Fiscal Year 2016

C O M M O D I TY F U T U R E S T R A D I N G C O M M I S S I O N

SUMMARY OF PERFORMANCE AND FINANCIAL INFORMATION
Summary of Performance

and Financial Informati

F i s c a l Y e a r 2 0 1 6

C O M M O D I T Y F U T U R E S T R A D I N G C O M M I S S I O N

A Message from the Chairman 1

Fiscal Year 2016 Commissioners 4

The Commission in Brief 6

Forward Looking – Future Business Trends and Events 14

Performance Highlights . 

Financial Highlights . 

Table of Conten

COMMODIT Y FUTURES TRADING COMMISSION

SUMMARY OF PERFORMANCE AND FINANCIAL INFORMATION

ABOUT THIS REPORT

This report is a high-level summary of the CFTC FY 2016 

Agency Financial Report. Information in this report covers 

the period of October 1, 2015, to September 30, 2016, unless 

otherwise indicated. The FY 2016 Summary of Performance 

and Financial Information and the FY 2016 Agency Financial 

Report are available in PDF and HTML formats on: 

http://www.cftc.gov/About/CFTCReports/index.htm.

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. While permission 

to reprint this publication is not necessary, the citation 

should be: Commodity Futures Trading Commission, FY 2016 

Agency Financial Report, Washington, D.C., 20581.

All photographs in this document are proprietary and prior 

permission from the photographer is required for any use 

or reproduction of the photographs.

ABOUT THE COVER

The cover is a photo mosaic that represents the work of 

Commission staff over the years ensuring market integrity 

and protecting market users in the commodity futures, 

options, and swaps markets.
A Message fr

the Chairm

Iam pleased to present the Fiscal Year (FY) 2016 Agency Financial Report for the U.S. Commodity Future

Trading Commission (CFTC or Commission). The pages that

follow will detail the agency’s performance, accomplishments, 

and audited financial statements for this period

The CFTC oversees the U.S. derivatives markets, which includ

commodity futures, options, and swaps. Although most Americans do not participate in these markets directly, their impact

on our economy cannot be understated. They shape the prices

we pay for food, energy, and a host of other goods and services

And these markets play a key role in the economic success of 

many farmers, ranchers, and commercial businesses in the 

United States, who rely on them for price discovery and to 

manage routine commercial risk

Our mission is to ensure these markets function properly. We

focus on fostering transparent, open, competitive, and financially sound markets. We work to safeguard customer funds and

to protect market participants from fraud, manipulation, and 

abusive practices. We also seek to protect the public from the

buildup of excessive risk, a buildup that contributed to making 

the 2008 financial crisis the worst since the Great Depression

This year, the hardworking men and women of the CFTC 

continued making progress on behalf of the American people

We have continued our work to improve the safety and soundness of our financial system following the devastation of the 

financial crisis. But we’re not just looking back to the crises of

the past; we are equally focused on looking ahead, to the new 

opportunities and challenges facing our markets

CFTC Mission

To foster open, transparent, competitive, and financially sound

markets to avoid systemic risk; and to protect market users and

their funds, consumers, and the public from fraud, manipulation, 

abusive practices related to derivatives and other products that

are subject to the Commodity Exchange A

 Commodity Futures Trading Commission 
Financial markets are constantly evolving. Technological transformations are shaping much of that evolution, as are other

forces. We must make sure our regulatory framework is adaptin

For example, this year we adopted measures to address the 

risks posed by cyber-attack and other technological failures 

in our markets. Cyber threats are probably the single greatest

risk to financial stability today. Our rules focus on making

sure that the critical market infrastructure that we oversee—

the clearinghouses, exchanges, trading platforms and data 

repositories—are adequately protecting themselves against the 

threat of cyber-attack

We are also working to address the challenges posed by automated trading, which has become the dominant form of trading 

in our markets. Automation has led to significant increases in

speed and complexity. And while this technology has brought

benefits, there is also a greater likelihood of disruption and other 

operational problems. As a result, we have issued a proposal

that seeks to minimize the risk of that disruption by requiring 

adequate risk controls, testing and monitoring of algorithms, 

and other measures. We hope to finalize this soo

We have also put a strong focus on issues related to the regulation and resilience of clearinghouses. Futures have been cleared

in the United States since at least 1891, and clearinghouses 

are one of the critical factors that propelled the growth of our 

markets. Since the financial crisis, clearinghouses have taken on

even greater importance, due to the decision by the G20 leaders 

to require the clearing of over-the-counter (OTC) swaps. As a

result, we have increased our efforts to ensure clearinghouses 

are strong and resilient

First, we reached a landmark accord that resolves our differences 

with European regulators regarding their recognition of clearinghouses in the United States. This agreement is an important

step in achieving cross-border harmonization of derivatives 

rules, bringing the United States and European regimes closer 

together and reducing the risk of regulatory arbitrage. And it will

ensure that our global derivatives markets remain robust, while 

keeping our financial system as strong and resilient as possible

We are also working on supervisory stress tests for the largest 

clearinghouses in our jurisdiction. These tests assess the impact

of stressful market scenarios across multiple clearinghouses 

and clearing members on the same date. We are making sure

our major clearinghouses have adequate recovery plans, and 

we are working with the Federal Deposit Insurance Corporation (FDIC) on resolution planning. Our work on these issues

takes place internationally as well, and we are helping to lead 

important efforts among regulators from around the world on 

clearinghouse resilience, recovery and resolution

Over the last year, CFTC has also continued implementation of 

the Dodd-Frank Wall Street Reform and Consumer Protection 

Act of 2010 (Dodd-Frank Act), which directed us to bring transparency and oversight to the OTC swaps market. Today, a new

framework for the regulation of the swaps market is in place

Clearing is mandated for most interest rate and credit default 

swaps, and this year the Commission expanded that requirement to interest rate swaps in several additional currencies

Registration and regulation of swap dealers is required. Trading

on regulated platforms is a reality—and the volume is growing

Data repositories are collecting and publically reporting swap 

data, which gives us much more information regarding the 

marketplace. And we are making sure that these requirements

focus on the areas of the greatest risk, and do not improperly 

burden commercial end-users who rely on these markets as 

part of their business activity.

To this end, we finalized strong, sensible rules setting margin 

requirements for uncleared swaps this past year. This is one

of the most important reforms required by the Dodd-Frank 

Act, because it is the first line of defense in the event of a 

FY 2016 Summary of Performance and Financial Inform

2 Commodity Futures Trading Commissio
default, and protects against the buildup of excessive risk to the 

financial system. We worked with regulators in Europe, Japan

and other countries to harmonize the substance of the rules, so 

that there is a strong global framework in place. This, as well as

the approach we adopted for cross-border transactions, helps 

protect against the possibility that risks created outside of our 

borders will flow back into the United States

The Commission has also worked to improve trading of swaps 

on regulated platforms. We have approved the registrations of

23 swap execution facilities (SEFs), and we have improved SEF 

trading through a number of actions. Our goal is to create a

regulatory framework that not only brings this market out of the 

shadows, but which attracts participation and build liquidity

We are also working to harmonize our rules with those coming 

on-line globally. And we have taken several actions to improve

swap data reporting

This past year, we continued to focus on an aggressive 

enforcement program that protects customers and prevents 

fraud and manipulation. Enforcement is a core component

to safeguarding the integrity of our markets, deterring bad 

behavior, and maintaining public confidence. The CFTC’s

enforcement responsibilities are more important than ever, 

due to its expanded mission, market complexity, and the advent 

of new, complicated forms of illegal behavior, such as spoofing

At the same time, the Commission is investigating more cases 

involving manipulation, false reporting of market information, 

and disruptive trading practices. And we are prosecuting

wrongdoers for a wide range of fraudulent schemes, including 

Ponzi schemes that prey upon the retail public, precious metals 

frauds, and deceptive practices related to commodity pools. In

FY 2016, the Commission filed 68 new enforcement actions and 

imposed nearly $1.3 billion in total monetary sanctions. Thi

work will remain a vital element of our operations in the future

Throughout this and all our work, we have also taken steps to 

ensure commercial end-users can continue to use the derivatives 

markets efficiently and effectively. These commercial businesses

have traditionally relied on these markets to hedge routine 

commercial risk, and they did not cause the global financial 

crisis. Therefore, we are always looking to ensure that our rules

do not create undue burdens on these businesses, and we have 

taken several actions over the past year to this effect. We will

continue to make being responsive to the concerns of end-users 

a priority

Our progress is a credit to the CFTC’s hardworking and dedicated 

professional staff. Their significant contributions this year are

highlighted in the pages that follow

While our achievements this year are significant, there is much 

more to do. The CFTC’s responsibilities were greatly expanded

by the Dodd-Frank Act. The swaps market we are now tasked

with overseeing is vast, global, and dramatically larger than the 

futures and options markets we also supervise. Moreover, all the

markets we regulate are continuously evolving, driven by innovative new technologies, competition, and an interconnected 

marketplace. As a result, the Commission’s work is constantly

changing, increasingly complex, and always forward-looking.

Unfortunately, our budget has not kept pace with this 

complexity—or the expansion of our responsibilities. As a

result, we cannot supervise our markets, protect our market 

participants, and achieve transparency and efficiency as fully 

as we believe the American people deserve

The CFTC places a strong emphasis on being an effective 

steward of its operating funds. The Chief Financial Officer’s

message includes the results of the independent audit of our 

FY 2016 Financial Statements. I am pleased to report that

the Commission has received an unmodified opinion on its 

financial statements

I can also report that the CFTC had no material internal 

control weaknesses and that the financial and performance 

data in this report are reliable and complete under the Office of 

Management and Budget (OMB) guidance. You can read about

the operation of our internal controls in the Management’s 

Discussion and Analysis Section of this report, which also 

highlights key management assurances

During FY 2016, the CFTC and its talented staff accomplished 

a great deal on behalf of the American public. As a result, the

markets we oversee are stronger, more transparent, and more 

competitive. We look forward to continuing this progress in

the months and years to come

Timothy G. Massa

Chairman

November 14, 2016

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 

A M ESSA G  F

OM T H E C H AIR M
Timothy G. Massad, Chairman

Timothy Massad was sworn-in as 

Chairman of the CFTC 

on June 5, 2014, after 

being confirmed by the 

U.S. Senate as Chairma

and as a Commissioner 

of the CFTC

Previously, Mr. Massad

was nominated by 

President Obama and confirmed by the U.S. Senate a

the Assistant Secretary for Financial Stability at the U.

