SEC And CFTC Say Reduced Budgets Pose Challenge

SEC and CFTC,  two of the country’s leading financial regulators, bemoaned sequestration, highlighting that reduced budgets pose challenges to oversee markets and its participants.

SEC And CFTC Say Reduced Budgets Pose Challenge

Mary Jo White, SEC chairman and Gary Genseler, CFTC chairman, testified before a Senate appropriations panel on the two agencies’ budgets. They sought about $220 million in additional funding for 2014 budgets.

In his testimony to the Senate appropriations panel, CFTC Chairman Gary Genseler indicated that CFTC has completed 90 percent of the swap market reform rules required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. As a result, the public is receiving the benefit of seeing the price and volume of each swap transaction, free of cost.

CFTC Seeks $308 Million in Funding

The CFTC Chairman is seeking $308 million and 1,015 FTE to oversee the nearly $300 trillion swaps market. The additional funding is sought as CFTC moves from Dodd-Frank rulemaking to swaps market oversight in 2014.

Gary Genseler highlighted that CFTC has to watch for market manipulation and abuses that affect hedgers, farmers, ranchers, producers and commercial companies, as well as the public buying gas at the pump.

The CFTC Chairman also justified the additional funding requirement to cater to staff needs for registering various entities such as clearing houses, designated contract markets, foreign boards of trade, swap data repositories, swap dealers and major swap participants, besides swap execution facilities.

CFTC is also required to conduct more in-depth examinations of the major market participants that the CFTC oversees. Gary Genseler emphasized examinations are the CFTC’s tool to check for compliance with laws to protect consumer funds.

Genseler also justified the additional funding requirement to ensure effective market surveillance. Effective market surveillance necessitates CFTC’s ability to acquire and analyze extremely large volume of data to identify trends and events that warrant further investigation.

The chairman highlighted that in 2014, the CFTC’s economists will be integral in developing tools to analyze automated surveillance data and continuing to evaluate new products for clearing.

SEC And CFTC Seek $220 Million in Additional Funding

SEC Chairman Mary Jo White sought $1.67 billion to hire 676 employees to expand the regulator’s oversight of investment advisors.

The Commodity Futures Trading Commission (CFTC) oversees not only the futures markets but also the swaps market. However, the Securities and Exchange Commission oversees the security-based swaps market.

SEC and CFTC emphasized they would invest in technology and train staff to better detect wrongdoing.

About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports