COMMODITY FUTURES TRADING COMMISSION 

FY 2019 AGENCY FINANCIAL REPORT 

COMMODITY FUTURES TRADING COMMISSION 
ABOUT THIS REPORT 

Te 2019 Agency Financial Report is intended to communicate to stakeholders 

and interested parties the Commodity Futures Trading Commission’s (CFTC or 

Commission) fnancial position and operating performance over the previous 12 

month time period, and state the CFTC’s plans for the future. 

Te Reports Consolidation Act of 2000 authorizes Federal agencies, with the 

Ofce of Management and Budget’s (OMB) concurrence, to consolidate various 

reports in order to provide performance, fnancial, and related information in a 

more meaningful and useful format. Te Commission has chosen an alternative to 

the consolidated Performance and Accountability Report and instead, produces an 

Agency Financial Report and an Annual Performance Report, pursuant to OMB 

Circular A-136, Financial Reporting Requirements. Unless otherwise indicated, 

information in this report is provided as of November 7, 2019, and covers the 

period October 1, 2018 to September 30, 2019. 

Tis report is in the public domain. Authorization to reproduce it in whole or in 

part is granted. While permission to reprint this publication is not necessary, the 

citation should be: Commodity Futures Trading Commission, FY 2019 Agency 

Financial Report, Washington, D.C. 20581. 

Te report may be electronically accessed at https://www.cfc.gov/About/ 

CFTCReports/index.htm 

Photographs in this document are proprietary and prior permission from the 

photographer is required for any use or reproduction. 
 

COMMODITY FUTURES TRADING COMMISSION

FY 2019 AGENCY FINANCIAL REPORT

HEATH P. TARbERT

CHAIRMAN AND CHIEF ExECUTIvE

ANTHONY C. THOMPSON

ExECUTIvE DIRECTOR

NOvEMbER 7, 2019
Table of Contents

Message from the Chairman .................................. 5 

MANAGEMENT’S DISCUSSION AND ANALYSIS 8 

T he Commission ................................................... 9 

What is on the Horizon? ....................................... 20 

Performance Highlights ....................................... 28 

Financial Highlights ........................................... 36 

Management Assurances ...................................... 51 

FINANCIAL SECTION ................................ 56 

Report of the Independent Auditor ...................... 57 

Principal Financial Statements .............................62 

Required Supplementary Information (Unaudited) . 88 

OTHER INFORMATION .............................. 89 

Inspector General’s FY 2019 Assessment ............... 90 

Summary of Audit and Management Assurances ..... 93 

Payment Integrity .............................................. 94 

Fraud Reduction Report .......................................97 

Reduce the Footprint ......................................... 100 

Civil Monetary Penalty Adjustment for Inflation ....101 

APPENDIX ............................................. 104 

CFTC Customer Protection Fund .......................... 105 

Why Are the Markets Important to Me?................ 108 

CFTC Oversight of Regulated Entities ................... 112 

CFTC Glossary ....................................................118 
CFTC MISSION: To promote the integrity, resilience, and vibrancy 

of the U.S. derivative markets through sound regulation. 

CFTC VISION: To be the global standard for sound derivatives 

regulation. 

CFTC VALUES: Commitment, Forward-Tinking, Teamwork, 

Clarity. 

Heath P. Tarbert 

Chairman 

MESSAGE FROM THE CHAIRMAN

I am pleased to present the CFTC’s Agency 

Financial Report for FY 2019. Transparency 

about the agency’s work and operations is 

fundamental to public accountability. 

While I was at the agency only for a small part 

of FY 2019, this is a year-long snapshot. I thank 

my predecessor Chairman J. Christopher 

Giancarlo for his stewardship of this agency 

prior to my arrival. 

U.S. Derivatives Markets 

U.S. derivatives markets are the world’s largest, 

most developed, and most infuential. Many 

of the world’s most important agricultural, 

mineral, and energy commodities are priced 

in U.S. dollars in our derivatives markets. 

Te estimated 2019 notional value of U.S. 

derivative markets was $27 trillion for U.S. 

futures and $353 trillion for U.S. swaps. 

Our derivatives markets also are central 

to America’s real economy. Tey allow 

businesses around the globe to hedge price 

and manage risk efectively and efciently. 

For example, farmers and ranchers use listed 

derivatives markets to hedge their costs of 

production and delivery. Tese markets allow 

the risks of variable production costs, such 

as the price of raw materials, energy, foreign 

currency, and interest rates, to be transferred 

from those who cannot aford them to those 

who can. 

Our derivatives markets also are critical for 

setting the prices of countless goods and 

services we depend on—from groceries to 

gasoline to home mortgage interest. Tey 

are the reason American consumers enjoy 

stable prices in the grocery store, whatever the 

conditions out on the farm. 

Role of the CFTC 

Te U.S. is unique in having a regulatory 

agency specifcally dedicated to derivatives 

market regulation. Te CFTC is recognized 

for its principles-based regulatory framework 

and its focus on economic and data-driven 

analysis. Te agency is also known around the 

world for its depth of expertise and breadth 

of capability. Well-regulated U.S. derivatives 

markets serve a vital national interest. 

5 
FY 2019 Highlights 

Te agency’s regulatory eforts are too broad 

and diverse to describe even in summary 

fashion in this short message. But I want to 

highlight a few areas of focus in FY 2019, 

enforcement, LabCFTC, and customer 

education and outreach. 

Enforcement 

Te CFTC is committed to rooting out fraud, 

manipulation, and other trading abuses in the 

derivatives markets. In FY 2019, the agency 

fled 69 enforcement actions and opened 

88 cases. CFTC staf continues to work pro 

actively alongside law enforcement partners, 

including the Department of Justice, the 

Securities & Exchange Commission, and state 

regulators. We have been and will continue to 

be tough on those who break the rules. 

Innovation and LabCFTC 

From corn to crypto, our derivatives markets are 

going through a major digital transformation. 

Electronic markets, combined with the 

introduction of new digital technologies 

and assets, have altered the entire fnancial 

landscape, with far-ranging implications 

for price discovery and risk transfer. It is 

imperative that regulators facilitate responsible 

innovation in these emerging spaces. 

LabCFTC serves as the focal point for 

the Commission’s eforts to understand 

and facilitate market-enhancing fnancial 

technology, (FinTech) and innovation and fair 

competition for the beneft of the American 

public. In FY 2019, LabCFTC launched the 

LabCFTC Accelerator program to include 

pilots, trials, and innovation competitions. 

LabCFTC also entered a FinTech cooperation 

arrangement with the Australian Securities 

and Investments Commission, and held the 

frst CFTC FinTech Forward Conference. In to 

the future, LabCFTC will enable the CFTC to 

be proactive and forward-thinking as FinTech 

presents opportunities, challenges, and risks. 