Department of the Treasury (Treasury). In that capacity,

Mr. Massad oversaw the Troubled Asset Relief Program

(TARP), the principal U.S. governmental response to th

2008 financial crisis designed to help stabilize the economy 

and provide help to homeowners. Under TARP, Treasury’s

investments in financial institutions, the credit markets and 

the auto industry prevented the economy from falling into 

a depression. Mr. Massad was responsible for the day-to-da

management and recovery of TARP funds, and during his 

tenure, Treasury recovered more on all the crisis investments 

than was disbursed. Mr. Massad also served as Chief Counse

for the program prior to becoming Assistant Secretary

Prior to joining Treasury, Mr. Massad served as a legal advisor

to the Congressional Oversight Panel for TARP, under the 

leadership of (now Senator) Elizabeth Warren. Mr. Massa

assisted the panel in its first report evaluating the investments 

made by Treasury under TARP

Prior to his government service, Mr. Massad was a partner in

the law firm of Cravath, Swaine & Moore, LLP. Mr. Massa

had a broad corporate practice with a focus on corporate 

finance and financial markets. He helped to draft the original

standardized agreements for swaps and helped many businesses negotiate and execute transactions to hedge exposures 

in the derivatives markets

Mr. Massad earned his bachelor’s and law degrees at Harvar

Mr. Massad was born in New Orleans, Louisiana, and also

lived in Texas, Oklahoma and Connecticut as a child. He

and his wife, Charlotte Hart, live in Washington with their 

two children

Sharon Y. Bowen, Commissioner 

Sharon Y. Bowenwas sworn in as a 

Commissioner of the 

CFTC on June 9, 2014 

for a five-year term

Ms. Bowen was previously confirmed by

the U.S. Senate an

appointed by President 

Obama on February 

12, 2010 to serve as Vice Chair of the Securities Investor 

Protection Corporation (SIPC). She assumed the role of

Acting Chair in March 2012. Prior to her appointment to

the CFTC, Ms. Bowen was a partner in the New York office

of Latham & Watkins LLP. Ms. Bowen’s broad and divers

corporate and transactional practice of almost 32 years 

began in 1982 when she started her career as an associate 

at Davis Polk & Wardwell. She joined Latham as a senior

corporate associate in the summer of 1988 and became a 

partner January 1991

Ms. Bowen’s practice has included corporate, finance, and

securities transactions for large global corporations and 

financial institutions, including mergers and acquisitions, 

private equity, securities offerings, strategic alliances, corporate 

restructurings, leveraged finance, securitizations, distressed 

debt and asset acquisitions, and venture capital financings

FY 2016 Summary of Performance and Financial Inform

4 Commodity Futures Trading Commissio

Fiscal Year 2016 Commissioner
Ms. Bowen served in several leadership positions in her firm,

including co-chair of the Diversity Committee, co-chair of 

the Diversity Hiring Subcommittee and co-founder and head 

of Latham’s Women Enriching Business (WEB) Task Force, 

whose mission is to create broader networks and productive 

business development relationships for women

Ms. Bowen has been involved in numerous pro bono,

educational, diversity and civic matters throughout her 

career and has received many awards in recognition of her 

contributions. She has served as a member of the Board

(formerly Executive Committee and Chair) and Emeritus 

Board of New York Lawyers for the Public Interest, Inc., the

Boards of New York City Economic Development Corporation 

(formerly Executive Committee), Northwestern University Law 

School (formerly Executive Member and Chair), and Public 

Education Needs Civil Involvement in Learning (PENCIL) 

(formerly Executive Committee)

Ms. Bowen is one of America’s “Top Black Lawyers” according

to Black Enterprise Magazine. She is a recipient of the 2011

Diversity Trailblazer Award of the New York State Bar Association, and was selected as the New York City Bar Association 

2007 Diversity Champion and the Metropolitan Black Bar 

Association 2006 Lawyer of the Year

Ms. Bowen was born in Chesapeake, Virginia. She receive

her B.A. in Economics from the University of Virginia, MB

from the Kellogg School of Management and J.D. from Northwestern University School of L

J. Christopher Giancarlo, Commissioner 

J

. Christopher “Chris”

Giancarlo was nominated by President 

Obama on August 1, 

2013, and confirmed by 

unanimous consent of 

the U.S. Senate on June 3

2014. On June 16, 2014,

Mr. Giancarlo was sworn

in as a CFTC Commissioner for a term expiring 

in April 2019

Before entering public service, Mr. Giancarlo served as the

Executive Vice President of GFI Group Inc., a financial services

firm. Prior to joining GFI, Mr. Giancarlo was Executive Vic

President and U.S. Legal Counsel of Fenics Software an

was a corporate partner in the New York law firm of Brown 

Raysman Millstein Felder & Steiner. Mr. Giancarlo joine

Brown Raysman from Giancarlo & Gleiberman, a law practice 

founded by Mr. Giancarlo in 1992 following his return from

several years in London with the international law firm of 

Curtis, Mallet-Prevost, Colt & Mosle

Mr. Giancarlo was also a founding Co-Editor-in-Chief of

eSecurities, Trading and Regulation on the Internet (Leader 

Publications). In addition, Mr. Giancarlo has testified thre

times before Congress regarding the implementation of the 

Dodd-Frank Act, and has written and spoken extensively on 

public policy, legal and other matters involving technology 

and the financial markets

Mr. Giancarlo was born in Jersey City, New Jersey. He attende

Skidmore College in Saratoga Springs, New York where he 

graduated Phi Beta Kappa with Government Department 

Honors. Mr. Giancarlo received his law degree from th

Vanderbilt University School of Law where he was an associate 

research editor at the Vanderbilt Journal of Transnational Law 

and President of the Law School’s International Law Society

Mr. Giancarlo has been a member of the Bar of the State of

New York since 1985

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 

F S C A  Y E A  2 0 1 

OM MIS
Organization and Locat

The Commission consists of five Commissioners, with two positions currently vacant. The President

appoints and the Senate confirms the CFTC Commissioners 

to serve staggered five-year terms. No more than three sitting

Commissioners may be from the same political party. With

the advice and consent of the Senate, the President designates 

one of the Commissioners to serve as Chairman

The Office of the Chairman oversees the Commission’s 

principal divisions and offices that administer and enforce the 

Commodity Exchange Act (CEA) and the regulations, policies, 

and guidance thereunder

The Commission is organized largely along programmatic and 

functional lines. The four programmatic divisions—the Division

of Clearing and Risk, Division of Enforcement, Division of 

Market Oversight, and the Division of Swap Dealer and 

Intermediary Oversight—are partnered with, and supported by, 

a number of offices, including the Office of the Chief Economist, 

Office of Data and Technology, Office of the Executive Director, 

Office of the General Counsel, and the Office of International 

Affairs. The Office of the Inspector General is an independent

office of the Commission

The Dodd-Frank Act established the CFTC Customer Protection 

Fund for the payment of awards to whistleblowers, through the 

whistleblower program, and the funding of customer education 

initiatives designed to help customers protect themselves against 

fraud or other violations of the CEA or the rules or regulations 

thereunder

Enforcement

CFTC Organization Structure, Locations and F

The Commission is headquartered in Washington D.C. Regional offices are located in Chicago, Kansas City and New York. T

CFTC organization chart is also located on the Commission’s website at http://www.cftc.gov/About/CFTCOrganization/index.htm

6 Commodity Futures Trading Commissio

The Commission in Brief
CFTC Regulatory La

from the farming operation, even if the price of wheat changes 

between today and November 1. Similarly, the bakery buying

the wheat also benefits by knowing how much the wheat will 

cost on November 1 and it will be better positioned to estimate 

its baking costs and set prices for its products. Finally, even

though the actual price of wheat on November 1 (when the 

contract is fulfilled) may be greater or less than the pricing 

in the November 1 contract, the price is fixed and both the 

farmer and the bakery are bound by the price agreed to when 

they entered into the agreement. Most futures contracts are

not settled with the actual physical delivery of the commodity, 

but by the purchase of opposite (offsetting) futures contracts, 

which serve to close out the original positions, with profits or 

losses dependent on the direction in which the price of the 

contracts have moved relative to those positions

Speculators may also buy or sell such futures contracts. The

speculator buying a futures contract for November wheat 

believes the value of the wheat in November will be higher 

than the price he is paying for the contract today. As time

passes, and November draws closer, people may try to estimate 

whether the cost of November wheat will rise or fall, and 

may cause the value of that futures contract to fluctuate

For example, if people expect an especially bad harvest in 

November, then the price of November wheat will rise, and 

the speculator may sell that futures contract for November 

wheat for even more (or less) than he or she paid

The Commission administers the CEA, 7 U.S.C. section 

et seq. The 1974 Act brought under Federal regulation futures

trading in all goods, articles, services, rights and interests; 

commodity options trading; leverage trading in gold and silver 

bullion and coins; and otherwise strengthened the regulation 

of the commodity futures trading industry. The Commission’s

mandate has been renewed and expanded several times since 

then, most recently by the 2010 Dodd-Frank Act

In carrying out this mission and to promote market integrity, 

the Commission polices the derivatives markets for various 

abuses and works to ensure the protection of customer funds

Further, the agency seeks to lower the risk of the futures and 

swaps markets to the economy and the public

Derivatives first began trading in the United States before the 

Civil War, when grain merchants came together and created 

this new marketplace. When the Commission was founded in

1974, the majority of derivatives trading consisted of futures 

trading in agricultural sector products. These contracts gave

farmers, ranchers, distributors, and end-users of products 

ranging from corn to cattle an efficient and effective set of 

tools to hedge against price risk

The Commission construes the definition of a futures contract 

broadly. Essentially, it is an agreement to purchase or sell a

commodity for delivery in the future: 1) at a price that is 

determined at initiation of the contract; 2) that obligates each 

party to the contract to fulfill the contract at the specified price; 

3) that is used to assume or shift price risk; and 4) that may 

be satisfied by delivery or offset. The CEA generally requires

futures contracts to be traded on regulated exchanges, with 

futures trades cleared and settled through clearinghouses, 

referred to as derivatives clearing organizations (DCOs)

To that end, futures contracts are standardized to facilitate 

exchange trading and clearing

Although a futures contract agreement is set today, the person 

selling (for example, a farmer marketing bushels of wheat) will 

not receive payment and the buyer (in this case a bakery) will 

not receive goods purchased until the predetermined delivery 

date agreed to in the contract, which is November 1 in the 

following example. The farmer benefits from this agreement

because he is certain as to the amount of money he will earn 

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 

T H E C

M

MISION IN
Over the years, the futures industry has become increasingly 

diversified. Futures based on other physicals, such as metals

and energy products, were developed. Highly complex financial

contracts based on interest rates, foreign currencies, Treasury 

bonds, security indexes, and other products have far outgrown 

the agricultural contracts in trading volume.(See chart above

Electronic integration of cross-border markets and firms, as well 

as cross-border alliances, mergers and other business activities 

have transformed the futures markets and firms into a global 

industry. With the passage of the Dodd-Frank Act, the Commission was tasked with bringing regulatory reform to the swaps

marketplace. Swaps, which had not previously been regulated

in the United States, formed a collective global trading market 

valued in the hundreds of trillions of dollars when measured 

by notional amount

Generally speaking, a swap is an exchange of one asset or 

liability for a similar asset or liability for the purpose of, 

inter alia, shifting risks, where the value of those payments 

is determined in the future based on some previously agreed 

measure. With a swap, counterparties agree to exchange future

cash flows at regular intervals, with each cash flow calculated 

on a different (previously agreed-upon) basis. Before the

Dodd-Frank Act, swaps were, for the most part, traded OTC 

(also called bilaterally), which means that swaps were not 

traded on regulated derivatives exchanges and many were 

not cleared through DCOs. Swaps are tools for hedging risks

associated with, among other things, interest rates, currency 

fluctuations, and the cost of energy products, such as oil and 

natural gas. The value of a swap is derived from the value of

the underlying asset or rate that serves as the basis for each 

(or both) legs of the exchange

FY 2016 Summary of Performance and Financial Inform

8 Commodity Futures Trading Commissio
For example, two people may agree to swap the cost of a fixed 

interest rate on a $100,000 mortgage for a variable interest 

rate on a $100,000 mortgage. Person A agrees to pay a fixed

interest rate of five percent to Person B, every month for a 

year. In exchange, Person B agrees to pay Person A variable

interest rate based on the prime rate (currently 3.25 percent)

