In the Tradition of Quality Reporting, 

the Commodity Futures Trading Commission 

Proudly Presents the FY 2008 

Performance and Accountability Report 

A Message fr

the Chairman

During the last year, the commodity futures and 

option markets continued their rapid growth and 

evolution as credit markets seized and equity 

markets began a steep decline. The fundamental shift in the

futures and option markets is illustrated by steadily increasing 

volumes, the introduction of new market participants, 

cutting edge technological and product innovation, and 

increased globalization and competition. At the same time,

commodity prices across the board—from metals, to agricultural, to energy—have been extremely volatile with many 

commodity prices reaching record highs during the year

While our markets have evolved dramatically in recent 

months and years, the mission of the Commodity Futures 

Trading Commission (CFTC or Commission) has remained 

strong and constant: We are charged with protecting market 

users and the public from fraud, manipulation, and abusive 

practices in the sale of commodity and financial futures and 

options, and fostering open, competitive and financially sound 

futures and option markets. In working to achieve its mission,

the Commission has been guided by the notion that regulatory evolution and informed responses to changing 

market conditions are the keys to effective market oversight, 

particularly in a global marketplace. This approach requires

a continual review of internal regulatory processes, consistent application of those processes to the markets, and an 

aggressive enforcement program that prosecutes wrongdoers. I am pleased to report that in Fiscal Year (FY) 2008,

the CFTC and its regulatory approach have evolved along 

with the futures and option markets we regulate to continue 

to protect our markets, market users, and the public.

A major step in the Commission’s evolution came in May, 

after years of work and bipartisan effort, when Congress 

Acting Chairman of the Commodity Futures 

Trading Commission Walter Lukken testifies 

before the House Committee on Agriculture on 

Capitol Hill in Washington, Wednesday, Oct. 

15, 2008. The hearing is to reveiw the role of 

credit derivatives in the U.S. economy.

(AP Photo/Lawrence Jackson)
CFTC

Commodity Futures Trading Commission (CTFC) Acting 

Chairman Walter Lukken is pictured during a break while 

testifying on Capitol Hill in Washington, Tuesday, June 24, 

2008, before a Senate Homeland Security and Governmental 

Affairs Committee hearing regarding oil speculation. 

(AP Photo/Charles Dharapak)

enacted the CFTC reauthorization legislation as part of the 

Food, Conservation, and Energy Act of 2008 (Farm Bill), 

making critical improvements to the Commodity Exchange 

Act (CEA or the Act) and the Commission’s authority

Specifically, the new legislation reauthorized the Commission through FY 2013, closed the so-called “Enron 

Loophole” by allowing enhanced Commission oversight of 

exempt commercial markets (ECMs) that trade contracts 

linked to regulated U.S. futures contracts, increased CFT

penalties for manipulation, clarified CFTC anti-fraud 

authority for off-exchange principal-to-principal energy 

trades, and clarified CFTC retail foreign currency fraud 

authority. The Commission is thankful for all the hard

work that went into this legislative effort and is working 

diligently to implement these important new authorities.

Any assessment of the past year must acknowledge the 

extraordinary rise then fall of commodity prices. The CFTC

recognizes that a secure, reliable, and sustainable energy 

future is of great importance to the American people, and is 

acutely aware that high commodity prices adversely affect 

all Americans. We have heard concerns that speculative

activity has been affecting commodity prices and impacting 

the price discovery and risk management roles of the 

markets we regulate. With that in mind, and building upon

the regulatory model developed as part of the Farm Bill, the 

CFTC has been systematically examining the various satellite markets that complement and compete with the centralized, regulated futures markets. These efforts have been

designed to increase transparency and to determine whether 

trading on satellite markets—such as ECMs, foreign boards 

of trade (FBOTs) and over-the-counter (OTC) swaps— 

impacts the regulated futures markets

In order to increase transparency and better inform the 

regulatory responses to the challenges of today’s markets, 

the Commission conducted a number of public hearings 

and meetings over the last year. These included: 1) a public

hearing concerning oversight of energy and other trading 

on ECMs; 2) two meetings of the Commission’s Agricultural Advisory Committee; 3) two meetings of the Commission’s Global Markets Advisory Committee; 4) the first 