Customer Education and Outreach 

Te changing digital landscape also brings 

new opportunities for fraud. In FY 2019, the 

CFTC’s Ofce of Customer Education and 

Outreach went on ofense against fraudulent 

activity stemming from social media, mobile 

apps, and deceptive websites to create the 

appearance of legitimate trading platforms or 

opportunities. 

Te Ofce of Customer Education and Outreach also continued to deploy evidence-based 

educational methods along with targeted and 

broad-based public outreach. Customers who 

are more knowledgeable about fraud or other 

market violations—whether they are farmers, 

ranchers, purchasers of digital assets, or professional traders—can make better-informed 

trading decisions and are more likely to report 

suspicious activity. 

Agency Financials 

Te Financial Section in this report includes 

the results of the independent audit of our 

FY 2019 Financial Statements, which I am 

pleased to report is an unmodifed opinion. I 

can also report that the CFTC had no internal 

control weaknesses and that the fnancial and 

performance data in this report are reliable 

and complete under OMB guidance. Key 

management assurances and further details 

about internal controls are provided in the 

Management’s Discussion and Analysis 

section. 

6 
Conclusion 

Tis report gives a picture of the CFTC at work. 

It shows the dedication, professionalism, and 

successes of the hundreds of people who are 

truly the heart of the agency. 

Every day, they bring their best to ensure 

the agency acts consistent with our core 

values: Commitment, Forward-Tinking, 

Teamwork, and Clarity. 

Te CFTC’s Commissioners and staf are 

committed to promoting the integrity, 

resilience, and vibrancy of the U.S. derivatives 

markets through sound regulation. We will 

continue to do our work in ways that refect 

our status as the world’s premier derivatives 

regulator and a guardian of the American 

free enterprise system. 

Heath P. Tarbert 

November 7, 2019 

7 
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MANAGEMENT’S DISCUSSION AND ANALYSIS

The Commission

What is on the Horizon? 

Performance Highlights 

Financial Highlights

Management Assurances
FY 2019 AGENCY FINANCIAL REPORT

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

The Commission

Te CFTC is an independent agency of the U.S. government that oversees the U.S. derivatives 

markets, which include futures, options, and swaps (for a glossary of terms, see page 118. 

• CFTC was established in 1974 to assume regulatory authority over 

commodity futures markets that had previously belonged to the U. S. 

Department of Agriculture (USDA) since the 1920s. 

• Tese markets have existed since the 1860s, beginning with agricultural 

commodities such as wheat, corn, and cotton. 

• Te markets grew to include energy and metal commodities, such as 

crude oil, heating oil, gasoline, copper, gold, and silver. 

• Over time, fnancial instruments based on interest rates, stock indexes, 

foreign currency, and other products far exceeded agricultural 

contracts in trading volume. 

• In the afermath of the 2008 fnancial crisis, the Commission’s 

mandate was vastly expanded to include most over-the-counter (OTC) 

derivatives markets. 

Be sure to visit the CFTC timeline of signifcant dates. 

Why Are Derivatives Important to Me? 

Te futures and swaps markets are essential to our economy and the way that businesses and 

investors manage risk. Te CFTC works to ensure that market participants can use markets 

with confdence. Tese markets also shape the prices we pay for food, energy, and a host of 

other goods and services. See the Appendix on page 108 for additional information on how 

futures and swaps work. 
COMMODITY FUTURES TRADING COMMISSION

CFTC Organizational Structure 

Te Commission consists of fve Commissioners, who are appointed by the President and 

confrmed by the Senate to serve staggered fve-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. 

Te Ofce of the Chairman oversees the Commission’s principal divisions and ofces that 

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

guidance thereunder. Te Ofce of the Chairman includes: the Ofce of Public Afairs (OPA), 

the Ofce of Legislative and Intergovernmental Afairs (OLIA), and the Ofce of Minority and 

Women Inclusion (OMWI). 

Te four programmatic divisions: Division of Clearing and Risk (DCR), Division of Enforcement 

(DOE), Division of Market Oversight (DMO), and Division of Swap Dealer and Intermediary 

Oversight (DSIO) are supported by a number of ofces, including the Ofce of the Chief 

Economist (OCE), Ofce of Data and Technology (ODT), Ofce of the Executive Director 

(OED), Ofce of the General Counsel (OGC), and Ofce of International Afairs (OIA). Te 

Ofce of the Inspector General (OIG) is an independent ofce of the Commission. 

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FY 2019 AGENCY FINANCIAL REPORT

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Chairman

Tarbert 

Office of the 

General Counsel

Commissioner

Quintenz

Office of the Inspector 

General

Office of Minority and 

Women Inclusion

Office of Data and

Technology

Office of Public Affairs

Office of Legislative and 

Intergovernmental Affairs

Office of the Executive 

Director

Office of International

Affairs

Division of Market

Oversight

Division of Clearing 

and Risk

Division of

Enforcement

Division of Swap Dealer 

and Intermediary 

Oversight

Office of the Chief

Economist

Commissioner

Stump

Regional Offices

Commissioner

Behnam

Commissioner

Berkovitz

Commodity Futures Trading Commission Organization Structure

Chicago Kansas City New York

Headquarters for the CFTC is located in Washington, DC.
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U.S. Commodity Futures Trading Commission Organization 

Offices of the Chairman and the Commissioners 

The Offices of the Chairman and the Commissioners provide executive direction and leadership to the 

CFTC as it implements the CEA. 

Division of Clearing and Risk 

The Division of Clearing and Risk (DCR) oversees derivatives clearing organizations (DCOs) and other 

market participants in the clearing process. DCR monitors the clearing of futures, options on futures, and 

swaps by DCOs, assesses DCO compliance with the CEA and Commission regulations, and conducts risk 

assessment and surveillance. DCR also makes recommendations on DCO applications and eligibility, rule 

submissions, and which types of swaps must be cleared. 

Division of Enforcement 

The Division of Enforcement (DOE) identifies, investigates, and prosecutes alleged violations of the CEA 

and Commission regulations. Potential violations include fraud, false statements to the Commission, 

misappropriation, price manipulation, use of a manipulative or deceptive device, disruptive trading 

practices, false reporting, accounting violations, registration and fitness violations, failure to maintain or 

produce required records, failure to make required reports, a registrant’s failure to supervise, failure to 

comply with business conduct standards, and illegal off-exchange activity. DOE’s Whistleblower Office 

receives tips, complaints, and referrals of potential violations, and its market surveillance program 

analyzes trade data to identify trading or positions that warrant further enforcement inquiry. 