plus 1.75 percent. Because these two interest rates equal eac

other at the time the swap is agreed, neither person owes 

anything to the other. If, however, the prime rate rises, then

Person B will owe more money to Person A. Thus, at the

time the swap is agreed, Person A is assuming interest rates 

will rise, whereas Person B is hoping interest rates will fall

In normal times, these markets create substantial, but largely 

unseen, benefits for American families. During the 2008

financial crisis, however, their effect was just the opposite

It was during the financial crisis that many Americans first 

heard the term “derivatives”. That was because OTC swaps

accelerated and intensified the crisis. The government was then

required to take actions that today still stagger the imagination: for example, largely because of excessive swap risk, the 

government committed $182 billion to prevent the collapse 

of a single company—AIG—because its failure at that time, 

in those circumstances, could have caused our economy to 

fall into another Great Depression

It is hard for most Americans to fathom how this could have 

happened. While derivatives were just one of many factors

that caused or contributed to the crisis, the structure of some 

of these products created significant risk in an economic 

downturn. In addition, the extensive, bilateral transactions

between the largest banks and other institutions meant that 

trouble at one institution could cascade quickly through the 

financial system. The opaque nature of this market meant

that regulators did not know the level of exposure that any 

one institution or the financial system faced

REGISTERED PROFESSIONALS 

AS OF SEPTEMBER 30, 2016

Type of Registered Professional Number 

Associated Persons (AP) (Sales People) 53,431

Commodity Pool Operators (CPOs) 1,710

Commodity Trading Advisors (CTAs) 2,298

Floor Brokers (FBs) 3,816

Floor Traders (FTs) 694

Futures Commission Merchants (FCMs)1 68

Introducing Brokers (IBs) 1,275

Major Swap Participant (MSP) 0

Retail Foreign Exchange Dealer (RFEDs) 3

Swap Dealer (SDs) 102

TOTAL 63,397

Source: National Futures Association 

Companies and individuals who handle customer funds, solicit or 

accept orders, or give trained advice must apply for CFTC registration through the National Futures Association, a self-regulatory organization with delegated oversight authority from the Commission. 

The Commission regulates the activities of over 63,000 registrants. 

Dodd-Frank Act: Enha

Regulatory Enviro

On July 21, 2010, the Dodd-Frank Act was enacted and the 

CEA was significantly amended to establish a comprehensive new regulatory framework to include swaps, as well as 

enhanced authority over historically regulated entities

The purpose of the derivatives provisions of the Dodd-Frank 

Act was to implement the commitments made by the United 

States at the G20 summit in Pittsburgh in 2009. The members

of the G20 made four commitments: 

■ Require regulatory oversight of the major market players; 

■ Require clearing of standardized transactions through 

regulated DCOs; 

■ Require more transparent trading of standardized transactions; and 

■ Require regular data reporting so that regulators and 

market participants would have an accurate picture of 

what is going on in the market

1 Includes futures commission merchants that are also registered as retail foreign exchange dealers.

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 

T H E C

M

MISION IN
Regulatory Oversight 

Six years ago, swap dealers faced no specific oversight with 

regard to their swap dealing activity. The first of the major

directives Congress gave to the CFTC was to create a framework for the registration and regulation of swap dealers and 

major swap participants. The Commission completed this

requirement. As of September 30, 2016, 102 swap dealers are

provisionally registered with the CFTC

The Commission has continued to adopt rules requiring strong 

risk management. In FY 2016, the CFTC strengthened the DoddFrank framework by releasing final rules for initial and variation

margin requirements for uncleared swaps. These rules setting

collateral requirements serve as the first line of defense in the 

event of a default, and are critically important to minimizing 

risk that can come from OTC swaps. There will always be a

large part of the swaps market that is not cleared, as many are 

not suitable for central clearing because of limited liquidity or 

other characteristics. Moreover, DCOs will be stronger if greater

care is exercised in what is required to be cleared. These rules

protect against such activity posing excessive risk to the system

The margin rules supplement the CFTC’s existing framework 

for OTC derivatives. This framework requires registered swap

dealers and major swap participants to comply with various 

business conduct requirements, which include strong standards 

for documentation and confirmation of transactions, as well 

as dispute resolution processes. The regulations also include

requirements to reduce risk of multiple transactions through 

what is known as portfolio reconciliation and portfolio 

compression. Further, they ensure that all counterparties are

eligible to enter into swaps, and make appropriate disclosures 

to those counterparties of risks and conflicts of interest

A dedicated swaps examination program is taking shape as 

well. Over the past two years, the CFTC has delegated additional responsibilities to and enhanced coordination efforts

with the National Futures Association (NFA), an industry 

funded, self-regulatory organization, to design and implement 

a direct examination process for swap dealers. By virtue of this,

the Commission is now leveraging the significant resources of 

the NFA to meet cyclical exam workload demands for swap 

dealer registrants while preserving and focusing finite CFTC 

resources on NFA oversight, strategic horizontal and direct 

reviews, industry monitoring/surveillance and, when necessary, 

critical incident response

As directed by Congress, the Commission has worked with the 

U.S. Securities and Exchange Commission (SEC), other 

regulators, and our international counterparts to establish this 

framework. The Commission will continue this coordination

to achieve as much regulatory consistency as possible in ways 

that best meet mutual goals and objectives

Clearing 

A second directive of the Dodd-Frank Act requires clearing of 

swaps that the Commission has determined under a five-part 

statutory framework should be cleared at DCOs. DCOs reduce

the risk that one market participant’s failure could adversely 

impact other market participants or the public. DCOs accomplish this by standing in between the two original counterparties

to a transaction—as the buyer to every seller and the seller to 

every buyer—and maintaining financial resources to cover 

potential defaults. DCOs value positions daily and require

parties to post adequate margin on a regular basis. “Margin”

is the collateral that holders of financial instruments have to 

deposit with DCOs to cover some or all of the risk of their 

positions. Collateral must be in the form of cash or highly

liquid securities

FY 2016 Summary of Performance and Financial Inform

10 Commodity Futures Trading Commissio
The use of DCOs in financial markets is commonplace 

and has existed for over 100 

years. The idea is simple:

if many participants trade 

standardized products on 

a regular basis, the tangled, 

hidden web created by thousands of private two-way trades can 

be replaced with a more transparent and orderly structure, like 

the spokes of a wheel, with the DCO at the center interacting 

with market participants. In addition to facilitating trades,

DCOs are required to monitor the overall risk and positions 

of each participant

The CFTC was the first of the G-20 nations’ regulators to implement a regime for mandatory clearing of swaps. In 2013, the

Commission required clearing for certain types of interest rate 

swaps denominated in U.S. dollars, Euros, Pounds and Yen

as well as credit default swaps on certain North American and 

European indices. In FY 2016, the CFTC expanded the interest

rate swap clearing requirement to include those denominated 

in the Australian dollar, Canadian dollar, Hong Kong dollar, 

Singapore dollar, Mexican peso, Norwegian krone, Polish 

zloty, Swedish krona, and Swiss franc. These currencies have,

or are expected soon, to mandate central clearing for these 

products, and these requirements will be phased-in based on 

when the corresponding clearing requirements have taken 

effect in non-U.S. jurisdictio

Based on data reported to SDRs, as of June 2016, 83 percent 

of all new interest rate swap transactions were cleared, as 

measured by notional value. This is compared to estimates by

the International Swaps and Derivatives Association (ISDA) 

that only 16 percent by notional value, of outstanding interest 

rate swaps were cleared in December 2007. With regard to

index credit default swaps, most new transactions are being 

cleared—81 percent of notional value, as of June 2016

(See chart below)

The Dodd-Frank Act’s approach to encouraging the use of central 

clearing for swaps and the accompanying CFTC rules for clearing 

swaps were patterned after the successful regulatory framework 

used for many years in the futures market. The Commission

requires that clearing occurs through CFTC-registered DCOs 

that meet certain standards—a comprehensive set of core principles and regulations that ensures each DCO is appropriately 

managing the risk of its members, and monitoring them for 

compliance with important rules.Non-U.S.DCOs can recei

exemptions, when they are subject to comparable, comprehensive supervision and regulation by the appropriate government 

authorities in their respective home country

Of course, central clearing by itself is not a panacea. DCOs

do not eliminate the risks inherent in the swaps market. The

Commission must therefore be vigilant. It must do all it can

to ensure that DCOs have financial resources, vigorous risk 

management tools, systems that minimize operational risk, 

and all the necessary standards and safeguards consistent with 

the core principles to operate in a fair, transparent and efficient 

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manner. DCOs must also have tools in place to address a

wide range of situations that may arise if a clearing member 

defaults, and they must develop plans to deal with losses to 

the DCO in non-default situations. In addition, the Commission must make sure that DCO contingency planning to deal

with operational events, such as cyber-attacks, is sufficient

To that end, throughout FY 2016, the Commission was 

intently focused on the resiliency of DCOs, as well as 

planning for recovery and resolution. These remain high

priorities for the CFTC, and there is significant work taking 

place domestically and internationally. Domestically, the

CFTC’s examination and risk surveillance programs focus 

on DCO resiliency on an ongoing basis. Commission staff is

applying regulatory or supervisory stress tests for the largest 

DCOs, which assess the impact of stressful market scenarios 

across multiple DCOs and clearing members on the same 

date. Staff is also working with the major clearinghouses to

make sure they have well-developed recovery plans in place

And staff has been actively engaged in working with the FDIC 

on resolution planning

In addition, the CFTC has played a leadership role with regulators from around the world on issues related to the resilience, 

recovery, and resolution of clearinghouses. During FY 2016,

CFTC staff continued its work with international regulators on 

a four-part international work plan on these issues. Indeed,

all aspects of this plan, some of which are being led by CFTC 

staff, have contributed to the important progress made to 

create an international regulatory framework to ensure the 

strength and stability of these institutions

Transparent Trading 

The third area for reform under Dodd-Frank requires more 

transparent trading of standardized derivatives products. In

the Dodd-Frank Act, Congress provided that certain swaps 

must be traded on a SEF or an exchange that is registered 

as a designated contract market (DCM). The Dodd-Frank

Act defined a SEF as “a trading system or platform in which 

multiple participants have the ability to execute or trade swaps 

by accepting bids and offers made by multiple participants.”

The trading requirement was designed to facilitate a more 

open, transparent and competitive marketplace, benefiting, 

among others, commercial end-users seeking to lock in a 

price or hedge risk

The CFTC finalized its 

rules for SEFs in June 

2013. Twenty-three SEFs

have been registered with 

the CFTC, and one application is pending. These

SEFs are diverse, but each is required to operate in accordance with the same core principles. These core principles

provide a framework that includes obligations to establish 

and enforce rules, as well as policies and procedures that 

enable transparent and efficient trading. SEFs must make

trading information publicly available, put into place system 

safeguards, and maintain financial, operational and managerial resources to discharge their responsibilities

Trading on SEFs began in October 2013. As of February 2014,

specified interest rate swaps and credit default swaps were 

required to be traded on a SEF or other regulated exchange

For the 2016 year-to-date, as of August 26, 2016, 56 percent of 

trading by notional volume in rates and credit was executed 

on SEFs. During this same period, notional value executed

on SEFs generally has been in excess of $8 trillion monthly

It is important to remember that trading of swaps on SEFs 

FY 2016 Summary of Performance and Financial Inform

12 Commodity Futures Trading Commissio
There are three general 

areas of activity, and the 

Commission has made 

progress in all of them

First, the CFTC is making 

sure its data reporting 

rules and standards are 

specific and clear, and harmonized as much as possible across 

jurisdictions. In FY 2016, the Commission adopted a rule to

create a simple, consistent process for reporting cleared swaps

The rule streamlines the reporting so there are not duplicate 

records of a swap, which can lead to double counting that 

can distort the data. It makes sure that accurate valuations of

swaps are provided on an ongoing basis. And it eliminates a

number of needless reporting requirements for swap dealers 

and major swap participants

CFTC staff has also made progress in standardizing reporting 

to SDRs. During the fiscal year, staff published draft technical

specifications for the reporting of 120 priority data elements

These describe the form, manner and the allowable values 

that each data element can have. The CFTC also is leading the

international effort in this area, both in the global harmonization of data standards and in building internationally 

accepted governance structures to maintain those data standards. The Commission will abstain from finalizing domestic

standards until this international work is complete, to ensure 

harmonization—and to achieve consistency in reporting 

across-borders

The Commission must also make sure the SDRs collect, 

maintain, and publicly disseminate data in the manner that 

supports effective market oversight and transparency. The

SDRs must have the ability to make sure the data they receive 

is complete and conforms to required standards

Finally, market participants must live up to their reporting 

obligations. Ultimately, the market participants bear the

responsibility to make sure that the data is accurate and 

reported promptly. The primary goal is to bring firms into

compliance. But where firms fail repeatedly to take these

obligations seriously or invest sufficient resources to meet 

them, the Commission has taken, and will continue to take, 

enforcement action

is still new. SEFs are still developing best practices under the

new regulatory regime. The new technologies that SEF trading

requires are likewise being refined. Additionally, other jurisdictions have not yet implemented trading mandates, which has

slowed the development of cross-border platforms. There will

be issues as SEF trading continues to mature. The Commission

will need to work through these to fully achieve the goals of 

efficiency and transparency SEFs are meant to provide

Data Reporting 

The fourth G20 reform commitment implemented by the 

Dodd-Frank Act was to require ongoing reporting of swap 

activity. Having rules that require oversight, clearing, and

transparent trading is not enough. The Commission must

have an accurate, ongoing picture of what is going on in the 

marketplace to achieve greater transparency and to address 

potential systemic risk. Title VII of the Dodd-Frank Act assigns

the responsibility for collecting and maintaining swap data 

to SDRs, a new type of entity necessitated by these reforms

All swaps, whether cleared or uncleared, must be reported 

to SDRs. There are currently four SDRs that are provisionally

registered with the CFTC

The collection and public dissemination of swap data by 

SDRs helps regulators and the public. It provides regulators

with information that can facilitate informed oversight and 

surveillance of the market and implementation of our statutory responsibilities. Dissemination, especially in real-time,

also provides the public with information that can contribute 

to price discovery and market efficiency. While the Commission has accomplished a great deal in this area, much work

remains. The task of collecting and analyzing data concerning

this marketplace requires intensely collaborative and technical 

work by industry and the agency’s staff. Going forward, it must

continue to be one of the CFTC’s chief priorities

FY 2016 Summary of Performance and Financial Inform

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There are some core principles that motivate the 

Commission’s work in implementing the DoddFrank Act. The first is that the CFTC must never forget the cost

of the financial crisis to American families, and it must do all 

it can to address the causes of that crisis in a responsible way

The second is that the United States has the best financial 

markets in the world. They are the strongest, most dynamic,

most innovative, most competitive and transparent. They

have been a significant engine of U.S. economic growth an

prosperity. The Commission’s work should strengthen U

markets and enhance those qualities in a way that does not 

place unnecessary burdens on the dynamic and innovative 

capacity of the industry

It has now been eight years since the global financial crisis, 

and the Commission has taken a number of steps to improve 

the safety and soundness of our financial system. However,

the work of the Commission does not just involve looking 

to the causes of past crises. An equally important part of the

CFTC’s work is looking ahead, to the new opportunities and 

challenges facing these markets

The financial markets are evolving and innovating at the 

speed of light. Transformations in technology are playing a

large role in those changes, and from them come new opportunities as well as challenges. In turn, market participants

are altering their activities—and strategies—in response. As

the industry continues to evolve, the CFTC must also take 

steps—to ensure our regulatory framework is able to respond 

to the challenges ahead

This understanding is critical to the Commission’s ability to 

appropriately regulate the industry of today and tomorrow

What follows is a brief discussion of what the Commission 

expects in the years to come

Instances of Cyber-Attack Warrant Increased Vigilance

There is heightened attention, both domestically and 

internationally, on cybersecurity and the risk of cyber-attacks

Indeed, this may be the most significant risk to financial 

stability we face today. The CFTC is very focused on this issue,

especially with respect to the core infrastructure in the markets 

it regulates—the clearinghouses, exchanges, trading platforms 

and data repositories. The CFTC already conducts regular

examinations of registered entities to monitor compliance with 

system safeguards core principles and CFTC regulations. And

in FY 2016, the Commission finalized new rules to address 

the risk posed by cyber-attack or other technological failures

These rules require the private companies that operate the core 

market infrastructure to regularly evaluate cyber risks and test 

their cybersecurity and operational risk defenses. They add

greater definition to the Commission’s existing efforts—by 

setting principles-based standards and requiring specific types 

of testing, all rooted in industry best practices

Recent cyber-attacks both inside and outside of the financial 

sector make clear the need for continued vigilance on this 

front. Through its participation in the Financial and Banking

Information Infrastructure Committee, CFTC coordinates and 

cooperates with other financial regulators, the intelligence 

community, and Federal law enforcement agencies to ensure 

that Commission oversight is informed by current cyber threat 

information and trends. And the CFTC also continues to

increase its own cybersecurity protections over the data collected 

from market participants for surveillance and enforcement

The Opportunities and Challenges Posed by 

the Increased Use of Automated Trading 

The Commission is also focused on the increased use of 

automated trading, which has become the dominant form 

of trading in the derivative markets. In recent years, there

has been a fundamental change in this regard—approximately 70 percent of trading in the futures market is now 

automated. While there are positives that come from this

technology, there is also a greater likelihood of disruption 

and other operational problems. The CFTC is taking steps to

address these challenges. In FY 2016, the Commission issued

a proposal that seeks to minimize the risk of that disruption caused by automated trading. The proposal relies on a

principles-based approach that codifies many industry best 

14 Commodity Futures Trading Commissio

Forward Looking – 

Future Business Trends and Even
practices. It requires pre-trade risk controls, such as message

throttles and maximum order size limits. It requires other

measures such as “kill switches,” which facilitate emergency 

intervention in the case of a malfunctioning algorithm. But it

does not prescribe the parameters or limits of such controls; 

it leaves those specifics to market participants

Growth in Clearing Means Increased Focus 

on Clearinghouse Resilience and Additional 

Requirements for Uncleared Swaps

Central clearing of standardized transactions, as required 

by Dodd-Frank, reduces credit risk between counterparties

Following the 2013 implementation of the Commission’s rules 

requiring that certain interest rate swaps and credit default 

swaps be cleared, a significant portion of the swaps market 

moved into central clearing. This shift in market behavior has

significant risk mitigation benefits

The segregation of customer funds from a futures 

commission merchant’s own proprietary funds 

for use is one of the core foundations 

of customer protection in the 

cleared swaps markets

Swap customers and other market participants are required 

to post initial margin to cover the potential future exposure 

of their positions in the event of default. In addition, swap

customers and other market participants are required to pay 

variation margin through futures commission merchants 

to avoid the accumulation of large gain and/or loss obligations. In FY 2016, the CFTC adopted margin requirements for

uncleared swaps entered into by swap dealers and major swap 

participants subject to the CFTC’s jurisdiction (i.e., non-ban

swap dealers and major swap participants). The Commission

also adopted a cross-border approach for the implementation of this rule—which helps protect against the possibility 

that risks created outside our borders will flow back into the 

United States. In addition to posting margin, the Commission

is working to propose rules that will require non-bank swap 

dealers and major swap participants to hold minimum levels 

of capital. Completion of the rulemaking process is a top

agency objective. Together, capital and margin requirements

are intended to reduce swaps-related systemic risk in the global 

financial system and to encourage clearing. As DCOs offer

new swaps for clearing, the CFTC will assess the ability of 

the DCO to properly manage the risk of clearing those swaps

The movement of swaps to a cleared environment has mitigated systemic risk in the market but has also shifted significant new levels of counterparty risk to DCOs. As more swap

activity migrates to clearing, DCOs are holding substantially 

more collateral that has been deposited by market participants

There is a need to perform examinations of DCOs to evaluate 

their resources and capabilities to monitor and control their 

financial and operational risks. There is a need for the CFTC

to apply additional staffing resources to perform these large 

and complex examinations. And the CFTC is focused on doing

so in the months and years ahead

The Commission will continue its work on supervisory stress 

tests for the largest clearinghouses in our jurisdiction. These

examinations assess the impact of stressful market scenarios 

across multiple DCOs and clearing members on the same date

The Commission will also continue to make sure the major 

DCOs have adequate recovery plans, and will continue its 

collaboration with the Federal Deposit Insurance Corporation 

on resolution planning

Further, the CFTC has taken a leadership role on an international work plan related to clearinghouse strength and 

stability. This ongoing work has four major elements, and

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our regulation of swap dealers. The Commission will be

looking closely at this issue, as well as the data that informs 

it, in the year ahead

Clearing Firms and Customers Trade the 

Same Asset Class at Multiple DCOs

Firms and customers often clear the same asset classes at 

multiple DCOs. Each DCO’s view is limited to the position

it clears, while the Commission has the unique perspective of 

being able to analyze positions and the risks that they pose 

across DCOs. The Commission has to ensure it has the data

and tools necessary to evaluate the risk of these positions. The

Commission should be able to ascertain if the positions at the 

multiple DCOs increase or offset risk. The Commission must

further be able to determine if the firm or customer has the 

resources to cover the potential losses at each DCO and not 

require the gains at one DCO to pay the losses at the others

Aggregating Cleared Swaps and Futures Risk

Many large swap accounts (firms and customers) also clear 

large futures positions. In many cases, the swaps and futures

are cleared at the same firm. The Commission has to ensure

it has the procedures in place to first identify these accounts

Secondly, the Commission has to ensure it has the software 

and information necessary to determine if the different asset 

classes increase or decrease risk. DCOs now and increasing in

the future are offering cross-margin programs between asset 

classes. The Commission has to ensure it receives all position

and account information for accounts in these programs

The Commission then has to have the software and expertise 

necessary to review and understand the risk and margin offsets 

present in the program

New Regulatory Environment Driving 

Innovations in Derivatives Markets

The Commission will also 

continue to oversee the 

activities of existing SEFs 

and DCMs to ensure compliance with Commission 

regulations and the CEA

The industry is responding quickly to the competitive opportunities engendered by the shifting regulatory landscape—the 

introduction of futures contracts by DCMs that are economically 

staff are involved in all of them. First, the CFTC is co-chairing a

working group looking at clearinghouse resilience and recovery 

issues, including whether the international regulatory standards, 

known as the Principles for Financial Market Infrastructures 

(PFMIs), have sufficient granularity. A second working group

has assessed the implementation of the PFMIs at ten representative clearinghouses. Third, a separate group is working on

resolution planning for clearinghouses, including international 

coordination. A final group is examining the interdependencies

among global clearinghouses and major clearing members

Resilient clearinghouses also depend on having a robust 

clearing member industry. There are many factors that affect the

health of clearing members. This is a key focus for CFTC staff

in the years ahead, and the Commission is already engaging 

with a wide array of market participants on this issue

Continuing to look at the Threshold 

for Registration as a Swap Dealer

The Commission recently acted to extend the phase-in of the de 

minimis threshold for swap dealing by one year. This threshold

determines when an entity’s swap dealing activity requires 

registration with the CFTC. In 2012, the CFTC set the threshold

initially at $8 billion in notional amount of swap dealing 

activity over the course of a year, and provided that it would fall 

to $3 billion at the end of 2017. This would have meant that

firms would have been required to start determining whether 

their activity exceeds that lower threshold in January 2017

The Commission took this step for several reasons. First, the

delay provides more time to study the issue. CFTC staff recently

completed a study required by the rule on the threshold

The study estimated that lowering the threshold would not 

increase significantly the percentage of interest rate swaps and 

credit default swaps covered by swap dealer regulation, but 

would require many additional firms to register, including 

some smaller banks whose swap activity is related to their 

commercial lending business. However, the study also notes

that the data has certain shortcomings, particularly when it 

comes to nonfinancial commodity swaps, a market that is very 

different than the interest rate swaps and credit default swaps 

markets. The delay will allow the Commission to consider

these issues further. In addition, the Commission has made

clear its intention to adopt a rule setting capital requirements 

for swap dealers before addressing the threshold. This rule,

required by Dodd Frank, is one of the most important in 

FY 2016 Summary of Performance and Financial Inform

16 Commodity Futures Trading Commissio
equivalent to standardized swaps is one such example. Innovation in the industry, which is likely to increase in pace with

the addition of SEFs, will continue to add complexity in ways 

currently unanticipated. For example, the Commission is seeing

new methods for executing transactions that were not proposed 

in previous years. While these changes will impact all of the

CFTC mission activities, the near-term impact will fall most 

heavily on the mission activities of registration, product review, 

examinations, enforcement, and economic analysis

Exponential Growth in Data Must be Acquired, 

Validated, Warehoused, and Analyzed to Fulfill 

the Commission’s Regulatory Responsibilities 

The Commission continues to enhance its software and 

automated tools to accommodate its enhanced surveillance 

responsibilities and access to data, including that generated by 

the swap data reporting rules, enhanced customer protection 

rules, other regulatory changes, increasing number of participants, and increasing number and complexity of data sources 

relevant to surveillance. The technology (data and processes)

required for surveillance of swaps markets differs from that 

required for futures and options markets, and differs across 

asset classes. In addition, the ability to view risk across asset

classes and in combination with futures is an overarching 

requirement that must also be automated and the Commission 

must continue to work closely with the SDRs, self-regulatory 

organizations and other Federal and international regulators 

(as appropriate) to harmonize how this data is recorded, 

organized, and stored. In response to the influx of new types

of data from new and existing registrants, the CFTC must build 

its own information infrastructure and analytical capabilities 

to support its responsibilities as the primary regulator for the 

derivatives markets

The CFTC is required to perform a comprehensive function 

that cannot be done by any single self-regulatory organization 

and needs to see data from all industry participants in the 

swaps and futures markets. In response to the influx of new

types of data from new and existing registrants, the CFTC must 

continue to enhance and adjust its information infrastructure 

and analytical capabilities to support its responsibilities as 

a first line regulator. Only by providing advanced tools and

enriched data for staff to connect, analyze, and aggregate data 

can the Commission apply its unique view of the derivatives 

market toward effective market and risk surveillance. With

each additional set of data collected there are data, technology, 

and usage requirements:

■ Defining data standards, such as financial information 

exchange markup language (FIXML) and financial products markup language (FpML), to collect data;

■ Designing data repositories to facilitate data loading 

and integration;

■ Developing software to load new data;

■ Developing data validation mechanisms to report errors 

and metrics to submitters;

■ Providing operations support to facilitate timely submission of data;

2 Swaps data include Part 20 and Part 39 interim records reporting files, additional by-rule development, Part 45 swaps data reporting, OCR-ownership and control 

reporting, and Volcker data.

3 CFTC Form 40, Statement of Reporting Trader, is a reporting requirement for every person that holds a reportable position in accordance to Section 1804 of the CEA. The 

information requested is used generally in the Commission’s market surveillance activities to provide information concerning the size and composition of the commodity 

futures or option markets, and to permit the Commission to monitor and enforce the speculative position limits that have been established. The complete listing of routine 

uses, in accordance with the Privacy Act, 5 U.S.C. §522a, and the Commission’s rules thereunder, 17 Code of Federal Regulations (CFR) Part 146, of the information 

contained in these records is found in the Commission’s annual notice of its system of records.

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■ Developing data profiles on data submissions, submitters, 

markets, etc. (not currently done); an

■ Analyzing data in a wide variety of ways to support 

mission functions

The Commission will continue to adapt its data architecture 

and data management practices to manage the exponential 

growth in the size and complexity of mission data and facilitate 

continuous improvements in data quality and the ability to 

isolate anomalous market activity and complex financial and 

systemic risk. It will also continue to bolster its own safeguards

to protect this data from cyber-attack

Growth and Complexity of the Markets 

the Commission Oversees

Enforcement remains critically important to maintain the 

integrity of our markets, deter bad behavior, and reinforce 

public confidence. The CFTC’s expanded mission coupled with

the increased complexity of the markets and new, complicated 

forms of illegal behavior make the Commission’s enforcement 

responsibilities are more important than ever. The CFTC’s

enforcement capabilities must keep pace with the challenges 

that go along with the growth and sophistication of financial 

markets and instruments. These include identifying and meeting

the challenges arising from proliferation of sophisticated 

instruments trading in multiple venues and the increased 

prevalence of algorithmic and high-frequency trading. The

Commission will also need to commit enforcement resources 

to understanding and investigating potential unlawful conduct 

within the Commission’s jurisdiction, including in evolving 

markets for derivatives and commodities, such as Bitcoin 

and other crypto-currencies or block chain technology. The

Commission also foresees a continued increase in multijurisdictional and multi-national investigations given the 

global nature of the swaps marketplace and the challenges 

associated with substituted compliance. The Commission is

also experiencing an increase in international enforcement 

investigations in its traditional markets. These cases are

inherently more resource-intensive due to their cross-border 

nature and coordination with foreign authorities

Specifically, the Commission is investigating more matters 

involving manipulation, false reporting of market information 

and disruptive trading practices, including spoofing. Often,

these matters involve misconduct spanning many years and 

multiple markets and products, and require forensic economic 

analysis of trading data. In order to investigate and litigate

market-wide violations, as well as those less complex but 

equally important retail fraud cases, the Commission has an 

increased need for specialized experts to work on enforcement 

cases. One example is the Commission’s work addressing fraud

in the precious metals space, where we use our anti-fraud 

enforcement authority. Others include the Commission’s work

prosecuting wrongdoers for fraudulent schemes like Ponzi 

schemes, deceptive practices related to commodity pools, 

and other efforts against those who try to perpetrate frauds 

against seniors and other retail investors

Maintaining Integrity of Benchmarks

The integrity of benchmarks used in the derivatives market, 

such as the London Interbank Offered Rate (LIBOR), FX, and 

International Swaps and Derivatives Association Fix (ISDAFIX) 

remains a priority for the Commission. Over the last five

4 The sanctions ordered represent civil monetary penalties, disgorgement, and restitution.

FY 2016 Summary of Performance and Financial Inform

18 Commodity Futures Trading Commissio
years, the CFTC has imposed over $5.08 billion in penalties

in 17 actions against banks and brokers to address ISDAFIX, 

FX, and LIBOR benchmark abuses to ensure the integrity 

of global financial benchmarks. Of this, over $1.8 billio

in penalties has been imposed on 6 banks for misconduct 

relating to FX benchmarks, while over $3.21 billion has been

imposed on 21 banks, as well as brokers, for misconduct 

relating to ISDAFIX, LIBOR, Euro Interbank Offered Rate 

(Euribor), and other interest rate benchmarks. These benchmarks are an essential valuation tool for thousands upon

thousands of derivatives across financial markets, including: 

options on interest rate swaps, or swaptions; cross-currency 

swaps; foreign exchange swaps; spot transactions; forwards; 

options; and futures. These investigations require a significant

allocation of enforcement resources due to the fact that they 

are global in nature and mandate intensive reconstruction of 

communications and trades requiring substantial documents, 

emails, and chat room reviews; analysis of trading data and 

books; outside experts; and reconstructing timelines

In addition to the various enforcement actions, since 2013, 

as a member of the Official Sector Steering Group established 

by the Financial Stability Board, CFTC has been working with 

regulators and central banks from around the world to review 

standards and principles for sound benchmarks. This includes

an assessment of the major interest rate benchmarks against 

the internationally agreed and endorsed IOSCO Principles for 

Financial Benchmarks. This effort included a report laying out

plans for reform of major reference rates such as the LIBOR, 

Euribor, and the Tokyo Interbank Offered Rate

A key component of the reform plans includes the development of alternative, nearly risk-free reference rates. CFTC staff

has been working with the market participant-led Alternative 

Reference Rate Committee convened by the Federal Reserve 

to develop alternatives to the U.S. Dollar LIBOR as well as 

transition strategy

Protecting Customers from Fraud

Anti-fraud enforcement remains a core commitment of 

the CFTC’s enforcement program. During the past year, the

Commission prosecuted wrongdoers for a wide range of 

fraudulent schemes, including Ponzi schemes that preyed upon 

the retail public’s hopes to participate in forex trading, precious 

metals speculation, and commodity pools. The Commission’s

experience with fraudsters is that they gravitate towards, and 

flourish in, financial markets that are perceived to be subject to 

limited oversight. Therefore, the Commission must continue

to devote significant resources to assure the integrity of the 

financial markets within its jurisdiction and to protect the 

retail public that wants to participate in them

Ensuring that Markets, Firms and Participants 

Meet their Obligations

In protecting the markets and market participants, the 

Commission engages in investigations and takes enforcement 

action, when necessary, to make sure that firms maintain their 

financial integrity and that markets, firms and significant 

market participants fulfill their regulatory obligations. For

example, the Commission conducts a comprehensive examination program to oversee compliance with the Dodd-Frank 

Act and Commission regulations. With the Dodd-Frank Act’s

expansion of the Commission’s responsibility, CFTC staff is 

doing all it can with the available resources to ensure that the 

markets, firms and significant market participants uphold these 

essential obligations. The Commission also is making sure its

registrants are meeting standards for their capitalization and 

handling of funds. These are intended to safeguard against

market disruption and abuse from imprudent practices or 

intentional misconduct and to protect customers. Further, the

Commission is focused on ensuring market participants are 

complying with reporting obligations. These requirements are

essential to the CFTC’s ability to conduct effective surveillance 

of the futures and derivatives markets that it regulates

Necessity for Continued Engagement with 

International Regulators

The 2008 financial crisis demonstrated how risks taken abroad 

by a large financial institution can result in, or contribute to, 

substantial losses to U.S. persons and threaten the financia

stability of the entire U.S. financial system. These failures a

near failures revealed the vulnerability of the U.S. financia

system and economy to systemic risk resulting from among 

other things, poor risk management practices of certain financial firms, the lack of supervisory oversight for certain financial 

institutions as a whole, and the overall interconnectedness 

of the global swap business. Given the global nature of the

swaps market, international cooperation among regulators has 

been, and will continue to be, essential to regulate effectively 

the financial markets

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 1

F R WA R D L

KIN    F U T U R  B U SINES

D

S 

ND E V 

N
This past year, the Commission worked closely with regulators 

across the globe on a number of fronts. For example, CFTC staff

worked successfully to ensure rules setting margin for uncleared 

swaps were as similar as possible among major jurisdictions, 

including the U.S., Europe and Japan. In addition, a maj

accomplishment toward harmonizing rules internationally 

took place in February, when the CFTC and European regulators 

reached an agreement that ensures European and U.S. clearinghouses can continue to provide clearing services to firms in eac

other’s jurisdiction. The agreement ensures European market

participants can carry on clearing derivatives trades on U.

clearinghouses without incurring higher capital charges. That

allows U.S. clearinghouses to remain competitive, and ensure

that the global derivatives market can continue to efficiently 

serve the many businesses that use it. This agreement brought

the U.S. and European regimes closer together and reduced th

risk of regulatory arbitrage. It also makes sure clearinghouses on

both sides of the Atlantic are held to high standards, which will 

enhance global financial stability and resilience. The Commission is already working to continue this progress, such as in the

area of trading requirements, for example. Specifically, CFTC

staff is working with their European colleagues on the process 

of recognizing of each other’s trading platforms

The Commission has taken additional steps to promote international cooperation and harmonization. It has approved the

registration of six clearinghouses located outside the United 

States, and staff has issued exemptive orders to several foreign 

clearinghouses, which allow them to clear proprietary swap 

trades for their U.S. members and the members’ affiliate

without having to register with the CFTC. This includes orders

for clearinghouses in Australia, Hong Kong, Japan, Korea, and 

temporary relief to others, such as in China. In addition, the

Commission has formalized a process so foreign exchanges 

seeking to provide direct electronic access to U.S. citizen

officially register as a foreign board of trade (FBOT). The CFTC

has approved the registration of 14 exchanges as FBOTs and 

is currently reviewing additional applications

The Commission will continue to be actively engaged with 

international regulators in IOSCO, where the CFTC is a 

member of the IOSCO Board and serves in leadership positions 

on various IOSCO committees. In addition, the Commission

will continue its work with the Financial Stability Board, where 

it participates in several working groups. Similarly, Commission staff will continue to participate in, other international

bodies and groups in order to develop international standards 

for DCOs, trading platforms, and various market activities. The

Commission will continue to develop and maintain strong 

bilateral relationships with major foreign regulators, especially 

in emerging markets like China and India and developed 

markets like Europe, Japan, Singapore and Hong Kong.

Responding to the Needs of Commercial End-Users

In all the work of the Commission, staff is mindful of acting 

in the interest of commercial end-users, to ensure they 

can continue to use the derivatives markets efficiently and 

effectively. These commercial businesses have traditionally

relied on these markets to hedge routine commercial risk, 

and they did not cause the global financial crisis

Therefore, all the Commission’s work is carried out with a 

focus on ensuring that its rules do not create undue burdens 

on these businesses, and we have taken several actions over 

the past year to this effect

For example, the Commission finalized amendments to its 

rules on trade options that recognize these are different from 

the swaps that are the focus of the Dodd-Frank reforms. These

changes will reduce the burdens on the commercial businesses 

that rely on them—and allow these companies to better 

address commercial risk. The Commission also reduced certain

recordkeeping obligations related to end-users’ commodity 

interest and related cash or forward transactions

In addition, as part of the Commission’s work to finalize its 

position limits rule, it unanimously proposed a supplemental 

rule that would ensure that commercial end-users can continue 

to engage in bona fide hedging efficiently for risk management and price discovery. It would permit the exchanges to

recognize certain positions as bona fide hedges, subject to 

CFTC oversight

This proposal is a critical piece of our effort to complete the 

position limits rule in the near future, as was the Commission’s 2015 proposal to streamline the process for waiving 

aggregation requirements when one entity does not control 

another’s trading, even if they are under common ownership

The Commission is also working to review exchange estimates 

of deliverable supply so that spot month limits may be set 

based on current data

The Commission will continue to make being responsive 

to the concerns of end-users a priority in the years to come

FY 2016 Summary of Performance and Financial Inform

20 Commodity Futures Trading Commissio
Performance Highligh

Strategic and Performance Planning Fra

The CFTC’s strategic and performance planning framework is based on the FY 2014 – FY 2018 

Strategic Plan, available at: http://www.cftc.gov/idc/groups/

public/@aboutcftc/documents/file/2018strategicplan.pdf

The Strategic Plan outlines the Commission’s mission, 

strategic goals, strategic objectives, and indicators. The

CFTC’s work is structured around four strategic goals and a 

set of management objectives. The goals and management

objectives are supported by a set of strategic objectives whose 

achievement reflects progress toward meeting the strategic 

goals and the management objectives. The goals in CFTC’s

Strategic Plan are influenced by several environmental factors, 

including global, complex and constantly evolving securities 

markets. The Commission is building a robust planning

process for the FY 2018 – FY 2022 Strategic Plan

 Commodity Futures Trading Commission 2
Summary f Performance Results by St

The following table displays historical performance trends for all of the CFTC’s performance indicators for the past five years

FY 2011-2015 Strategic Plan FY 2014-2018 Strategic Plan

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 

Strategic Goal 1 

Market Integrity 

and Transparency

Target Met 4 2 4 3 4

Target Not Met 8 8 6 1 4

Data Not Available/Other5 1 2 0 4 0

Strategic Goal 2

Financial Integrity 

and Avoidance of 

Systemic Risk

Target Met 4 8 8 6 8

Target Not Met 11 9 10 6 3

Data Not Available/Other 3 1 0 2 0

Strategic Goal 3

Comprehensive 

Enforcement

Target Met 1 1 1 5 2

Target Not Met 1 1 1 0 2

Data Not Available/Other 1 1 0 0 0

Strategic Goal 4

Domestic and International Cooperation 

and Coordination

Target Met 3 2 2 2 1

Target Not Met 0 1 1 0 0

Data Not Available/Other 1 1 0 4 5

Management 

Objectives

Target Met 10 8 3 4 3

Target Not Met 5 7 7 3 5

Data Not Available/Other 0 0 0 4 1

Total Number of Indicators6 53 52 44 44 387

Total Number of Indicators with Results 47 47 44 30 32

Percentage of Targets Met 46.8% 44.7% 40.9% 66.7% 56.3%

Results prior to FY 2015 are based on targets contained in the 

FY 2011-2015 Strategic Plan. The following in chronological

order, are the results for the past five years:

■ In FY 2016, 18 of 32 performance indicators met their 

annual targets, 14 did not meet their targets, and 6 indicators did not have data available or the indicators did 

not have targets. In addition, 6 other indicators were

discontinued or were completed as of the end of FY 2016 

and are no longer being tracked

■ In FY 2015, 20 performance indicators out of 44 met 

their annual targets and 10 did not meet their targets

Eight performance indicators established a baseline in 

FY 2015 and 6 indicators either had no available data 

or had no set target

■ FY 2014 reporting was the last year under CFTC’s 

FY 2011-15 Strategic Plan. Of the 44 total indicators in

that strategic plan, 18 met their annual targets, while 26 

did not meet targets that year

■ In FY 2013, the Commission was not provided with the 

commensurate increase in budget authority to oversee the 

markets and market participants. These constraints, which

were exacerbated by the FY 2013 budget sequestration, 

limited the effectiveness of the Commission in carrying 

out its mission, leading to 21 targets met by year end

■ In FY 2012, results declined from the prior year to 22 

targets being met. Progress was hampered in many areas

by significant resource deficiencies and reallocations as 

the Commission focused on writing new rules required 

under the Dodd-Frank Act

5 This category also includes indicators without results because it was the baseline year for data collection.

6 Indicators from CFTC’s FY 2011-2015 Strategic Plan included one indicator (Objective 0.1) to, “complete Dodd-Frank Act rule requirements within statutory deadlines,” 

for which results are not included in this report.

7 The total of 38 FY 2016 indicators are 6 less than FY 2015’s 44 indicators, as 6 indicators were discontinued due to management discretion or the underlying effort 

was completed. 

FY 2016 Summary of Performance and Financial Inform

22 Commodity Futures Trading Commissio
Iam honored to 

join Chairman 

Massad in presenting the FY 2016 Agency 

Financial Report for the CFTC

This report provides financial 

and high-level performance 

information to the American 

taxpayer and the Commission’s stakeholders to enable 

them to understand and evaluate how the Commission accomplishes its mission. The CFTC takes pride in providing timely,

reliable and meaningful information to its many stakeholders

Although we face many challenges, including resource constraints, we are committed to achieving our mission as efficiently 

and effectively as possible

I am pleased to report that our independent auditor has issued 

an unmodified opinion on our financial statements for 

FY 2016. This means that the Commission’s financial statements are presented fairly, in all material respects and are in

conformity with U.S. generally accepted accounting principle

(GAAP). I am also pleased to report that the Commission has

resolved a material weakness in internal controls related to 

the recording of lease obligations, and had no reportable 

control issues that would affect the fair presentation of the 

financial statements

The Commission is committed to improving and maintaining 

strong internal controls over operations. We will remain

focused on sound financial management techniques, will 

continue to focus efforts to improve the efficiency and 

A Message from the Chief Financ

effectiveness of agency operations and strive to ensure that 

the Commission will be well-positioned to respond to additional challenges as they arise

Since FY 2007, the CFTC has leveraged a financial management 

systems platform operated by the U.S. Department of Transportation’s Enterprise Services Center, an Office of Management and Budget designated financial management servic

provider. As a result, the CFTC is able to accumulate, analyze,

and present reliable financial information, and provide 

reliable, timely information for managing current operations 

and timely reporting of financial information to central 

agencies. The Commission’s financial management systems

strategy for FY 2017 includes continued monitoring and oversight of the financial management system operated by its 

shared service provider and preparation for the implementation of an end to end procurement management system in 

FY 2018

 As always, it is our dedicated staff and their commitment to 

financial reporting excellence, transparency and accountability 

that ensures we are good stewards of the funds entrusted to 

us by the American taxpayer. Without their efforts, CFTC could

not have achieved its unmodified opinion or cleared its 

material weakness this past year

Mary Jean Buhler

Chief Financial Officer

November 14, 2016

 Commodity Futures Trading Commission 2

Financial Highligh
Summary f Audit and Management As

Summary f FY 2016 Financial Statement 

Audit Opinion: Unmodified

Restatement: Yes

MATERIAL WEAKNESS BEGINNING BALANCE NEW RESOLVED CONSOLIDATED ENDING BALANCE

1 1 0

Summary f Management Ass

EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA § 2)

Statement of Assurance: Unmodified

MATERIAL WEAKNESS BEGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE

1 1 0

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2)

Statement of Assurance: Unmodified

MATERIAL WEAKNESS BEGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE

0 0 0

CONFORMANCE WITH FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS (FMFIA § 4)

Statement of Assurance: Federal systems conform to financial management system requirements

NON-CONFORMANCE BEGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE

0 0 0

COMPLIANCE WITH FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT (FFMIA)

Agency Auditor

1. Federal Financial Management System Requirements Compliance noted

2. Applicable Federal Accounting Standards Compliance noted

3. USSGL at Transaction Level Compliance noted

Definition of Terms

Beginning Balance: The beginning balance will agree with the 

ending balance of material weaknesses from the prior year

New: The total number of material weaknesses that have 

been identified during the current year

Resolved: The total number of material weaknesses that have 

dropped below the level of materiality in the current year

Consolidation: The combining of two or more findings

Reassessed: The removal of any finding not attributable 

to corrective action (e.g., management has re-evaluated an

determined a finding does not meet the criteria for materiality 

or is redefined as more correctly classified under another 

heading (e.g., Section 2 to a Section 4 and vice vers

Ending Balance: The agency’s year-end balance of material 

weaknesses

FY 2016 Summary of Performance and Financial Inform

24 Commodity Futures Trading Commissio
Highlights 2016 2015 2014 201

CondensedB

Fund Balance with Treasury $ 71,891,891 $ 67,246,060 $ 47,070,343 $ 36,467,970 $ 82,557,690

