The U.S. Commodity Futures Trading Commission, regulator of the $708 trillion global swaps market, needs a 50 percent budget increase to $308 million to meet its duties under the Dodd-Frank Act, said CFTC Chairman Gary Gensler.
“The CFTC is requesting significantly more resources to oversee a much expanded field of play,” Gensler said at a Senate appropriations subcommittee hearing today. “We’re being asked to oversee the swaps markets, which is eight times the size of the futures markets. And we need more referees to protect the players.”
Gensler, who wants to spend about a third of the requested budget -- $96.2 million -- on technology, said budget constraints have meant his agency has been able to meet only 57 percent of its performance targets, examining fewer derivatives clearing organizations than planned and creating a backlog of contract reviews.
President Barack Obama sought a 50 percent increase from the CFTC’s current $205 million to fund its 2013 fiscal year budget -- the same amount he failed to get for the agency the year before. The commission’s budget has been the focus of a debate between Democrats seeking resources to complete Dodd-Frank Act rules and Republicans trying to reduce the agency’s spending as part of a broader effort to rein in deficits.
MF Global Response
The CFTC is also considering changes to rules governing the futures industry after last year’s collapse of MF Global Holdings Ltd. The CFTC, Securities and Exchange Commission and Justice Department are investigating the collapse of the New York-based brokerage and the estimated $1.6-billion shortfall in customer funds.
One regulatory change under discussion at the CFTC is insulating futures’ customers collateral during a default in the same way that the CFTC has mandated for the swaps market. The agency hasn’t decided to make the change and doesn’t plan on doing so before November, Gensler said.
“For capacity reasons, it will wait,” Gensler said.