Division of Market Oversight 

The Division of Market Oversight (DMO) oversees derivatives platforms and swap data repositories 

(SDR). DMO reviews new applications for designated contract markets, swap execution facilities, SDRs 

and foreign boards of trade and examines existing trading platforms and swap data repositories to ensure 

their compliance with regulatory requirements, including system safeguards. DMO also evaluates new 

platform-traded products to ensure that they are not susceptible to manipulation, and reviews entity rules 

to ensure compliance with the CEA and Commission regulations. DMO’s data analysis informs CFTC 

policymaking. 

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Division of Swap Dealer and Intermediary Oversight 

The Division of Swap Dealer and Intermediary Oversight (DSIO) oversees the registration and 

compliance of intermediaries and futures industry self-regulatory organizations, including U.S. 

derivatives exchanges and the National Futures Association (NFA). DSIO also develops and monitors 

compliance with regulations addressing registration, business conduct standards, capital adequacy, and 

margin requirements for swap dealers and major swap participants. 

Office of the Chief Economist 

The Office of the Chief Economist (OCE) conducts economic and econometric analysis of derivatives 

markets. It also partners with other CFTC divisions and offices to integrate economic reasoning and data 

analysis into Commission policy and cost-benefit considerations. 

Office of Data and Technology 

The Office of Data and Technology (ODT) provides technology and data management support for 

Commission market and financial oversight, surveillance, enforcement, legal support, and public 

transparency activities. ODT also provides general network, communication, storage, computing, and 

information management infrastructure and services. 

Office of the Executive Director 

The Offices of the Executive Director (OED) leads the innovative and strategic management of employee, 

financial, and operational resources in support of the CFTC’s mission. By delegation of the Chairman, 

OED directs the internal management of the Commission, ensuring the Commission’s continued success, 

continuity of operations, and adaptation to the ever-changing markets it is charged with regulating. OED 

directs effective and efficient allocation of CFTC resources, develops and implements management and 

administrative policy, and ensures program performance is measured and tracked agency-wide. 

Office of the General Counsel 

The Office of General Counsel (OGC) provides legal services and support to the Commission and all of its 

programs. These services include: engaging in defensive, appellate, and amicus curiae litigation; assisting 

the Commission in the performance of its adjudicatory functions; providing legal advice and support for 

Commission programs; assisting other program areas in preparing and drafting Commission regulations; 

interpreting the CEA; overseeing the Commission’s ethics program and compliance with laws of general 

applicability; and providing advice on legislative, regulatory issues and financial technology innovation. 
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Office of the Inspector General

The Office of the Inspector General (OIG) is an independent organizational unit at the CFTC. Its mission 

is to detect waste, fraud, and abuse and to promote integrity, economy, efficiency, and effectiveness in the 

CFTC’s programs and operations. In accordance with the Inspector General Act of 1978, the OIG issues 

semiannual reports detailing its activities, findings, and recommendations. 

Office of International Affairs 

The Office of International Affairs (OIA) advises the Commission on all international regulatory 

initiatives, provides guidance regarding international issues raised in Commission matters, represents the 

Commission in international groups (such as the Financial Stability Board (FSB)), standard setting bodies 

(such as the International Organization of Securities Commissions (IOSCO)) and bilateral fora, and 

provides technical assistance to non-U.S. authorities. 

Office of Legislative and Intergovernmental Affairs

The Office of Legislative and Intergovernmental Affairs (OLIA) is the Commission’s official liaison with 

Members of Congress, federal agencies, and the Administration. OLIA develops and executes legislative 

strategy on behalf of the Chairman and Commission, manages congressional testimony, and works with 

the various divisions to provide technical assistance on legislation. 

Office of Minority and Women Inclusion

The Office of Minority and Women Inclusion (OMWI) leads the CFTC’s civil rights, equal employment 

opportunity, diversity, and inclusion programs. 

Office of Public Affairs 

The Office of Public Affairs (OPA) is the Commission’s primary public-facing office that provides honest, 

timely, and useful information across all communication platforms in order to serve internal and external 

stakeholders in all sectors to accomplish and facilitate the Commission’s mission. OPA proactively 

conducts outreach and creates messages designed to raise awareness of the CFTC brand in order to 

promote the public’s trust. 

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

 

CFTC Staffing and Funding Resources 

The CFTC is funded through the Salary and Expenses (S&E) Appropriation and the Customer 

Protection Fund (CPF). The S&E Fund is appropriated annually and provides for the general 

operating expenses for the Commission to carry out its responsibilities under the CEA. The CPF 

consists entirely of the monetary sanctions the CFTC levies and collects in enforcement actions; 

no tax payer money is included in the Fund. The CFP is a permanent appropriation, but must be 

apportioned annually by OMB (See the Appendix for more information on the CPF.). 
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FY 2019 AGENCY FINANCIAL REPORT

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

CFTC Industry Oversight

Te Commission is committed to carrying out its mission to promote the integrity, resilience, and 

vibrancy of the U.S. derivatives markets through sound regulation. 

For more details on the types and numbers of regulated entities, see pages 112-116. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

 

 

 

CFTC Fiscal Year 2019 Highlights 

• Issued 12 Proposed Rulemakings and 10 Final Rulemakings including: 

o Adopted Final Rule setting the swap dealer de minimis exception threshold at $8 

billion 

o Adopted amendments to the Volcker Rule under the Economic Growth, 

Regulatory Relief, and Consumer Protection Act 

o Adopted “Volcker 2.0” amendments 

o Adopted Uncleared Swap Margin Rules Comparability Determination for 

Australia 

o Adopted Amendment of Uncleared Swap Margin Rules Comparability 

Determination for Japan 

o Adopted Brexit-related Interim Rule permitting retention of legacy status under 

the uncleared swap margin rules for swaps transferred from the U.K. to European 

Union (EU)-based affiliates of swap dealers. 