meeting of the newly-formed Energy Markets Advisory 

Committee; and 5) an Agricultural Forum (Webcast to 

2,800 individuals in 38 states and 43 countries) to discuss 

the sudden run-up in agricultural prices in early 2008

In addition, in FY 2008, the Chairman and senior Commission staff members appeared on Capitol Hill on 14 occasions to provide testimony to various House and Senate 

Committees addressing issues within the Commission’s 

regulatory purview.

As a result of these public hearings and meetings, the 

Commission focused on a number of critical initiatives, 

including: 1) providing a detailed report to Congress 

recommending legislative changes relating to oversight of 

trading on ECMs (recommendations that were enacted in 

large part as part of the Farm Bill); 2) announcing its 

national crude oil enforcement investigation and its 
4 CF

enforcement investigation into the February/March 2008 

price run-up in the cotton futures markets; 3) entering into 

an agreement to receive enhanced data from IntercontinentalExchange (ICE) Futures Europe in London relating to its 

crude oil markets; 4) requiring production of more detailed 

trading information from index traders and swap dealers; 

5) modifying the recognition process for FBOTs to condition direct access to U.S. customers on implementation o

position and accountability limits on linked contracts; 

6) reviewing whether index traders and swap dealers are 

properly classified for regulatory and reporting purposes; 

and 7) issuing an unprecedented special call for information from commodity swap dealers and index funds trading 

in OTC markets to quantify the amount of this trading and 

evaluate its potential effects on the regulated markets.

In addition to this comprehensive inward review, the 

Commission has continued to look outward to foster 

important relationships, both domestic and international, 

to assist us in carrying out our mandate. To that end, the

CFTC formed an interagency working group with the 

Federal Reserve Board, U.S. Department of the Treasur

(Treasury), U.S. Securities and Exchange Commissio

(SEC), U.S. Department of Energy, U.S. Department

Agriculture (USDA), and the Federal Trade Commission 

(FTC) to study investor practices, fundamental supply and 

demand factors, and the role of speculators and index 

traders in the commodity markets. In addition, the CFTC

signed a ground-breaking mutual cooperation agreement 

with the SEC to establish a closer working relationship 

between the agencies, establish a permanent regulatory 

liaison between the agencies, provide for enhanced information sharing, and establish several key principles guiding 

the agencies’ consideration of novel financial products that 

may reflect elements of both securities and commodity 

futures or options. This agreement led to the expedited,

coordinated approval of the trading and clearing of several 

novel derivative products (futures and option contracts 

based on shares of an exchange traded fund), an outcome 

expected to enhance legal and regulatory certainty for users 

of these novel products.

On the international front, the CFTC was tasked to co-chair 

the International Organization of Securities Commissions’ 

(IOSCO) newly-created Task Force on Commodity Markets 

that will examine the current supervisory approaches for 

overseeing commodity markets worldwide. It also reached

an agreement with the China Securities Regulatory Commission (CSRC) to hold regular meetings to promote enhanced 

cooperation and collaboration to promote investor protection, market integrity, and the supervision of derivatives 

trading occurring on a cross-border basis between China 

and the United States. In addition, the Commission hosted

an International Regulators Meeting of more than 50 

futures industry regulators from around the world to 

address concerns associated with cross-border clearing, the 

differences between a core principles-based regulatory 

regime and a rules-based regime, the development of international financial centers, and whether OTC instruments 

that are centrally collateralized or cleared should be subject 

to the same or comparable regulatory regimes as economically equivalent exchange-traded instruments.

