President Obama’s request for a spending increase for the Commodity Futures Trading Commission (CFTC) in fiscal year (FY) 2014 is warranted because of the expanded role of the agency in regulating the futures and swaps markets, Chairman Gary Gensler told a House panel Friday. But Commissioner Scott O’Malia argued the agency failed to make a case for a budget hike.
The president’s budget requests an appropriation of $315 million and 12,015 full-time employees for the agency in FY 2014, up from the president’s FY 2013 budget proposal of $308 million and 1,015 employees. The CFTC’s current funding is $207 million prior to sequestration, according to Gensler.
“We recognize that the federal government is operating under a sequester and that budgets for agencies across government require additional scrutiny. Our mission, however, has expanded dramatically. We have a duty to help protect the economy and taxpayers from risks in the financial system,” he said during a hearing of the House appropriations subcommittee on agriculture.
“This is an incredibly strained budget environment. But without sufficient funding for the CFTC, the nation cannot be assured this agency can closely monitor for the protection of customer funds and utilize our enforcement arm to its fullest potential to go after bad actors in the futures and swaps markets.”
In justifying the budget request, Gensler said the futures market, which the agency has traditionally overseen, has grown fivefold. In addition, the CFTC now directly oversees the swaps market, which is eight times bigger and far more complex than the futures markets.
The president’s spending request would provide $44.3 million and 185 employees for the CFTC to conduct more in-depth examinations of the major market participants, such as futures commission merchants, clearinghouses and swap dealers. It sets aside $61.7 million and 174 employees for surveillance, data acquisitions and analytics, up by $18.3 million from the current fiscal year.
The budget also provides a significant increase to $57.7 million for the CFTC’s enforcement activities. Nearly one-third of the overall budget will be earmarked for information technology (internal and external services).
O’Malia said he could not support the budget request for two reasons. “First, I believe the requested funding level of $315 million…is both improbable and unsustainable. Second, this budget fails to provide specifics and makes a broad, unsubstantiated appeal for more resources without the requisite demonstration of either mission priorities or essential deliverables,” he said.
“Expanding our mission to oversee the swaps markets, along with existing oversight of the futures and options markets, is significant” and “cannot be accomplished without modest increases in resources for the Commission,” he said.
“What is questionable, however, is whether the Commission has developed a sufficiently clear plan to achieve this mission, and a sufficiently detailed budget request to reflect such a plan.” He called on Congress to direct the CFTC to “develop such a plan and support our mission by making technology our top budget priority.”
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