• Published a LabCFTC primer on smart contracts, and held first CFTC FinTech Forward 

Conference 

• Entered into third international FinTech cooperation arrangement with the Australian 

Securities and Investments Commission 

• Filed 69 enforcement actions, opened 88 investigations, and imposed $205 million in civil 

monetary penalties and $120 million in restitution and disgorgement 

• Published four Whistleblower Alerts and two customer Advisories on the CFTC website 

• Created a prototype to detect spoofing in futures trading using Machine Learning 

• Centralized the intake of enforcement cases for Chicago, New York, and Kansas City; 

deployed the legal Case Management system to DOE, OGC, and the OIG; implemented a 

data analytics platform to support the investigative analysis of unstructured data. These 

efforts streamlined 400 cases and supported processing nine terabytes of information 

• Published more than 25 research papers on derivative markets 

• Reviewed approximately 140 Chief Compliance Officer annual reports for swap dealers 

and futures commission merchants 

• Conducted four system safeguard examinations, examinations of the two systemically 

important DCOs, which included a measurement of compliance in both the risk 

management and system safeguards core principles, and five other DCOs including a 

system safeguard examination of a DCO that clears crypto assets; issued orders of 

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FY 2019 AGENCY FINANCIAL REPORT

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

 

 

 

 

 

registration to four Swap Execution Facilities and Foreign Boards of Trade and one DCO; 

and evaluated remediation plans for 140 ad hoc DCO notifications 

• Published the CFTC’s third Supervisory Stress Test of central counterparties, breaking 

new ground by targeting a series of reverse stress tests to assess sufficiency of central 

counterparties’ pre-funded resources to absorb losses from market moves in multiples of 

historic events 

• Conducted quantitative analysis of aspects of the Basel III capital rules related to the 

leverage ratio, resulting in the Basel Committee’s decision to change the rules to remove 

certain exposures from the leverage ratio 

• Fortified cyber defenses by launching phishing campaign exercises, resulting in the click 

rate decreasing from 24% to under 2% within 10 months. In addition, introduced 

advanced email security and encryption enhancements, and implemented all the 

Department of Homeland Security Binding Operational Directives. 

• Launched the web-based Learning Management System, eliminating the legacy paper 

process and uploaded over 1500 online classes. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

What is on the Horizon? 

The CFTC’s unique mission is to promote the integrity, resilience, and vibrancy of the U.S. 

derivatives markets through sound regulation. As our markets continue to evolve at a 

breakneck pace, the CFTC remains committed to becoming the global standard for sound 

derivatives regulation. 

In taking advantage of future opportunities and tackling challenges, the CFTC is focused on 

resolving unfinished business and preparing for the future. Going forward, the Commission 

will work in support of five strategic goals: 1) strengthen the resilience and integrity of our 

derivatives markets while fostering their vibrancy, 2) regulate our derivatives markets to 

promote the interests of all Americans, 3) encourage innovation and enhance the regulatory 

experience for market participants at home and abroad, 4) be tough on those who break the 

rules, and 5) focus on our unique mission and improve our operational effectiveness. The 

following highlights just a few of the CFTC activities on the road ahead. 

Strengthen the Resilience and Integrity of Our Derivatives Markets While Fostering Their 

Vibrancy 

Strong and resilient central counterparties (CCP) are essential to the efficiency and stability of 

derivatives markets, as they provide crucial risk management services and reduce 

counterparty risk. The CFTC is focused on promoting the strength and resilience of CCPs 

through regular examinations, stress testing, capital requirements, financial reporting 

obligations, and ongoing risk monitoring, among many other supervisory tools. 

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The CFTC collaborates closely with other domestic regulators on oversight of CCPs. 

Cooperation with international and domestic financial regulators advances consistent margin 

and capital requirements. The CFTC also works with international financial regulators of both 

developed and developing countries and participates (and in some cases occupies leadership 

roles) in standard setting bodies such as the Committee on Payments and Market 

Infrastructures (CPMI)-IOSCO to achieve international standards that are strong and 

effective, but also practicable, proportionate, and efficient. 

The CFTC is also working with international counterparts to identify and address the 

potential impacts of Brexit. The CFTC’s Brexit Task Force has proposed and enacted a series 

of concrete regulatory actions to mitigate the effects of a disorderly Brexit, culminating in the 

CFTC’s Joint Statement with the Bank of England and U.K. Financial Conduct Authority on 

Continuity of Derivatives Trading and Clearing Post-Brexit. 

Another key point of engagement with international counterparts involves negotiations 

regarding the EU’s proposed European Market Infrastructure Regulation known as “EMIR 

2.2” legislation. As currently drafted, this legislation could direct EU regulators to exercise 

direct supervision over U.S. CCPs. The CFTC is working with the European Commission, the 

European Securities and Markets Authority, and other stakeholders to reach an agreement 

that preserves the CFTC’s exclusive direct supervision over U.S.-based CCPs. 
COMMODITY FUTURES TRADING COMMISSION

 

 

Regulate Our Derivatives Markets To Promote the Interests of All Americans

The derivatives markets serve the needs of everyday Americans. These financial instruments 

touch all corners of the real economy — from farmers and ranchers who need to hedge grain 

and cattle prices, to manufacturers and exporters who need to manage exchange-rate 

fluctuations. In regulating these instruments, the CFTC serves as a guardian of our freeenterprise system. 

The Commission demonstrates commitment to the agricultural community and its 

stakeholders by understanding and addressing issues that negatively impact agricultural 

commodity derivatives markets. We also focus on tailoring regulation of smaller financial 

institutions and end users. In FY 2019, the CFTC adopted rulemakings that streamlined 

regulatory burdens for futures commission merchants, commodity pool operators, 

commodity trading advisors, and designated self-regulatory organizations. The Commission 

removed regulatory burdens preventing certain market participants, like prime brokers and 

proprietary trading firms, from providing liquidity for customers on registered trading 

venues. The CFTC will continue these efforts by demonstrating improved market accessibility 

to end users, and by taking actions to right-size regulations for Main Street financial 

institutions and smaller futures commission merchants. 

To inform policymaking and decision making, the Commission’s Market Intelligence Branch 

analyzes current and emerging market dynamics, developments, and trends. The Market 

Intelligence Branch’s focus includes automated trading in derivatives and cash markets, the 

changing landscape of commodity markets and the effect on derivatives markets, and 

development of liquidity in our markets. 

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Encourage Innovation and Enhance the Regulatory Experience for Market Participants at 

Home and Abroad 

Technological innovation such as blockchain holds great promise, and the rise of digital assets 

has created a new asset class. Working with our counterparts, the CFTC must develop a 

holistic framework for these 21st-century commodities. 

One of the emerging issues in digital assets is the clearing and the deposit of those assets at 

DCOs or other non-traditional depositories. Clearing of these types of instruments is an 

important and emerging business trend where principles need to be formally defined, 

addressed, and made public. The Commission will continue to assess this marketplace to 

identify its unique risks and balance the need to allow for innovation with maintaining 

resilience and integrity of the markets. Cloud providers and distributed ledger technology are 

additional examples of developing technology that has the potential for broad use across the 

derivatives markets. The Commission will dedicate resources to analyze the technology, 

identify the risks, and determine if there is a need for any additional rulemaking action to help 

ensure the derivatives markets continue to function effectively, efficiently, and in a manner 

that is prudent for the marketplace and the protection of its customers. 
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LabCFTC is the agency’s office of financial innovation. LabCFTC provides a channel to 

interact with FinTech innovators, to inform the Commission’s understanding of emerging 

technologies, and to serve as a focal point for the development and implementation of 

regulatory policy within the FinTech space. For instance, LabCFTC serves as a dedicated point 

of contact for FinTech innovators to engage with the CFTC, learn about the CFTC’s 

regulatory framework, and obtain feedback and information on the implementation of 

innovative technology-driven ideas for the market. LabCFTC coordinates internal/interdivisional resources to track FinTech-related developments, educate Commission staff, 

coordinate with other U.S. and international regulatory authorities, and engage with external 

organizations (e.g., academic institutions, think tanks). 

Be Tough on Those Who Break the Rules

The CFTC remains vigilant against those who seek to game the market. The CFTC’s strong 

enforcement program emphasizes being tough on those who break the rules, but also being 

fair and consistent. We recognize that the best way to preserve market integrity is by deterring 

potential bad actors from engaging in misconduct in the first place. The CFTC’s enforcement 

efforts to obtain remedial sanctions and maximize deterrence against future violations 

increases public confidence and trust in our derivatives markets. 

In FY 2019, the CFTC focused its enforcement efforts on the following consistent priorities: 

(1) preserving market integrity; (2) protecting customers; (3) promoting individual 

accountability; and (4) increasing coordination with other regulators and criminal authorities. 

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The CFTC has focused on detecting, investigating, and prosecuting misconduct that has the 

potential to undermine the integrity of the markets—misconduct like fraud, manipulation, 

spoofing, and disruptive trading. The CFTC continues to track down fraudsters as they enter 

new markets—and sometimes entirely new asset classes, like digital assets—seeking to use new 

products or new technologies to target unsuspecting customers. The CFTC works to hold 

accountable those culpable, including individuals in supervisory and leadership positions. 

Individual accountability ensures that the person committing the illegal act is held responsible 

and punished—and when appropriate, banned from the market; it deters others, it 

incentivizes companies to develop cultures of compliance; and it promotes the public’s 

confidence that we are achieving justice. 
COMMODITY FUTURES TRADING COMMISSION

 

Focus on Our Unique Mission and Improve Our Operational Effectiveness

The Commission continues to sustain, optimize, and protect CFTC’s core IT infrastructure 

and create the next generation of tools, systems, and services necessary to generate new 

capabilities with greater efficiency and effectiveness. The CFTC must guard against emerging 

threats, especially cyber risks. Protecting against these risks, which includes protecting 

confidential trading and clearing data, is a top priority of the CFTC as well as the firms, 

clearinghouses, and exchanges we regulate. The CFTC will continue to work closely with the 

U.S. Department of Homeland Security on security matters while maintaining and evaluating 

cybersecurity protections to guard against growing and evolving cyber threats. 

Effective Data Management: With the signing of the Foundations of Evidence Based 

Policymaking Act of 2018 into law, the agency is mandated to adopt best practices in data 

management and to ensure that data is used in an effective way in decision-making and 

creating public policy. The Commission will focus not only on complying with the law, but 

also driving value for the agency through effective management of data priorities. 

26 
FY 2019 AGENCY FINANCIAL REPORT

27 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

 

 

Technology Initiatives: Several initiatives are in process including a new asset management 

system and initial implementation of the Commission’s Chicago Mercantile Exchange Order 

Book on Demand, an initiative that will leverage cloud technology to access large amounts of 

market data to support the agency’s enforcement, oversight, and regulatory policy functions. 

The Commission will also be evaluating the application of other emerging technologies, such 

as machine learning to oversee the increasingly diverse and challenging 21st Century markets. 

IT Modernization: In addition to the new tools, data streams, and other means of supporting 

mission operations, the CFTC is also pursuing initiatives to best maintain and optimize its 

core IT infrastructure to continue to provide the capacity, reliability, and resiliency necessary 

to support an increasingly technology-focused mission. These modernization efforts cover all 

aspects of the CFTC’s IT platform including computer, network, telecommunications, data 

storage, and business continuity. For example, the Commission plans to implement the 

General Services Administration’s Enterprise Infrastructure Solutions Unified 

Communications Service, which integrates multiple communication tools such as Internet 

Protocol-based phone service, mobile communication, e-mail, voicemail, and video calling to 

enable users to connect, collaborate, and exchange information from any device, anywhere, 

and at any time. In addition, the agency is exploring off-premises infrastructure 

cloud/managed services initiatives that will create new efficiencies and cost effectiveness, 

address mission challenges, and further mobilize the CFTC’s workforce. 
COMMODITY FUTURES TRADING COMMISSION

Performance Highlights

Prior to the adoption of the 2019-2022 Strategic Plan, the CFTC structured its eforts around four 

strategic goals and a set of management objectives. 

GOAL 1: MARKET INTEGRITY & TRANSPARENCY 

Te focus of Market Integrity and Transparency was to recognize that derivatives 

markets provide a means for market users to ofset price risks inherent in their 

businesses and to serve as a public price discovery mechanism.

 GOAL 2: FINANCIAL INTEGRITY & AVOIDANCE 

OF SYSTEMIC RISK 

Te focus of Financial Integrity and Avoidance of Systemic Risk was to ensure 

that Commission-registered DCOs, swap dealers, and futures commission 

merchants have the fnancial resources, risk management systems and 

procedures, internal controls, customer protection systems, and other controls 

necessary to meet their obligations to minimize the risk that the fnancial 

difculty of any of these registrants, or any of their customers has systemic 

implications. 

GOAL 3: COMPREHENSIVE ENFORCEMENT 

Trough the goal of Comprehensive Enforcement, the CFTC enforced the 

CEA and Commission regulations, and worked to promote awareness of and 

compliance with these laws. 

GOAL 4: DOMESTIC & INTERNATIONAL 

COOPERATION & COORDINATION 

Domestic and International Cooperation and Coordination focused on how the 

Commission interacts with domestic and international regulatory authorities, 

market participants, and others afected by the Commission’s regulatory policies 

and practices. 

MANAGEMENT OBJECTIVES 

Te CFTC achieved Commission-wide excellence by empowering strong, 

enterprise-focused leaders, maintaining a high-performing and engaged 

workforce, and ensuring efective stewardship of resources. 

28 
FY 2019 AGENCY FINANCIAL REPORT

29 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

Performance results are infuenced by several environmental factors, including 

global, complex and constantly evolving securities markets. Te Commission recently 

completed a robust Strategic Plan, refecting leadership priorities. A revised CFTC 

mission statement and strategic goals are included at the end of this section. 

Verifcation and Validation of Performance Data 

Te CFTC continues to build completeness and reliability into the Commission’s 

performance management by refning performance indicators, and providing detailed 

justifcations of how the indicators gauge progress towards the strategic objectives. 
COMMODITY FUTURES TRADING COMMISSION

Strategic Goals and Key Results 

The following are results with selected representative indicators from each strategic goal of the 

FY 2014-2018 Strategic Plan. 

Strategic Goal One: Market Integrity and Transparency 

Public Benefit 

Derivatives markets are designed to provide a means for market users to offset price risks 

inherent in their businesses and to act as a public price discovery platform from which prices are 

broadly disseminated for public use. The markets best fulfill this role when they are open, 

competitive, and free from fraud, manipulation, and other abuses such that the prices discovered 

on the markets reflect the forces of supply and demand. 

Resource Investment

In FY 2019, the Commission invested $67.5 million and 180 FTE for Goal One. 

Strategic Goal One: Key Indicator Performance Results 

Objective 1.1: Markets are not readily susceptible to manipulation and other abusive 

practices 

30 

Performance Indicator 1.1.a: Percentage of high impact contract and rule submissions received by the 

CFTC through the Organizations, Products, Events, Rules, and Actions (OPERA) portal 

Description: This indicator captures the efficiency with which staff can receive and process exchange 

submissions related to contracts and rules. Through the OPERA portal, exchanges are able to electronically

file submissions directly with the Commission. The portal will then automatically route submissions to 

relevant staff without the need for staff to input certain data elements into its systems. Use of the OPERA 

portal reduces staff burdens and increases the efficiency and effectiveness with which staff can identify 

high impact contract and rule submissions in order to conduct reviews of new or amended contracts and 

rule filings. 

Data Source: The Filings and Actions database indicates whether a filing was made via email or OPERA 

portal. 

Verification and Validation: The OPERA portal automatically assigns a submission number to all filings 

made through the portal. Filings made via email are not assigned a submission number. 

FY 2016 FY 2017 FY 2018 FY 2019 

99% 99% 100% 100% 
FY 2019 AGENCY FINANCIAL REPORT

31 

 

 

 

 

 

 

 

 

Performance Indicator 1.2.c: Examine compliance by exchanges and SDRs with the system safeguards 

and cybersecurity requirements of the CEA Core Principles and Commission regulations, prioritizing 

systematically important entities. 

Description: Utilizing both risk-based and Core Principles-based approaches, the Commission conducts 

comprehensive system safeguards examinations (SSE) and cybersecurity programs at exchanges and SDRs, 

and prepares examinations reports when deficiencies are identified. Exchanges and SDRs are notified, and 

staff monitors their remediation efforts. SSEs have four main stages: 1) initiating letter, 2) onsite exam, 

including data review and systems review, 3) review findings and follow up questions and 4) determination 

of a rating: Adequate/Needs Improvement/Inadequate, DMO develops a letter with findings and 

recommendations, and presents them to Commission. When the letter is accepted by Commission, it is 

sent to the Exchange. 

Data Source: DMO maintains a list of SSEs commenced and completed each year. 

Verification and Validation: Management record keeping. 

FY 2016 FY 2017 FY 2018 FY 2019 

5 on-site reviews for SSEs 

conducted 

5 on-site reviews for SSEs 

conducted 

7 on-site reviews for SSEs 

conducted 

8 on-site reviews for SSEs 

conducted 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

Objective 1.2: Effective self-regulatory framework 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

Performance Indicator 2.1.a: Conduct back testing of DCOs’ material product and portfolio initial 

margin requirements to assess their sufficiency. 

Description: The Commission relies on a range of analytical tools and metrics to test and assess the 

sufficiency of margin requirements. The defaulting firm’s margin contributions are the first financial 

resource used to cover the financial impact of a clearing member default. To the extent margin can cover 

the financial impact of the default, the DCO will not have to use its own resources to cover the balance. 

Data Source: Part 39 data from DCOs, and financial reporting by FCMs 

Verification and Validation: Multiple analytical tools, some sourced from vendors, others developed using 

internal resources. 

FY 2016 FY 2017 FY 2018 FY 2019 

Conducted back-testing of 

products and portfolios of 

5 DCOs 

Conducted back-testing of 

products and portfolios of 

5 DCOs 

Conducted back-testing 

of products and 

portfolios of 5 DCOs 

DCR no longer measures 

DCO back-testing to gauge 

its performance. DCR 

continues to strengthen 

and expand its risk 

surveillance program’s 

scope and sophistication to 

identify potential clearing 

system weaknesses 

Strategic Goal Two: Financial Integrity and Avoidance of Systemic Risk 

Public Benefit 

Resource Investment 

Strategic Goal Two: Key Indicator Performance Results 

Objective 2.1: Avoid disruptions to the system for clearing and settlement of contract 

obligations 

In fostering financially sound markets, the Commission’s main priorities under the FY 2014-

2018 Strategic Plan are to avoid disruptions to the system for clearing and settling contract 

obligations and to protect the funds that customers entrust to futures commission merchants 

(FCM) and other intermediaries. Effective regulatory oversight of clearing and intermediary 

entities is integral to the financial integrity of derivatives transactions, and by extension, the faith 

and confidence of market users. 

In FY 2019, the Commission invested $90.4 million and 241 FTE for Goal Two. 

32 
FY 2019 AGENCY FINANCIAL REPORT

33 

 

 

 

 

 

 

 

 

 

 

 

Performance Indicator 2.1.c: Aggregate cleared swaps, futures, and options positions into a 

comprehensive risk surveillance process and conduct analysis for each material market participant 

Description: The Commission has a comprehensive program in place to aggregate and conduct risk 

surveillance of market participants’ futures and options positions. The Commission is developing 

procedures to aggregate swap positions across multiple DCOs and the asset classes for which such DCOs 

offer clearing services. Upon the development of such procedures, the Commission will be in a position to 

aggregate the risk of market participants that trade futures, options on futures and swaps, and conduct risk 

surveillance for that aggregate portfolio. 

Data Source: For futures, options on futures, and swaps, the source of trader data is currently large trader 

data that the Commission receives daily from FCMs and Part 39 margin and position data that the 

Commission receives daily from DCOs. DCR worked with DCOs to have them transmit account level data 

with their Part 39 transmissions. This work is now complete as all DCOs submit account level data. DCR 

receives additional supplementary data such as delta ladders for swaps. 

Verification and Validation: The Standard Portfolio Analysis of Risk application can stress test futures 

positions. 

FY 2016 FY 2017 FY 2018 FY 2019 

Aggregated the risk of 16 

IRS and interest rate (IR) 

futures accounts 

Aggregated the risk of 100 

IRS and IR futures accounts 

Aggregated the risk of 100 

IRS and IR futures 

accounts 

Aggregated the risk of 100 

IRS and IR futures 

accounts 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 
COMMODITY FUTURES TRADING COMMISSION

Strategic Goal Three: Comprehensive Enforcement 

Public Benefit 

Resource Investment 

Strategic Goal Three: Key Indicator Performance Results 

Objective 3.1: Strengthen capacity to receive and expeditiously handle high-impact tips, 

complaints, and referrals 

The Commission is committed to prosecuting violations of the CEA and Commission 

regulations to protect market participants and promote market and financial integrity. 

In FY 2019, the Commission invested $129.8 million and 260 FTE for Goal Three. 

Performance Indicator 3.1.b.2: Develop comprehensive communication strategy, geared for internal 

and external stakeholders, relating to role of whistleblowers and the function of the Whistleblower 

Office (WBO). 

Description: The Commission participates in public forums and trade shows annually, including the 

National Futures Industry Association Conference. This measure reflects the need of the WBO to 

communicate effectively to external audiences. Outreach is an essential part of the program. The WBO 

sends the message that the program is in place and emphasize in its message the rewards and protections 

offered by Section 23 of the CEA and the Commission regulations. Whistleblowers provide the 

Commission with the opportunity to receive timely information relating to potential violations of the CEA 

that may not otherwise be available. 

Data Source: www.whistleblower.gov/news/events: https://www.whistleblower.gov/whistleblower-alerts 

Verification and Validation: Management record keeping. 

FY 2016 FY 2017 FY 2018 FY 2019 

Participated in 18 public 

forums and trade shows 

and launched a new website 

for the CFTC 

Whistleblower Office 

Participated in 16 public 

forums and trade shows 

Participated in 19 public 

forums and trade shows 

• Participated in 15 public 

forums and trade shows 

• Posted three “trending 

topic” alerts to 

Whistleblower Office 

website 

34 
FY 2019 AGENCY FINANCIAL REPORT

35 

 

 

 

 

 

Performance Indicator 4.4.a: Leverage the impact of its enforcement program through coordination 

with Self-Regulatory Organizations (SRO) and active participation in domestic and international 

cooperative enforcement efforts. 

Description: This indicator reflects the Commission’s continued participation in regular meetings with the 

SROs and with domestic and international cooperative partners. The Commission’s enforcement program 

regularly meets with the SROs to discuss matters of common interest including investigations, enforcement 

actions, and the sanctioning of violative conduct. The Commission’s enforcement program also works 

cooperatively with both domestic and international authorities to maximize its ability to detect, deter, and 

bring sanctions against wrongdoers involving U.S. markets, registrants, and customers. These cooperative 

efforts bolster the effectiveness of the enforcement program by allowing it to investigate and litigate more 

efficiently, and seek penalties that provide the appropriate punitive and deterrent effect. 

Data Source: Meeting records 

Verification and Validation: Management record keeping. 

FY 2016 FY 2017 FY 2018 FY 2019 

Participated in 12 

domestic and international 

cooperative enforcement 

meetings, task forces, etc. 

Participated in 38 domestic 

and international 

cooperative enforcement 

meetings, task forces, etc. 

Participated in 48 domestic 

and international 

cooperative enforcement 

meetings, task forces, etc. 

Participated in 58 

domestic and 

international cooperative 

enforcement meetings, 

task forces, etc. 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

Strategic Goal Four: Domestic and International Cooperation and Coordination 

Public Benefit 

Resource Investment 

Strategic Goal Four: Key Indicator Performance Results 

Because the swaps market is a global market, international cooperation among regulators is 

necessary to regulate financial markets effectively. Recognizing this risk, the United States joined 

with other G-20 countries in 2009 to require that all major market jurisdictions bring swaps 

under regulation. 

In FY 2019, the Commission invested $13.6 million and 35 FTE for Goal Four. 

Objective 4.4: Robust Domestic and International Enforcement Cooperation and 

Coordination 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

Financial Highlights 

Financial Overview

The CFTC prepares annual financial statements in accordance with U.S. generally accepted 

accounting principles (GAAP) for Federal government entities and subjects the statements to an 

independent audit. The following table presents an overview of the Commission’s financial 

position and net costs as of and for the fiscal years ending September 30, 2019, and September 30, 

2018. 

CONDENSED BALANCE SHEET DATA 

Fund Balance with Treasury 

Investments 

Accounts Receivable, Net 

Prepayments 

Custodial Receivables, Net 

General Property, Plant and Equipment, Net 

$ 86,407,483 

2019 

141,300,000 

54,582 

5,693,295 

51,364,449 

29,738,196 

$ 66,320,101 

2018 

157,518,375 

44,667 

4,145,426 

11,497,175 

35,176,845 

TOTAL ASSETS $ 314,558,005 $ 274,702,589 

Accounts Payable 

FECA Liabilities 

Accrued Payroll and Annual Leave 

Custodial Liabilities 

Deposit Fund Liabilities 

Deferred Lease Liabilities 

Liability for Whistleblower Awards 

Contingent Liabilities 

$ 21,419,590 

564,109 

19,885,383 

51,364,449 

445,754 

21,494,054 

20,280,146 

-

$ 10,575,642 

539,092 

17,618,256 

11,497,175

369,175

23,970,026 

4,913,875 

38,696 

Total Liabilities 

Unexpended Appropriations - All Other Funds 

Cumulative Results of Operations - Funds from Dedicated Collections 

Cumulative Results of Operations - All Other Funds 

$ 135,453,485 

$ 58,465,701 

125,439,162 

(4,800,343) 

$ 69,521,937 

$ 47,626,826 

158,337,598 

(783,772) 

Total Net Position $ 179,104,520 $ 205,180,652 

TOTAL LIABILITIES AND NET POSITION $ 314,558,005 $ 274,702,589 

CONDENSED STATEMENTS OF NET COST 

Gross Costs 

Earned Revenue 

$ 301,553,671 

(248,915) 

$ 305,304,023

(42,739) 

TOTAL NET COST OF OPERATIONS $ 301,304,756 $ 305,261,284

NET COST BY STRATEGIC GOAL 

Goal One - Market Integrity and Transparency 

Goal Two - Financial Integrity and Avoidance of Systemic Risk 

Goal Three - Comprehensive Enforcement 

Goal Four - Domestic and International Cooperation and Coordination 

$ 67,476,123 

90,364,976 

129,854,799 

13,608,858 

$ 65,351,841

89,433,103

136,287,044 

14,189,296 

TOTAL NET COST OF OPERATIONS $ 301,304,756 $ 305,261,284 

36 
FY 2019 AGENCY FINANCIAL REPORT

37 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S

2019 2018 $ Change % Change 

Total Assets $ 314,558,005 $ 274,702,589 $ 39,855,416 14.51% 

Total Liabilities $ 135,453,485 $ 69,521,937 $ 65,931,548 94.84% 

Total Net Position $ 179,104,520 $ 205,180,652 $ (26,076,132) (12.71%) 