The agency’s sweeping regulatory review and regulatory 

outreach is complemented by the efforts of its Division of 

Enforcement (DOE). This year, DOE filed 40 new actions,

including 13 actions against hedge funds/pool operators/

trading advisors, and cases charging attempted manipulation and/or manipulation in the energy markets involving a 

former gasoline trader for BP Products North America Inc

and Optiver Holding BV and related companies and 

employees. As a result of these prosecutions, respondents

and defendants were ordered to pay more than $630 million 

Washington, D.C., March 11, 2008 — Securities and 

Exchange Commission Chairman Christopher Cox and 

Commodity Futures Trading Commission Acting Chairman 

Walter L. Lukken today signed a ground-breaking mutual 

cooperation agreement to establish a closer working 

relationship between their agencies. (SEC Photo)
CFTC

in civil monetary penalties, restitution, and disgorgement

In addition to its investigation and litigation efforts, DOE 

continued to foster relationships with global regulators by 

hosting two enforcement conferences with international 

regulators to share observations of trends in commodities 

markets, including on-exchange, cash, and OTC markets to 

enhance the ability of regulators to work cooperatively 

across borders as we all share the same goals of detecting 

and deterring misconduct affecting commodity prices.

With the credit crunch and overall market distress over the 

last year, the Division of Clearing and Intermediary Oversight (DCIO) has worked tirelessly to ensure the financial 

integrity of the futures and option clearing systems regulated by the CFTC. This required active daily monitoring of

and working with exchange self-regulatory organizations 

(SROs) to ensure that futures firms continued to meet their 

customer segregation and capital requirements while 

allowing for the orderly functioning and stability of the 

markets. As part of its effort, DCIO staff were on-site in

New York during the Lehman Brothers Holdings Inc. bankruptcy proceedings to safeguard customer assets and

promote the orderly transfer of positions from CFTC regulated futures commission merchant subsidiary, Lehman 

Brothers Inc. DCIO also worked with fellow regulators and

market participants to advance the development and proper 

oversight of a clearinghouse for credit default swaps and 

other over-the-counter (OTC) instruments.

The CFTC is dedicated to protecting the public and market 

users from manipulation, fraud, and abusive practices in 

order to ensure that the futures markets are working 

properly. Throughout the year, the agency has sought to

successfully meet its important oversight mission while 

facing the significant challenge of operating at historically 

low staffing levels. At the same time, agency internal

controls and accountability have remained among our 

highest priorities. The agency’s financial statements are

included in this report and we can confirm that that the 

financial and performance data presented in this report are 

fundamentally reliable and complete. Moreover, I am

pleased to report that in FY 2008, the CFTC again had no 

material weaknesses. On behalf of our Inspector General,

our auditor, the public accounting firm KPMG, LLP, has 

affirmed that our financial statements are presented fairly 

in all material respects and are in conformity with 

U.S. generally accepted accounting principles (GAA

The Financial Section of this report includes greater detail 

about our internal controls and highlights some key 

management assurances. Success in these important areas

makes it possible for the Commission to operate as effectively as we do.

The year ahead will be a busy one for the Commission

In the wake of the financial crisis, Congress will likely turn 

to broad financial reform. Volatility in the energy and agricultural markets will continue to be the focus of policymakers as we work to ensure the proper functioning of our

price discovery and risk management markets. I am confident that the Commission’s dedicated staff and the flexible

principles-based authority provided by Congress will help 

this agency to forcefully police these ever-changing markets 

in order to uphold the CFTC’s important mission and the 

public’s trust

Walter Lukken

Acting Chairman

November 17, 2008 

President Bush center, with, from left, Commodity Futures Trading 

Commission (CFTC) Acting Chairman Walt Lukken, Security and 

Exchange Commission (SEC) Chairman Christopher Cox, Vice 

President Dick Cheney,Treasury Secretary Henry Paulson and Federal 

Reserve Board Chairman Ben Bernanke are seen at the end of a 

meeting with members of the President’s Working Group on Financial 

Markets, Friday, Jan. 4, 2008, in the Roosevelt Room of the White 

House in Washington. (AP Photo/Lawrence Jackson)