CFTC May Need User Fees to Pay for Dodd-Frank, Chilton Says

The Commodity Futures Trading Commission may have to impose “user fees” on traders if Congress doesn’t give the agency enough money to police the newly regulated $583 trillion derivatives market, said Commissioner Bart Chilton.

The CFTC has asked Congress for a budget increase to $261 million from $169 million to implement the Dodd-Frank financial overhaul. The law expanded the commission’s jurisdiction to the over-the-counter swaps market for the first time since the products emerged 30 years ago.

The agency’s request for more money has been delayed as the newly empowered Republican House majority promises to slash spending and Democrats warn that cuts will undermine consumer protections. Lawmakers agreed last month to fund the government at current levels through March 4.

“It’s not my preference, but if the choice is no regulation of these markets or a user fee, then we will have to pull the trigger,” said Chilton, one of three Democrats on the five-member commission, in an interview.

Chilton said a fee would be a “last resort” to pay for staff and technology needed to prevent a recurrence of the 2008 financial crisis. The agency may need authority from Congress to levy such a fee, he said.

The financial overhaul, named for its primary authors, former Senator Christopher Dodd of Connecticut and Representative Barney Frank of Massachusetts, both Democrats, aims to stem systemic risk by requiring most commodity, interest-rate and other swaps be processed by clearinghouses after being traded on exchanges or swap-execution facilities.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.