The head of the Commodity Futures Trading Commission (CFTC) Wednesday indicated that he would support the imposition of user fees on traders of futures and swaps to help fund the agency, similar to the system used at FERC.

“I’d look forward to working with Congress in any way you’d think is most appropriate to help ensure the public has a well-funded CFTC,” said Chairman Gary Gensler in response to a question by Sen. Frank Lautenberg (D-NJ).

The CFTC is the “only financial regulator that does not offset a portion of its costs,” Lautenberg noted. The Federal Energy Regulatory Commission (FERC) is self-funded by imposing user fees on interstate natural gas pipelines and power transmission lines. In 2011 FERC collected and spent $298 million, costing the Treasury zero.

CFTC Commissioner Bart Chilton first raised the idea of a user fee in February 2011 when it looked like the Commission was not going to receive sufficient funding for fiscal year 2012 (see Daily GPI, Feb. 2, 2011).

Gensler also indicated that he expects U.S. District Judge Robert Wilkins for the District of Columbia to issue a decision in the “near term” on a request for a temporary injunction of the CFTC’s speculative position limit rule. The International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association brought the legal challenge in December (see Daily GPI, Dec. 6, 2011).

The district judge has signaled that it’s “highly likely that the rule implementing position limits will be struck down,” said Sen. Jerry Moran of Kansas, the ranking Republican on the Senate Appropriations Committee’s Subcommittee on Financial Services and General Government.

In the event of an adverse court decision, “I don’t have a plan yet…The first thing I would do is turn to our attorneys and probably personally read whatever opinion comes [from] the judge,” Gensler said during the hearing.

“I believe that what we did in October [with the final rule] was consistent with the congressional mandate.” The controversial final rule seeks to curb excessive speculation in commodity futures contracts and economically equivalent swaps. It establishes limits on speculative positions in 28 core physical commodity contracts, four of which are energy contracts: Nymex Henry Hub Natural Gas, Nymex Light Sweet Crude Oil, Nymex New York Harbor Gasoline Blendstock and Nymex New York Harbor Heating Oil (see Daily GPI, Oct. 19, 2011).

Gensler said the rule won’t be implemented until the agency defines what a “swap” is, and until it collects more information on position limits in the derivatives market.

Moran was critical of the CFTC’s performance. “What I often hear from the futures industry is that they are overwhelmed by the volume, frequency and speed in which the CFTC is issuing new regulations.” And “there’s a sense out there [that] while you are willing to sit down, you’re not quite as willing to listen” to industry.

He further decried the “haphazard nature of the rulemaking” process, and the apparent move from principles-based regulation to prescriptive regulation at the CFTC.

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