COMMODITY FUTURES TRADING COMMISSION

President’s Budget

F i s c a l Y e a r

2016

Protecting Commodity Futures,

Option and Swaps Ma

Prepared for the Committee on Appropriations, February 2015
U.S. Commodity Futures Trading Commission

Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581

www.cftc.gov

Timothy G. Massad (202) 418-5050

Chairman (202) 418-5533 Facsimile

tmassad@cftc.gov

Chairman’s Transmittal Letter

February 2, 2015

The Honorable Thad Cochran

Chairman

Committee on Appropriations

U.S. Senate

Washington, D. C. 20510 

The Honorable Hal Rogers

Chairman

Committee on Appropriations

U.S. House of Representatives

Washington, D. C. 20515

The Honorable Barbara A. Mikulski

Ranking Member

Committee on Appropriations

U.S. Senate

Washington, D. C. 20510

The Honorable Nita M. Lowey

Ranking Member

Committee on Appropriations

U.S. House of Representatives

Washington, D. C. 20515

Dear Chairman Cochran, Senator Mikulski, Chairman Rogers and Representative Lowey: 

I am pleased to transmit the Commodity Futures Trading Commission (CFTC or Commission) Budget 

Estimate for fiscal year (FY) 2016. This budget request will substantially enhance the Commission’s 

ability to fulfill its responsibilities to oversee our nation’s futures, options and swaps markets.

The Commission and its predecessor agencies have overseen the derivatives markets since the 1920s, 

and in these markets, the Commission seeks to protect market participants from fraud, manipulation 

and abusive practices, and to protect the public and our economy from systemic risk related to 

derivatives. To fulfill these roles, the Commission requires adequate funding to oversee futures 

exchanges (referred to as designated contract markets, or DCMs), swap execution facilities (SEFs), 

derivatives clearing organizations (DCOs), swap dealers (SDs), swap data repositories (SDRs), futures 

commission merchants (FCMs) and other intermediaries.
The Commission’s responsibilities were substantially increased by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act (Dodd-Frank Act). This gave the Commission primary 

responsibility for oversight of the over-the-counter (OTC) swaps market, an over $400 trillion market 

in the United States, measured by notional amount. While the Commission’s budget has increased 

somewhat since that time, the increases have not been commensurate with the vast expansion of the 

Commission’s responsibilities and the increased challenges in light of market developments. Funding 

levels received in prior years have limited the Commission’s ability to fulfill its new responsibilities 

with respect to the swaps market while at the same time continuing to meet its traditional 

responsibilities for the futures and options markets.

In addition, the markets that the Commission has traditionally overseen have grown in technological 

sophistication and complexity. Trading is increasingly conducted in an automated, electronic fashion, 

and cybersecurity represents a major new threat to the integrity and smooth functioning of the critical 

market infrastructure that the Commission regulates. The Commission must substantially increase 

its own capabilities in order to fulfill its responsibilities.

In order to advance the goals and priorities of the Commission in FY 2016, the Commission is 

requesting a budget of $322 million and 895 full-time equivalents (FTE). This is an increase of $72 

million and 149 FTE over the FY 2015 enacted level. 

Approximately 39 percent of the requested $72 million increase is required for information 

technology investments that will enhance all of the Commission’s activities, including in particular, 

market surveillance, financial and risk surveillance, data collection and analysis, and enforcement. 

The other 61 percent of the funding request supports an increase in staffing and related support, 

specifically targeting highly critical areas such as enforcement, registration, economic and legal 

analysis, and examinations. 

This request will enable the Commission to engage in the following activities, among others, in 

support of its mission:

 Enhance surveillance capabilities to keep pace with the increasing technological 

sophistication of the markets—in particular, the increasing use of automated trading—as well 

as the fact that the markets it oversees have expanded, and engage in the necessary level of 

surveillance and oversight to detect excessive risk, fraud, abusive practices, and 

manipulation.

 Increase its enforcement capabilities in light of the expanded markets now under the 

Commission’s authority, as well as the increasing complexity of all derivatives markets, so 

that the Commission is able to investigate and punish fraud, abusive practices and 

manipulation in all areas.

 Substantially expand its capabilities with respect to cybersecurity, which is probably the 

single most important threat to financial stability today. The Commission needs to conduct 

more frequent and comprehensive cybersecurity and business continuity examinations, 

particularly of critical market infrastructure such as clearinghouses, and be better equipped to 

deal with this increasingly dangerous threat. 

 Examine the many new market participants under its jurisdiction, such as SDs and SEFs, as 

well as traditional market participants on a regular basis for compliance with the Commodity 

Exchange Act (CEA) and Commission regulations. This is of particular concern when it 

comes to monitoring critical infrastructure such as clearinghouses and exchanges, as well as 

FCMs and SDs, which the Commission seeks to review for adequacy of risk management, 

financial and operational resources, cybersecurity preparedness, business continuity and 

disaster recovery planning, compliance with customer protection rules, and other important 

issues. 

 Ensure timely review of requests for rule approvals, requests for rule certifications, requests 

for new product approvals, and submissions for swap clearing and trading mandates. 
 Provide a timely response to concerns of the public and users of the derivatives markets. 

Responding to such concerns is an important part of making sure the markets work efficiently 

and effectively to facilitate price discovery and allow the hedging of risk. 

 Provide additional economists and other staff to perform critical analysis of market structure 

and developments and provide robust assistance in considering the costs and benefits of the 

Commission’s regulatory activities.

 Engage with international regulators to harmonize rules and supervision as much as possible 

and work together on enforcement matters. The task of harmonizing new rules to regulate 

the swaps market is a particular challenge that requires substantial resources. In addition, 

the increasing globalization of the markets means that in all areas of its work, the 

Commission must work with regulators in many other jurisdictions. 

 Maintain and improve critically important information technology systems and resources that 

are vital to enforcement and oversight. This includes the ability to receive, store and analyze 

vast new quantities of data related to the swaps market, as well as enabling the review of rules 

based on changes in market technology. The Commission must substantially enhance its 

capabilities in order to increase its effectiveness. 

The Commission has made much progress, but there are many other activities that the Commission 

must be able to perform regularly to oversee the markets under its jurisdiction. This budget request 

will help the Commission fulfill its statutory responsibility to protect the integrity of the markets and 

safeguard the American public.

Sincerely,
cc:

The Honorable John Boozman

Chairman

Subcommittee on Financial Services 

 and General Government

Committee on Appropriations

U.S. Senate

Washington, D. C. 20510

The Honorable Robert B. Aderholt

Chairman

Subcommittee on Agriculture, Rural

 Development, Food and Drug

 Administration, and Related Agencies

Committee on Appropriations

U.S. House of Representatives

Washington, D. C. 20515

The Honorable Christopher A. Coons

Ranking Member

Subcommittee on Financial Services

 and General Government

Committee on Appropriations

U.S. Senate

Washington, D. C. 20510

The Honorable Sam Farr

Ranking Member

Subcommittee on Agriculture, Rural

 Development, Food and Drug

 Administration, and Related Agencies

Committee on Appropriations

U.S. House of Representatives

Washington, D. C. 20515
The FY 2016 President’s Budget

Table of Contents

EXECUTIVE SUMMARY.......................................................... 1

OVERVIEW OF THE FY 2016 BUDGET .................................... 7

FY 2016 Budget Request by Program ................................................7

FY 2016 Budget Request by Mission Activity.................................... 8

FY 2016 Budget Request by Division................................................. 9

FY 2016 Budget Request by Object Class .........................................10

Crosswalk from FY 2015 to FY 2016 ................................................. 11

JUSTIFICATION OF THE FY 2016 BUDGET BY MISSION 

ACTIVITY ........................................................................... 12

Registration and Compliance............................................................12

Product Reviews ................................................................................19

Surveillance....................................................................................... 22

Examinations .................................................................................... 29

Enforcement ..................................................................................... 36

Economic and Legal Analysis........................................................... 40

International Policy .......................................................................... 45

Data and Technology Support.......................................................... 49

Agency Direction and Management................................................. 53

APPENDIX 1 ....................................................................56

The Commissioners .......................................................................... 56

Organizational Divisions and Offices............................................... 56

APPENDIX 2....................................................................60

Information Technology................................................................... 60

APPENDIX 3....................................................................64

Inspector General ............................................................................. 64

APPENDIX 4....................................................................65

Statement of Availability on Basis of Obligations ........................... 65

APPENDIX 5....................................................................66

Customer Protection Fund ............................................................... 66

APPENDIX 6....................................................................68

The Commission and the Industry We Regulate............................. 68

APPENDIX 7....................................................................83

Dodd-Frank Act Rules with Significant Resource Requirements .. 83

APPENDIX 8 ...................................................................85

Strategic Response............................................................................ 85

FY 2016 Planned Resources by Draft Strategic Goal ...................... 87

APPENDIX 9.................................................................... 91

Table of Acronyms .............................................................................91
The FY 2016 President’s Budget

Figures and Tables

Table 1: Summary of FY 2014 to 2016 by Program ..........................................7

Figure 1: $322.0 Million Budget Request by Program.....................................7

Table 2: Summary of FY 2014 to 2016 by Mission Activity ............................ 8

Figure 2: $322.0 Million Budget Request by Mission Activity....................... 8

Table 3: Summary of FY 2014 to 2016 by Division .......................................... 9

Table 4: Summary of FY 2014 to 2016 by Object Class..................................10

Figure 4: $322.0 Million Budget Request by Object Class ............................10

Table 5: Crosswalk from FY 2015 to FY 2016................................................. 11

Table 6: Breakout of Registration and Compliance by Division....................18

Figure 5: Registration and Compliance Request by Division .........................18

Table 7: Breakout of Product Reviews by Division.........................................21

Figure 6: Product Reviews Request by Division..............................................21

Table 8: Breakout of Surveillance by Division............................................... 28

Figure 7: Surveillance Request by Division .................................................... 28

Table 9: Breakout of Examinations by Division ............................................ 35

Figure 8: Examinations Request by Division ................................................. 35

Table 10: Breakout of Enforcement by Division............................................ 39

Figure 9: Enforcement Request by Division................................................... 39

Table 11: Breakout of Economic and Legal Analysis by Division.................. 44

Figure 10: Economic and Legal Analysis Request by Division ...................... 44

Table 12: Breakout of International Policy by Division ................................ 48

Figure 11: International Policy Request by Division ...................................... 48

Table 13: Breakout of Data and Technology Support by Division ................ 52

Table 14: Breakout of Agency Direction and Management by Division........55

Figure 13: Agency Direction and Management Request by Division .............55

Table 16: Summary of FY 2014 to 2016 Statement of 

Availability on Basis of Obligations ................................................................ 65

Figure 14: Matrix of U.S. Registered Entities and 

Registrants by CFTC Mission Activity ............................................................ 69

Figure 15: Number of Market Participants by Fiscal Year ............................ 70

Figure 16: Growth of Volume of Contracts Traded ........................................72

Figure 17: Estimated Swap Event Volume......................................................73

Figure 18: Actively Traded Futures and Option Contracts ............................74

Figure 19: Notional Value of Futures and Option Open Contracts................75

Figure 20: Notional Value of Exchange-Traded and OTC Contracts ............76

Figure 21: Customer Funds in FCM Accounts ...............................................77

Figure 22: Aggregate Sum of House Origin Margin on Deposit................... 78

Table 18: Contract Markets Designated by the CFTC ...................................80

Table 19: Derivatives Clearing Organizations Registered with the CFTC .... 82

Table 20: Breakout of Goal One by Mission Activity .................................... 87

Figure 23: Breakout of Goal One Request by Mission Activity...................... 87

Table 21: Breakout of Goal Two by Mission Activity.....................................88

Figure 24: Breakout of Goal Two Request by Mission Activity .....................88

Table 22: Breakout of Goal Three by Mission Activity.................................. 89

Table 23: Breakout of Goal Four by Mission Activity .................................... 90

Figure 26: Breakout of Goal Four Request by Mission Activity ................... 90
FY 2016 President’s Budget

Executive Summary 1

Executive Summary

The CFTC oversees our nation’s futures, options and swaps markets. The Commission’s mission is to 

foster transparent, open, competitive and financially sound derivatives markets. The Commission 

seeks to protect market participants from fraud, manipulation and abusive practices, and to protect 

the public and our economy from systemic risk related to derivatives. To fulfill these roles, the 

Commission oversees DCMs, SEFs, DCOs, FCMs, SDs, SDRs, and other intermediaries. 

Although few Americans participate directly in the markets overseen by the Commission, they 

profoundly affect our economy and the prices American families pay for food, energy, transportation 

and most other goods and services bought each day. A wide variety of businesses—such as 

manufacturers, retailers, farmers and ranchers—use these markets to manage their routine 

commercial risk. For example, derivatives enable farmers to lock in a price for their crops, and utility 

companies or airlines to hedge the costs of fuel. They enable exporters and importers to manage 

fluctuations in foreign currency exchange rates, and businesses of all types to lock in their borrowing 

costs. In the simplest terms, derivatives markets enable businesses of all kinds to manage risk. 

In order for the Commission to fulfill its responsibilities to oversee these vital markets in FY 2016, it is 

requesting $322 million and 895 FTE. This is an increase of $72 million and 149 FTE over the FY 

2015 enacted level, and is consistent with the Commission’s post-Dodd-Frank Act steady-state 

funding level, which was estimated in the FY 2012 Budget Appendix to be $340 million.

The Commission’s responsibilities were substantially increased by the Dodd-Frank Act. This gave the 

Commission primary responsibility for oversight of the OTC swaps market, a $700 trillion market 

globally, measured by notional amount. The Commission was directed to implement four basic goals: 

1) clearing of standardized swaps through central counterparties (CCPs); 2) trading of swaps on 

transparent, regulated platforms; 3) oversight of SDs and major swap participants (MSPs); and 4) 

reporting of data on the swaps market to facilitate greater transparency and enhance regulatory 

efforts. 

Prior to the enactment of the Dodd-Frank Act, the swaps market was unregulated across the globe, 

and excessive risk related to swaps was one of the causes of the 2008 financial crisis. That crisis—the 

worst the nation has experienced since the Great Depression—exacted a heavy toll on American 

families and our economy. We must never forget the true cost of that crisis: eight million jobs lost, 

millions of foreclosed homes, countless retirements and college educations deferred, and businesses 

shuttered.

The reform efforts are designed to bring the swaps market out of the shadows and prevent such 

excessive risk from recurring. The specific goals of the Dodd-Frank Act are consistent with those 

agreed to by all the G-20 nations to reform this market. 

Although the CFTC’s budget has been increased since the passage of Dodd-Frank Act, the increase has 

not been commensurate with the vast expansion in the Commission’s responsibilities. Funding levels 

have limited the Commission’s ability to fulfill its new responsibilities with respect to the swaps

market while at the same time continuing to meet its traditional responsibilities for the futures and 

options markets. In addition, the funding level has not enabled the Commission to keep pace with the 

increased technological complexity and globalization of the markets overseen by the Commission. The 

Commission’s resources continue to be stretched far too thinly over many important responsibilities. 

As a result, for example:

 The Commission needs to substantially expand its capacity to keep pace with the increasing 

technological sophistication of market participants and to address cybersecurity issues, the 

single most important threat to financial stability today. The Commission needs to conduct 

more frequent and comprehensive cybersecurity and business continuity examinations, 

particularly of critical market infrastructure, such as clearing houses.
FY 2016 President’s Budget

Executive Summary 2

 The Commission does not have the resources to examine FCMs, SDs, MSPs, DCOs, CCPs, 

SEFs, foreign boards of trade (FBOTs) and other market participants on a regular basis for 

compliance with the law and regulations. This is of particular concern when it comes to 

monitoring FCMs and SDs, as well as, critical infrastructure such as clearinghouses and 

exchanges, where the Commission seeks to review for adequacy of risk management, financial 

and operational resources, cybersecurity, business continuity recovery, compliance with 

customer protection rules, and other important issues. 

 The Commission cannot engage in the necessary level of market surveillance, risk oversight 

and enforcement efforts, resulting in the risk that fraud, abusive practices and manipulation 

will go undetected and unpunished, and that customers, our markets and our economy 

generally may be exposed to excessive risk. 

 The Commission does not have adequate resources to make sure that market participants 

registered with the Commission comply with its rules and fulfill their obligations to their 

customers. 

 The Commission cannot respond in a timely and thorough manner to the concerns of the 

public and users of the derivatives markets. Responding to such concerns is an important part 

of making sure the markets work efficiently and effectively to facilitate price discovery and 

allow the hedging of risk. 

 The Commission will not have enough economists to perform critical analysis of market 

developments and provide robust assistance in considering the relative costs and benefits of 

the Commission’s regulatory activities.

 The Commission cannot maintain and improve information technology systems and 

resources that are vital to its mission, including in particular its ability to receive, store and 

analyze vast new quantities of data related to the swaps market. 

Approximately 39 percent of the requested $72 million increase is required for information 

technology investments that will enhance all of the Commission’s activities, including in particular 

market surveillance, financial and risk surveillance, data collection and analysis, and enforcement. 

The other 61 percent of the funding request supports an increase in staffing and related support,

specifically targeting highly critical areas such as enforcement, economic and legal analysis, and 

examinations. 

More entities, more markets and more products (including more complex products) are subject to 

CFTC regulation than ever before. The markets have increased substantially in technological 

complexity and sophistication, and are increasingly global. 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 equivalent to standardized swaps is one such 

example. Innovation in the industry, which is likely to increase in pace with the addition of new 

entrants, such as SEFs, will continue to add complexity in ways that are yet to become apparent. 

While these changes will impact all of the CFTC mission activities, the near-term impacts will fall 

most heavily on the registration, product reviews, examinations, enforcement and economic analysis 

mission critical activities.

The Commission is grateful for the increases it has received and will continue to carry out its 

responsibilities as best it can with the resources it has. But it simply cannot fulfill all of its new duties 

and continue to meet its traditional ones in the timely and thorough manner that the American people 

deserve with the current level of funding. In short, without additional resources, our markets cannot 

be well supervised, participants cannot be adequately protected, and market transparency and 

efficiency cannot be fully achieved. 
FY 2016 President’s Budget

Executive Summary 3

2016 Increases by Mission Activity

Registration and Compliance

The Commission requests $17.8 million and 63 FTE for registration and compliance activities, an 

increase of $1.0 million and 3 FTE over the FY 2015 enacted level. The Commission performs a 

thorough review of the applications of all entities seeking to be registered or designated as DCMs, 

SEFs, FBOTs, DCOs, and SDRs, as well as oversight of the National Futures Association (NFA) and 

the registration of SDs, MSPs, FCMs, CPOs, and other intermediaries. The Commission expects to see 

continued increases in the trading of swaps on SEFs and DCMs, and the clearing of swaps on DCOs, 

which will further strain the Commission’s resources with respect to registration of market 

participants and the review of rule certifications and requests for rule approvals by DCOs, SEFs, and 

DCMs. Further, upon completion of an entity’s initial registration process, the CFTC continues to 

monitor the entity’s activities for compliance and may provide policy direction and legal interpretative 

guidance on an as-needed basis. Compliance oversight includes addressing both registrant-initiated 

and staff-initiated matters. Continued innovation will require continued evaluation of registrants (and 

the rules they implement) for compliance with the statutorily-mandated requirements and core 

principles. The Commission must ensure it has subject matter experts who can respond to rapid 

changes in the marketplace. The lack of adequate funding would prevent the Commission from 

fulfilling its mission in a timely and effective manner, and can result in delayed registrations, 

ineffective customer protection, regulatory uncertainty, poor compliance and risk management by 

registrants, higher legal and compliance costs for registrants, ineffective compliance oversight by selfregulatory organizations (SROs), and international disharmony.

Product Reviews

The Commission requests $6.4 million and 23 FTE for product reviews, an increase of $0.9 million 

and one FTE from the FY 2015 enacted level. The Commission conducts due diligence reviews of new 

contract filings to ensure that the contracts are not readily susceptible to manipulation or price 

distortion, and that the contracts are subject to appropriate position limits or position accountability.

The Commission also analyzes amendments to contract terms and conditions to ensure that the 

amendments do not render the contracts readily susceptible to manipulation and do not otherwise 

affect the value of existing positions. In addition, new swaps products are reviewed to determine 

whether they should be required to be cleared pursuant to a Commission clearing mandate.

Proliferation of products by industry—which has increased in recent years—and the inherently greater 

complexity of swaps contracts will demand that we keep pace with industry’s innovations while 

maintaining existing capabilities.

Surveillance

The Commission requests $62.4 million and 163 FTE for market surveillance, an increase of $5.9 

million and 42 FTE over the FY 2015 enacted level. During FY 2014, CFTC reviewed its highest 

priority sourcing requirements and determined a significant investment in technology is required to 

support this mission area. The increase in funding will also support information technology 

requirements to further develop the automated surveillance tools and data visualization. The CFTC 

continues to face a number of challenges with its new jurisdiction related to swaps; the types of data 

required by the Commission, the number of data sources providing data, the complexity of the data, 

and the volume of the data have each expanded significantly. The Commission monitors trading and 

positions of market participants on an on-going basis. Commission staff screen for potential market 

manipulations and disruptive trading practices, as well as trade practice violations. Such market 

surveillance is dependent on the ability to acquire large volumes of data and the development of 

sophisticated analytics to identify trends and/or outlying events that warrant further investigation, 

which can only be achieved through investment in technology and expert staff to process, analyze, and 

interpret the information. Without adequate funding, the Commission will be significantly impaired 

in its ability to analyze both traditional and new sources of market data, and will possess a limited 

ability to develop deep expertise over a broad spectrum of derivative instruments. The Commission 

also will be limited in its ability to surveil DCOs in a comprehensive and robust manner, which is 

critical to minimizing systemic risk.
FY 2016 President’s Budget

Executive Summary 4

Examinations

The Commission requests $35.4 million and 135 FTE for examinations, an increase of $6.7 million 

and 21 FTE over the FY 2015 enacted level. Examinations are formal, structured assessments of 

regulated entities’ operations or oversight programs designed to assess on-going compliance with 

statutory and regulatory requirements. Regular examinations are the most effective method of 

ensuring that the entities are complying with the core principles established in the CEA and the 

Commission’s rules. This level of funding is critical to maintaining a robust and effective examination 

program.

Examinations of market intermediaries, including FCMs and SDs, for compliance with applicable 

capital, segregation, risk management, and financial reporting requirements help ensure that funds 

belonging to customers are protected from loss. The complexity of examinations has increased in light 

of the increasing number and complexity of products and increasing technological sophistication of 

the markets. 

Across the markets, oversight of the financial surveillance and compliance programs of designated 

self-regulatory organizations (DSROs) is designed to ensure that the DSROs are effectively 

monitoring the financial integrity of market intermediaries and protecting customer funds. Reviews 

of DSROs, DCMs, and SEFs focus on the structural sufficiency of their self-regulatory and compliance 

programs. 

While Commission staff believes that it is important to perform routine annual examinations of the 

largest DCOs, DCMs and SEFs, with reviews of the smaller entities every two to three years, sufficient 

resources for such examinations will not be available without increased funding. Indeed, the 

Commission is required under Title VIII of the Dodd-Frank Act to examine, at least annually, DCOs 

that have been designated as “systemically important.” Examinations of systemically-important DCOs 

are a priority, and examinations of other DCOs are relegated to less frequent examinations, as 

resources permit.

Further, targeted examinations, such as the System Safeguards Examinations, focus on compliance 

and risk management by FCMs, SDs, DCMs, SEFs, SDRs, and DCOs with cybersecurity, automated 

system safeguards, and business continuity requirements. Given significant increases in the threat of 

cybersecurity attacks and other incidents in the financial markets, this oversight is critical. 

Examinations are conducted by multi-disciplinary teams of auditors, attorneys, accountants, industry 

economists, risk analysts, trade practice analysts, systems risk analysts, and risk management 

specialists. The Commission currently is hampered from performing these examinations in sufficient 

depth and frequency without an increase in funding.

Enforcement

The Commission requests $70.0 million and 212 FTE for enforcement activities, an increase of $20.7 

million and 48 FTE over the FY 2015 enacted level. Market integrity will continue to be one of the 

Commission’s key priorities. A strong compliance and enforcement function is vital to maintaining 

public confidence in the financial markets. This is critical to the participation of many Americans who 

depend on the futures and swaps marketplace—whether they are farmers, oil producers or exporters. 

The Commission’s enforcement efforts can help rebuild and maintain public confidence and trust in 

the financial markets. The Commission has the authority to: 1) Shut down fraudulent operations and 

immediately preserve customer assets through asset freeze and receivership orders; 2) Terminate 

manipulative and disruptive schemes; 3) Bar defendants from trading and being registered in its 

markets; and 4) Seek restitution, disgorgement, and monetary penalties up to the greater of three 

times the amount of a defendant’s gain or a fixed statutory amount.

The Commission anticipates more time-intensive and inherently complex investigations due to 

innovative products and practices within the industry, including the use of automated and high 

frequency trading. Cases have been strengthened by recent amendments to the law, but the 
FY 2016 President’s Budget

Executive Summary 5

Commission cannot take full advantage of this authority at the current funding levels. In order to 

investigate and litigate market-wide violations, as well as those less complex but equally important 

retail fraud cases, additional funding is requested for increased specialized enforcement experts. 

The Commission foresees an increase in multi-jurisdictional and multi-national investigations given 

the global nature of the swaps marketplace and the challenges associated with substitute compliance. 

The Commission is also experiencing an increase in international enforcement investigations in its 

traditional markets (the most significant being the international benchmark rate rigging cases). These 

cases are inherently more resource intensive due to increased costs for travel, translations and 

coordination. 

Economic and Legal

The Commission requests $27.9 million and 94 FTE for economic and legal support activities in FY 

2016, an increase of $5.8 million and 11 FTE over the FY 2015 enacted level.

Economic analysis plays an integral role in the development, implementation, and review of financial 

regulations to ensure that regulations are economically sound and have undergone a rigorous 

consideration of potential costs and benefits. The Commission is committed to integrating robust 

economic analysis into its regulatory activities. While Commission staff has established a network of 

well-renowned researchers and academics in quantitative financial methods, applied mathematics, 

econometrics, and statistics to augment resources, the Commission’s capacity should be enhanced to 

ensure that a high quality of economic analysis can be performed throughout the Commission.

The Commission’s Office of the General Counsel represents the Commission in Federal courts and 

before administrative bodies in litigation, including appeals of enforcement actions, challenges to 

agency actions, derivatives industry bankruptcies, employment lawsuits and other administrative 

matters. It also is responsible for reviews of proposed rules and staff interpretive and no-action 

letters to ensure consistency and compliance with the requirements of the CEA, a function that has 

been slowed by the current lack of resources. 

The lack of adequate economic staff in the divisions, as well as adequate staff for the Office of General 

Counsel, has significantly impaired the ability of Commission staff to respond promptly to requests 

for relief or interpretations from regulated entities and market participants, such as end users. The 

increased funding would significantly improve the ability of staff to respond in a timely and 

appropriate manner.

International Policy

The Commission requests $4.9 million and 16 FTE for international support activities, an increase of 

$0.4 million over the FY 2015 enacted level. The global nature of the futures and swaps markets, 

including the presence of a growing number of foreign-based DCOs that are registered in both the 

United States and their home country, makes it imperative that the United States consult and 

coordinate with international authorities. The Commission is actively communicating internationally 

to avoid conflicting requirements and to engage in cooperative supervision, wherever possible. The 

Commission will work with leaders of authorities with responsibility for the regulation of the swaps 

markets in major market jurisdictions to support the adoption and enforcement of robust and 

consistent standards in and across jurisdictions and to develop concrete and practical solutions to 

conflicting application of rules, identify inconsistent or duplicative requirements and attempt to 

reduce the regulatory burdens associated with such requirements and identify gaps that could lead to 

regulatory arbitrage.

Data and Technology Support

Information technology costs, including information technology (IT) investments (e.g., hardware, 

software, and contractor services), FTE, and indirect costs, are directly attributed to the benefiting 

Mission Activity wherever possible. Any IT costs that are not directly attributed to another Mission 

Activity are captured in the Data and Technology Support Mission Activity as described below. A full 

breakout of the Commission’s IT Portfolio is located in Appendix 2. 
FY 2016 President’s Budget

Executive Summary 6

The Commission requests $63.1 million and 59 FTE for enterprise-wide data and technology support 

activities, an increase of $26.9 million and 15 FTE over the FY 2015 enacted level. This mission 

activity supports the cross-agency data and technology infrastructure needs of the Commission. Data, 

and the ability to analyze and report data, are more important than ever in the derivatives markets 

and in CFTC’s ability to oversee those markets; therefore, data understanding and ingestion is the 

priority for the Commission’s resources. The CFTC has an imperative to aggregate various types of 

data from multiple industry sources, such as DCMs, SEFs, SDRs, and DCOs across multiple markets 

(e.g., futures, exchange-traded swaps, and off-exchange swaps). Under the Volcker Rule provisions of 

the Dodd-Frank Act, the CFTC must now also take in and analyze a whole new set of metrics data 

from its registrants. The new swaps data is an order of magnitude more complex than futures. The 

increasing complexity, volume, and interrelations of the data set will require significantly more 

powerful hardware such as high performance computing systems to support business analytics. 

Without the requested level of funds, the Commission will not have sufficient infrastructure to deploy 

mission systems to fulfill the critical mandates of the agency, directly impacting the Commission’s 

ability to protect market participants from fraud, manipulation and abusive practices, and to protect 

the public and the U.S. economy from systemic risk.
FY 2016 President’s Budget

Overview of the FY 2016 President’s Budget 7

Overview of the FY 2016 Budget

FY 2016 Budget Request by Program1 2

FY14

Actual3

FY15

Estimate

FY16

Request

$ (000) $ (000) $ (000)

Salaries and Expenses $181,171 $198,900 $243,000

Information Technology 35,000 51,100 79,000

Total $216,171 $250,000 $322,000

Table 1: Summary of FY 2014 to 2016 by Program

Salaries & 

Expenses

Information 75%

Technology

25%

Figure 1: $322.0 Million Budget Request by Program

 

1 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). All other budget displays by Mission Activity, Division or any other depiction are for 

informational purposes only.

2 Salaries and Expenses: The Salaries and Expenses program provides funding for all CEA-related activities. This includes 

funding for Federal staff salaries and benefits, leasing of facilities, travel, training, and general operations of the Commission. 

Information Technology: The Information Technology program provides funding for information technology investments. This 

includes hardware, software, contractor support, and other related information technology requirements.

3 Costs include expenditures from all funds.
FY 2016 President’s Budget

Overview of the FY 2016 President’s Budget 8

FY 2016 Budget Request by Mission Activity1

FY14

Actual2

FY15

Estimate

FY16

Request

FTE $ (000) FTE $ (000) FTE $ (000)

Registration and Compliance 43 $11,202 60 $16,794 63 $17,807

Product Reviews 22 5,574 22 5,460 23 6,388

Surveillance 113 35,938 121 56,502 163 62,429

Examinations 93 24,213 114 28,676 135 35,365

Enforcement 148 50,515 164 49,332 212 69,993

Economic and Legal Analysis 73 20,134 83 22,102 94 27,949

International Policy 16 4,505 16 4,523 16 4,914

Data and Technology Support334 36,012 44 36,216 59 63,134

Agency Direction and Management 105 28,078 122 30,395 130 34,021

Total 647 $216,171 746 $250,000 895 $322,000

Table 2: Summary of FY 2014 to 2016 by Mission Activity

Registration and 

Compliance

5 %

Product Reviews

2 % Surveillance

19%

Examinations

11%

Enforcement

22% Economic & Legal 

Analysis

9 %

International Policy

1 %

Data & Technology

20%

Agency Direction & 

Management

11%

Figure 2: $322.0 Million Budget Request by Mission Activity

 

1 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). All other budget displays by Mission Activity, Division or any other depiction are for 

informational purposes only.

2 Costs include expenditures from all funds.

3 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity. Refer to Appendix 2 for a full 

breakout of IT funds.
FY 2016 President’s Budget

Overview of the FY 2016 President’s Budget 9

FY 2016 Budget Request by Division1

FY14

Actual2

FY15

Estimate

FY16

Request

FTE $ (000) FTE $ (000) FTE $ (000)

Agency Direction322 $6,268 33 $8,515 35 $9,340

Administrative Management & Support 77 19,128 82 19,260 86 20,726

Chief Economist 9 2,380 12 2,911 18 5,164

Clearing & Risk 56 15,380 66 17,089 85 22,675

Data & Technology477 59,147 98 80,664 111 108,428

Enforcement 149 47,247 169 48,060 217 66,152

General Counsel 48 13,151 52 14,277 58 16,365

International Affairs 12 3,360 12 3,445 12 3,573

Inspector General 6 1,504 7 2,620 9 2,790

Market Oversight 110 27,412 121 29,649 153 38,253

Swap Dealer & Intermediary Oversight 81 21,194 94 23,510 111 28,534

Total 647 $216,171 746 $250,000 895 $322,000

Table 3: Summary of FY 2014 to 2016 by Division

Agency Direction

3 %

Administrative 

Management & 

Support

6 %

Chief Economist

2 %

Clearing & Risk

7 %

Data & Technology

34%

Enforcement

20%

General Counsel

5 %

International Affairs

1 %

Inspector General

1 %

Market Oversight

12%

Swap Dealer & 

Intermediary 

Oversight

9 %

Figure 3: $322.0 Million Budget Request by Division

 

1 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). All other budget displays by Mission Activity, Division or any other depiction are for 

informational purposes only.

2 Costs include expenditures from all funds.

3 Transition of the Chairman, three Commissioners and related staff resulted in a lower FTE utilization in FY 2014.

4 Data & Technology amounts include all costs funded by the Information Technology program, including FTE and indirect 

costs funded by the Salaries and Expenses program.
FY 2016 President’s Budget

Overview of the FY 2016 President’s Budget 10

FY 2016 Budget Request by Object Class 

FY14

Actual1

FY15

Estimate

FY16

Request

$ (000) $ (000) $ (000)

11.0 Personnel Compensation $97,237 $116,483 $145,723

12.0 Personnel Benefits: Civilian 29,058 34,712 43,425

13.0 Benefits for Former Personnel 0 0 0

21.0 Travel & Transportation of Persons 1,361 1,600 2,908

22.0 Transportation of Things 36 69 75

23.2 Rental Payments to Others 21,761 21,700 22,935

23.3 Communication, Utilities & Misc. 4,035 4,629 3,840

24.0 Printing & Reproduction 739 703 708

25.0 Other Services 54,915 61,207 81,857

26.0 Supplies & Materials 1,488 1,297 1,470

31.0 Equipment 5,541 7,600 19,044

32.0 Building & Fixed Equipment 0 0 15

Total $216,171 $250,000 $322,000

Table 4: Summary of FY 2014 to 2016 by Object Class

Compensation & 

Benefits

59%

Travel & 

Transportation 

1 %

Printing 

& Supplies

1 %

Space 

Rental

7 %

Communications 

& Utilities

1 %

Other Services

25%

Equipment

6 %

Figure 4: $322.0 Million Budget Request by Object Class

 

1 Costs include expenditures from all funds.
FY 2016 President’s Budget

Overview of the FY 2016 President’s Budget 11

Crosswalk from FY 2015 to FY 2016

FY 2015

Estimate

FY 2016

Request Change

Budget Authority ($000) $250,000 $322,000 $72,000

Full-Time Equivalents (FTEs) 746 895 +149

Explanation of Change FTE

Dollars 

($000)

Current Services Increases: (Adjustments to FY 2015 Base)

To provide for changes in personnel compensation & benefits: $6,464

To provide for the following changes in non-personnel costs: $446

 --Space Rental/Communications/Utilities ($446)

Program Increase: (Adjustments to FY 2016 Current Services) 149 $65,090

 --Addition of 149 FTE ($31,489)

 -Travel/Transportation ($1,314)

 --Other Services ($20,650)

 --Supplies/Printing ($178)

 --Equipment ($11,459)

Total Change +149 $72,000

Table 5: Crosswalk from FY 2015 to FY 2016
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 12

Justification of the FY 2016 Budget by Mission Activity

Registration and Compliance

Resource Overview 

 

 

Mission Activity Description 

The Commission reviews the registration applications of all entities seeking to be registered as DCMs, 

DCOs, SEFs and SDRs. Review teams comprised of attorneys, industry economists, trade practice 

analysts and risk analysts ensure that the Commission undertakes a thorough analysis of such 

applications to assess compliance with the applicable statutory core principles and Commission 

regulations. Important to the application process is a site visit to the applicant, enabling Commission 

staff to fully evaluate the operational and managerial resources that will support regulatory 

compliance once the applicant is registered. For SDs, MSPs, FCMs, and other intermediaries, where 

registration responsibility has been delegated to the NFA, an SRO, the Commission provides 

registration regulatory guidance to the NFA and to provisional registrants and generally oversees the 

registration process. This oversight includes sample testing of NFA’s application reviews and periodic 

targeted reviews of the SRO registration procedures. Site visits may be required to validate needed 

technical and self-regulatory capabilities. 

Upon completion of an entity’s initial registration process, the CFTC continues to monitor the entity’s 

activities for legal compliance and may provide policy direction and legal interpretative guidance to 

SROs and registrants on an as-needed basis. Compliance oversight includes addressing both 

registrant initiated and staff initiated activities in connection with registration issues and ongoing 

compliance following registration. Registrants often contact Commission staff to request interpretive 

guidance or no action relief for registration purposes or ongoing compliance and have the option to 

self-report compliance concerns or failures and seek staff assistance in remediating these issues. 

Furthermore, staff initiates compliance oversight activities such as reviews of registrant reports, 

horizontal registrant inquiries on specific compliance topics, and conducts on-site visits with 

registrants to observe compliance activities. 

Industry Trends and Emerging Issues 

Over the next year, the Commission expects trading in swaps on SEFs and DCMs to increase. 

Likewise, consistent with market trends in recent years, the Commission expects the number of rule 

certifications and requests for rule approvals by SEFs and DCMs to increase. At the same time, the 

Commission expects the number of market participants that are subject to Commission jurisdiction to 

increase as they become a member of, or trade products on, a registered DCM or SEF. The 

Commission also must complete its review of the 22 SEFs that are currently or temporarily registered

in order for them to become fully registered, and complete its evaluation of the two applications for 

DCM registration that currently are pending before the Commission. In addition, the Commission 

has 21 pending applications for FBOT registration, to date. The Commission has been limited in its

ability to review these rule certifications and rule approval requests, as well as these SEF, DCM and 

FBOT applications for registration and make timely recommendations to the Commission on each. 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $11,201,577 $16,794,031 $17,806,731 +$1,012,700

FTE 43 60 63 +3
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 13

Over the next year, the Commission expects to receive two to three new applications for SEF 

registration and/or DCM designation.

As the Commission has worked to implement the Dodd-Frank Act’s clearing requirement for swaps, 

more foreign-based CCPs have expressed interest in clearing swaps for U.S. persons. In the past year, 

the Commission issued no-action letters to six foreign-based CCPs, permitting them to clear the 

proprietary swap transactions of U.S. persons for a limited time or until the CCP becomes either 

registered or exempt from registration as a DCO. In FY 2016, the Commission expects these and other 

foreign-based CCPs to either apply for registration with the Commission as a DCO or to petition the 

Commission for an exemption from registration. As with the review of applications for SEF, DCM and

FBOT registration, the Commission has been historically limited in its ability to review these 

applications for DCO registration or petitions for exemption and make timely recommendations to 

the Commission. 

At present, over 100 entities have provisionally registered as SDs or MSPs. Completing the review of 

these entities for permanent registration in a timely manner is also difficult with current resources. 

In addition to requiring that such entities register with the CFTC, the Dodd-Frank Act also requires 

that such entities comply on an ongoing basis with regulations governing business conduct standards, 

reporting and recordkeeping, risk management, conflicts of interest, and customer protections, 

among other requirements, but resources limit the ability of staff to conduct reviews of compliance.

The Dodd-Frank Act requirements promote best practices for customer interaction, corporate 

governance, and recordkeeping, strengthening efficiencies while also promoting robust risk 

management capabilities. As the Commission has implemented these Dodd-Frank Act provisions, 

Commission staff has issued no-action letters and interpretive guidance to assist in the transition to 

full compliance by these provisionally registered SDs and MSPs, given that the new requirements 

require varying degrees of business processes and technological changes depending on the size and 

nature of an individual entity. These actions continue to be needed and often need to be provided in a 

timely manner to promote the smooth functioning of the markets. Additionally, the Commission 

anticipates that approximately 75 FCMs will be registered as of FY 2016, together with thousands of 

registered IBs, CPOs, CTAs, and other intermediaries. Within those entities, the Commission 

anticipates that there will be approximately 58,000 individuals registered as Associated Persons. The 

Commission’s ability to respond promptly to requests for no-action letters and interpretive guidance

with respect to the new and existing statutory and regulatory requirements, and to provide prompt 

registration regulatory guidance to the NFA, has been limited by Commission staff resources. 

Justification of CFTC Resource Requirements 

The FY 2016 request for $17,806,731 will support the Commission’s registration/designation and 

continuing compliance oversight mission. The request will enable the Commission to evaluate and act 

on applications for registration in a much more timely fashion. Limited resources over the last few 

years have significantly hindered the Commission’s ability to do so and resulted in delays in

completing many such reviews. Additionally, the request will better enable the Commission to provide 

interpretative guidance promptly to SROs and registrants, and its obligation with respect to 

compliance oversight.

 Permanently registering temporarily-registered SEFs, as well as reviewing new applicants for 

DCM designation or SEF registration, will be an area of particular focus for the Commission. 

 The Commission expects to receive and evaluate petitions from foreign-based CCPs for 

exemption from DCO registration. 

 The Commission expects to receive and evaluate no-action requests from foreign-based 

swaps-trading platforms seeking relief from SEF registration.

 The Commission expects to encounter increases in workload given the dramatic increase in

registered entities (SEFs, DCMs, SDRs, and DCOs) and the fact that such entities will 

continue to implement and refine their rules of operation under the new regulatory 

framework. 

 In addition to guiding and overseeing the registration/designation of new U.S. and foreignbased entities, the Commission staff will perform periodic reviews to assess entity-legal 
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 14

compliance with the CEA’s statutory requirements and the Commission’s implementing 

regulations, as well as regulations promulgated by the Commission under Title VIII of the 

Dodd-Frank Act (relating to systemically important DCOs). 

 On a day-to-day basis, registered entities are subject to Commission oversight, which includes 

review of registrants’ rules, operations, and procedures. The Commission will review daily, 

quarterly, annual, and event-specific reports and notices from DCOs, SDs, FCMs and other 

intermediaries, as well as DCMs and SEFs, to continually monitor and help ensure 

compliance with applicable financial and risk management regulations. Simultaneously, the 

Commission will oversee and coordinate with the NFA and other SROs and DSROs to provide 

on-going policy guidance, legal interpretation and other critical services necessary to execute 

its oversight mission. 

 The Commission needs to work closely with the international regulatory community to 

establish agreements on substituted compliance matters central to overseeing the global 

activities of the derivatives industry and implementing key aspects of Dodd-Frank Act and 

other high priority initiatives. The objective of these cross-border activities is to better 

rationalize regulatory processes (e.g., financial reporting, risk management standards, swap 

data reporting, etc.) and other regulatory matters of common interest with other nations, and 

to strengthen and institutionalize cooperative oversight in ways that avoid unnecessary 

burdens on the industry. 

 The Commission will continue on-going efforts to access, standardize, structure and integrate 

technology for the use of new and legacy data streams generated by the swap data reporting 

rules, Volcker Rule, enhanced customer protection rules, chief compliance officer annual 

reports, risk exposure reports and other regulatory changes. The Commission’s additional 

responsibilities for the swaps market as a result of the Dodd-Frank Act have created vast new 

quantities of data that must be received, loaded, and analyzed properly. The Commission 

must be able to do this in a timely and effective manner to fulfill its responsibilities with 

respect to compliance oversight, risk management, and registration. 

 The Commission will seek to leverage and incorporate data harmonization efforts to develop 

and incorporate more effective and efficient data management tools and practices into the 

agency’s regulatory operations. Strengthening the agency’s understanding of transactional

data, Volcker Rule data, and risk and chief compliance officer reports will generate new 

capabilities for guiding Commission policy making, registrant compliance and best practices, 

and assessing registration and compliance operations.

 The Commission also projects that in FY 2016 it will be completing and implementing 

rulemakings expected to be initiated in FY 2015. The rulemakings will address: 1) block 

trades, including their appropriate threshold sizes; 2) DCM Core Principle 9; 3) clean-up 

modifications to the Part 37 regulations for SEFs; 4) position limits and related requirements 

for all economically-equivalent derivatives across trading venues; and 5) clean-up 

modifications to the Part 45 regulations for swap reporting data standards.

 Key regulatory processes supported by the CFTC regulatory portal will need to be fully 

automated and integrated with the electronic records and document management system. 

The Commission needs to create dashboards to provide transparency and management 

visibility into the status of registrations.

Impact if Not Funded at Requested Level of Resources 

If the requested funding is not received, it can result in delayed registrations, poor compliance, 

ineffective customer protection, regulatory uncertainty, poor risk management by registrants, higher 

legal and compliance costs, ineffective compliance oversight by SROs, and deficient international

coordination. 

Registration and Compliance Oversight of DCMs, SEFs, and FBOTs. To the extent resources are 

unavailable, the Commission will be unable to ensure that DCM, SEF and FBOT applications are 

reviewed in a timely and comprehensive manner, which could slow the ability of those entities to offer 

their services to the market or allow inadequately-reviewed exchanges to begin operations and 
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 15

potentially jeopardize market participants and market integrity. In addition, comprehensive 

application reviews entail on-site visits, interviews with relevant exchange personnel, evaluation of 

systems safeguards, all of which may be impacted by reprioritization of funding. Likewise, insufficient 

resources could compromise the ability of the Commission to oversee DCMs, SEFs, and FBOTs on an 

ongoing basis to ensure that their rules, operations and procedures are compliant with Commission 

regulations and the CEA. Without adequate compliance oversight in this regard, the Commission 

cannot validate that exchanges are adequately carrying out their self-regulatory responsibilities. This 

shortcoming in performing critical oversight activities may put at risk not only the particular users of 

those markets, but also those portions of the broader economy that look to those exchanges for price 

discovery purposes. 

Such consequences of not receiving the requested funding would also frustrate a central goal of the 

Dodd-Frank Act to move a broad class of swap products away from unregulated, non-transparent 

markets to an adequately monitored, transparent environment. Inadequate funding would delay the 

Commission’s efforts to continue the implementation of Dodd-Frank Act requirements, including 

efforts to evaluate possible adjustments to regulatory requirements in response to requests from 

market participants and changes in market structures. Further, the Commission’s continuing efforts 

to coordinate and proactively engage with foreign regulators and international organizations with 

respect to market oversight will be limited without adequate staffing.

Registration and Compliance Oversight of DCOs. With respect to DCO registration applications and 

petitions for exemptions, processing has historically been delayed due to limited staff resources. In 

addition, the Commission may be limited in its ability to conduct comprehensive site visits (a routine 

part of the application process), which will become more of an issue given the expectation that most 

DCO applicants will be based in foreign countries. The inability to conduct a thorough review and 

analysis of a DCO application undermines the efficacy of the application review process and the 

stature and significance of DCO registration. These delays will limit the number of CCPs available to 

U.S. persons for clearing and will frustrate the Dodd-Frank Act’s goal of mitigating systemic risk in

the financial system. 

Implementation of the Dodd-Frank Act and effective oversight of the derivatives markets requires 

greater cooperation and consultation with domestic and foreign regulators. In addition, the DoddFrank Act imposed an entirely new regime of systemically important DCO regulation, oversight and 

examination under Title VIII, which includes continued participation on various clearing related 

working groups and work streams of the Financial Stability Oversight Council (FSOC). Moreover, by 

migrating swaps to a cleared environment, significant counterparty risk has shifted to DCOs. This 

has, in turn, necessitated a more comprehensive program of DCO regulation and oversight with the 

goal of ensuring rigorous risk management while expanding access to global markets and promoting 

capital efficiency.

Adequate staffing is essential to effectively oversee DCOs and the futures and swaps markets. For 

example, without the requested resources, the Commission will be limited in its ability to proactively 

engage in thorough risk surveillance; to engage with DCO Chief Compliance Officers to facilitate more 

effective compliance programs across all DCOs; to carefully review self-certified rule submissions 

from DCOs; and to provide prompt responses to industry requests to address regulatory ambiguities. 

Without this effective oversight, there is a greater risk of DCO problems which would adversely affect

U.S. financial markets. Moreover, adequate staffing allows the Commission to respond in a timely 

manner to market participants which can facilitate innovation or improvements that enhance 

liquidity or efficiency of our markets. Without adequate staffing, legal and risk management issues 

cannot always be addressed in a timely manner resulting in unnecessary uncertainty in the 

marketplace and delay in the introduction of products and services.

Staffing inadequacies likewise may impact DCOs that want to operate internationally, and in 

particular those DCOs that have sought to qualify as qualifying CCPs under the Basel Capital 

Framework, because the limitations on the Commission’s oversight of such DCOs may cause foreign 

regulators to be unwilling to permit DCOs to do business in their jurisdictions in reliance on the 

Commission’s oversight. If foreign regulators perceive CFTC supervision of U.S.-based entities as 

insufficient, they might not allow market participants in their jurisdictions to do business with U.S.-
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 16

based entities, which will harm U.S. competitiveness. Similarly, banking regulators may come to 

doubt the wisdom of reliance on CFTC regulation to qualify DCOs as qualifying CCPs, which would 

create higher capital charges for participating firms and could, in turn, cause participating firms to 

transfer their derivatives business away from U.S.-based DCOs. In each instance, DCOs would face a 

competitive disadvantage in maximizing business opportunities and retaining members and 

customers.

Staffing inadequacies have historically impeded Commission efforts to provide timely information in 

response to requests from the FSOC, and other domestic and international regulators. These delays 

could further delay the FSOC’s ability to fulfill its responsibilities relating to financial market utilities 

(which include systemically-important DCOs) by, among other things, delaying efforts to identify and 

monitor potential threats or risks to U.S. financial stability that could be related to or mitigated 

through systemically important DCO activities. Staffing inadequacies and budget restrictions can also 

impede CFTC efforts to effectively coordinate the implementation of new regulations and address 

systemic concerns on a cross-border basis. These impediments could result in regulatory arbitrage 

and result in a competitive disadvantage to domestic market participants. 

Staffing shortages may also delay amendments and updates to part 190 (the Commission’s 

bankruptcy rules), which are necessary to take into account changing market structures and valuable 

lessons learned from the MF Global and Peregrine bankruptcy proceedings. CFTC resource 

constraints may also delay amendments to Regulation 1.49 (permitted depositories). The Regulation 

1.49 amendments are needed to respond to the globalization of the marketplace and regulatory 

changes in banking, as well as to address and take into account current market practices with respect 

to currencies and depositories. Revisions to Part 39 of the Commission’s regulations (DCO rules), 

which should be updated to reflect experience with implementation of the regulations which were 

adopted in October 2011, may also be delayed.

Registration and Compliance Oversight of SDs, MSPs, FCMs, and Other Intermediaries. Adequate 

funding is essential to facilitate fair competition among market participants, protect market

participants from fraudulent practices, promote the integrity of derivatives transactions, prevent

disruptions to markets, and minimize systemic risk. To the extent that resources are unavailable, the 

Commission will be limited in its ability to respond in a timely manner to requests for guidance from 

registered SDs, MSPs, FCMs, and other intermediaries. These requests for guidance, as well as the 

need to provide guidance on issues directly identified by the Commission and SROs, as part of their 

routine activities are expected to increase due to the continued implementation of the Dodd-Frank 

Act. Likewise, the Commission will be limited in its ability to evaluate possible adjustments to existing 

regulatory requirements in a timely manner.

As noted above, implementation of the Dodd-Frank Act and effective oversight of the derivatives 

markets requires greater cooperation and consultation with domestic and foreign regulators. For 

example, the Commission has provided substituted compliance for the activities of SDs and MSPs in 

certain foreign jurisdictions, with respect to certain business conduct standards mandated under the 

Dodd-Frank Act. Such efforts are essential to fulfilling the goal of promoting a coordinated, 

cooperative international regulatory framework for swaps. However, the Commission’s ability to

fulfill that goal will be limited without the requested funding, resulting in delays in evaluating further 

requests for substituted compliance and proactively engaging with foreign regulators and 

international organizations.

Another essential component of the Commission’s registration and compliance activities is the 

compliance oversight of NFA’s activities as an SRO. Such compliance oversight is necessary to ensure 

that NFA’s activities with respect to registration, enforcement, and examinations, among other things, 

fulfill its responsibilities under the CEA. Such activities directly impact the protection of customers 

and the proper functioning of the marketplace. Without adequate funding, the Commission’s 

compliance oversight activities relating to NFA will be limited.

The lack of adequate funding also will impair the Commission’s ability to further implement data,

systems, and processes that will improve the Commission’s compliance oversight of SDs, MSPs, 

FCMs, and other intermediaries, including with respect to compliance with such requirements as the 
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 17

Volcker Rule. Without adequate funding, enhancements to the Commission’s regulatory portal and 

business process automation will be delayed or deferred, reducing the effectiveness of Commission 

staff and the transparency of the compliance review process.
FY 2016 President’s Budget

Mission Activities─Registration and Compliance 18

Breakout of Registration and Compliance Request 

12 

FTE

Salaries and 

Expenses

($000)

IT13

($000)

Total

($000)

Clearing and Risk 6 $1,653 $0 $1,653

Data and Technology 0 0 1,575 1,575

General Counsel 3 842 0 842

Market Oversight 24 6,055 0 6,055

Swap Dealer and Intermediary Oversight 30 7,682 0 7,682

Total 63 $16,232 $1,575 $17,807

Table 6: Breakout of Registration and Compliance by Division

Clearing and Risk

9 %

Data & Technology

9 % General Counsel

5 %

Market Oversight

34%

Swap Dealer & 

Intermediary Oversight

43%

Figure 5: Registration and Compliance Request by Division

 

12 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

13 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─Product Reviews 19

Product Reviews

Resource Overview 

 

 

Mission Activity Description 

The Commission reviews new product filings by exchanges as well as no-action letters related to such 

product issues. The CFTC’s scope of work includes reviewing new futures, options and swap contract 

filings, reviewing contract amendment submissions, reviewing foreign stock index futures, and 

developing new rules and policies to accommodate innovations in the industry. The focus is primarily 

on verifying that derivatives contracts are not readily susceptible to manipulation or other price 

distortions, and that contracts are subject to appropriate position limits or position accountability 

standards. The Commission implemented a procedure that assigns greater review priority to contracts 

that have achieved certain thresholds of trading volume and open interest. 

The Commission has the responsibility to review aggregate position limits for physical commodity 

derivatives. The Commission establishes uniform position limits and related requirements for all 

economically-equivalent derivatives across trading venues. Thus, in accordance with the Dodd-Frank 

Act, the Commission proposes rules to establish Federal position limits for specified core 

commodities and reviews periodically those Federal limits.

The Commission also evaluates transaction and pricing data collected by SDRs to determine 

appropriate block trade and large notional swap threshold levels that registered SEFs, DCMs, and 

market participants may use to delay public reporting of swap transaction data. The Commission also 

evaluates market data and contract characteristics to determine whether a swap contract should be 

subject to mandatory clearing and whether it is listed on a DCM or SEF and been “made available to 

trade.” Transactions in contracts that have been “made available to trade” must be conducted on a 

DCM or SEF.

Additionally, the Commission reviews whether these new products are suitable for clearing by DCOs 

and, with respect to swap contracts, whether they should be mandated for clearing.

Industry Trends and Emerging Issues 

One of the most significant trends that affect the Commission’s ability to carry out its regulatory 

duties with respect to product review is the speed with which exchanges list new products, and the 

diversity of commodities underlying those products. For example, from FY 2012 to FY 2014, the 

number of contract certifications received from DCMs and SEFs increased from 894 to 1,088, an 

increase of more than 20 percent and we expect increases to continue into FY 2016. Exchanges, 

looking to gain a competitive advantage in the marketplace, are more often seeking to develop both 

novel products as well as contracts intended to compete directly with contracts listed on competitor’s 

platforms. This influx of new product listings is expected to further tax the exchange’s and 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $5,574,222 $5,460,241 $6,387,650 +$927,409

FTE 22 22 23 +1
FY 2016 President’s Budget

Mission Activities─Product Reviews 20

Commission’s staff to maintain a high quality analysis of product offerings. In addition, the 

Commission expects an influx of swaps made available to trade that will also require staff review.

New capital and uncleared margin requirements, which the Commission is currently seeking to 

finalize, will likely cause market participants to seek clearing of additional and more complex 

transactions. The proliferation of greater numbers of products by industry participants, and the 

inherently greater complexity of swap contracts, requires the Commission to keep pace with 

industry’s innovations, to evaluate whether these products are suitable for clearing by DCOs, and to 

evaluate whether they should be mandated for clearing. Additional requests for the portfolio 

margining of these complex products is also likely to reduce excess collateral needs for market 

participants.

Justification of CFTC Resource Requirements 

The FY 2016 request for $6,387,651 will support current activities and enhance the Commission’s 

capabilities related to products review and assessment of product-related rules, and enable the 

Commission to address problems that it has been unable to resolve due to limited funding.

 The Commission anticipates on-going product reviews during FY 2015 and FY 2016 as new 

contracts are created in response to changing market needs. The Commission will continue to 

review public comments and refine its position limit rulemaking. The Commission also

anticipates completing its analysis of swap data for the purpose of implementing reporting 

delays for large notional value swaps.

 In addition, the Commission anticipates that it will begin to analyze, by asset class, the 

percentage and volume of previously non-transparent swaps now cleared, the level of risk 

transfer, the potential relative movement of institutions to new financial products, and the 

implied overall credit and market risk in FY 2016 to ensure that the Commission’s regulations 

reflect an appropriate understanding of the markets and potential for systemic risk.

 Key regulatory processes supported by the CFTC regulatory portal will be fully automated and 

integrated with the electronic records and document management system. Dashboards will 

provide transparency and management visibility into the status of reviews.

Impact if Not Funded at Requested Level of Resources 

The Commission has seen a significant increase in the number of contracts filed by DCMs and SEFs, 

with the number of contract certifications increasing by more than 20 percent over the past two years, 

with a continued expectation of increases into FY 2016. If this request is not funded, many contracts, 

even those that exhibit market significance, will not be reviewed in a timely manner to ensure 

compliance with the CEA. Moreover, the Commission will be unable to fulfill its responsibilities to 

establish appropriate position limits for certain physical commodities, determine appropriate large 

notional/block sizes for swaps, or properly evaluate whether certain swaps should be subject to 

mandatory clearing on a DCO and mandatory trading on a DCM or SEF.

To the extent that resources are unavailable to review product innovations and their related impact on 

margin methodology at DCOs, market participants will bear the burden of delays, or inability to 

complete, reviews of new products for clearing or trading, and new margin methodologies will take 

longer to be evaluated. Market participants will see increased margin and capital charges as a result 

of the lack of clearing or inefficient margin methodologies, and systemic risk that may otherwise have 

been minimized through clearing could increase. Liquidity of trading and product choice may also be 

adversely impacted. 

Enhancements to the CFTC regulatory portal and business process automation will be delayed or 

deferred, reducing the effectiveness of staff and the transparency of the review process, and require 

continued use of manual paper-based processes.
FY 2016 President’s Budget

Mission Activities─Product Reviews 21

Breakout of Product Reviews Request 14 

FTE

Salaries and 

Expenses

($000)

IT15

($000)

Total

($000)

Clearing and Risk 6 $1,592 $0 $1,592

Data & Technology 0 0 525 525

General Counsel 2 561 0 561

Market Oversight 15 3,710 0 3,710

Total 23 $5,863 $525 $6,388

Table 7: Breakout of Product Reviews by Division

Clearing and Risk

25%

Data & Technology

8 %

General Counsel

9 %

Market Oversight

58%

Figure 6: Product Reviews Request by Division

 

14 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

15

 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─Surveillance 22

Surveillance

Resource Overview 

 

 

Mission Activity Description 

The Commission performs market surveillance and financial and risk surveillance, supported by 

business analytics.

Market Surveillance. The Commission monitors trading and positions of market participants on an 

on-going basis. Commission staff screen for potential market manipulations and disruptive trading 

practices, as well as trade practice violations. 

Market oversight and surveillance activities are dependent on the ability to receive and load large 

volumes of data, coupled with the development of sophisticated systems to analyze that data and 

respond to outlying events or help identify trading or positions that warrant further inquiry. The 

combination of analysis of available data sets and Special Call authority leads to an understanding of 

market activities and possible violations of the CEA. It is anticipated that through the collection of 

shared data sets, including swaps data that is maintained at SDRs, the Commission will have the 

unique and essential ability to aggregate data received by all market participants by continuously 

improving data ingest, warehousing, and analytics systems and tools and implementing new systems 

and tools as needed or as innovative technology is adopted by industry participants. This ultimate 

aggregation will give the Commission a more encompassing view of futures, options and swaps 

transactions, which will, in turn, allow the Commission to conduct participant level surveillance for 

violations and abuses across markets. This capability is particularly important with the expansion of 

the Commission’s mandate in the disaggregated swaps markets, as market participants may have 

swaps data residing in multiple SDRs, and multiple DCOs. The increased complexity of swap 

instruments (versus futures and options) as well as the increased velocity of trading across these 

various instruments and trading venues makes it essential that the Commission have sufficient tools 

and resources to view data across the industry landscape in order to detect and deter market 

manipulation and disruptive trading practices. 

Market surveillance monitoring is conducted to further understand structural market changes and 

support new regulatory requirements. Surveillance systems and tools will incorporate innovative 

surveillance approaches developed by staff into scheduled, regularly-run monitoring processes.

Financial and Risk Surveillance. Staff conducts risk and financial surveillance of DCOs, clearing 

FCMs, and other market participants, such as SDs, MSPs, and large traders, that may pose a risk to 

the clearing process. 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $35,937,603 $56,501,694 $62,429,488 +$5,927,794

FTE 113 121 163 +42
FY 2016 President’s Budget

Mission Activities─Surveillance 23

As part of its financial and risk surveillance activities, the Commission is working to establish a 

specialized program to assess capital and margin models, both on an initial and ongoing basis, as part 

of the Dodd-Frank Act requirement to establish and implement margin and capital requirements for 

SDs and MSPs. The program would seek to leverage to the extent practicable, reviews and 

assessments performed by the prudential regulators, the Securities and Exchange Commission (SEC), 

and foreign regulators, and would include coordinating efforts with SROs. 

Financial and risk surveillance technology allows identification of large traders whose positions may 

pose financial risk to the industry or a clearing firm, analyze an owner’s holdings and project the 

effect of market moves on these holdings, perform “what if” stress testing and risk scenarios to 

determine the effect of market movement on margin, and evaluate overall portfolio risk under 

different market conditions. Financial and risk surveillance technology also allows monitoring FCMs 

by storing and analyzing monthly financial statements and annual reports provided to the 

Commission to report net capital positions and other financial information. 

Enhancing CFTC’s financial analysis tools is critical, as the Commission will be the only financial 

regulator that will be able to aggregate and evaluate risk across all DCOs. Each DCO’s view of risk is 

limited to market participants clearing at that DCO. Many market participants will have positions at 

multiple DCOs in more than one asset class. The Commission is enhancing its futures-specific risk 

surveillance program to include the ability to stress test positions in swaps for market participants 

and DCOs. These financial analysis tools, coupled with analysis of the swaps data that is maintained 

at SDRs, will also be used as part of oversight and reviews of FCMs and swaps dealers’ risk 

management controls.

Business Analytics. CFTC also maintains a business analytics platform that supports market 

surveillance and financial and risk surveillance. Platforms allow staff analyzing regulatory reporting 

and industry data to keep pace with the continuing growth in data volume and complexity and 

rapidly evaluate data, build specific work products for unique market and participant conditions, and 

develop innovative approaches to ongoing market and financial and risk monitoring.

Industry Trends and Emerging Issues 

The implementation of the Dodd-Frank Act has increased the Commission’s surveillance 

responsibilities beyond the existing futures mandates to encompass oversight of new more complex 

products, product platforms, and registrants. As the market participants adapt and adjust to the fluid 

regulatory environment and develop technology based trading practices, the Commission’s 

understanding of new, more complex and sophisticated trading methods and technologies, as well as 

the interaction of physical and financial trading tools, is of paramount importance. Surveillance staff, 

in order to protect market integrity, must have access to a broad array of regulatory and market data 

and state-of-the-art technology. The Commission also continues to intensify surveillance efforts to 

protect against systemic risk and potential threats from market shocks or cybersecurity attacks.

The Dodd-Frank Act requires the Commission to adopt regulations imposing capital requirements on 

SDs and MSPs that are not subject to regulation by a U.S. prudential regulator. The Dodd-Frank Act 

also requires the Commission to adopt regulations setting minimum margin requirements for 

uncleared swap transactions that are entered into by SDs and MSPs that are not subject to margin 

rules of a U.S. prudential regulator. There currently are over 100 provisionally registered SDs and 

MSPs, and approximately 60 of these entities will be subject to the Commission’s capital and margin 

rules, as such SDs and MSPs are not subject to the capital or margin rules of a U.S. prudential 

regulator. Establishing capital and margin requirements is a central element for the Commission to 

achieve its regulatory objectives of reducing risks posed by swap transactions that are not centrally 

cleared and reducing overall system risk. 

The Commission has proposed capital and margin rules for SDs and MSPs, and market participants 

have identified their ability to use internal capital and margin models as a critical issue of the 

proposals. Accordingly, the CFTC will seek to leverage the SD and MSP model reviews performed by 

domestic and foreign prudential regulators to the extent that such reviews covered the models used by 

the SDs and MSPs that are subject to the Commission’s jurisdiction. In addition, the Commission will 
FY 2016 President’s Budget

Mission Activities─Surveillance 24

work with the NFA to review models of other SDs and MSPs that have not had their models reviewed 

by prudential regulators. 

Justification of CFTC Resource Requirements 

The FY 2016 request for $62,429,488 will support the Commission’s activities related to surveillance. 

Additional funding is requested in light of the vastly expanded surveillance needs with the increase in 

the Commission’s responsibilities under the Dodd-Frank Act and the limited resources that have been 

available to those activities. The funding will, among other things, enable the Commission to begin 

regular surveillance of futures order message data to increase the scope of futures and cross-market 

surveillance; for increased data extraction, transformation, and loading to support a more 

encompassing view of futures, options, and swaps transactions; for increased data analytics support 

services to assist in the development and operationalization of innovative surveillance approaches; to 

enhance position limits monitoring systems; and to support the operations, maintenance, and 

incremental enhancement of market financial and risk surveillance systems and tools implemented to 

date.

Market Surveillance. The Commission anticipates building additional automated surveillance tools,

and enhancing current tools, to adjust to evolving market dynamics and adopt state-of-the-art 

technology. As trading across the world’s marketplaces has moved almost entirely to electronic 

systems, the Commission must engage in substantial upgrades to its capabilities to handle 

unprecedented volumes of transactions in inter-related markets. 

Staff will integrate the information in the swaps database with that currently held in the 

Commission’s futures and options database. In so doing, staff will be better able to track the positions 

of traders for the purpose of enhancing market surveillance of large traders as well as enforcing 

position limits. Case management technology will be enhanced continually and applied in all mission 

areas, including market surveillance. Automating integration between regulatory mission activities 

will improve workflow, increase re-use of information, improve situational awareness and 

coordination, and increase the ability of staff to correlate data and events. Staff will make use of newly 

available technologies to blend data from different data sources, such as futures and swaps position 

data, trade execution data and order data, and develop new methods to analyze trading within and 

across products and markets. Proof of concepts innovated by staff will be operationalized, enhanced, 

and adapted over time to address evolving market conditions. Best practices will be shared across 

CFTC market, financial and risk surveillance programs.

Staff will gather and analyze trade data from SEFs, SDRs and DCMs, and the Commission will work 

with DCMs and SEFs to collate order book data, develop a database to store this data and develop 

tools to analyze this data and integrate it with trade data. Similarly, staff will work with SEFs to 

develop data standards and protocols to collate both trade and order book data, and develop tools to 

analyze this data.

Financial and Risk Surveillance. The Commission’s financial and risk surveillance technology has 

been predominantly applied to futures and options on futures products. The Commission will 

continue to update existing and introduce new financial and risk surveillance technology to expand 

data intake, surveillance, analysis, and reporting. 

The Commission will implement a SD capital and margin modeling program. The modeling program 

is a process for the review and ongoing assessment of models through a program of coordination with 

the prudential regulators, SEC, SROs, and foreign regulators.

Systems will support the identification and aggregation of related market participants across DCOs. 

The Commission will enhance tools to back test and evaluate sufficiency of all material product and 

portfolio margin requirements; monitor firm level variation and initial margin requirements across 

DCOs; evaluate the risk of market participants positions held at multiple FCMs or DCOs; and 

combine cleared and bilateral positions to obtain a more complete picture of a clearing firm’s risk.

Risk surveillance staff currently receive large amounts of new margin data from DCOs each day. The 

data includes variation margin and initial margin for house accounts and customer accounts. Risk 
FY 2016 President’s Budget

Mission Activities─Surveillance 25

surveillance staff are using financial and risk surveillance systems and data analytics platforms to 

develop methods that allow each risk analyst more flexibility to view the data in multiple ways and 

improve risk assessment.

The Commission is increasing the resources available to review new DCO margin models and changes 

to existing margin models. Many DCOs clear the same asset class. Each uses its own margin model to 

calculate margin requirements. In some instances the requirements for the same positions will not be 

the same at multiple DCOs. Risk surveillance staff compare and contrast these models in order to 

analyze differences and to ensure appropriate coverage. 

Risk surveillance is increasing the amount of data extraction and loading of futures, options on 

futures and swaps positions. Risk surveillance is also increasing the related data analytics support 

services. In addition to these new efforts, risk surveillance will be performing continuing maintenance 

and enhancements on existing systems. 

Business Analytics. The Commission will be able to improve its ability to conduct market 

surveillance, financial and risk surveillance, investigations, and economic analysis by expanding the 

use of its high-performance computing platform, continuously enhancing that platform, and applying 

state-of-the art technology for big data. With the investment in a high-performance computing 

platform, staff will be able to more quickly, and effectively analyze very large datasets, cross-correlate 

very large datasets, conduct market reconstructions and simulations, and conduct financial and risk 

models and assessments. This type of advanced technology will allow staff to begin surveillance of 

high-frequency trading that is currently unavailable using existing technology. Technology 

enhancements must keep pace with the increasing amount and complexity of the data. Staff must be 

able to rapidly analyze the increasing sophistication of surveillance algorithms.

To effectively accomplish its mission, the CFTC must adapt to frequent and innovative changes in the 

derivatives markets, implementation of new Commission rules, increasing use of technology and 

growing market complexity. The Commission will extend its data ingestion and analysis framework 

to manage market and NFA data as it evolves with the industry and to make greater use of pre-trade 

and non-regulatory data. The existing framework will continue to be leveraged and built upon to 

provide services that multiply the effectiveness of staff, accomplishing integration between futures 

and swaps data, NFA data, and increased integration of CFTC systems and processes for monitoring 

registered entities, market and financial risk, market integrity, trade practice; and conducting 

enforcement and economic analysis. This framework will include an expansion of the CFTC portal to 

accommodate new and existing data submissions. 

The CFTC will reinforce common data standards and services among the SDRs to ensure data 

interchange and interoperability. The CFTC will also establish and maintain a unified set of master 

and reference data using legal entity identifiers as a linchpin. The Commission will seek to increase 

the use of data feeds from industry and government system-based data services in order to reduce the 

latency between market events and staff ability to analyze correlated data from diverse sources.

Data analytics platforms and high-performance computing technology will be enhanced by developing 

flexible dashboards to increase dynamic visibility into key sets of data. Additional data aggregation 

methods will also be established and refined. CFTC data storage will be expanded to handle the 

continuing growth of analytical data. High-performance computing infrastructure will be scaled to 

meet demand. Secure, private cloud services will be implemented to ensure future scalability and to 

cost-effectively support largely-fluctuating ingest volumes.

Impact if Not Funded at Requested Level of Resources

Market Surveillance and Related Business Analytics. Without adequate funding, the Commission

will be significantly impaired in its ability to analyze both traditional and new sources of market data, 

and will possess a limited ability to develop deep expertise over a broad spectrum of commodity 

instruments. As a result, the Commission will be unable to analyze market anomalies or detect and 

analyze potential market abuses sufficiently, or develop and implement sophisticated analytic

surveillance tools to the extent necessary to guard against market abuses. The Commission likewise 
FY 2016 President’s Budget

Mission Activities─Surveillance 26

will be unable to invest in and deploy an automated trading violation and surveillance alert system 

and other sophisticated analysis-based surveillance tools, which are essential to fulfill the 

Commission’s surveillance responsibilities over a marketplace that continues to grow in both size and 

complexity. Additionally, the Commission will continue to be limited in its capabilities with respect to 

potential threats from market shocks and cybersecurity attacks.

Pursuant to the Dodd-Frank Act, the volume of data to be reported to and analyzed by the 

Commission in the course of its surveillance activities has increased dramatically, requiring the 

Commission to aggregate the vast amount of data from multiple industry sources (i.e., DCM, SEFs, 

and DCOs), and from multiple markets (i.e., futures, exchange-traded swaps, and bilaterally-executed 

swaps). Without the requested level of funding, the Commission will be extremely limited in its ability 

to ensure that the data reporting requirements are properly structured to facilitate proper market 

surveillance, and that the Commission will be able to fulfill its obligations to promote transparency 

and monitor for risk. The lack of a comprehensive understanding of market events and participant 

trading behaviors, caused by a lack of adequate funding of the Commission’s surveillance activities, 

will significantly increase the likelihood that major market risks or illegal activities will go undetected,

thereby significantly increasing the costs to be borne by other market participants and the broader 

U.S. economy.

Historic underfunding of the surveillance function has dramatically and adversely impacted or 

compromised the Commission’s ability to protect market integrity and to detect and deter 

manipulation within the futures space. Surveillance mandates had increased prior to Dodd-Frank Act 

legislation. The Commission expects the increased requirements throughout FY 2015 and continuing 

into FY 2016. If adequate funding is not received, the CFTC will be required to abandon forensic 

evaluations, postpone surveillance tool development, and provide surface-only examination of swaps 

data for potential abuses. Technology acquisition is only a partial solution to assist in identifying 

potential problems.

Financial and Risk Surveillance and Related Business Analytics. The importance of comprehensive 

and robust surveillance of DCOs cannot be understated, and is critical to minimizing systemic risk. In 

recent years, following the enactment of the Dodd-Frank Act, the role of DCOs has continued to 

increase, as standardized swap contracts have been cleared by market participants with increasing 

frequency. If the Commission is not funded at the requested level, it will not have the resources to 

adequately enhance systems, tools, and models and efficiently perform analytics to evaluate initial 

margin and variation margin across DCOs, clearing firms and large traders. Several DCOs clear the 

same asset class, many clearing firms clear at multiple DCOs, and many large traders have positions 

at multiple DCOs. Being able to evaluate the entire risk picture—across multiple asset classes, DCOs, 

clearing firms, and large traders—is crucial to the Commission’s efforts to minimize systemic risk.

Each large DCO has recently either developed a new margin model or enhanced an existing margin 

model. These margin models are very complex, and analysis of them involves complex mathematical 

modeling and requires significant resources. Establishing a sufficient margin requirement is one of 

the first and most important lines of defense a DCO has available to cover a default, and the 

Commission has established regulations concerning margin model coverage. Without the requested 

level of funding, the CFTC’s efforts to monitor the effectiveness of these new margin models will be 

limited, and the Commission will be unable to conduct an adequate amount of stress testing and back 

testing to properly evaluate the performance of margin models. The Commission also will be unable 

to regularly conduct hypothetical default exercises, which would enhance the Commission’s review of

the adequacy of the margin models and default procedures of DCOs, and facilitate the development of 

best practices. 

Without the requested funding, the Commission will be unable to complete with sufficient frequency 

its reviews of clearing members that are registered as FCMs or SDs, which increases the risks to the 

DCOs as a whole. For example, the Commission will not be able to make sufficient reviews of

compliance by FCMs with risk management standards of Regulation 1.73, or by SDs with risk 

management standards of Regulation 23.609. Furthermore, without adequate funding, the 

Commission will be unable to develop an effective program to oversee the use of margin and capital 

models by SDs and MSPs.
FY 2016 President’s Budget

Mission Activities─Surveillance 27

Additionally, without the requested funding the Commission will be prevented from providing staff 

with access to the full scope of data and the use of up-to-date technology systems, high-performance 

computing platforms, and tools required to efficiently conduct both market and financial and risk 

surveillance, and the Commission will continue to be limited in its capabilities with respect to 

potential threats from cybersecurity attacks.
FY 2016 President’s Budget

Mission Activities─Surveillance 28

Breakout of Surveillance Request 16 

FTE

Salaries and 

Expenses

($000)

IT17

($000)

Total

($000)

Clearing and Risk 26 $6,930 $0 $6,930

Data and Technology 47 9,442 23,806 33,248

Market Oversight 86 21,234 0 21,234

Swap Dealer and Intermediary Oversight 4 1,017 0 1,017

Total 163 $38,623 $23,806 $62,429

Table 8: Breakout of Surveillance by Division

Clearing & Risk

11%

Data & Technology

53%

Market Oversight

34%

Swap Dealer & 

Intermediary 

Oversight

2 %

Figure 7: Surveillance Request by Division

 

16 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

17

 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─Examinations 29

Examinations

Resource Overview 

 

 

Mission Activity Description 

Examinations are formal, structured reviews of regulated entities’ operations or oversight programs to 

assess on-going compliance with statutory and regulatory mandates. Regular examinations, in concert 

with the Commission’s surveillance and other activities, are a highly effective method for ensuring 

that entities are complying with the core principles established in the CEA and Commission 

regulations. This mission activity covers both direct examinations performed by Commission staff and 

oversight of the examinations by the SROs and DSROs. The CEA requires examinations of market 

structures such as DCMs, DCOs, SEFs, and SDRs, as well as intermediaries like FCMs, CPOs, 

commodity trading advisors (CTAs), introducing brokers (IBs), SDs, and MSPs. It also requires 

oversight of the examinations and functions performed by the SROs.

Industry Trends and Emerging Issues 

The Commission has struggled to provide robust examinations and oversight in the face of extensive 

change in the markets and in its responsibilities over the past few years. 

The Commission must examine DCMs and the other entities for which it is responsible for system 

safeguards, which includes market continuity planning and rule enforcement. While examinations by 

the Commission’s Division of Market Oversight were previously limited to DCMs, this division now 

must also examine SEFs and SDRs. Moreover, SEFs present an array of different trading models, 

requiring both additional time and training to understand. SDRs present new industry functions that 

must be adequately addressed in examinations. Both require appropriate resources for the greater 

number and complexity of examinations. 

Similar challenges are faced in the Commission’s oversight of DCOs, which has greatly expanded, both 

as a result of legislation and changes in DCO activities and memberships. The DCOs are holding 

substantial amounts of collateral that have been deposited by clearing members and their customers, 

creating increased urgency in ensuring that DCOs are complying with customer protection rules. 

Both clearing members and their customers are aware of these facts, and want the DCOs to be 

rigorously supervised, which is difficult with the current level of funding. 

More frequent examinations are required for DCOs that wish to be treated as “qualifying CCPs” for 

bank capital purposes in order to lower costs to member institutions. These qualifying CCPs must 

meet the same requirements as CCPs that have been designated by the FSOC as systemically 

important entities. As such, qualifying CCPs should be fully examined once each year. The additional 

staff would enable the Commission to examine qualifying CCPs and other DCOs on a more timely 

basis. It also would permit the Commission to complete reviews of new DCO applications within the 

180 days prescribed by regulation. Finally, the Commission must engage with domestic regulators for 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $24,212,982 $28,676,242 $35,364,712 +$6,688,470

FTE 93 114 135 +21
FY 2016 President’s Budget

Mission Activities─Examinations 30

systemically important DCOs and with foreign regulators for DCOs registered in multiple 

jurisdictions, adding complexity to the oversight responsibilities. While the Commission leverages the 

resources of other supervisory agencies when conducting joint exams to the greatest extent possible, 

other supervisors look to the Commission to lead examinations for DCOs based in the United States. 

Additionally, technology represents significant challenges for all registrants, both from cybersecurity 

threats and market structure issues. Commission staff must be able to respond quickly as threats arise 

to better understand and mitigate such threats. This is particularly critical for DCMs and DCOs, and 

other critical elements of market infrastructure, as well as for FCMs and SDs, where vulnerability to 

cybersecurity attack represents a significant threat to the markets. Similarly, the increased complexity 

of automation through the order and trade life-cycle will require a similar ability. In FY 2014, staff 

responded to multiple major cybersecurity incidents and a greater number of other cybersecurity 

incidents at DCMs, DCOs, and SDRs, lessening staff ability to meet other examination 

responsibilities. We expect this trend to continue, and perhaps increase in FY 2015 and FY 2016.

Extensive change in the marketplace over the past few years likewise has impacted the Commission’s 

ability to conduct robust examinations of SDs, FCMs and other intermediaries. While the mission of 

the Commission has been expanded by legislation, the recent failures of FCMs highlight the increased 

challenges faced even in its traditional role as regulator of the futures markets.

The risk profiles of FCMs and intermediaries registered with the Commission has increased, with 

profitability reduced due to increased technology and compliance costs, low volatility, and low 

interest rates, all resulting in increased risk to customers. The higher risk profile of primary market 

participants increases the need for the Commission to focus on monitoring registrants to help ensure 

industry risks are managed effectively. This requires the Commission to ensure that examinations of 

FCMs and SDs are more risk-sensitive and focused on the key risks facing the industry and protecting 

customers. Moreover, DCMs and DCOs have now de-mutualized and are being managed as profitmaking entities. These factors, combined with the need to examine many more entities, such as SDs, 

SEFs, and SDRs, have created the need for a substantial increase in the Commission’s resources for 

examinations. 

The Commission must examine FCMs and SDs to review whether they employ effective risk 

management techniques, have appropriate compliance monitoring, and retain adequate levels of 

liquidity, in an effort to protect the over $240 billion of customer funds held by these registrants. 

However, the complexity of the firms, increased sophistication of technology, the advent of 

heightened risk events related to cybersecurity, business continuity, liquidity issues, complex and 

global financial structures, and anti-money laundering have made proactive examinations even more 

critical.

In light of recent events surrounding the financial difficulties of Registered Foreign Exchange Dealers 

(RFEDs), following high volatility related to the Swiss franc, the Commission should also review 

whether its rules for RFEDs are sufficient to protect retail customers. Given that the RFED rules have 

been in place for almost five years, it would be timely for the Commission to review the protections for 

those engaging in retail foreign exchange transactions.

Justification of CFTC Resource Requirements 

The FY 2016 request for $35,364,712 will substantially improve the Commission’s examination 

activities and address historical underfunding problems.

While this staff is augmented in some areas by staff of the National Futures Association (NFA) or an 

SRO, the staff has primary responsibility for examining Commission registrants and overseeing the 

activities of the NFA and SROs. 

 The Commission currently has 14 DCMs, over 20 SEFs and four SDRs that it seeks to fully 

examine on a regular basis, with those which are deemed most significant on an annual basis 

and others on a two or three year cycle. Examinations cover a wide range of areas including 

system safeguard examinations to address business continuity and disaster recovery plans 
FY 2016 President’s Budget

Mission Activities─Examinations 31

and cybersecurity, and reviews of market integrity, risk management, customer protection 

and compliance with other regulations. To date, the Commission has not been able to meet 

even this frequency of examinations, which is necessary to regulate the integrity of the 

markets. Moreover, these same staff are active participants on SEF registration teams, must 

perform rule enforcement reviews discussed below, and make time to respond to market 

halts, automated system issues, cybersecurity incidents or other irregular occurrences that 

require immediate response. 

 Rule Enforcement Reviews (RERs) of DCMs and SEFs (and eventually fully registered SEFs) 

play an essential role in protecting futures and swaps market participants from market 

manipulation, fraud, and other market abuses. RERs examine DCM and SEF staffing to 

ensure it is adequate for performing required self-regulatory functions and compliance with 

statutory and regulatory requirements relating to audit trail, trade practices and market 

surveillance, and disciplinary programs. The Commission projects that the number of SEFs 

will grow by the end of 2016. Examinations will require additional staff with expertise to 

complete annual exams of these new entities in addition to DCMs and SEFs.

 SDRs accept and maintain swap data and make such data available to regulators in order to 

provide systemic risk mitigation, transparency, and market supervision. Availability and 

maintenance of swaps data is essential to the Commission’s surveillance function. In addition, 

reliable and accurate swaps data mitigates systemic risk for the nation’s financial sector as a 

whole. Examinations of SDRs will be instrumental in improving swap data quality reported to 

the Commission and made available to the public. The focus of SDR reviews will be on 

compliance with system safeguard rules, including business continuity and disaster recovery, 

various swap data reporting rules and the ability to adhere to various obligations, duties, and 

core principles. 

 The Commission’s examination expertise will be expanded to examine registrants’ 

compliance with emerging risks in information security, especially in the area of 

cybersecurity. System Safeguards Examinations of DCMs, SEFs, SDRs, and DCOs are an 

essential part of the Commission’s examinations program. Sophisticated computer systems 

and technical expertise are crucial to the ability of DCMs, SEFs, DCOs, and SDRs to conduct 

trading in, clear transactions for, and provide data concerning markets that are vital to the 

U.S. economy. The financial sector faces heightened operational risk from cybersecurity 

threats and market incidents. The Commission has an urgent need to be able to respond 

promptly when cybersecurity attacks or system malfunctions disrupt or threaten DCMs, 

SEFs, DCOs, or SDRs.

 The Commission currently lacks sufficient resources to examine all of the DCOs for which it is 

responsible on a reasonable schedule, or even the subset of DCOs that have sought to qualify 

as qualifying CCPs. Examinations of DCOs’ compliance with the core principles and 

implementing regulations will necessitate the need for new automated tools that will aid in 

the evaluation of compliance with these new regulations. Moreover, Commission staff expects 

the number of DCOs to grow by FY 2016.

 The Commission has limited FTE resources devoted to examinations of the 14 clearing 

organizations. The Commission has sought to add additional FTE to its examination staff in 

FY 2015 and is in need of additional FTE in FY 2016 to increase the total number of 

examiners that would be devoted to all clearing organizations.

 Examinations of FCMs, SDs, MSPs and RFEDs to assess compliance with risk management 

and chief compliance officer regulations, as well as liquidity, capital, segregation, technology, 

and financial reporting requirements, protect markets from systemic risk and customers from 

loss. Examinations performed will include “for cause” reviews, limited scope reviews and 

horizontal reviews that may target specific aspects of registrant operations (e.g., information 

technology risks, anti-money laundering controls, etc.). Additional resources would enable 

the Commission to increase its technology and risk management staffing, which would greatly 

enhance the Commission’s ability to monitor firms on these critical issues.
FY 2016 President’s Budget

Mission Activities─Examinations 32

 The Commission has limited FTE resources devoted to examinations of nearly 75 FCMs, 

seven RFEDs, 105 SDs, two MSPs, and approximately 1,800 CPOs, 2,600 CTAs, and 1,500

IBs, as well as oversight of the SROs and their examination functions. The Commission seeks 

to add staff to this function for FY 2016, which would enable it to come closer to meeting its 

goals in terms of coverage. 

 Examinations of FCMs, SDs, MSPs and RFEDs to assess compliance with risk management 

and chief compliance officer regulations, as well as liquidity, capital, segregation, technology, 

and financial reporting requirements, protect markets from systemic risk and customers from 

loss. Examinations performed will include “for cause” reviews, limited scope reviews and 

horizontal reviews that may target specific aspects of registrant operations (e.g., information 

technology risks, anti-money laundering controls, etc.). Additional resources would enable 

the Commission to increase its technology and risk management staffing, which would greatly 

enhance the Commission’s ability to monitor firms on these critical issues.

 Enhanced audit systems and software tools could be used to monitor registrant financial and 

non-financial activities as well as regulatory notices filed with the Commission. This would 

include the use of dashboards to monitor individual firms, analyze peer groups, and industry 

trends for potential increased risk; and provide additional analytic and assessment 

capabilities. The Commission currently does not have the ability to obtain or perform these 

functions, and resources are requested to alleviate this issue. 

 The Commission also has responsibility to assess and validate the DSRO’s and NFA’s 

oversight of FCM and SD compliance with the CEA and applicable SRO rules and 

Commission regulations, including business conduct, capital, margin segregation 

requirements, and risk management standards. While these organizations can enhance the 

Commission’s capacity, oversight is critical to ensure that these functions are performed 

properly. 

 The Commission, in coordination with the NFA, will put in place a base examinations 

program for SDs/MSPs that, while similar in many respects to the examinations of 

FCMs/RFEDs, will be specifically tailored to address the business operations, internal 

controls, risks and compliance requirements of these new registrants. It is important to note 

that, unlike the roughly 82 FCM/RFED registrants that the Commission already examines, a 

significant portion of the SDs that will be subjected to examinations have had no prior 

connection to the CFTC’s regulatory regime. As such, we anticipate that these firms will 

require additional advisory support and more detailed examinations review to both assess

their compliance and assist in any remediation efforts when issues are identified.

 The CFTC’s intermediary examinations program (much like its legal compliance operations) 

will increasingly leverage and integrate financial and business data points from a greater 

variety of sources to enhance the effectiveness of its reviews and confirm/validate registrant 

compliance. For example, as SD trade data reporting is better harmonized among the four 

SDR entities, the SD examinations program can use this information to enhance its ability to 

readily monitor registrant business risk. 

 Absorbing significant increase in examinations responsibilities since the enactment of the 

Dodd-Frank Act, generated by the Commission’s number of primary intermediaries (i.e.,

increasing from approximately legacy FCMs/RFEDs to a combined total of almost 200 

FCM/RFED and SD/MSP registrants) requires a significant investment in new staffing 

resources. In addition, the Commission’s use of new data streams to better guide 

examination assessments and the expansion of registrant business and risk management 

areas to strengthen and enhance industry situational awareness also have workload 

ramifications since these enhancements add to review complexity and in certain cases require 

additional specialized knowledge, training, time and manpower to perform. 

 The Commission will perform SD/MSP on-site reviews, review and monitor registrant 

reporting, coordinate with the NFA on matters of mutual interest, and supplement the 
FY 2016 President’s Budget

Mission Activities─Examinations 33

Commission’s efforts to develop more comprehensive examinations products by testing and 

validating additional aspects of registrant operations and related risks.

 The Commission will continue efforts to design and implement examinations processes and 

procedures to address a wider range of registrant business operations and related risks. For 

example, the CFTC will seek to cover important issues such as registrant business continuity 

plans (in the wake of natural or manmade disasters), anti-money laundering detection 

processes, and place additional emphasis on testing the firm’s governance structure and its 

ability to continuously review and update internal controls.

 Automating integration between registration and review, market and trade practice 

surveillance, financial and risk surveillance, examination, and enforcement activities will 

result in a reusable data sources, improve workflow, increase re-use of information, improve 

situational awareness and coordination, and increase the ability of staff to correlate data and 

events.

Impact if Not Funded at Requested Level of Resources 

The Commission will be limited in its ability to perform examinations of its registered entities if 

additional funding is not received. 

If the requested funding level is not received, the Commission’s ability to conduct examinations of 

DCMs, SEFs, and SDRs, including System Safeguards Examinations will be reduced. Further, staff 

may have a reduced ability to work proactively to consider and help reduce or mitigate threats to 

market integrity and customer protection in the long term. The examinations would focus on a subset 

of entities, a subset of core principles and Commission regulations, or both. A reduction in the 

number of planned examinations conducted or the subject areas reviewed will be detrimental to the 

self-regulatory system established by the CEA, which relies on Commission oversight of regulated 

entities to ensure that markets operate fairly, effectively, and efficiently. 

The Commission also will be hampered in its ability to fulfill its DCO oversight responsibilities to 

perform examinations in as comprehensive and thorough a manner as would be optimal if it does not 

have adequate resources. For example, each DCO should be subject to an in-depth, targeted 

examination on a regular basis. However, currently, the Commission only has capacity to examine two 

systemically-important DCOs annually. Other DCOs are examined less often, as resources permit, and 

for these DCOs the Commission relies on review of DCO rule changes, daily risk surveillance, analysis 

of periodic financial reports, and DCO self-reporting.

Due to the increase in swaps business at DCOs, the amount of collateral on deposit is growing at 

DCOs. The Commission is hampered in its ability to review policies, procedures and reconciliations 

regarding how collateral is handled for the customers of clearing members. The public would benefit 

from an increase in this activity to aid in identifying if customer property is not being handled 

appropriately. The four largest DCOs were holding approximately $300 billion in clearing member 

collateral, both customer and house.

The Commission must possess the expertise and skills to evaluate compliance with the regulations 

and must have enough staff to perform due diligence during examinations. Lack of resources will 

cause the Commission to fall short of meeting its responsibilities under the CEA. Additionally, if the 

Commission is not able to perform frequent examinations for DCOs seeking treatment (for bank 

capital purposes) as qualifying CCPs, it will likely have an impact on a DCO’s ability to qualify as a 

CCP. If the DCO is not able to qualify, there will be an increase in capital charged to its bank clearing 

members, thus making it more costly to do business in the United States.

If the level of funding requested is not provided, it would directly impact the Commission’s base 

capabilities for examining FCMs, SD, and MSPs at a time when these examinations are most needed. 

In this regard, insufficient funding would limit the Commission’s ability to assess FCM, SD, and MSP 

compliance with risk management and Chief Compliance Officer regulations, and as well as such 

registrants’ compliance with liquidity, capital, segregation, and financial reporting requirements. 
FY 2016 President’s Budget

Mission Activities─Examinations 34

The Commission would not have the manpower necessary to meet the anticipated high workload 

demands for the new and complex SD/MSP registrant population. In addition, the resources available 

to assess and monitor FCMs will also decrease as staff resources will be redirected to provide a 

minimal level of monitoring of SD/MSP activities. The resultant staff shortfall could impact the 

Commission’s ability to detect potential threats to customer funds and adversely impact the 

Commission’s ability to produce the more specialized and varied examination products the agency 

needs to more comprehensively address systemic and other risks that could threaten customers’ funds 

and the market at large. 
FY 2016 President’s Budget

Mission Activities─Examinations 35

Breakout of Examinations Request 18 

FTE

Salaries and 

Expenses

($000)

IT19

($000)

Total

($000)

Clearing and Risk 44 $11,624 $0 $11,624

Data & Technology 0 0 221 221

Market Oversight 23 6,006 0 6,006

Swap Dealer and Intermediary Oversight 68 17,514 0 17,514

Total 135 $35,144 $221 $35,365

Table 9: Breakout of Examinations by Division

Clearing & Risk

33%

Data & Technology

1 %

Market Oversight

17%

Swap Dealer & 

Intermediary 

Oversight

49%

Figure 8: Examinations Request by Division

 

18 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

19 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─Enforcement 36

Enforcement

Resource Overview 

 

 

Mission Activity Description 

The Commission is responsible for protecting market participants and other members of the public 

from fraud, manipulation and other abusive practices in the futures and swaps markets. Its cases 

range from quick strike actions against Ponzi enterprises that victimize investors across the country, 

to actions concerning sophisticated manipulative and disruptive trading schemes in markets the 

Commission regulates, including financial instruments, oil, gas, precious metals and agricultural 

goods. 

Industry Trends and Emerging Issues 

 The Dodd-Frank Act gave the Commission expanded responsibility for the swaps market, 

which also meant whole new categories of entities subject to Commission jurisdiction (SDs, 

SEFs and SDRs). 

 Increasing use of automated trading and high frequency trading in the markets overseen by 

the Commission requires new enforcement efforts to prevent manipulation and fraud. 

 Commission anticipates more time-intensive and inherently complex investigations due to 

innovative products and practices within the industry, coupled with new anti-manipulation 

authority in the futures and swaps markets and the statutory prohibition on disruptive 

trading. 

 In order to investigate and litigate market-wide violations, as well as those less complex but 

equally important retail fraud cases, the number of specialized enforcement experts must 

increase. The Commission further expects matters relating to the compliance, reporting, 

recordkeeping and internal controls requirements pertaining to swaps and the regulated 

entities on and through which they are traded and cleared. 

 The Commission foresees an increase in multi-jurisdictional and multi-national 

investigations given the global nature of the swaps marketplace and the challenges associated 

with substitute compliance. The Commission is also experiencing an increase in international 

enforcement investigations in its traditional markets (the most significant being the 

international benchmark rate rigging cases). These cases are expected to be more resource 

intensive due to increased demands for legal counsel and expertise in connection with multilateral initiatives such as International Organization of Securities Commissions (IOSCO) 

Committee on Enforcement and Information Sharing and G-7 initiatives.

 In addition to extending the Commission’s jurisdiction to the swaps markets, the Dodd-Frank 

Act also clarified its jurisdiction with respect to certain retail off-exchange transactions, 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $50,515,063 $49,331,734 $69,993,535 +$20,661,800

FTE 148 164 212 +48
FY 2016 President’s Budget

Mission Activities─Enforcement 37

including transactions in foreign exchange and precious metals. This area has had significant 

fraud and will result in more matters referred for investigation and enforcement action. 

 As the Commission increases investor’s awareness through Consumer Outreach efforts and 

Whistleblower programs, it is anticipated we will receive a spike in tips and complaints for 

referrals to Enforcement. 

Justification of CFTC Resource Requirements 

The FY 2016 request for $69,993,535 will support and expand the Commission’s activities related to 

enforcement. 

A robust enforcement program, including the proverbial “cops on the beat,” is critical to protecting 

the public. The expansion of the Commission’s responsibilities to include the swaps market as well as 

continued growth in the size and complexity of the markets—with more products, more sophisticated 

electronic trading, and more interactions between futures and cash markets—require the Commission 

to substantially enhance its enforcement efforts if it is to keep pace. In addition, the Commission 

needs additional enforcement resources if it is to take advantage of the expansion of the Commission’s 

enforcement powers with regard to retail fraud and manipulative trading. As the enforcement 

demand increases, the Commission will continue utilizing its authority to: 1) shut down fraudulent 

operations and immediately preserve customer assets through asset freeze and receivership orders; 2) 

terminate manipulative and disruptive schemes; 3) ban defendants from trading and being registered 

in its markets; and 4) seek restitution, disgorgement and monetary penalties. 

The eLaw technology components supporting the enforcement program will be enhanced. Data 

storage capacity will be increased to support ever increasing volumes of digital evidence and analytic 

support databases. Computer forensics will be enhanced to examine new types of digital evidence. 

Technical support services for staff will be increased to ensure that technical and logistical activities 

minimally constrain the critical time lines of enforcement actions. 

Impact if Not Funded at Requested Level of Resources 

The industry continues to grow in volume and complexity as increasingly sophisticated systems or 

instruments and practices are employed across the market and around the world. At the same time, 

the sophistication of the wrongdoers also is increasing, including their use of technology to gain the 

advantage or conceal their activities. The Commission’s enforcement efforts require adequate 

resources to ensure that timely and responsive enforcement is achieved as the industry rapidly grows. 

The Commission’s ability to respond in a timely manner to market events, act swiftly where customers 

are at risk, require new and existing registrants to meet their regulatory obligations, and protect the 

integrity of the markets subject to the Commission’s jurisdiction will be strengthened if adequate 

resources are provided.

If the requested funding level is not received, the Commission faces an inability to respond quickly to 

investigate and pursue wrong-doing in the markets, particularly where retail customers are involved, 

which threatens to significantly undermine confidence in the markets and our oversight. An everlarger segment of the population has investments in the futures and swaps markets, either directly or 

indirectly through pension funds or ownership of shares in companies that participate in the markets. 

The continued growth in responsibilities, and industry complexities coupled with inadequate 

resources will directly impact the agency’s mission to enforce the laws and preserve the market’s 

integrity. 

Allegations related to off-exchange retail foreign exchange and precious metals fraud, as well as 

industry allegations concerning manipulation, trade practice violations, and false reporting have 

grown significantly and require additional resources to address. Failure to increase funding will mean 

that the Commission’s enforcement program will increasingly be unable to generate new cases and 

investigations.

The increasing use of automated trading strategies and high frequency trading has created the 

potential for new manipulative practices, such as spoofing. The expanded use of such trading 
FY 2016 President’s Budget

Mission Activities─Enforcement 38

techniques has captured public attention and led to increasing concern about the integrity of the 

markets. Although the Commission’s ability to investigate such matters was enhanced by DoddFrank, its ability to do so effectively requires increases in resources, particularly given the resourceintensive nature of such matters.

Integrity of benchmarks also continues to be an issue, as evident by the London Interbank Offered 

Rate (LIBOR) and foreign exchange orders brought by the Commission. On these matters alone, 

Commission actions related to manipulation of benchmarks have resulted in fines and penalties of 

over $6 billion between June 2012 and November 2014. There are hundreds of thousands of 

contracts used in the markets overseen by the Commission that depend on benchmark rates. 

Finally, failing to enhance the eLaw technology components supporting the enforcement program will 

reduce the efficiency of enforcement staff, reduce the number and increase the duration of active 

investigations and cases, and place enforcement staff at a competitive disadvantage when conducting 

investigations and enforcement actions.
FY 2016 President’s Budget

Mission Activities─Enforcement 39

Breakout of Enforcement Request 20 

FTE

Salaries and 

Expenses

($000)

IT21

($000)

Total

($000)

Data and Technology 5 1,004 6,245 7,249

Enforcement 207 62,744 0 62,744

Total 212 $63,748 $6,245 $69,993

Table 10: Breakout of Enforcement by Division

Data & Technology

10%

Enforcement

90%

Figure 9: Enforcement Request by Division

 

20 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

21

 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─Economic and Legal Analysis 40

Economic and Legal Analysis

Resource Overview 

 

 

Mission Activity Description 

Economic analysis is critical in supporting the regulatory activities in a wide range of areas, including: 

 Economic and quantitative analysis, including cost-benefit considerations utilized in 

designing and implementing the Commission’s rulemaking; 

 Determining the requirements for reporting and data rules;

 Analyzing the quality, integrity, and usefulness of the market data reported to the 

Commission; 

 Developing analytical tools and methods in support of the Commission’s automated 

surveillance initiatives, especially as they pertain to SEFs and the connections between SEFs 

and DCMs;

 Determining whether certain products/contracts are eligible for clearing and the levels for 

capital and margin;

 Providing the technical expertise to evaluate and report on risk models, stress tests, and other 

stability-related evaluations necessary for oversight; and

 Developing analytical tools and methods in support of the Commission’s enforcement 

activities, including economic and statistical analysis or expert testimony to promote 

compliance with and deter violations of the CEA.

The Commission supports a focused research group that analyzes innovations in trading technology, 

developments in trading instruments, and market structure, and interactions of various market 

participants in the futures and swaps markets. These specialized economists collaborate with staff 

across the Commission’s divisions and offices. The Commission also publishes various periodic 

reports including the Commitment of Traders Report, and the weekly, semi-annual and annual Swaps 

Reports. 

The legal activities of the Commission include: 1) regulatory issues; 2) engaging in defensive, 

appellate, and amicus curiae litigation; 3) providing general legal advice and support; 4) assisting the 

Commission in the performance of its adjudicatory functions; and 5) providing advice on legislative 

and other intergovernmental affairs issues. In addition to providing support on new and evolving 

issues, the Commission is responsible for providing on-going analysis under government ethics, 

personnel, procurement, and recordkeeping rules and under statutes such as the Government in the 

Sunshine Act, Federal Advisory Committee Act, Federal Information Security Management Act, the 

Freedom of Information Act, and other statutes applicable to the Commission. 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $20,134,024 $22,101,641 $27,948,756 +$5,847,115

FTE 73 83 94 +11
FY 2016 President’s Budget

Mission Activities─Economic and Legal Analysis 41

Industry Trends and Emerging Issues 

The Commission seeks to maintain a staff with extensive research and analytical backgrounds to 

ensure that analyses reflect the forefront of economic knowledge and econometric techniques. 

Economics staff with particular expertise and experience provide leverage to dedicated staff 

throughout the Commission in order to anticipate and mitigate significant regulatory, surveillance, 

clearing, and enforcement challenges. Economic analysis plays an integral role in the development, 

implementation, and review of financial regulations to ensure that regulations are economically 

sound and have undergone a rigorous consideration of potential costs and benefits.

Commission staff has established a network of well-renowned researchers and academics in 

quantitative financial methods, applied mathematics, econometrics, and statistics to augment the 

resources of the Commission. Continued engagement with an extended network of experts across the 

Federal government has fostered the necessary dialogue to promote a common framework for 

interagency consensus-building. For example, the Commission’s involvement with the FSOC ensures 

financial regulatory agencies communicate perceived financial and economic issues with one another. 

This dialogue allows for a well-coordinated approach to address these potential issues.

Effective research requires a data environment that is supported by transparent policies and 

procedures; allows data to be used and shared with external parties without compromising privacy, 

confidential, or sensitive information; and provides researchers with flexibility in using tools and 

approaches.

Regulatory Legal Issues. The Commission requires legal expertise to interpret and opine on 

questions of statutory and regulatory authority and review for legal sufficiency proposed exemptive, 

interpretive, and no-action relief to regulated entities and other market participants. Staff review 

draft rulemakings and provide legal counsel in support of all substantive Commission and staff 

actions, including registration and rule submission review, regulations, exemptions, product reviews 

and market and clearing issues. Staff analysis ensures compliance with the CEA, and laws of 

government-wide applicability, such as the Administrative Procedure Act, the Regulatory Flexibility 

Act, the Congressional Review Act, and the Paperwork Reduction Act. 

 Requests from registrants and other market participants potentially affected by Commission 

rules must be reviewed by legal counsel for compliance with statutory authority. This review 

has been hampered by the lack of resources available, slowing responsiveness of the agency to 

requests for relief or interpretations. 

Litigation. Attorneys in the litigation area represent the Commission in: 1) Federal appellate 

litigation, as a party or, where appropriate, as amicus curiae; 2) certain Federal court trial-level cases, 

including challenges to agency rulemakings and bankruptcy cases involving derivatives industry 

professionals; and 3) personnel actions, equal employment opportunity complaints, and other related 

employment litigation. The Commission also maintains the capability to respond to labor, contract, 

and Freedom of the Information Act matters, and Merit Systems Protection Board cases arising under 

the Civil Service Reform Act of 1978. In addition, attorneys in the litigation program advise the 

Commission on responses to appeals from decisions of industry SROs, Administrative Law Judges or 

Judgment Officers in administrative reparations or enforcement actions. 

 The Commission has a variety of new enforcement tools under the Dodd-Frank Act. Efforts to 

use these new tools are likely to lead to an increase in appeals from the Commission’s 

enforcement actions, which must be handled by litigation program staff.

General Law. The Commission also manages information governance in compliance with applicable 

laws. Principal responsibilities include Freedom of Information Act and Privacy Act compliance. The 

Commission maintains a robust capability with respect to all matters related to information requests, 

and implements the processes, policies, and information systems to ensure that the Commission 

appropriately manages electronically stored information as required in the Federal Rules of Civil 

Procedure and relevant judicial decisions. As the Commission’s enforcement caseload increases, the 

program’s role in advising and responding to information requests increases apace. 

 The Commission also ensures compliance with the Government in the Sunshine and Federal 

Advisory Committee Acts. The Commission also is responsible for maintaining compliance 
FY 2016 President’s Budget

Mission Activities─Economic and Legal Analysis 42

with the government-wide ethics regulations promulgated by the Office of Government 

Ethics.

 National Treasury Employees Union was successful in a recent vote to unionize Commission 

staff in Washington, Kansas City and Chicago. The Commission expects a significant increase 

in labor and employment law workload as a result.

Legislation and Intergovernmental Affairs. The Commission monitors, reviews, and comments on 

proposed legislation affecting the Commission or the derivatives industry, and prepares technical 

assistance regarding draft legislation as requested by members of Congress. Additionally, the 

Commission maintains liaisons with other Federal regulators to analyze and resolve jurisdictional 

issues and to address specific matters implicating the jurisdiction of multiple agencies. 

 The Commission is a member of the FSOC, a government organization established by the 

Dodd-Frank Act. The Legislation and Intergovernmental Affairs team supports the 

Commission’s activities with the FSOC. This group works with staff to review requests for 

data sharing among agencies and by the Office of Financial Research and to provide guidance 

on appropriate access to data consistent with the CEA. 

Justification of CFTC Resource Requirements 

The FY 2016 request for $27,948,756 will allow the Commission to produce timely economic and legal 

analysis with a high level of quality to inform the public and support the entire Commission. 

The Commission’s economists play an integral part in the cost-benefit considerations of Commission 

rules. Consistent with the mission of the CFTC, new and existing regulations are evaluated in light of 

considerations of, among other factors, protection of market participants and the public, efficiency 

and competitiveness of futures markets, price discovery, and sound risk management practices. The 

extensive research and analytical backgrounds of Commission economists will help to ensure that 

analyses reflect the forefront of economic knowledge and econometric techniques. 

The increased funding will assist in implementing a research-focused data environment that will 

support CFTC and inter-agency research into evolving market conditions. It will also assist in 

continuing to provide appropriate market information to the public to increase market transparency.

As mentioned above, the Commission interprets and applies legal requirements of a variety of 

government-wide statutes to assure the legal sufficiency of all Commission actions.

The Commission also drafts and reviews domestic and international memoranda of understanding 

and other agreements as appropriate to further the work of the Commission and assure that 

Commission data is protected and agreements are consistent with the CEA. The increased level of 

inter-agency cooperation to analyze emerging risks, as well as increased international cooperation 

with foreign regulators and multi-lateral regulatory groups has increased this work significantly and 

created the need for increased funding. 

Impact if Not Funded at the Requested Level of Resources 

Without the requested additional resources the Commission will struggle to provide the research, 

analysis, advice and counsel necessary to meet its mission to protect market users from systemic risk, 

and to foster open, transparent, competitive and financially sound markets. Inadequate staffing will 

hurt the Commission’s ability to leverage the rich data accessible to provide sound quantitative 

economic analyses for the Commission. In addition, it will hurt the ability of the Commission’s 

economists to collaborate effectively with academic experts in subject matters of interest to the 

Commission and the public.

Similarly, without adequate funding to allow for additional personnel and expertise, the Commission 

will be unable to maintain its current workload and effectively address new matters. Among other key 

concerns, inadequate funding would create delays with respect to rulemaking (including revising or 

rescinding rules in light of market developments or new information and conducting a retrospective 

review of Commission regulations to identify and address outdated, unnecessary or unduly 
FY 2016 President’s Budget

Mission Activities─Economic and Legal Analysis 43

burdensome rules), and a slowing of responsiveness by the Commission to concerns raised by 

regulated entities and market participants, such as end-users of derivative instruments.
FY 2016 President’s Budget

Mission Activities─Economic and Legal Analysis 44

Breakout of Economic and Legal Analysis Request 22 

FTE

Salaries and 

Expenses

($000)

IT23

($000)

Total

($000)

Chief Economist 18 $5,164 $0 $5,164

Clearing and Risk 2 540 0 540

Data & Technology 0 0 1,282 1,282

Enforcement 7 2,432 0 2,432

General Counsel 53 14,962 0 14,962

Market Oversight 5 1,248 0 1,248

Swap Dealer and Intermediary Oversight 9 2,321 0 2,321

Total 94 $26,667 $1,282 $27,949

Table 11: Breakout of Economic and Legal Analysis by Division

Chief Economist

18%

Clearing & Risk

2 %

Data & Technology

5 %

Enforcement

9 %

General Counsel

54%

Market 

Oversight

4 %

Swap Dealer & 

Intermediary 

Oversight

8 %

Figure 10: Economic and Legal Analysis Request by Division

 

22 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

23 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─International Policy 45

International Policy 

Resource Overview 

 

 

Mission Activity Description 

The global nature of the futures and swaps markets makes it imperative that the United States consult 

and coordinate with international authorities. The Commission is actively communicating 

internationally to avoid conflicting requirements and to engage in international cooperative efforts, 

wherever possible. For example, the Commission has engaged in bilateral discussions and shared 

many of our pre-decisional memoranda, term sheets, and draft rule proposals with international 

regulators, such as the European Commission, the European Central Bank, the Bank of England, the 

European Securities and Markets Authority, and the Financial Services Authority of Japan. 

The Commission participates in numerous international working groups regarding derivatives, 

including numerous IOSCO committees and task forces, as well as projects with the Basel Committee 

on Banking Supervision, the Committee on Payments and Market Infrastructures, and the Financial 

Stability Board. Over the past four years, the CFTC, SEC, European Commission, European Securities 

Market Authority, and market regulators from around the globe have been meeting to discuss and 

resolve issues related to financial reform through a technical working group. 

The Commission also is consulting with many other jurisdictions such as Hong Kong, Singapore, 

Japan, and Canada. Discussions have focused on the details of the Dodd-Frank Act and implementing 

rules, including mandatory clearing, mandatory trade execution, reporting swap transactions to trade 

repositories, and regulation of SDs and derivatives market intermediaries. The Commission’s 

international outreach efforts directly support global consistency in the oversight of the derivatives 

markets. 

In addition, the Commission has been engaged in ongoing international work and policy coordination 

in the development of data and reporting standards under Dodd-Frank Act rules. Data standards and 

common identifiers provide easier, less expensive data sharing and transfer by providing regulators 

and diverse industry participants with consistent terms, format, and quality measures. Legal Entity 

Identifiers (LEIs) are part of a unique identification system for parties to financial transactions being 

adopted by financial markets globally and will allow regulators to cost-effectively determine the 

controlling and benefitting party to every derivatives transaction. Unique product identifiers (UPIs) 

for standardized derivatives will allow regulators to cost-effectively determine the characteristics of 

most derivatives transactions. 

Finally, the Commission has entered into and also is negotiating cooperative supervisory 

arrangements for regulated cross-border entities and market participants.

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $4,505,317 $4,523,158 $4,914,647 +$391,489

FTE 16 16 16 0
FY 2016 President’s Budget

Mission Activities─International Policy 46

Industry Trends and Emerging Issues 

The adoption of Dodd-Frank Act legislation and the development of implementing rules by the 

Commission have significantly increased communication between the Commission and global 

regulatory authorities, most notably the European Commission. In particular, the implementation of 

the Dodd-Frank Act regulations requires continued development of supervisory coordination 

arrangements with foreign authorities in major jurisdictions where regulated entities are located, 

such as the European Union, Canada, and Japan. With regard to the European Union, we are

engaging not only the European Commission, but also the European Securities and Markets Authority 

and relevant national regulators, such as those in the United Kingdom, France, and Germany, to 

negotiate supervisory arrangements for entities that are subject to regulation in both the European 

Union and the United States. Similar arrangements are being negotiated in other major market 

jurisdictions. 

The aftermath of the financial crisis spawned a multitude of initiatives within the Financial Stability 

Board and IOSCO and within the U.S. Treasury and G20 working groups that address topics such as: 

cooperation and coordination in the areas of OTC regulation, CCP clearing standards, the monitoring 

and control of systemic risk, the protection of customer funds, and mechanisms to share systemically 

important information internationally. International concerns regarding the integrity of commodity 

derivatives markets are being addressed within the IOSCO committee on Commodity Derivatives 

Markets, which is co-chaired by Commission.

Commission participation in these work-streams is critical, primarily because the work-product is 

transformed into international standards of best practice, which are then subject to compliance 

assessment by the International Monetary Fund in its Financial Sector Assessment Program. The 

Commission’s participation historically has focused on incorporating the Commission’s regulatory 

approach into these internationals standards and encouraging international harmonization. 

The Commission’s international agenda also includes responding to requests from the U.S. Treasury 

to participate in international dialogues (e.g., U.S.-China dialogue), providing technical assistance to 

developing market jurisdictions, and engaging in bilateral discussions with foreign regulators to 

resolve cross-border issues. 

Finally, the Commission also is focusing on strengthening its supervision of registered entities such as 

clearing organizations, markets and dealers that are registered by both the Commission and a foreign 

regulator, and on ensuring that the recipients of regulatory exemptions remain in compliance with 

applicable requirements. Achieving this goal of greater due diligence and ongoing compliance 

monitoring will require the Commission to coordinate closely with foreign regulators.

Justification of CFTC Resource Requirements 

The FY 2016 request for $4,914,647 will support the Commission’s activities related to the 

Commission’s international policy coordination, including but not limited to:

 Perform outreach to harmonize the international regulatory framework for derivatives. The 

Commission will work with leaders of authorities with responsibility for the regulation of the 

OTC derivatives markets in major market jurisdictions to support the adoption and 

enforcement of robust and consistent standards in and across jurisdictions and to develop 

concrete and practical solutions to conflicting application of rules, identify inconsistent or 

duplicative requirements, identify gaps and reduce the potential for regulatory arbitrage. 

 Work with staff at the European Commission, in order to harmonize requirements between 

European Union and the Commission's Dodd-Frank Act rulemakings, to resolve policy 

differences, and avoid gaps that could lead to regulatory arbitrage. Commission staff will 

continue to coordinate meetings with the European Commission and European Union 

authorities.

 Continue engagement with a number of foreign regulators, such as Australia, Canada, Japan, 

and Singapore, to harmonize and coordinate rules in these jurisdictions with U.S. rules. 
FY 2016 President’s Budget

Mission Activities─International Policy 47

 Coordinate supervision of global entities with foreign authorities and work with foreign 

authorities, to coordinate policies. 

 Negotiate cooperative arrangements with foreign regulators in connection with the 

supervision of regulated cross-border entities and market participants.

 Continue to participate in IOSCO's Board and co-chair the IOSCO committee on commodity 

derivatives markets, as well as continuing to participate in IOSCO’s task force on benchmarks, 

the committee on secondary markets, the committee on intermediaries, the committee on 

emerging risks, the committee on investor protection, the cross-border task force, and the 

OTC derivatives task force. All of these activities relate collectively to the development of 

standards of best practices and guidance in derivatives regulation. 

 Support U.S. Treasury and other initiatives. Coordinate CFTC participation in U.S. Treasury 

financial dialogues, Financial Stability Board projects and other multilateral initiatives, such 

as free trade agreements.

 Continue to plan and coordinate the Commission's annual trading seminar for foreign market 

authorities; the Commission's annual hosting of an international conference for foreign 

regulators in Boca Raton, Florida; visits to the Commission requested by foreign regulators to 

the Commission; and on-site technical assistance to foreign market authorities, on a staffavailable basis. 

 Work with the FSOC’s Designations Committee to monitor both designated financial market 

infrastructures in the U.S. and non-designated financial market utilities in other jurisdictions. 

 Work in coordination with foreign regulatory authorities to evaluate compliance with the 

Committee on Payment and Settlement Systems-IOSCO Principles for Financial Market 

Infrastructures. 

 Effect and maintain global establishment of entity, product and transaction data standards. 

Impact if Not Funded at Requested Level of Resources 

The failure to provide requested resources will result in a diminution of the Commission’s ability to

help develop a sound global regulatory framework at a time when the Commission will be 

implementing Dodd-Frank Act rules, and when many multilateral organizations and regulatory 

authorities are engaged in developing new responses to the financial crisis generally and OTC

derivatives in particular. IOSCO, the U.S. Treasury, and important international regulatory 

authorities look to the Commission for leadership in futures and swaps market policies. Any 

diminution in resources would require the Commission to reduce its international program, thereby 

making it less able to advocate for harmonization of international regulatory policies and to resolve 

potentially conflicting rules. A failure to establish global entity, product and transaction data 

standards will increase operating costs and risk for both regulators and industry participants.
FY 2016 President’s Budget

Mission Activities─International Policy 48

Breakout of International Policy Request 24 

FTE

Salaries and 

Expenses

($000)

IT25

($000)

Total

($000)

Agency Direction 0 $29 $0 $29

Clearing and Risk 1 336 0 336

Enforcement 3 976 0 976

International Affairs 12 3,573 0 3,573

Total 16 $4,914 $0 $4,914

Table 12: Breakout of International Policy by Division

Agency Direction

<1%

Clearing & Risk

7 % Enforcement

20%

International 

Affairs

73%

Figure 11: International Policy Request by Division 

 

24 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

25

 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.
FY 2016 President’s Budget

Mission Activities─ Data and Technology Support 49

Data and Technology Support

Resource Overview 

 

 

Mission Activity Description 

Information technology costs, including IT investments (e.g., hardware, software, and contractor 

services), FTE, and indirect costs, are directly attributed to the benefiting Mission Activity wherever 

possible. Any IT costs that are not directly attributed to another Mission Activity are captured in the 

Data and Technology Support Mission Activity as described below. A full breakout of the 

Commission’s IT Portfolio, which includes IT costs relating to other Mission Activities, is located in 

Appendix 2. 

The Commission’s IT program uses a service-oriented approach to provide technology infrastructure 

and services that allow staff Commission-wide to work effectively and increase the integration of data 

and technology into the Commission operating model. The Office of Data and Technology will ensure 

that Commission staff have secure and appropriate access to highly available communication, 

processing, and storage infrastructure capabilities. The Commission supports the following priorities:

 Provide available, flexible, reliable, scalable, and high performance infrastructure and base 

services. The CFTC IT infrastructure includes hardware, software and telecommunication 

equipment as well as base services that empower staff to fulfill the CFTC mission. The 

Commission will scale and enhance communication, processing, storage, and platform 

infrastructure to meet mission requirements.

 Facilitate data understanding and ingestion. Because CFTC has a unique imperative to 

aggregate various types of data from multiple industry sources across multiple market 

segments both domestic and international, data access, data transfer, data ingest, data 

warehousing, data standards, and data quality activities are essential.

 Provide CFTC market, financial, legal, and economic analysts with the ability to rapidly adjust 

their analytic activities and approaches. Staff must be provided with platforms and tools that 

enable them to innovatively analyze data while minimizing time, process, and resource 

constraints.

 Provide automation services and solutions that address and support a diversity of roles and 

activities and increase data re-use across the Commission. Enterprise-wide solutions are 

preferable to narrowly focused systems and allow CFTC to leverage limited resources.

Industry Trends and Emerging Issues 

The CFTC is a data-centric organization. The growth in the past several years for the types of data 

required to be received and analyzed by the Commission, the number of data sources providing data, 

the complexity of the data, and the volume of the data have each expanded significantly. This is 

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $36,012,483 $36,216,329 $63,133,843 +$26,917,514

FTE 34 44 59 +15
FY 2016 President’s Budget

Mission Activities─ Data and Technology Support 50

driving the significant need for a more comprehensive and capable technology platform, such as that 

available in the form of high-performance computing technology. Additional technology requirements 

such as advanced extraction, data loading and browsing technology are growing to provide the 

capability to perform analysis on the thousands of lines of transactions and provide timely responses 

to queries. Only by providing advanced tools and enriched data for staff to connect, analyze, and 

aggregate data can the Commission attempt to understand the industry changes and fulfill its 

responsibility to appropriately oversee the proper functioning of the derivatives markets, particularly 

with respect to effective market and risk surveillance.

Justification of CFTC Resource Requirements 

The FY 2016 request for $63,133,843 will support and continue to enhance the Commission’s 

activities related to its data infrastructure, without which the Commission will be severely limited in 

its ability to fulfill its responsibilities. This funding level supports required technology refreshment 

on a sustainable cycle, and infrastructure and services to support new mission initiatives as well as

improvements to the current mission and management programs. Hardware, software, and other 

components that provide communications, processing, and storage will be updated to maintain 

acceptable performance and provide cost-effective and secure operation and scalability. In FY 2016,

the Commission will conclude the migration to a virtual desktop environment that will allow increases 

in desktop computing capacity and enhancements to desktop tools to be provided to staff more 

quickly and efficiently. The virtual desktop environment will also improve mobile computing for staff, 

which, for example, will enable the Commission’s surveillance and examinations staff to more 

effectively fulfill their duties. 

Given the importance of continuing oversight of derivatives markets to the health of the United States

and global financial systems, the Commission must be fully prepared for continuity of operations 

under a broad range of circumstances. To ensure consistency of day to day operations that the 

Commission needs to have a safe and reliable environment for its production systems, the server 

room at the Washington, D.C. Headquarters location will be de-commissioned and the Commission’s 

alternate computing facility will be supplemented with a second, geographically co-located alternate 

computing facility. In addition to the current capability to recover operations within recovery time 

objectives, application system architectures will be adjusted to further automate recovery and 

reconstitution processes and reduce the need for outages for planned maintenance. 

The Commission will continue to improve information technology and management capabilities in 

the areas of data management to support analytics, economic analysis, and market research. The 

Commission also will implement enterprise technology solutions that enable the sharing and reuse of 

data for cross-divisional purposes. Policy, procedures, and resources will continue to be used to 

govern, manage, and access data using a Commission-wide information architecture and framework. 

Such improvements will significantly improve the Commission’s ability to maximize the productivity 

of its workforce across multiple functions and work areas. Furthermore, the Commission will facilitate 

the improvement in the quality of data received from market participants to empower its staff to 

perform the complex data analyses needed to regulate the futures and swaps markets. An example of 

such improvements is the Commission’s continued work to harmonize SDR data reporting, the 

effective functioning of which is essential to the Commission’s mission to oversee the swaps markets.

The Commission plans to utilize increased funding to fully deploy a National Archives and Records 

Administration compliant electronic record and document management system that will improve 

information management and security, support process automation, improve internal controls, and 

improve staff productivity. A secure enterprise search capability will allow simultaneous searching of 

key Commission information sources and databases. In addition, the IT program will imbed division 

specific SharePoint support to leverage the new electronic records system. 

In FY 2016, the Commission will focus on the information security requirements, specifically on 

Cybersecurity Continuous Diagnostics and Mitigation implementation and sustainment as well as 

continuing to enhance automated controls to mitigate the risk of evolving security threats. Since the 

Commission is charged with protecting sensitive information assets that are critical to overseeing the 

markets, Cybersecurity Continuous Diagnostics and Mitigation is required to assess and mitigate risk 

more effectively. 
FY 2016 President’s Budget

Mission Activities─ Data and Technology Support 51

Mobile computing and mobile communication services will be enhanced to increase the productivity 

of investigators, examinations staff, and international affairs staff by ensuring availability of 

information and services. Mobile video conferencing that enables individuals to participate fully in 

meetings from remote locations will be implemented. The ability to securely host online meetings 

with desktop sharing and video conferencing with external parties will be implemented. 

Media streaming will be implemented to improve the ability of large numbers of staff to view external 

presentations and conferences. After-hours technical support will be increased to improve the 

productivity of investigators, examinations staff, and international affairs staff by ensuring availability 

of information and services, anytime and anywhere. It will also improve the productivity of staff 

working extended hours on high-priority projects under tight deadlines. 

Impact if Not Funded at Requested Level of Resources 

If the Commission does not receive the requested level of resources, the Commission will not be able 

to use technology to expand the scope and depth of its oversight. IT initiatives previously funded in 

prior fiscal years will be halted or delayed in FY 2016 due to funding limitations. The impact will be 

widespread across the Commission’s activities, severely limiting the Commission’s ability to fulfill its 

statutory responsibilities.

In addition to the critical IT functions detailed in other Mission Activities that would be severely 

limited without the requested level of funds, the Commission will not have sufficient infrastructure to 

deploy mission systems that analyze orders as well as trades for trade practice violations or deploy 

more comprehensive financial and systemic risk modelling tools. The Commission likewise will not 

have sufficient infrastructure to support the upgrade of enforcement forensics and litigation tools, and 

there will be insufficient infrastructure to support the continuing implementation of straight-through 

processing for all regulatory processes. The Commission will not be able to complete infrastructure 

upgrades required to support the increased use of analytics platforms, and only very critical 

infrastructure technology refreshments will be accomplished, limiting the Commission to a reactive, 

as opposed to a proactive, posture with respect to its infrastructure. 

In the critical area of business continuity, a secondary alternate computing facility (ACF) will not be 

implemented, exposing the entire Commission to an untenable continuity risk without the requested 

level of funding. Ongoing investments in cybersecurity technology will be reduced, increasing the 

risks imposed on Commission operations and the data and processes that are reliant on robust 

cybersecurity. The use of high-performance computing platforms for data analytics will not be 

expanded impacting the Commission’s ability to provide core activities such as surveillance, 

enforcement, examinations, and product reviews. 

In the absence of adequate funding, the customer support provided to industry participants using the 

Commission portal will be minimal. The Commission will not be able to keep pace with the growth of 

new data, expanded mission requirements, or industry-related technological and data innovations 

that affect Commission regulatory functions. 
FY 2016 President’s Budget

Mission Activities─ Data and Technology Support 52

Breakout of Data and Technology Request 26 

Table 13: Breakout of Data and Technology Support by Division

 

26 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

27

 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.

FTE

Salaries and 

Expenses

($000)

IT27

($000)

Total

($000)

Data and Technology 59 $11,852 $51,282 $63,134

Total 59 $11,852 $51,282 $63,134
FY 2016 President’s Budget

 

Mission Activities―Agency Direction and Management 53

Agency Direction and Management

Resource Overview 

 

Mission Activity Description 

The Commission’s ability to achieve its mission of protecting the public, derivative market 

participants, the U.S. economy and the U.S. position in global markets is driven by well-informed and 

reasoned executive direction, strong and focused management, and an efficiently-resourced, 

dedicated, and productive workforce—this is a top-to-bottom requirement. These attributes of an 

effective organization combine to lead and support the critical work of the Commission to provide 

sound regulatory oversight and enforcement programs for the U.S. public. To ensure the 

Commission’s continued success, continuity of operations, and adaptation to the ever-changing 

markets it is charged with regulating, the Commission must empower strong, enterprise-focused 

leaders, maintain a high-performing, diverse and engaged workforce, promote transparent and clear 

communication, and develop and equip leaders at all levels of the organization. The Commission must 

manage its resources effectively through effective internal controls, governance and planning 

processes, and ensure its workforce has the leadership, knowledge, data and technology, and other 

tools to work effectively. 

The Commission is committed to operationalizing its expanded regulatory scope and to maintaining 

its strong presence in its traditional markets. This requires unambiguous and timely direction, and 

the right quantity and quality of staff, aligned in an optimal operating structure supported by the 

necessary training, development, tools, resources and working environment. 

The Commission utilized shared services provided by other agencies for its financial management and 

human resources systems, as well as services provided by commercial providers to many Federal 

agencies (e.g., travel and hiring systems). The Commission also maintains administrative services that 

are unique to the Commission (e.g., performance management, pay adjustment, and ethics 

compliance). To reduce data redundancy, rework, and support cost-effective automation, 

administrative data and systems must continue to be centralized, replacing point solutions and 

eliminating redundant data stores.

Industry Trends or Emerging Issues 

The Commission continues to be in direct competition with industry and our Federal counterparts for 

highly-skilled technical and analytical positions that enable the Commission to fulfill our regulatory 

requirements. The Commission continues to struggle with recruiting and retention of sophisticated 

professionals that provide core mission activities. 

The Commission is striving to maintain its dedicated team of management professionals focused on 

human capital strategy, talent management, and organizational performance to support the 

Commission of the future.

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request Change

BUDGET $28,078,205 $30,394,930 $34,020,638 +$3,625,708

FTE 105 122 130 +8
FY 2016 President’s Budget

 

Mission Activities―Agency Direction and Management 54

The Commission is focused on maintaining effective management and administrative programs as 

efficiently as possible to maximize the resources and staff available to the primary mission activities. 

The utilization of shared services continues to be an important strategy in maintaining these 

programs and services at a reasonable cost

Justification of CFTC Resource Requirements 

The FY 2016 request for $34,020,658 will continue to support and expand the Commission’s activities 

related to the Commission’s agency direction, management and administrative support.

The Office of the Inspector General (OIG) will add staff to expand its work regarding Dodd-Frank 

implementation and other high-visibility events and issues impacting the Commission, and enhance 

its ability to oversee the search and production of documents relevant to investigations, audits, and 

reviews. This will allow the OIG to oversee these processes in order to verify that any search is 

complete and appropriate while preserving OIG independence.

In the Administrative Management and Support area, the Commission will expand and fortify its 

performance management program to ensure the Commission is not only allocating resources to its 

highest priority activities in pursuit of its mission, but also in the leadership and management of the 

performance of those resources to achieve maximum results. This will require the addition of subject 

matter expertise in strategic and operational planning, specifically performance metrics and data 

analysis; and in human capital strategy and analysis, specifically in individual and organizational 

performance management system reform, compensation and workforce planning.

In addition, the Commission will expand and continue implementing a controlled unclassified 

information program, including additional controls for high-risk personally identifiable information 

and research data, and information security continuous monitoring. The addition of records 

management expertise in the controlled unclassified information program will strengthen the 

Commission’s ability to provide and ensure security of data throughout the agency. 

Impact if Not Funded at Requested Level of Resources 

The Commission will be unable to expand and improve on its highest priority mission support 

activities. Expertise in organizational and operational management, financial management, and 

human resources are needed at the requested levels in order for the agency to provide the systems, 

data protections, performance management and analysis needed to keep pace with the technologydriven innovative environment it is charged with overseeing and regulating. 
FY 2016 President’s Budget

 

Mission Activities―Agency Direction and Management 55

Breakout of Agency Direction and Management Request 28 

FTE

Salaries and 

Expenses

($000)

IT29

($000)

Total

($000)

Agency Direction 35 $9,311 $0 $9,311

Administrative Management and Support 86 20,726 0 20,726

Data and Technology 0 0 1,194 1,194

Inspector General 9 2,790 0 2,790

Total 130 $32,827 $1,194 $34,021

Table 14: Breakout of Agency Direction and Management by Division

Figure 13: Agency Direction and Management Request by Division

 

28 The Commission considers the Salary and Expense and the Information Technology programs to be its sole programs, 

projects, and activities (PPAs). The budget displays by Mission Activity are for informational purposes only, and do not 

represent a PPA.

29 Information Technology costs, including IT investments (e.g., hardware, software, contractor services), FTE, and indirect 

costs, are directly attributed to the benefiting Mission Activity wherever possible. Any IT costs that are not directly attributed 

to another Mission Activity are captured in the Data and Technology Support Mission Activity.

Agency Direction

27%

Administrative 

Management and 

Support

61%

Data & Technology

4%

Inspector General

8%
FY 2016 President’s Budget

Appendix 1─ The Commissioners & Organizational Divisions

56

APPENDIX 1

The Commissioners

The CFTC consists of five Commissioners, with one position 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 following 

represent the current CFTC Commissioners:

Timothy G. Massad, Chairman

Timothy G. Massad was appointed as Chairman of the U.S. Commodity Futures Trading Commission 

on June 5, 2014. His term expires on April 13, 2017.

Mark P. Wetjen, Commissioner

Mark P. Wetjen was appointed as Commissioner of the U.S. Commodity Futures Trading Commission 

on October 25, 2011. His term expires on June 19, 2016.

Sharon Y. Bowen, Commissioner

Sharon Y. Bowen was appointed as Commissioner of the Commodity Futures Trading Commission on 

June 9, 2014. Her term expires on April 13, 2018.

J. Christopher Giancarlo, Commissioner

J. Christopher Giancarlo was appointed as Commissioner of the Commodity Futures Trading 

Commission on June 16, 2014. His term expires on April 13, 2019.

Organizational Divisions and Offices

The Offices of the Chairman and Commissioners provide executive direction and leadership to the 

Commission. The Offices of the Chairman include Public Affairs, Legislative Affairs, and Minority 

and Women Inclusion.

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 Division of Swap Dealer and Intermediary Oversight—are partnered with, and 

supported by, a number of offices, including the Office of Chief Economist, Office of Data and 

Technology, Office of General Counsel, and the Office of International Affairs. 

Administrative and Management Support is administered by the Office of the Executive Director, 

which includes the following offices: Business Management and Planning, Counsel to the Executive 

Director, Financial Management, Human Resources, Logistics and Operations, Privacy, Records, 

Proceedings (reparations), Secretariat, and the Library.

The Office of Inspector General is an independent office of the Commission. 
FY 2016 President’s Budget

Appendix 1─ The Commissioners & Organizational Divisions

57

Agency Direction 

The Office of the Chairman and the Commissioners provide executive direction and leadership to the 

Commission—specifically, as it develops and adopts agency policy that implements and enforces the 

CEA and amendments to that Act, and the Dodd-Frank Act. Commission policy is designed to foster 

the financial integrity and economic utility of commodity futures and option markets for hedging and 

price discovery, to conduct market and financial surveillance, and to protect the public and market 

participants against manipulation, fraud, and other abuses. Executive leadership, in this regard, is 

the responsibility of the Chairman, including the Offices of Public Affairs, Legislative Affairs, and 

Minority and Women Inclusion, and the Commissioners.

Administration Management and Support 

The Commission’s ability to achieve its mission of protecting the public, derivatives market 

participants, U.S. economy, and the U.S. position in global markets is driven by well-informed and 

reasoned executive direction; strong and focused management; and an efficiently-resourced, 

dedicated, and productive workforce. These attributes of an effective organization combine to lead 

and support the critical work of the Commission to provide sound regulatory oversight and 

enforcement programs for the U.S. public. The Executive Director ensures the Commission’s 

continued success, continuity of operations, and adaptation to the ever-changing markets it is charged 

with regulating; directs the effective and efficient allocation of CFTC resources; develops and 

implements management and administrative policy; and ensures program performance is measured

and tracked Commission-wide. The OED includes the following programs: Business Management and 

Planning, Counsel to the Executive Director (Library, Records, and Privacy), Secretariat, Financial 

Management, Human Resources, Consumer Outreach, and the Office of Proceedings. The Office of 

Proceedings has a dual function to provide a cost-effective, impartial, and expeditious forum for 

handling customer complaints against persons or firms registered under the CEA, and to administer 

enforcement actions, including statutory disqualifications, and wage garnishment cases.
FY 2016 President’s Budget

Appendix 1─ The Commissioners & Organizational Divisions

58

Chief Economist

The Office of Chief Economist provides economic analysis, advice, and context to the Commission and 

to the public. The Office of Chief Economist provides perspectives on both current topics and longterm trends in derivatives markets. The extensive research and analytical backgrounds of staff ensure 

that analyses reflect the forefront of economic knowledge and econometric techniques. The Office of 

Chief Economist plays an integral role in the cost-benefit considerations of Commission regulations 

and collaborates with staff in other Divisions to ensure that Commission rules are economically 

sound. The Office of Chief Economist and its research also play a key role in transparency initiatives 

of the Commission.

Clearing & Risk

The Division of Clearing and Risk program oversees DCOs and other market participants that may 

pose risk to the clearing process including FCMs, SDs, MSPs and large traders, and the clearing of 

futures, options on futures, and swaps by DCOs. The staff prepare proposed regulations, orders, 

guidelines, and other regulatory work products on issues pertaining to DCOs; review DCO 

applications and rule submissions and make recommendations to the Commission; make 

determinations and recommendations to the Commission to which types of swaps should be cleared; 

make determinations and recommendations to the Commission as to the initial eligibility or 

continuing qualification of a DCO to clear swaps; assess compliance by DCOs with the CEA and 

Commission regulations, including examining systemically important DCOs at least once a year; and 

conduct risk assessment and financial surveillance through the use of risk assessment tools, including 

automated systems to gather and analyze financial information, to identify, quantify, and monitor the 

risks posed by DCOs, clearing members, and market participants and its financial impact.

Data and Technology

The Office of Data and Technology is led by the Chief Information Officer and delivers services to 

CFTC through three components: Systems and Services, Data Management, and Infrastructure and 

Operations. Systems and Services focuses on several areas: 1) market and financial oversight and 

surveillance; 2) enforcement and legal support; 3) document, records, and knowledge management; 

4) CFTC-wide enterprise services; and 5) management and administration. Systems and services 

provide access to data and information, platforms for data analysis, and enterprise-focused 

automation services. Data Management focuses on data analysis activities that support data 

acquisition, utilization, management, reuse, transparency reporting, and data operations support. 

Data Management provides a standards-based, flexible data architecture; guidance to the industry on 

data reporting and recordkeeping; reference data that is correct; and market data that can be 

efficiently aggregated and correlated by staff. Infrastructure and Operations organizes delivery of 

services around network infrastructure and operations, telecommunications, and desktop and 

customer services. Delivered services are highly available, flexible, reliable, and scalable, supporting 

the systems and platforms that empower staff to fulfill the CFTC mission. The three service delivery 

components are unified by an enterprise-wide approach that is driven by the Commission’s strategic 

goals and objectives and incorporates information security, enterprise architecture, and project 

management.

Enforcement

The Division of Enforcement program investigates and prosecutes alleged violations of the CEA and 

Commission regulations. Possible violations involve improper conduct related to commodity 

derivatives trading on U.S. exchanges, or the improper marketing and sales of commodity derivatives 

products to the general public.
FY 2016 President’s Budget

Appendix 1─ The Commissioners & Organizational Divisions

59

General Counsel

The Office of General Counsel provides legal services and support to the Commission and all of its 

programs. These services include: 1) engaging in defensive, appellate, and amicus curiae litigation; 2) 

assisting the Commission in the performance of its adjudicatory functions; 3) providing legal advice 

and support for Commission programs; 4) drafting and assisting other program areas in preparing 

Commission regulations; 5) interpreting the CEA; 6) overseeing the Commission’s ethics program; 

and 7) providing advice on legislative and regulatory issues.

International Affairs

The Office of International Affairs advises the Commission regarding international regulatory 

initiatives; provides guidance regarding international issues raised in Commission matters; 

represents the Commission in international organizations, such as IOSCO; coordinates Commission 

policy as it relates to policies and initiatives of major foreign jurisdictions, the G20, Financial Stability 

Board and the U.S. Treasury Department; and provides technical assistance to foreign market 

authorities.

Market Oversight

The Division of Market Oversight program fosters markets that accurately reflect the forces of supply 

and demand for the underlying commodities and are free of disruptive activity. To achieve this goal, 

program staff oversees trading organizations, performs market surveillance, reviews new applications 

for exchanges, SEFs and data repositories, and examines existing trading organizations and data 

repositories to ensure their compliance with the applicable core principles. Other important work 

includes evaluating new products to ensure they are not susceptible to manipulation, and reviewing 

entity rules to ensure compliance with the CEA and CFTC regulations. 

Swap Dealer and Intermediary Oversight

The Division of Swap Dealer and Intermediary Oversight oversees the registration and compliance 

activities, as well as the examination of intermediaries and the futures and swaps industry SROs, 

which include the U.S. derivatives exchanges and the NFA. Program staff develop and implement 

regulations concerning registration, fitness, financial adequacy, sales practices, risk management, 

business conduct, capital and margin requirements, protection of customer funds, cross-border transactions, and anti-money laundering programs, as well as policies for coordination with foreign market 

authorities and emergency procedures to address market-related events that impact intermediaries. 

The division monitors the compliance activities of these registrants and provides oversight and 

guidance for complying with the system of registration and compliance established by the CEA and 

the Commission’s regulations. Concurrently, DSIO evaluates the effectiveness of registrant 

governance and internal controls through monitoring of the risk profile of firms, targeted reviews and 

examinations, oversight of examinations by SROs and a focus on the activities of the risk managers 

and chief compliance officers. The division also reviews whether registrants maintain sufficient 

financial resources, risk management procedures, internal controls and customer protection practices 

to enhance the financial stability of market participants and transparency in the markets.
FY 2016 President’s Budget

Appendix 2─Information Technology 60

APPENDIX 2

Information Technology

Introduction

The Commission’s IT Portfolio reflects strategic priorities to provide highly available infrastructure 

and services, access to data, platforms for staff data analysis, and enterprise-focused automation 

services. The Commission will scale and enhance communication, processing, storage, and platform 

infrastructure to meet mission requirements. IT initiatives that provide staff with access to data are 

given priority over all other investments. IT initiatives that provide staff with flexible self-service 

analytics tools for their direct use are given priority over initiatives that take longer to implement and 

need greater investment in staff time as a prerequisite to successful development and 

implementation. IT investments are mission-focused, enterprise-focused, or integrated with 

enterprise services and data.

The Commission has organized its IT portfolio into the five major investments described below: 

 Surveillance. Supports market, trade practice, and financial and risk oversight. Success in 

this area is highly dependent on the ability to acquire large volumes of data and the 

development of standards and analytics to support data segregation, as well as identify trends 

and/or outlying events that warrant further investigation. 

 Enforcement. Provides a variety of critical automated litigation and investigation support 

services to facilitate the overall management of documents and data. Enforcement technology 

also provides the ability to rapidly query and retrieve information about investigations and 

litigation and perform analytics. 

 Other Mission Support. Provides services that are vital to CFTC’s regulatory mission 

activities including: Registration and Compliance, Product Review and Assessment, 

Examinations, Legal and Economic Analysis, and International Policy Coordination. 

 Data Infrastructure. Supports all mission areas by providing the underlying infrastructure 

for IT services including: messaging, communications, network security, database 

administration, business continuity, and data storage management. The data infrastructure 

effort also provides transparency through the CFTC.gov website, staff collaboration and 

knowledge management, as well as document and records management. 

 Management and Administrative Support. Includes IT service to commission-wide general 

support activities that require specialized or dedicated IT service components, for example, 

financial management, payroll and personnel services, training, hiring and logistics support. 

Management of the IT Portfolio in FY 2016

The Commission requests $79.0 million for the Information Technology Program and $29.4 million 

for the Salaries and Expenses Program, in support of the following IT priorities;

Surveillance:

 Data Standards

o Continue working with domestic and international regulators, as well as industry to 

harmonize and refine data standards and improve data quality.

o Implement master reference data management.

o Enhance data governance policy and implement revised procedures.

o Automate data quality management activities and increase data analysis and 

analytics support activities.
FY 2016 President’s Budget

Appendix 2─Information Technology 61

o Continue harmonizing data standards and data access services for all SDR data.

 Swaps Data Management 

o Continue data loading support for all new data submissions.

o Implement data aggregation mechanisms for cross-SDR data analysis.

o Continue integrating NFA systems and data with CFTC systems and data. 

o Continue integrating futures, swaps, and master and reference data in an enterprise 

data environment.

o Continue enhancing the CFTC data warehouse to facilitate rapid access to large 

volumes of market data. 

 Position and Transaction Surveillance 

o Continue modifying large trader reporting systems to support new swaps data 

analysis, internal reporting requirements, and transparency reporting. 

o Deploy systems that analyze orders as well as trades for trade practice violations.

o Enhance position monitoring systems.

o Enhance account ownership and control information systems.

 OTC Risk Management 

o Continue enhancing stress testing of positions in swaps for market participants and 

DCOs.

o Continue enhancing systems to identify and aggregate data for related market 

participants across DCOs.

o Continue improving tools for back testing and evaluation of sufficiency of all material 

product and portfolio margin requirements.

o Continue improving monitoring of firm level variation and initial margin 

requirements across DCOs.

o Continue enhancing tools to evaluate the risk of market participants positions held at 

multiple FCMs or DCOs.

o Continue enhancing tools to combine cleared and bilateral positions to obtain a more 

complete picture of a clearing firm’s risk.

o Continue to enhance financial analysis tools to support reviews of FCMs and swaps 

dealers risk management controls.

 Market and Data Analytics 

o Continue enhancing data availability and analytics tools that allow staff to prototype 

new surveillance and risk and compliance monitoring methods.

o Adjust production analytics to use high-performance computing platforms.

o Support additional public transparency reporting.

Other Mission Support:

 Registration and Compliance, Product Review and Assessment.

o Automate regulatory mission and key activity processes.

 Examinations 

o Automate regulatory mission and key activity processes.
FY 2016 President’s Budget

Appendix 2─Information Technology 62

 Legal and Economic Analysis

o Automate regulatory mission and key activity processes.

Enforcement:

 Enhance eLaw and forensics program technology and increase litigation technical support 

services.

Data Infrastructure:

 Increase storage, processing, and communications infrastructure to meet demand.

 Refresh desktop computing technology.

 Reduce business continuity risk and increase availability during non-business hours: 

decommission the server room at the DC Headquarters location; supplement the 

Commission’s ACF with a second, geographically co-located ACF; and adjust system 

architectures to further automate recovery and reconstitution processes and reduce the need 

for outages for planned maintenance.

 Increase customer support provided to CFTC staff during non-business hours.

 Implement information security continuous diagnostics and mitigation (CDM).

 Continue refreshing staff computing resources and complete the deployment of a virtual 

desktop environment.

 Upgrade the Commission’s public website, CFTC.gov.

 Increase customer support for industry participants using the CFTC portal. 

 Implement an electronic records and document management system and enterprise search.

 Increase support for the Commission-wide collaboration site and division collaboration sites.

Management and Administrative Support:

 Enhance video production capabilities to support electronic learning and improved 

communications.

Summary of Information Technology Budget by Cost Type

FY 2014

Actual

FY 2015

Estimate

FY 2016 

Request

($000) ($000) ($000)

 Development, Modernization and Enhancement (DME) 7,981 11,988 25,900

 Operations and Maintenance (O&M) 41,366 59,080 75,397

 Indirect Overhead 9,800 9,596 7,131

Total IT Portfolio $59,147 $80,664 $108,428

 Information Technology Services 35,000 51,116 79,000

 Information Technology Personnel 14,347 19,925 22,297

 Indirect Overhead 9,800 9,596 7,131

Total IT Portfolio $59,147 $80,664 $108,428
FY 2016 President’s Budget

Appendix 2─Information Technology 63

Detail of Information Technology Budget by Cost Type

FY 2014 

Actual

FY 2015 

Estimate

FY 2016 

Request

($000) ($000) ($000)

Surveillance 13,139 17,884 32,649

 DME 4,466 3,700 13,394

 Services 4,227 3,380 13,020

 Personnel 239 320 374

 O&M 8,673 14,184 19,255

 Services 2,949 6,524 10,291

 Personnel 5,724 7,660 8,964

Enforcement 3,728 5,105 6,968

 DME 84 738 823

 Services 62 694 785

 Personnel 22 44 38

 O&M 3,644 4,367 6,145

 Services 3,107 3,409 5,230

 Personnel 537 958 915

Other Mission Support 1,361 2,332 3,637

 DME 655 1,404 2,100

 Services 655 1,404 2,100

 Personnel - - -

 O&M 706 928 1,537

 Services 706 928 1,537

 Personnel - - -

Management and Administrative 

Support 1,722 2,156 2,808

 DME 37 48 53

 Services - - -

 Personnel 37 48 53

 O&M 1,685 2,108 2,755

 Services 791 959 1,474

 Personnel 894 1,149 1,281

Data Infrastructure and Technology 

Support 29,397 43,591 55,235

 DME 2,739 6,098 9,530

 Services 2,463 5,709 9,103

 Personnel 276 389 427

 O&M 26,658 37,493 45,705

 Services 20,040 28,109 35,460

 Personnel 6,618 9,384 10,245

Indirect Overhead 9,800 9,596 7,131

Total IT Portfolio $59,147 $80,664 $108,428

Table 15: Information Technology Budget

Table Key

Category Description

DME Costs related to the development, modernization, and enhancement of technology.

O&M Costs related to the operations and maintenance of technology.

PERSONNEL Costs of government personnel for salary and benefits only. 

SERVICES Hardware, software, and contracted data and technology services and contracted labor.

INDIRECT Overhead related to leases and other centrally funded costs.
FY 2016 President’s Budget

Appendix 3 Inspector General 64

APPENDIX 3

Inspector General

The Office of Inspector General is an independent organizational unit at the CFTC. The mission of the 

Office of Inspector General is to detect waste, fraud, and abuse and to promote integrity, economy, 

efficiency, and effectiveness in the CFTC’s programs and operations. As such it has the ability to 

review all of the Commission’s programs, activities, and records. In accordance with the Inspector 

General Act of 1978, as amended, the Office of Inspector General issues semiannual reports detailing 

its activities, findings, and recommendations.

Total FY 2016 Budget as described below includes the OIG request of $2,660,000 for estimated direct 

salary and benefit costs of nine FTE, including an estimated contribution of $6,479 to support the 

Council of the Inspectors General on Integrity and Efficiency. The Budget also includes overhead of 

approximately $130,000. Overhead represents a proportional share of all estimated indirect costs, 

such as, lease of space, utilities, communications, printing, supplies, equipment and other services

used by or available to the Office of Inspector General.

FY 2016 

Total Budget Training Budget Estimate FTE 

$2,790,000 $14,100 9

The following amounts were included in the FY 2015 President’s Budget:

FY 2015 

Total Budget Training Budget Estimate FTE 

$2,620,000 $15,196 7
FY 2016 President’s Budget

Appendix 4 Statement of Availability 65

APPENDIX 4

Statement of Availability on Basis of Obligations

FY 2014

Actual

FY 2015

Estimate

FY 2016 

Request

$ (000) $ (000) $ (000)

New Appropriations $215,000 $250,000 $322,000

Sequestration 0 0 0

Carryover from Prior Year 2,196 5,322 49

Recoveries of Prior Year Obligations 1,627 2,000 2,000

Total Available 218,823 257,322 324,049

Obligations 216,171 252,150 324,000

Balance Available 2,652 5,172 49

Lapsing Appropriations30 (2,670) 5,123

Total Available or Estimate $5,322 $49

Table 16: Summary of FY 2014 to 2016 Statement of Availability on Basis of Obligations

 

30 Reflects adjustments made as a result of GAO Decision Memorandum B-325351.
FY 2016 President’s Budget

Appendix 5 Customer Protection Fund 66

APPENDIX 5

Customer Protection Fund

Introduction

Section 748 of the Dodd-Frank Act amended the CEA by adding Section 23, entitled “Commodity 

Whistleblower Incentives and Protections.” Among other things, Section 23 establishes a 

whistleblower program that requires the Commission to pay awards, under regulations prescribed by 

the Commission and subject to certain limitations to eligible whistleblowers, who voluntarily provide 

the Commission with original information about violations of the CEA that lead to the successful 

enforcement of a covered judicial or administrative action, or a related action. The Commission’s 

whistleblower awards are equal, in the aggregate amount to at least 10 percent but not more than 30 

percent of the monetary sanctions actually collected in the Commission’s action or a related action.

Section 748 of the Dodd-Frank Act also established the CFTC Customer Protection Fund (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. The Commission undertakes and 

maintains customer education initiatives through an Office of Consumer Outreach.

Management of the Whistleblower Office

The Whistleblower Office (WBO) has three essential functions:

 Process Whistleblower Submissions. WBO receives, tracks, and handles whistleblower 

submissions and inquiries.

 Coordinate with Commission Divisions and Outside Agencies. WBO answers questions from 

Commission staff and others regarding the whistleblower program, and guides the handling 

of whistleblower matters as needed during examination, investigation and litigation. WBO 

also approves referrals of whistleblower-identifying information to outside agencies.

 Administer Claims Process. WBO receives and tracks whistleblower award claims, gathers 

and prepares the adjudicatory records for the Whistleblower Award Determination Panel 

(Panel), advises the Panel as needed on the whistleblower provisions and rules, and 

memorializes the Panel’s decisions.

Management of the Office of Consumer Outreach

The Office of Consumer Outreach administers the CFTC’s customer and public education initiatives. 

The Commission currently conducts outreach efforts towards consumers through a comprehensive 

social marketing campaign called ”SmartCheck”. This campaign utilizes numerous outreach channels 

to convey messages that encourage customers to engage in behavior that help lower the likelihood 

they will become fraud victims and mitigate the impact for those who do fall for it. The majority of the 

outreach efforts drive consumers to a website, www.SmartCheck.cftc.gov, where anti-fraud 

information and research tools are available and referenced. Those customers seeking in-depth 

information about trading in commodities markets at a retail level can continue to find it on CFTC’s 

main website www.cftc.gov. 

The outreach efforts include targeted online and print advertising, media outreach, in-person 

presentations and events, and collaborative programs. The collaborative programs include efforts 

with entities such as state banking, insurance, securities and consumer protection regulators, 

financial markets SROs, nonprofit consumer groups, public libraries, local government, and 
FY 2016 President’s Budget

Appendix 5 Customer Protection Fund 67

academia. The Commission is also actively involved with ongoing Federal financial literacy efforts, 

including participating on the Financial Literacy and Education Commission. 

Operation of the Customer Protection Fund 

The Customer Protection Fund is a revolving fund established under section 748 of the Dodd-Frank 

Act. The Commission shall deposit civil monetary penalties, disgorgements, and interest it collects in 

covered administrative or judicial enforcement actions into the Fund whenever the balance in the 

Fund at the time of the deposit is less than or equal to $100 million. The Commission will not deposit 

restitution awarded to victims into the Fund, and will pay whistleblower awards and finance customer 

education initiatives from the Fund.

In FY 2016, the CFTC estimates that it will use $32.4 million:

 Approximately $21.0 million will be used for the Office of Consumer Outreach to fund 

customer education initiatives, administrative expenses, and six full-time equivalents, an 

increase of $13.3 million over the FY 2015 level.

 Whistleblower awards are estimated at $10 million.

 Approximately $1.4 million will be used for the Whistleblower Office to fund administrative 

expenses and five FTE, which is an increase of $0.2 million over the FY 2015 level. 

Table 17: Customer Protection Fund

FY 2014

Actual

($000)

FY 2015

Estimate

($000)

FY 2016

Estimate

($000)

Budget Authority – Prior Year $98,987 $269,901 $250,856

Budget Authority – New Year 175,933 0 0

Prior Year Recoveries 24 0 0

Total Budget Authority 274,944 269,901 250,856

 Whistleblower Program 644 1,200 1,400

 Whistleblower Awards 246 10,000 10,000

 Customer Education Program 4,153 7,845 20,980

Total Planned Expenditures 5,043 19,045 32,380

Unobligated Balance $269,901 $ 250,856 $218,476
FY 2016 President’s Budget

Appendix 6 The Commission and the Industry We Regulate 68

APPENDIX 6

The Commission and the Industry We Regulate

The mission of the CFTC is 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, and abusive practices related to derivatives and other products that are subject 

to the CEA. As a key mechanism for performing these responsibilities, the Commission delegates 

certain authorities to registered entities such as SROs, clearing entities and data depositories and then 

oversees and supports these organizations by reviewing their operations and procedures and by 

providing guidance, policy and direction in accordance with Commission regulations. 

With respect to its oversight of SDs, MSPs and intermediaries, the CFTC oversight occurs in 

coordination with the SRO system. While the DSROs are obligated to conduct surveillance, 

compliance oversight and enforcement activities for entities under their purview, the Commission 

conducts surveillance, compliance oversight and enforcement activities across all market participants 

while concurrently providing the rules, legal interpretations and policy oversight necessary to guide 

DSRO activities. 

Recent revisions to the Commission’s regulatory requirements have required additional focus on the 

oversight of DSROs in their implementation of these new requirements for market participants. As 

the CFTC seeks to strengthen the regulatory framework for both FCMs and SDs, a new category of 

registrants for the CFTC, the Commission will continue to work closely with the NFA to emphasize 

priority areas such as risk management, internal controls, legal compliance and FCM and SD 

examinations. 
FY 2016 President’s Budget

Appendix 6 The Commission and the Industry We Regulate 69

CFTC Regulatory Landscape

The following matrix provides an overview of regulated entities and the CFTC’s related mission 

activities. Activities and entities for which CFTC is the first-line regulator are identified as “CFTC”. 

Activities and entities for which the agency is the second-line regulator are identified as “SRO/CFTC,” 

“DSRO/CFTC” or “NFA/CFTC”. Activities and entities for which the CFTC has delegated 

responsibility to the NFA are identified as “NFA.”

Entity Acronym CFTC Mission-Activity 

 

 

Registration 

& 

Compliance

Product 

Reviews

Surveillance Examinations Enforcement

Economic 

& Legal 

Analysis

Trading Entities

Designated Contract Market DCM CFTC CFTC CFTC CFTC CFTC CFTC

Swap Execution Facility SEF CFTC CFTC CFTC CFTC CFTC CFTC

Clearing Entities

Derivatives Clearing Organization DCO CFTC CFTC CFTC CFTC CFTC CFTC

Systemically Important Derivatives 

Clearing Organization 

SIDCO CFTC CFTC CFTC

CFTC/

Federal 

Reserve

CFTC CFTC

Data Repositories

Swap Data Repository SDR CFTC N/A N/A CFTC CFTC CFTC

Registered Futures Association

National Futures Association NFA CFTC N/A N/A CFTC CFTC CFTC

Intermediaries

Futures Commission Merchant FCM NFA/CFTC N/A

DSRO/CFT

C

DSRO/CFTC DSRO/CFTC CFTC

Swap Dealer SD NFA/CFTC CFTC NFA/CFTC NFA/CFTC NFA/CFTC CFTC

Major Swap Participant MSP NFA/CFTC CFTC NFA/CFTC NFA/CFTC NFA/CFTC CFTC

Retail Foreign Exchange Dealer RFED NFA N/A NFA/CFTC NFA/CFTC NFA/CFTC CFTC

Managed Funds

Commodity Trading Advisor CTA NFA N/A NFA/CFTC NFA NFA/CFTC CFTC

Commodity Pool Operator CPO NFA N/A NFA/CFTC NFA NFA/CFTC CFTC

Other Registrants

Introducing Broker IB NFA N/A NFA/CFTC NFA NFA/CFTC CFTC

Floor Broker FB NFA N/A CFTC N/A SRO/CFTC CFTC

Floor Trader FT NFA N/A CFTC N/A SRO/CFTC CFTC

Associated Person (Sales) AP NFA N/A CFTC N/A SRO/CFTC CFTC

Figure 14: Matrix of U.S. Registered Entities and Registrants by CFTC Mission Activity
FY 2016 President’s Budget

Appendix 6 The Commission and the Industry We Regulate 70

Assumptions on the Number of Regulated Entities and Registrants

The futures and swaps industry is a marketplace driven by change. These trillion-dollar markets, with 

massive economic force are expanding steadily both in volume and new users and their complexity 

are rapidly evolving with new technologies, cross-border activities, product innovation, and greater 

competition. However, the phenomenal expansion in the industry, for all its benefits, carries with it 

new responsibilities and challenges for the Commission and the industry. The FY 2014 estimated 

actuals and the Commission’s assumptions on the number of regulated trading and clearing entities 

and registrants through FY 2016 are provided below. 

Entity Acronym Number of Registered Entities/Registrants 

 

FY 2014

Actuals

FY 2015

Assumptions

FY 2016

Assumptions

Trading Entities

Designated Contract Market DCM 15 20 23-26

Swap Execution Facility SEF 22 24 26

Clearing Entities

Derivatives Clearing Organization DCO 14 19 20

Clearing Member 191 200 210

Systemically Important DCO SIDCO 2 No more than 4 No more than 4

Data Repositories

Swap Data Repository SDR 4 4 4

Intermediaries

Futures Commission Merchant 31 FCM 78 75 75

Swap Dealer SD 104 105 105

Major Swap Participant MSP 2 2 2

Retail Foreign Exchange Dealer RFED 7 7 7

Managed Funds

Commodity Trading Advisor CTA 2,525 2,600 2,600

Commodity Pool Operator CPO 1,774 1,800 1,800

Other Registrants

Introducing Broker IB 1,359 1,500 1,500

Floor Broker FB 4,433 4,500 4,500

Floor Trader FT 813 900 900

Associated Person AP 57,578 58,000 58,000

Figure 15: Number of Market Participants by Fiscal Year

 

31 Excludes FCMs registered as RFEDs.
FY 2016 President’s Budget

Appendix 6 The Commission and the Industry We Regulate 71

Industry Growth in Volume, Globalization and Complexity

In a marketplace driven by change, it may be helpful to look back at industry and CFTC trends over 

the past few years. The charts that follow reflect many of those changes affecting the CFTC: 

 Growth in volume of futures and option contracts traded; 

 Growth in volume of swaps traded; 

 Growth in actively traded futures and option contracts; 

 Notional value of futures/option open contracts;

 Notional value of exchange-traded and OTC contracts;

 Amount of customer funds held at futures commission merchants;

 Aggregate sum of house origin margin on deposit;

 Contract markets designated by the CFTC; and

 Number of derivatives clearing organizations registered with the CFTC.
FY 2016 President’s Budget

Appendix 6─Futures and Option Contract Volume 72

Growth in Volume of Futures & Option Contracts Traded32

Trading volume for CFTC-regulated contracts maintained a general upward trend for the past decade. 

As the volume of futures and option contracts increases, CFTC resource requirements also increase, 

since the CFTC has to conduct trade practice and market surveillance for a larger number of 

transactions.

1,518

1,920

2,377

3,094

3,425

2,718

3,060

3,528

3,154

3,757

3,700

3,900

4,100

0

500

1000

1500

2000

2500

3000

3500

4000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Est.

2015

Est.

2016

Est.

Contract Trading Volume (Millions)

Contract Trading Volume (Millions)

Figure 16: Growth of Volume of Contracts Traded

 

32 Data Source: Futures Industry Association, CFTC estimates.
FY 2016 President’s Budget

Appendix 6─Swaps Contract Volume 73

Growth in Volume of Swaps Traded33

In 2013, the CFTC began publishing the Semi-Annual Swaps Report including volume data for 2013 

and 2014. The annualized volume estimates for 2013 and 2014 are based on data obtained from SDRs 

for the period from October 1, 2013 and December 26, 2014. The CFTC Swaps Reports currently 

include only interest rates and credit, but the Commission expects to include additional asset classes 

in the near future. The CFTC Swaps Report currently incorporates data from four SDRs; however 

data from additional SDRs could be incorporated in the future.

SEFs, a new type of CFTC-regulated platform for trading swaps, began operating on October 2, 2013. 

The annualized volume estimates for 2013 and 2014 are based on actual trading volume between 

October 2, 2013 and December 31, 2014. 

The Commission only recently began receiving SDR data and SEF data and needs additional 

resources to render the data in useable form so that it can be used to conduct market surveillance, to 

include additional asset classes in the Swaps Reports, and to automate these processes. 

85

310

340

380

54

92 98

108

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

360

380

400

2013 2014 2015 Est. 2016 Est.

Swap Trading Volume (Trillions)

SDR Swap Trading Volume (Trillions)

SEF Swap Trading Volume (Trillions)

Figure 17: Estimated Swap Event Volume

 

33 Data Source: CFTC Weekly Swaps Report and Clarus Financial Technology.
FY 2016 President’s Budget

Appendix 6─Actively Traded Futures and Option Contracts 74

Growth in Actively Traded Futures & Option Contracts34

The number of actively traded contracts on U.S. exchanges (contracts that trade at least 10 contracts 

on at least one day in the calendar year) has increased almost six-fold in the last 10 years; with a 

substantial increase in 2014. As the number of actively traded contracts increases, CFTC resource 

requirements also increase since the CFTC has to conduct market surveillance for a larger number of 

products.

662

906

1046

1271

1435

1887

2203

2410 2338

2589

4077

4400

4700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Est.

2016

Est.

Futures and Options Actively Traded Contracts

Figure 18: Actively Traded Futures and Option Contracts

 

34 Data Source: CFTC Integrated Surveillance System
FY 2016 President’s Budget

Appendix 6─Notional Value of Futures and Options Open Contracts 75

37.7 37.7

43.3 43.0

29.7

34.1

36.0

33.7

25.2

33.9

30.8

33.0

34.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Est.

2016

Est.

Amount in Trillions

Physical Commodities

Financial Commodities

Notional Value of Futures and Option Open Contracts35

The notional value of open financial commodities contracts decreased by $3.2 trillion from year-end 

2013 to September 2014, and the notional value of open in physical commodities contracts increased 

by $0.1 trillion. 

Figure 19: Notional Value of Futures and Option Open Contracts

 

35 Data Source: Exchange-traded futures/options are those traded on CFTC designated contract markets.

 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fin’l 37.3 36.9 42.1 41.2 28.3 32.2 33.5 30.4 22.8 31.7 28.5 30.0 31.0

Phys 0.4 0.8 1..2 1.8 1.4 1.9 2.5 3.3 2.4 2.2 2.3 3.0 3.0
FY 2016 President’s Budget

Appendix 6─Notional Value of Exchange Traded and OTC Contracts 76

Notional Value of Exchange-Traded and OTC Contracts

The Commission’s ability to monitor derivatives trading activity has been enhanced in recent years 

with the development of SDRs, although additional resources are needed to render the data in a more 

useable form so that it can be used for economic analyses and to conduct market surveillance. Data 

with respect to “Swaps”, as detailed in Figure 20, currently includes data from four SDRs and reflects 

data relating to two asset classes: interest rates and credit. The Commission expects to include 

additional SDRs and asset classes in the future. Data with respect to “Exchange-Traded Futures & 

Options” reflects contracts that were traded on DCMs that are regulated by the CFTC. Data with 

respect to “OTC Contracts (BIS)” reflects data reported by the Bank of International Settlements 

(BIS), which compiles reports from 13 countries on different categories of OTC contracts. 

3 8 3 8 4 3 4 3 3 0 3 4 3 6 3 4 2 5 3 1 3 1 3 3 3 4

427

412 420

440

258

298

415

596 598 604 601

648 639

693

720

750

800

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Est.

2016

Est.

Amount in Trillions

Exchange-Traded Futures & Options

Swaps

OTC Contracts (BIS)

Figure 20: Notional Value of Exchange-Traded and OTC Contracts
FY 2016 President’s Budget

Appendix 6─Customer Funds in FCM Accounts 77

Customer Funds in Futures Commission Merchants Accounts36

FCMs act as intermediaries between the exchanges and the public investor, serve as a broker for the 

purchase and sale of swaps and derivatives, and function as a custodian for billions of dollars of 

customer funds. As a key component of the Commission’s regulatory frame work for both FCMs and 

RFEDs, all customer funds for trading on DCMs (exchanges) must be segregated from the FCM or 

RFED’s own funds—this includes cash deposits and any securities or other property deposited by such 

customers to margin or guarantee futures trading. In addition, Part 30 of the CFTC’s regulations also 

requires FCMs to hold apart from their own funds a “secured amount” for U.S. customers trading on 

foreign boards of trade through FCMs. This segregation of customer funds is the core foundation of 

customer protection in the commodity futures and swaps markets because it prohibits the use of nondefaulting, innocent customers’ collateral to protect the FCM or RFED firm or their clearing members 

from trading risks. 

Although the Commission has required segregation of funds reporting for FCM/RFED futures 

transactions since 2003, the CFTC made the decision to expand this mandate to cover all customercleared swap funds held by these entities in January 2012 (formal reporting become effective in June 

2014). The segregated swap fund information for FY 2014 is $40 billion, a net 46 percent increase 

from the 2013 level. 

$94.5

$116.7

$138.0

$155.4

$201.0 

$169.1 

$177.4 

$195.8 

$184.2 $181.3 

$222.9 

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Amount in Billions

Figure 21: Customer Funds in FCM Accounts

 

36 Data Source: CFTC Monthly FCM Financial Reporting
FY 2016 President’s Budget

Appendix 6─ House Origin Margin on Deposit 78

Aggregate Sum of House Origin Margin on Deposit

Origin Margin (also referred to as Original or Initial Margin) is the initial deposit of margin money 

each clearing member firm is required to make according to clearing organization rules based upon 

positions carried, determined separately for customer and proprietary positions.37

Origin Margin is an amount directly related to the risk of a specific firm or DCO. Large Origin Margin 

amounts point to large risk. The Commission needs to be aware of these amounts to understand 

changing risk profiles. As appropriate, Commission staff will conduct house risk reviews of specific 

firms. Commission staff will present to the firm its evaluation of the risk of the positions. The firm 

will then detail for Commission staff the financial resources it has available to support the trades and 

any offsetting OTC trades not available to Commission staff. As amounts increase so does the number 

of firm level risk reviews. Additionally, many firms are clearing members of multiple DCOs now 

under the Commission’s jurisdiction.

$22.9

$34.5 

$27.0 

$36.2 

$46.0 

$63.1 

$70.0 

$92.0 

2007 2008 2009 2010 2011 2012 2013 2014

Amount in Billions

Figure 22: Aggregate Sum of House Origin Margin on Deposit

 

37 Data Source: Margin on Deposit amounts obtained at month-end from DCOs.
FY 2016 President’s Budget

Appendix 6─Designated Contract Markets 79

Contract Markets Designated by the CFTC

The following DCMs are boards of trade or exchanges that meet the criteria and core principles for 

trading futures, options or swaps by both institutional and retail participants. Currently, 15 DCM 

participants meet criteria and core principles for trading futures, options and swaps. For each 

business day, each designated contract market electronically submits several data sets to the CFTC. 

These data are a major source of input to the Commission’s surveillance programs and for input to 

other programs throughout the CFTC. Per CFTC Rule 16.01 of the Commission’s regulations, basic 

market level product data is submitted that includes open interest, trading volume, exchange of 

futures for related positions, delivery notices, option deltas, and prices. Per CFTC Rule 16.00, clearing 

member end of day position data by proprietary and customer trading is received. Customer data is 

the aggregation of all customer positions cleared through the clearing member. Data elements include 

positions, bought and sold quantities, exchange of futures for related positions, and delivery notices. 

Per CFTC Rule 16.02, each transaction occurring during the business day is submitted and includes 

such elements as trade quantity, time of trade, price, market participant account numbers, etc. These 

data sets, along with end of day large trader data submitted daily by FCMs, clearing members, and 

foreign brokers, are loaded into internal database systems and analyzed using sophisticated software 

applications.

The number of new contracts listed by the designated contract markets each year adds to the 

surveillance workload in several ways. New contract terms and conditions have to be studied for full 

understanding of the product characteristics, support data for each contract has to be defined to the 

internal database systems, new analyses if appropriate need to be developed, and software engines 

may have to be modified. In addition, each analyst must spread his/her time across more and more 

contracts, limiting in some way the degree of analysis on any one contract.

Designated Contract Market 2009 2010 2011 2012 2013 2014 

Cantor Futures Exchange, L.P. CX 

Board of Trade of the City of Chicago CBOT 

Chicago Climate Futures Exchange, LLC CCFE 

CBOE Futures Exchange, Inc. CFE 

Chicago Mercantile Exchange, L.P. CME 

Commodity Exchange Inc. COMEX 

ELX Futures, L.P. ELX 

Eris Exchange, LLC ERISDCM 

Green Exchange, LLC38 GREENEX 

ICE Futures US, Inc.39 ICE US 

Kansas City Board of Trade KCBT 

Minneapolis Grain Exchange, Inc. MGE 

North American Derivatives Exchange, 

Inc. 40 NADEX 

 

38 Designation vacated in July 2012

39 Formerly, New York Board of Trade

40 Formerly, HedgeStreet, Inc.
FY 2016 President’s Budget

Appendix 6─Designated Contract Markets 80

Designated Contract Market (continued) 2009 2010 2011 2012 2013 2014 

NASDAQ OMX Futures Exchange, Inc. 41 NFX 

New York Mercantile Exchange, Inc. NYMEX 

Nodel Exchange, LLC NEX 

NYSE Liffe US, LLC NYSE LIFFE 

OneChicago LLC Futures Exchange OCX 

The Trend Exchange TRENDEX 

trueEx LLC TRUEEX 

US Futures Exchange, LLC USFE

TOTAL 15 17 18 19 19 15 

Table 18: Contract Markets Designated by the CFTC

 

41 Formerly, Philadelphia Board of Trade
FY 2016 President’s Budget

Appendix 6─CFTC-Registered Derivatives Clearing Organizations 81

Derivatives Clearing Organizations Registered with the CFTC

A clearinghouse that seeks to provide clearing services with respect to futures contracts, options on 

futures contracts, or swaps must register with the CFTC as a DCO. In FY 2014, 14 DCOs were 

registered with the CFTC. The Commission is currently (first quarter of FY 2015) processing three 

applications for DCO registration (all of which are from foreign clearinghouses) and expects to receive 

three or four more applications in FY 2015. These numbers do not include foreign clearinghouses 

that have expressed an interest in receiving from the Commission an exemption from DCO 

registration. Any clearinghouse that receives such an exemption would still be subject to limited 

oversight by the Commission. 

While the number of DCOs has declined slightly over the past few years due to consolidation in the 

industry, the Commission’s oversight of DCOs has greatly expanded as a result of the Dodd-Frank Act 

and the adoption of implementing regulations. In addition, the DCOs’ activities have become more 

complex as they have expanded their product offerings and increased their memberships. Finally, the 

movement of swaps to a cleared environment has created greater transparency in the market, but has 

also shifted significant new levels of counterparty risk to DCOs. As more swap activity migrates to 

clearing, the DCOs are holding substantial amounts of collateral that have been deposited by clearing 

members and the customers of those clearing members. 

Derivatives Clearing Organizations 2009 2010 2011 2012 2013 2014 

Cantor Clearinghouse L.P. Cantor 

Clearinghouse 

Chicago Board of Trade42 CBOT 

Clearing Corporation CCorp 

Chicago Mercantile Exchange , Inc. CME Clearing House 

Chicago Mercantile Exchange 

Europe Limited43

CME Clearing 

Europe 

ICE Clear Credit LLC ICE Clear Credit 

ICE Clear Europe Ltd ICE Clear Europe 

ICE Clear US, Inc.44 ICE Clear US 

Kansas City Board of Trade Clearing 

Corp45 KCBT 

LCH, Clearnet LLC.46 LCH LLC 

LCH, Clearnet Ltd LCH Ltd 

LCH, Clearnet SA LCH SA 

Minneapolis Grain Exchange Inc. MGE 

 

Natural Gas Exchange Inc. NGX 

 

42 Registration vacated as of 8/6/2012

43 Registration vacated as of 3/13/2012

44 Formerly, HedgeStreet, Inc.

45 Registration vacated as of 4/16/2013

46 Formerly, International Derivatives Clearinghouse LLC
FY 2016 President’s Budget

Appendix 6─CFTC-Registered Derivatives Clearing Organizations 82

Derivatives Clearing Organizations (continued) 2009 2010 2011 2012 2013 2014 

New York Portfolio Clearing, LLC NYPC 

North American Derivatives

Exchange, Inc.47 NADEX 

NYMEX Clearing House48 NYMEX 

Options Clearing Corporation OCC 

Singapore Exchange Derivatives 

Clearing SGX-DC 

TOTAL 12 14 17 17 13 14 

Table 19: Derivatives Clearing Organizations Registered with the CFTC

 

47Formerly, New York Clearing Cooperation

48 Registration vacated as of 8/6/2012
FY 2016 President’s Budget

Appendix 7─Dodd-Frank Act Rules with Significant Resource Requirements 83

APPENDIX 7

Dodd-Frank Act Rules with Significant Resource Requirements 

The Dodd-Frank Act amended the CEA to establish a comprehensive new regulatory framework for 

swaps, as well as enhanced authorities over historically regulated entities. The Commission 

undertook an ambitious schedule for finalizing the rules necessary to expand its scope, bringing 

protection to market users and the public from fraud, manipulation, abusive practices and systemic 

risk related to swaps and fostering open, competitive, and financially sound markets. 

Under the Dodd-Frank Act, the Commission established a significant set of rules, a number of which 

significantly impact the Commission’s workload and resources. The following summarizes the major 

Dodd-Frank Act rules and indicates which mission activities are impacted by the new regulatory 

requirements. 

Impact of Major Rules Related to Swap Products by Mission Activity

Title

Definition of 

Swaps, Swap 

Dealer, Major 

Swap 

Participants

Swap Data 

Recordkeeping 

and Reporting 

Requirements

Reviews of 

Swaps for 

Clearing 

Requirement 

Determination

Real-Time Public 

Reporting of 

Swaps 

Transaction Data

Large Trader 

Reporting for 

Physical 

Commodity 

Swaps

Block Sizes

Reference Multiple 17 CFR Part 45 Multiple 17 CFR Part 45 17 CFR Parts 15 

and 20 Multiple

Mission Activity:

Registration

Product Reviews

Surveillance

Examinations

Enforcement

Economic & Legal 

Analysis

International P9licy

Data & Technology 

Management
FY 2016 President’s Budget

Appendix 7─Dodd-Frank Act Rules with Significant Resource Requirements 84

Impact of Major Rules Related to Swap Products by Mission Activity

Title

Core 

Principles 

and Other 

Requirements 

for DCMs

Derivative 

Clearing 

Organization 

General 

Provisions 

and Core 

Principles

Swap Data 

Repositories: 

Registration 

Standards, 

Duties and 

Core 

Principles

Registration 

of Swap 

Dealers and 

Major 

Swap 

Participants

Core 

Principles 

and Other 

Requirements 

for Swap 

Execution 

Facilities

CrossBorder 

Application 

of Swaps 

Provisions

Business 

Conduct 

Standards for 

Intermediaries

Antidisruptive 

Practices 

Authority

Reference:

17 CFR Parts 

1, 16, and 38

17 CFR Parts 

1, 21, 39, 140

17 CFR Part 

49

17 CFR Parts 

3, 23, and 

170

17 CFR Part 

37

TBD Multiple 78 FR 31890

Mission Activity:

Registration

Product Reviews

Surveillance

Examinations

Enforcement

Economic & 

Legal Analysis

International 

P9licy

Data & 

Technology 

Management
FY 2016 President’s Budget

Appendix 8─CFTC Mission Statement, Strategic Goals & Outsomes 85

APPENDIX 8

Strategic Response

The Commission’s Strategic Plan reflects a set of guiding principles for implementing the CFTC’s 

expanded scope, this plan provides direction for a future that is still fluid. These strategic goals are 

constructed in a focused way, lending credence to unifying goals found within CEA, as amended by 

the Dodd-Frank Act. Using this strategic plan, Commission activities will be aligned through 2018. 

Summary of CFTC Mission Statement, Strategic Goals & Outcomes

Mission Statement

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, 

and abusive practices related to derivatives and other products that are subject to the Commodity 

Exchange Act.

Goal One

Market Integrity and Transparency

Objectives

1. Markets not readily susceptible to manipulation and other abusive practices.

2. Effective self-regulatory framework.

3. Availability of market information to the public and for use by authorities.

4. Integrate swaps data with futures and options on futures data.

Goal Two

Financial Integrity and Avoidance of System Risk

Objectives

1. Reduce the risk of disruptions to the system for clearing and settlement of contract obligations.

2. Provide market participants with regulatory guidance.

3. Strong governance and oversight by Commission registrants.

4. Assess whether SDs, MSPs and FCMs maintain sufficient financial resources, risk management 

procedures, internal controls, and customer protection practices.

Goal Three

Comprehensive Enforcement

Objectives

1. Strengthen capacity to receive and expeditiously handle high-impact tips, complaints and referrals.

2. Execute rigorous and thorough investigations.

3. Effectively prosecute violations.

4. Remedy past violations, deter future violations and prevent consumer losses.
FY 2016 President’s Budget

Appendix 8─CFTC Mission Statement, Strategic Goals & Outsomes 86

Goal Four

Domestic and International Cooperation and Coordination

Objectives

1. Broad outreach on regulatory concerns.

2. Sound international standards and practices.

3. Provide global technical assistance.

4. Robust Domestic and International Enforcement Cooperation and Coordination.
FY 2016 President’s Budget

Appendix 8─2016 Planned Resources by Strategic Goal─Goal One 87

FY 2016 Planned Resources by Draft Strategic Goal

Goal One: Market Integrity and Transparency.

Breakout of Goal One Request by Mission Activity

FY 2015

Estimate

FY 2016

Request

Change

Mission Activities $ (000) FTE $ (000) FTE $ (000) FTE

Registration and Compliance $5,707 20 $6,051 21 $344 1

Product Reviews 4,166 17 4,875 18 $709 1

Surveillance 34,602 73 38,231 100 $3,629 27

Examinations 17,206 69 21,219 81 $4,013 12

Enforcement 0 0 0 0 $0 0

Economic and Legal Analysis 5,556 21 7,026 23 $1,470 2

International Policy 0 0 0 0 $0 0

Data and Technology 10,876 13 18,959 18 $8,083 5

Agency Direction and 

Management 

8,827 36 9,880 38 $1,053 2

Total Goal One $86,940 249 $106,241 299 $19,301 50

Table 20: Breakout of Goal One by Mission Activity

Registration 

6 %

Product Reviews

4 %

Surveillance

36%

Examinations

20%

Economic and Legal 

Analysis

7 %

Data and Technology

18%

Agency Direction and 

Management

9 %

Figure 23: Breakout of Goal One Request by Mission Activity
FY 2016 President’s Budget

Appendix 8─2016 Planned Resources by Strategic Goal─Goal Two 88

Goal Two: Financial Integrity and Avoidance of System Risk

Breakout of Goal Two Request by Mission Activity

FY 2015

Estimate

FY 2016

Request

Change

Mission Activities $ (000) FTE $ (000) FTE $ (000) FTE

Registration and Compliance $11,087 40 $11,756 42 $669 2

Product Reviews 1,294 5 1,513 5 $219 0

Surveillance 21,900 48 24,198 63 2,298 15

Examinations 11,470 45 14,146 54 2,676 9

Enforcement 0 0 0 0 $0 0

Economic and Legal Analysis 5,557 21 7,026 24 1,469 3

International Policy 0 0 0 0 0 0

Data and Technology 9,014 11 15,714 15 6,700 4

Agency Direction and 

Management 

7,571 30 8,475 32 904 2

Total Goal Two $67,893 200 $82,828 235 $14,935 35

Table 21: Breakout of Goal Two by Mission Activity

Registration 

14%

Product Reviews

2 %

Surveillance

29%

Examinations

17%

Economic and Legal 

Analysis

9 %

Data and Technology

19%

Agency Direction and 

Management

10%

Figure 24: Breakout of Goal Two Request by Mission Activity
FY 2016 President’s Budget

Appendix 8─2016 Planned Resources by Strategic Goal─Goal Three 89

Goal Three: Comprehensive Enforcement

Breakout of Goal Three Request by Mission Activity

FY 2015

Estimate

FY 2016

Request

Change

Mission Activities $ (000) FTE $ (000) FTE $ (000) FTE

Registration and Compliance $0 0 $0 0 $0 0

Product Reviews 0 0 0 0 $0 0

Surveillance 0 0 0 0 $0 0

Examinations 0 0 0 0 $0 0

Enforcement 49,332 164 69,993 212 20,661 48

Economic and Legal Analysis 5,556 21 7,027 24 1,471 3

International Policy 0 0 0 0 0 0

Data and Technology 13,718 17 23,915 22 10,197 5

Agency Direction and 

Management 

10,742 42 12,023 46 1,281 4

Total Goal Three $79,348 244 $112,958 304 $33,610 60

Table 22: Breakout of Goal Three by Mission Activity

Enforcement

62%

Economic and Legal 

Analysis

6 %

Data and Technology

21%

Agency Direction and 

Management

11%

Figure 25: Breakout of Goal Three Request by Mission Activity
FY 2016 President’s Budget

 

Appendix 8─2016 Planned Resources by Strategic Goal─Goal Four 90

Goal Four: International and Domestic Cooperation and Coordination

Breakout of Goal Four Request by Mission Activity

FY 2015

Estimate

FY 2016

Request

Change

Mission Activities $ (000) FTE $ (000) FTE $ (000) FTE

Registration and Compliance $0 0 $0 0 $0 0

Product Reviews 0 0 0 0 0 0

Surveillance 0 0 0 0 0 0

Examinations 0 0 0 0 0 0

Enforcement 0 0 0 0 0 0

Economic and Legal Analysis 5,433 20 6,870 23 1,437 3

International Policy 4,523 16 4,914 16 391 0

Data and Technology 2,608 3 4,546 4 1,938 1

Agency Direction and 

Management 

3,255 14 3,643 14 388 0

Total Goal Four $15,819 53 $19,973 57 $4,154 4

Table 23: Breakout of Goal Four by Mission Activity

Economic and 

Legal Analysis

34%

International Policy 

25%

Data and 

Technology

23%

Agency Direction 

and Management

18%

Figure 26: Breakout of Goal Four Request by Mission Activity
FY 2016 President’s Budget

Appendix 9Table of Acronyms 91

APPENDIX 9

Table of Acronyms

BIS Bank of International Settlements

CCP Central Counterparties

CEA Commodity Exchange Act

CFTC Commodity Futures Trading Commission

CPO Commodity Pool Operators

CTA Commodity Trading Advisors

DCM Designated Contract Market

DCO Derivatives Clearing Organization

DSRO Designated Self-Regulatory Organization

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

FBOT Foreign Boards of Trade

FCM Futures Commission Merchant

FSOC Financial Stability Oversight Council

FTE Full-time Equivalent

FY Fiscal Year

IB Introducing Brokers

IOSCO International Organization of Securities Commissions

IT Information Technology

LEI Legal Entity Identifier

LIBOR London Interbank Offered Rate

MSP Major Swap Participant

NFA National Futures Association

OMB Office of Management and Budget

OTC Other-the-Counter

RFED Retail Foreign Exchange Dealers

RER Rule Enforcement Reviews

SD Swap Dealer

SDR Swap Data Repository

SEC Securities and Exchange Commission

SEF Swap Execution Facility

SRO Self-Regulatory Organization

UPI Unique Product Identifier

WBO Whistleblower Office (CFTC)