The Commodity Futures Trading Commission (CFTC) may need legislative authority to impose user fees on traders of futures and swaps if the agency does not receive sufficient funding in fiscal year (FY) 2012 to implement the new regulations required under the Dodd-Frank Wall Street Reform Act.

"I do not like having to take this route. Traders and exchanges will not like it. If we don't get funding from our traditional [congressional] appropriations, however, we risk the kind of lax oversight that got us into such a fine economic mess starting just a few short years ago," CFTC Commissioner Bart Chilton told the Institutional Investor TraderForum in New York City last week.

"If we don't receive the needed funding this year, I hope we use our existing authority to impose [some] type of reasonable fee and/or seek approvals for additional fees and request from Congress additional authority to impose supplementary fees," he said. "We collect some fees currently and we could change that system.

"I have been opposed to user fees of various types and stripes. If we are faced, however, with the draconian option of no funding to implement the reform bill, putting us directly back where we were in 2007 and 2008 when the economic mess began to show its ugly head, then perhaps some type of user fee is the least onerous remedy."

"Approximately 1.5 billion contracts are traded on regulated commodity exchanges in the U.S. every six months. If market participants are charged even a third-of-a-cent transaction fee on those trades -- assuming we were given authority to assess such fees -- this could provide the funds to do our jobs. But I wouldn't suggest we just have a fee only on futures. We certainly should include swaps transactions as well -- the new area of regulation that is actually going to require us to increase our workload."

The CFTC received an operating budget of $168 million in FY 2011 and has requested $261 million for FY 2012. President Obama is expected to submit his budget to Congress on Feb. 14. "Whatever numbers are requested and proposed [for the CFTC], it is clear that we will require tens of millions more than we did before the new law was passed," Chilton said.

The Federal Energy Regulatory Commission -- which regulates natural gas pipelines, oil pipelines, the electric transmission grid and hydro facilities -- is entirely funded by user fees. It does not receive any appropriations from Congress.

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