rangingtransparencyeffortsdesignedtoprovideaggregateinfOlmationaboutcommodityfuturesmarketsandtradingtotheAmericanpublic.Theagencyalsousesitsbroadsurveillancepowerstopolicethemarkets.TheCFTCisnowtaskedwithbringingitsregulatoryexpertisetotheswapsmarketplace.ThoughtheCommissionhasmuchexperienceregulatingtheon-exchangederivativesmarketplace-havingdone
so
formorethan70years-theDodd-FrankActpresentsnewresponsibilitiesandauthorities.ThefuturesmarketplacethattheCFTC
cUlTently
overseesisa$40trillionindustryinnotionalamount.TheswapsmarketthattheDodd-FrankActtaskstheCFTCwithregulatinghasanotionalamountroughlyseventimesthesize
of
that
of
thefuturesmarketandissignificantlymorecomplex.BaseduponfigurescompiledbytheOffice
of
theComptroller
of
the
CUlTency
as
of
the3
rd
quarter
of2010,
thelargest
25
banle
holdingcompanies
cUlTently
have$277trillionnotionalamount
of
swaps.Othersestimatethatthemarketcouldbeasbigas$300trillionintheUnitedStatesalone,orroughlyninetimesthesize
of
thefuturesmarkets.Some
of
theCFTC'sexpandedauthoritieswillbeconsistentwithour
CUlTent
authoritiesbutexpandedtoalsoincludeswaps.Somewillbenewresponsibilities,suchasregulatingswapdealers,majorswappaliicipants,swapexecutionfacilities(SEFs)andswapdatarepositories(SDRs).Inadditiontobringingregulationtotheswapsmarket,theDodd-FrankActprovidestheCommissionwithspecificauthoritiestoaddressareas
of
needunderitstraditionalmissionintheregulation
of
futuresmarkets.Includedisspecificdirectionwithregard
to
theregulation
of
bothon-exchangeandoff-exchangederivativesmarketsforagriculturalandenergycommodities.Thechallengebeforetheagencyissignificant,butmanageable,providedwearesufficientlyresourced.

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