Investments 244,000,000 263,000,000 270,000,000 95,000,000 77,135,901

Accounts Receivable 13,120 18,614 11,112 13,252 20,976

Prepayments 2,847,772 2,473,459 1,712,871 1,541,681 1,803,497

Custodial Receivables, Net 15,089,568 4,696,176 4,218,788 69,744,626 4,140,347

General Property, Plant, and Equipment, Net 48,357,120 50,358,266 54,464,549 58,251,172 53,410,435

Deferred Costs – 28,487 64,201 220,953 1,234,223

TOTAL ASSETS $ 382,199,471 $ 387,821,062 $ 377,541,864 $ 261,239,654 $ 220,303,069

Accounts Payable $ 10,589,674 $ 8,607,890 $ 5,483,221 $ 5,092,410 $ 7,217,772

FECA Liabilities 505,002 498,101 549,734 596,353 764,243

Accrued Payroll and Annual Leave 16,647,297 15,004,112 13,007,491 11,651,586 16,477,676

Custodial Liabilities 15,089,568 4,696,176 4,218,788 69,744,626 4,140,347

Deposit Fund Liabilities 265,828 179,806 134,683 83,997 77,098

Deferred Lease Liabilities 28,293,139 25,673,457 25,961,973 25,241,114 24,808,042

Contingent Liabilities – 300,000 85,000 – –

Other – 22,397 11,699 19,600 19,050

TOTAL LIABILITIES $ 71,390,508 $ 54,981,939 $ 49,452,589 $ 112,429,686 $ 53,504,228

Unexpended Appropriations – All Other Funds 53,836,721 50,997,602 35,420,980 25,006,039 46,349,473

Cumulative Results of Operations – Funds from 

Dedicated Collections 247,550,496 267,612,410 274,315,312 99,904,291 99,996,749

Cumulative Results of Operations – All Other Funds 9,421,746 14,229,111 18,352,983 23,899,638 20,452,619

Total Net Position 310,808,963 332,839,123 328,089,275 148,809,968 166,798,841

TOTAL LIABILITIES AND NET POSITION $ 382,199,471 $ 387,821,062 $ 377,541,864 $ 261,239,654 $ 220,303,069

Condensed Sate

Gross Costs $ 278,141,094 $ 249,861,126 $ 217,450,008 $ 218,155,538 $ 207,618,265

Earned Revenue (55,123) (53,074) (31,375) (49,483) (227,504)

TOTAL NET COST OF OPERATIONS $ 278,085,971 $ 249,808,052 $ 217,418,633 $ 218,106,055 $ 207,390,761

Net Cost of Oerati

Goal One – Market Integrity and Transparency $ 72,413,587 $ 68,322,502 N/A N/A N/A

Goal Two – Financial Integrity and Avoidance of 

Systemic Risk 85,650,480 73,918,203 N/A N/A N/A

Goal Three – Comprehensive Enforcement 106,506,926 95,501,618 N/A N/A N/A

Goal Four – Domestic and International Cooperation 

and Coordination 13,514,978 12,065,729 N/A N/A N/A

Goal One – Market Integrity N/A N/A $ 56,746,263 $ 62,225,658 $ 59,168,584

Goal Two – Clearing Integrity N/A N/A 51,963,054 57,470,946 54,647,465

Goal Three – Robust Enforcement N/A N/A 71,530,730 64,123,179 60,972,883

Goal Four – Cross-Border Cooperation N/A N/A 11,740,606 7,306,553 6,947,591

Goal Five – Organizational and Management Excellence N/A N/A 25,437,980 26,979,719 25,654,238

TOTAL NET COST OF OPERATIONS BY STRATEGIC GOAL $ 278,085,971 $ 249,808,052 $ 217,418,633 $ 218,106,055 $ 207,390,761

The table below presents trend information for each major 

component of the Commission’s balance sheets and statements 

of net cost for FY 2012 through FY 2016. The table is immediately

followed by a discussion and analysis of the Commission’s major 

financial highlights for FY 2016

8 In 2015, the CFTC issued its FY 2014-2018 Strategic Plan. With this plan, the Commission changed Strategic Goal 5, Organizational and Management Excellence, into 

Management Objectives

5-Year Financial Summa

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 2

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Financial Discussion an

The CFTC prepares annual financial statements in accordance 

with GAAP for Federal government entities and subjects the 

statements to an independent audit

Management recognizes the need for performance and 

accountability reporting, and regularly assesses risk factors 

that could have an impact on the Commission’s ability to 

effectively report. Improved reporting enables managers to

be accountable and supports the concepts of the Government 

Performance and Results Act, which requires the Commission 

to: 1) establish a strategic plan with programmatic goals and 

objectives; 2) develop appropriate measurement indicators; 

and 3) measure performance in achieving those goals

Understanding the Financial Statem

The CFTC presents financial statements and notes in accordance 

with accounting principles generally accepted in the United 

States of America and in the form and content requirements 

of OMB Circular A-136, Financial Reporting Requirements, which 

is revised annually by OMB in coordination with the U.S. Chie

Financial Officers Council. The CFTC’s current year and prior

year financial statements and notes are presented in a 

comparative format

The chart below presents changes in key financial statement 

line items, as of and for, the fiscal year ended September 30, 

2016, compared to September 30, 2015

Key Financial Statement Line Items 2016 2015, as Restate

Total Assets $ 382,199,471 $ 387,821,062 $ (5,621,591) (1.45%)

Total Liabilities $ 71,390,508 $ 54,981,939 $ 16,408,569 29.84%

Total Net Position $ 310,808,963 $ 332,839,123 $ (22,030,160) (6.62%)

Total Net Cost of Operations $ 278,085,971 $ 249,808,052 $ 28,277,919 11.32%

Total Budgetary Resources $ 315,215,866 $ 298,325,883 $ 16,889,983 5.66%

Apportioned $ 246,556,853 $ 270,359,908 $ (23,803,055) (8.8%)

Unapportioned $ (194,232,932) $ (209,897,098) $ 15,664,166 7.46%

Total Remaining Unfunded Lease Obligations $ 194,378,658 $ 210,042,824 $ (15,664,166) (7.46%)

New Obligations and Upward Adjustments $ 270,891,918 $ 258,702,003 $ 12,189,915 4.71%

Gross Outlays $ 265,476,500 $ 234,914,187 $ 30,562,313 13.01%

Custodial Receivables/Liabilities $ 15,089,568 $ 4,696,176 $ 10,393,392 221.32%

Balance Sheet

The Balance Sheet presents, as of a specific point in time, the 

assets and liabilities retained or managed by the Commission

The difference between assets and liabilities represents the net 

position of the Commission

FY 2016 Total Assets

(Composition)

Custodial

Receivables

and Other

4%

Property, Plant

and Equipment

13%

Investments

64%

Fund Balance

with Treasury

19%

Total Assets: For the year ended September 30, 2016, the Balance 

Sheet reflects total assets of $382.2 million. This is a decreas

of $5.6 million, or 1.5 percent, over FY 2015. The decrea

is primarily due to a $19 million decrease in investments, 

offset by increases of $10.4 million in custodial receivables

and $4.6 million in Fund Balance with Treasur

FY 2016 Summary of Performance and Financial Inform

26 Commodity Futures Trading Commissio
The $19 million, or 7.2 percent, decrease in Investments was

due to the redemption of investments to pay eligible expenses 

of the CFTC Customer Protection Fund (CPF) during the fiscal 

year, including $11.6 million in whistleblower award

The $10.4 million, or 221.3 percent, increase in Custodia

Receivables is due to an increase in the number and amount 

of receivables for civil monetary sanctions that are estimated 

to be collectible as of September 30, 2016. The number and

amount of civil monetary sanctions are driven by enforcement 

actions in any given fiscal year

The $4.6 million, or 6.9 percent, increase in Fund Balance wit

Treasury was primarily due to appropriations of $250 million 

in excess of outlays from appropriated funds of $245.8 million

due to the timing of cash payments

FY 2016 Total Liabilities

(Composition)

Custodial

Liabilities

21%

Deferred Lease

Liabilities

40%

Accrued

Payroll and

Annual Leave

23%

Accounts

Payable 

and Other

16%

Total Liabilities: For the year ended September 30, 2016, the 

Balance Sheet reflects total liabilities of $71.4 million. This i

an increase of $16.4 million, or 29.8 percent, over FY 20

The increase is primarily due to increases in Custodial Liabilities, Deferred Lease Liabilities, and Accounts Payable of 

$10.4 million, $2.6 million, and $2.0 million, respectiv

The $10.4 million, or 221.3 percent, increase in Custodia

Liabilities is directly related to the increase in Custodial 

Receivables discussed above. As custodial receivables are

established, an offsetting custodial liability is also created 

to recognize the Commission’s custodial responsibility for 

these receivables that are assets to be used by the Federal 

government, rather than the Commission

The $2.6 million, or 10.2 percent, increase in Deferred Leas

Liabilities is primarily the result of credits for rent taken in 

FY 2016 that were spread over the life of the lease

Accounts payable, which represents the amount owed to 

Federal and non-Federal vendors for goods and services 

received but not yet paid for at the end of the reporting 

period, increased by $2.0 million, or 23 percent, primarily

due to unbilled costs for paralegal, advisory, and other 

services received through September 30, 2016

FY 2016 Total Net Position

(Composition)

Cumulative

Results of

Operations – 

Funds from

Dedicated

Collections

80%

Unexpended

Appropriations –

All Other Funds

17%

Cumulative

Results of

Operations – 

All Other

Funds

3%

Total Net Position: For the year ended September 30, 2016, the 

Balance Sheet reflects a total net position of $310.8 millio

This is a decrease of $22.0 million, or 6.6 percent, over FY 20

The combined decrease in Total Net Position is the result of 

decreases of $20.1 million in Cumulative Results of Operations—Funds from Dedicated Collections and $4.8 million i

Cumulative Results of Operations—All Other Funds, offset by 

an increase in Unexpended Appropriations—All Other Funds 

of $2.8 millio

The $20.1 million, or 7.5 percent, decrease in Cumulativ

Results of Operations—Funds from Dedicated Collections is 

due to CPF expenses of $20.6 million offset by interest revenue

of $490 thousand

The $4.8 million, or 33.8 percent, decrease in Cumulativ

Results of Operations—All Other Funds is primarily due to an 

increase in unfunded liabilities of $189 thousand (e.g., accrual

for annual leave and Federal Employees’ Compensation Act 

(FECA) expenses and contingent liabilities), net loss on 

disposal of fixed assets of $552 thousand, and accumulated 

depreciation and amortization of fixed assets of $15.4 million

in excess of fixed asset purchases of $11.3 millio

The $2.8 million, or 5.6 percent, increase in Unexpende

Appropriations—All Other Funds is primarily due to 

FY 2016 appropriations received of $250 million in excess of 

appropriations used of $247.2 million due to the timing of

actual cash payments

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 2

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Statement of Net Cost

This statement is designed to present the components of the 

Commission’s net cost of operations. Net cost is the gross cost

incurred less any revenues earned from Commission activities

The Commission experienced a $28.3 million, or 11.3 percent

increase in the total net cost of operations during FY 2016

This overall increase is made up of increases of $12.0 million in

payroll, $11.2 million in Whistleblower awards, $7.9 million i

technology and non-Federal service contracts, and $2.8 million

in depreciation, offset by decreases of $5.0 million in leases

and $684 thousand in travel. $3.3 million, or 11 percent, of th

total increase in gross costs was intragovernmental, primarily 

for employee benefit payments

The $12.0 million increase in total payroll costs is primarily

the result of a two percent across-the-board increase and up 

to three percent merit increase that was implemented in the 

third quarter of FY 2015. These fourth quarter FY 2015 salary

increases resulted in increased payroll costs for all of FY 2016, 

for salary and any benefit costs affected by salary increases, 

despite an approximate decrease in the number of employees 

by 11, or 1.5 percen

The $16.3 million increase in non-payroll expenses is reasonable

considering the $13.8 million increase in Whistleblower

awards and CPF operating expenses, and that FY 2015 year-end 

undelivered orders were $15.6 million, or 47 percent, higher

than FY 2014. This increase in undelivered orders in FY 2015 was

primarily due to a 16 percent increase in appropriations received 

in FY 2015 over FY 2014, which resulted in increased FY 2016 

outlays due to contract periods of performance extending beyond 

the end of the prior fiscal year and the timing of cash payments

The Statement of Net Cost is categorized by the following four 

strategic goals:

■ The focus of Strategic Goal One, Market Integrity and Transparency, is to recognize that derivatives markets provide 

a means for market users to offset price risks inherent in 

their businesses and to serve as a public price discovery 

mechanism. In FY 2016, the net cost of operations for

this goal was $72.4 million or 26.0 percent of total ne

cost of operations

■ The focus of Strategic Goal Two, Financial Integrity 

and Avoidance of Systemic Risk, is to strive to ensure that 

Commission-registered DCOs, swap dealers, MSPs, and 

FCMs have the financial resources, risk management 

systems and procedures, internal controls, customer 

protection systems, and other controls necessary to meet 

their obligations so as to minimize the risk that the 

financial difficulty of any of these registrants, or any of 

their customers has systemic implications. In FY 2016, the

net cost of operations for this goal was $85.7 million or

30.8 percent of total net cost of operation

■ Through Strategic Goal Three, Comprehensive Enforcement, 

the CFTC enforces the CEA and Commission regulations, 

and works to promote awareness of and compliance with 

these laws. In FY 2016, the net cost of operations for this

goal was $106.5 million or 38.3 percent of total net cos

of operations

■ The focus of Strategic Goal Four, Domestic and International 

Cooperation and Coordination, is on how the Commission 

interacts with domestic and international regulatory 

authorities, market participants, and others affected by the 

Commission’s regulatory policies and practices. In FY 2016,

the net cost of operations for this goal was $13.5 million

or 4.9 percent of total net cost of operation

Statement of Changes in Net Position

FY 2016 Summary of Performance and Financial Inform

28 Commodity Futures Trading Commissio
The Statement of Changes in Net Position presents the 

Commission’s cumulative net results of operations and 

unexpended appropriations for the fiscal year. The CFTC’s

Net Position decreased by $22.0 million, or 6.6 percent i

FY 2016. As explained in the Total Net Position discussion in the

Balance Sheet section above, this combined decrease in Total Net 

Position is the result of decreases of $20.1 million in Cumulative

Results of Operations—Funds from Dedicated Collections and 

$4.8 million in Cumulative Results of Operations—All Other

Funds, offset by an increase in Unexpended Appropriations—All 

Other Funds of $2.8 millio

The $20.1 million, or 7.5 percent, decrease in Cumulativ

Results of Operations—Funds from Dedicated Collections is 

due to CPF expenses of $20.6 million offset by interest revenue

of $490 thousand

The $4.8 million, or 33.8 percent, decrease in Cumulativ

Results of Operations – All Other Funds is primarily due to an 

increase in unfunded liabilities of $189 thousand (e.g., accrual

for annual leave and FECA expenses and contingent liabilities), 

net loss on disposal of fixed assets of $552 thousand, and 

accumulated depreciation and amortization of fixed assets of 

$15.4 million in excess of fixed asset purchases of $11.3 milli

The $2.8 million, or 5.6 percent, increase in Unexpende

Appropriations—All Other Funds is primarily due to FY 2016 

appropriations received of $250 million in excess of appropriations used of $247.2 million due to the timing of actual

cash payments

Statement of Budgetary Resources

This statement provides information about the provision of budgetary resources and its status as of the 

end of the year. Information in this

statement is consistent with budget 

execution information and the 

information reported in the Budget 

of the U.S. Government, FY 2016

Obligations have resulted from the Commission’s budgetary 

accounting for its active leases for building space. The CFTC was

granted independent leasing authority in 1974, and received 

authority to expend appropriated funds on multiple-year leases 

in FY 1981. The CFTC’s historical practice has been to obligate

only the annual portion of lease payments due each fiscal 

year. On February 4, 2016, GAO issued Comptroller General

Decision B-327242, Commodity Futures Trading Commission—

Recording of Obligations for Multiple-Year Leases (“Decision”). This

Decision concluded that CFTC’s historical practice of recording 

multiple-year lease obligations on an annual basis violated the 

recording statute, 31 U.S.C. § 1501(a)(1). The Decision furt

indicated that the Commission needs to determine whether “the 

failure to properly record these obligations has resulted in the 

obligation of funds in excess of appropriations in violation of 

the Antideficiency Act.”

After considering GAO’s decision, the Commission concluded 

that it should report a budgetary obligation for the full amount 

of the lease agreements in its statements of budgetary resources 

retrospectively. This error has been corrected in the financial

statements with an increase in obligations as of September 30, 

2016, and 2015, of $194,378,658 and $210,042,824, which 

represents the full amount of obligations remaining on CFTC’s 

active leases at the end of FY 2016 and 2015, respectively. The

recording of these previously unrecorded obligations resulted 

in negative unapportioned balances for both FY 2016 and 2015 

because budgetary resources have not been made available to 

the Commission to fund these multi-year leases. This correcting

entry reduced the beginning unobligated balance by the amount 

of the unfunded lease obligations that remained unliquidated 

at the beginning of FY 2016 and FY 2015 of $210,042,824 and 

230,177,054, respectively. The change (decrease) in unfunded

lease obligations during FY 2016 and FY 2015 was $15,664,166 

and $20,134,230, respectively. This decrease reflects the amount

of lease payments paid through current year appropriations 

each year and the Unfunded Lease Obligations balance will be 

fully liquidated once all active leases for building space have 

ended on September 30, 2025

The Commission’s Total Budgetary Resources prior to 

recording its Unfunded Lease Obligations were $525.3 million

and $528.5 million, as of September 30, 2016, and 2015,

respectively. After recording the Commission’s full Unfunded

Lease Obligations and restating the FY 2015 Statement of 

Budgetary Resources, the Commission’s Total Budgetary 

$

250.0

MILLION

FY 2016 Appropriation

$

265.5

MILLION

FY 2016 Gross Outlays

In order to fairly present the Commission’s budgetary resources 

and the status of those resources, CFTC has restated its FY 2015 

Statement of Budgetary Resources to record Unfunded Lease 

Obligations for the full amount of obligations remaining on 

CFTC’s active leases for building space. These Unfunded Lease

FY 2016 Summary of Performance and Financial Inform

 Commodity Futures Trading Commission 2

F 

A

C IA L H IG H L IG 
Resources decreased by $194,378,658 and $210,042,824, as 

of September 30, 2016, and 2015, respectively. The adjusted

change in Total Budgetary Resources reflects an increase 

of $16.9 million, or 5.7 percent, from $298.3 million 

$315.2 million primarily due to the $20.1 million reductio

in Unfunded Lease Obligations discussed above, offset by a 

$5.8 million reduction in CPF available authorit

Gross Outlays increased by $30.6 million, or 13.0 percent, du

to more funds expended in FY 2016 then in FY 2015, primarily 

due to the increase in FY 2015 year-end undelivered orders 

discussed above, which affects FY 2016 outlays due to contract 

periods of performance extending beyond the end of the prior 

fiscal year and the timing of cash payments. Gross Outlays are

not affected by the Unfunded Lease Obligations correcting 

entry discussed above

Statement of Custodial Activity

Total Cash Collections

($ in millions)

Registration and Filing Fees $ 1.4

Fines, Penalties, and Forfeitures $ 479.9

General Proprietary Receipts $ –*

$

481.3 * Total cash collections include $2.4 thousand, or < $0.1 million, in general 

proprietary receipts.

This statement provides information about the sources and 

disposition of collections. CFTC transfers eligible funds from

dedicated collections to the Customer Protection Fund when 

the balance falls below $100 million and other non-exchange 

revenue to the Treasury general fund. Collections primarily

consist of fines, penalties, and forfeitures assessed and levied 

against businesses and individuals for violations of the CEA 

or Commission regulations. They also include non-exchange

revenues such as registration, filing, appeal fees, and general 

receipts. The Statement of Custodial Activity reflects total

cash collections for FY 2016 in the amount of $481.3 million,

a decrease of $2.4 billion, or 83.1 percent, over FY 20

This decrease in collections was expected due to nine large 

collections in FY 2015 ranging in amounts from $35 million 

to $800 million that resulted from the Commission’s 

enforcement cases related to attempted manipulation of 

global foreign exchange and LIBOR benchmark rates. Of the

$481.3 million in FY 2016 cash collections, all $481.3 millio

was transferred to the Treasury because the CPF fund balance 

exceeded $100 million so no collections were eligible to be 

transferred to it

An allowance for uncollectible accounts has been established 

and included in the accounts receivable on the Balance Sheet

Although historical experience has indicated that a high 

percentage of custodial receivables prove uncollectible, the 

Commission determines the collectability of each individual 

judgment based on knowledge of the financial profile of the 

debtor obtained through the course of the investigation and 

litigation of each case, including efforts to identify and freeze 

assets at the beginning of cases, when any remaining assets are 

most likely to be recoverable. Accounts are re-estimated quarterly

based on account reviews and the agency’s determination that 

changes to the net realizable value are needed

FY 2016 Summary of Performance and Financial Inform

30 Commodity Futures Trading Commissio
IMAGE CREDITS

Clark Day Photography; Pages cover, 2, 7, 21, and 23

Ken Jones Photography; Pages cover, 1, 4, and 5 

Robert Hart Photography; Cover

Steve Puppe Photography; Cover

ACKNOWLEDGEMENTS

This Summary of Performance and Financial Information 

was produced with the energies and talents of Commission 

staff. To these individuals, the Financial Management

Branch would like to offer our sincerest thanks and 

acknowledgement

We would also like to acknowledge the Office of the 

Inspector General and Allmond & Company, LLC for the 

professional manner in which they conducted the audit 

of the Fiscal Year 2016 Financial Statements

We offer our special thanks to The DesignPond, in 

particular Sheri Beauregard and Michael James, for their 

outstanding contribution to the design of this report

CONTACT INFORMATION

Commodity Futures Trading Commission

Financial Management Branch

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Telephone: Mary Jean Buhler, 202.418.5089 or

Lisa Malone, 202.418.5184

E-mail: mbuhler@cftc.gov or lmalone@cftc.gov

Web: http://www.cftc.gov/About/CFTCReports/index.htm

COMMODITY FUTURES TRADING COMMISSION

Timothy G. Massad

Chairman

Anthony C. Thompson

Executive Director

Mary Jean Buhler

Chief Financial Officer

May 2017
C O M M O D I T Y F U T U R E S T R A D I N G C O M M I S S I O N

Three Lfaette Centre  •  155 21st Street, 

202.418.5000 • www