Total Net Cost of Operations $ 301,304,756 $ 305,261,284 $ (3,956,528) (1.30%) 

Total Budgetary Resources $ 295,144,893 $ 333,115,209 $ (37,970,316) (11.40%) 

New Obligations and Upward Adjustments $ 268,029,495 $ 310,043,029 $ (42,013,534) (13.55%) 

Apportioned $ 142,982,838 $ 160,197,074 $ (17,214,236) (10.75%) 

Unapportioned $ (126,714,806) $ (149,078,415) $ 22,363,609 (15.00%) 

Agency Outlays, Net $ 260,142,271 $ 327,281,972 $ (67,139,701) (20.51%) 

Custodial Receivables/Liabilities $ 51,364,449 $ 11,497,175 $ 39,867,274 346.76% 

 

 

The above overview is supplemented with brief descriptions of the nature of each required 

financial statement and its relevance. Significant balances or conditions featured in the graphic 

presentation are explained in each section to help clarify their relationship to Commission 

operations. Readers are encouraged to gain a deeper understanding by reviewing the 

Commission’s financial statements and notes and the accompanying audit report presented in 

the Financial Section of this report. 

Understanding the Financial Statements 

The CFTC presents financial statements and notes in accordance with accounting principles 

generally accepted in the United States of America and in the form and content requirements of 

OMB Circular A-136, Financial Reporting Requirements, which is revised annually by OMB in 

coordination with the U.S. Chief Financial Officers Council. The CFTC’s current year and prior 

year financial statements and notes are presented in a comparative format. The chart below 

presents changes in key financial statement line items, as of and for, the fiscal year ended 

September 30, 2019, compared to September 30, 2018. 

To better comprehend the Commission’s financial statements and the reasons for changes from 

year to year, it is important to understand that the Commission’s financial statements report on 

the operations of the Commission as well as its Customer Protection Fund. As discussed in Note 

1A to the financial statements, the Customer Protection Fund is available to pay whistleblower 

awards and fund customer education initiatives to help investors protect themselves against 

fraud. Amounts in the Fund are invested until needed to fund whistleblower awards, customer 

education initiatives, or operating expenses of the fund. As shown in the table below, the balance 

in the fund can change significantly as a result of large whistleblower awards paid to individuals 

in exchange for the voluntary disclosure of information that leads to the successful enforcement 

by the CFTC of a covered judicial or administrative action in which monetary sanctions 

exceeding $1 million are imposed. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

125.4 

158.3 

196.3 

247.6 

267.6 

274.3 

99.9 

FY 2019 

FY 2018 

FY 2017 

FY 2016 

FY 2015 

FY 2014 

FY 2013 

Customer Protection Fund Net Position 

($ millions) In accordance with the Dodd-Frank 

Act, when the CFTC Customer 

Protection Fund balance falls below 

$100 million, the fund is replenished 

by the next eligible sanction collected. 

The $32.9 million decrease in the net position of the Customer Protection Fund in FY 2019 was 

primarily due to new whistleblower awards of $4.6 million paid during FY 2019 and $26.1 

million in awards pending as of September 30, 2019 (disclosed in Note 8—Liability for 

Whistleblower Awards).1 Pending awards increase liabilities and decrease net position as of 

September 30, 2019, but will not result in the obligation of resources and redemption of 

investments until the awards are issued. The remaining decrease of $2.2 million is due to 

administrative expenses and costs for customer education initiatives of $3.2 million and $2.1 

million, respectively, offset by $3.2 million in interest earned on investments. 

When the balance in the fund falls below $100 million, as it did in FY 2013, the Customer 

Protection Fund is replenished by the next eligible sanction collected by the Commission in 

accordance with the provisions of the Dodd-Frank Act. The Customer Protection Fund’s 

individual balance sheets, statements of net cost, and statements of changes in net position are 

reported separately in Note 12—Funds from Dedicated Collections, and its statements of 

budgetary resources are reported in the “Customer Protection Fund” column of the combining 

statements of budgetary resources in the required supplementary information section 

immediately following the notes to the financial statements. 

1 $8.4 million was disbursed from the Customer Protection Fund for whistleblower awards during FY 2019. The cash disbursed 

included $3.8 million in awards that were previously reported as pending claims as of September 30, 2018, and an additional $4.6 

million in new amounts awarded and disbursed during FY 2019. The amount of unpaid claims of $26.1 million consists of final 

whistleblower awards due and payable plus the amount of new awards preliminarily determined by the Commission as of 

September 30, 2019, but not issued as final awards during FY 2019. Of the $20.3 million reported as the FY 2019 Liability for 

Whistleblower Awards, $1.1 million was for awards previously included in the FY 2018 Liability for Whistleblower Awards but 

not yet disbursed as a result of requests for reconsideration by the whistleblowers and other elements of due process. 

38 
FY 2019 AGENCY FINANCIAL REPORT

39 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

Balance Sheets 

($ millions) 

314.6 

274.7 

135.5 

69.5 

179.1 

205.2 

FY 2019 

FY 2018 

Assets 

Liabilities 

Net Position 

FY 2019 Total Assets 

(Composition) 

Custodial 

Receivables 

Property, 

Plant, 

and Equipment 

and Other 

11% 

Fund Balance 

with Treasury 

28% 

Investments 

16% 

45% 

 

 

Balance Sheets

The Balance Sheets present, as of a specific point in time, the assets and liabilities retained or 

managed by the Commission. The difference between assets and liabilities represents the net 

position of the Commission. 

Total Assets: As of September 30, 2019, the Balance Sheet reflects total assets of $314.6 million. 

This is an increase of $39.9 million, or 14.5 percent, over FY 2018. The increase was primarily 

due to increases of $39.9 million in Custodial Receivables, $20.1 million in Fund Balance with 

Treasury, and $1.5 million in Prepayments, offset by decreases of $16.2 million in Investments 

and $5.4 million in Property, Plant, and Equipment. 

The $39.9 million, or 346.8 percent, increase in custodial receivables was due to an increase in the 

number and amount of receivables for civil monetary sanctions that are estimated to be 

collectible as of September 30, 2019. The number and collectible amount of receivables for civil 

monetary sanctions are driven by enforcement actions and the violators’ ability to pay in any 

given fiscal year. 
COMMODITY FUTURES TRADING COMMISSION

The $20.1 million, or 30.3 percent, increase in Fund Balance with Treasury was due to $24.0 

million more in appropriations plus offsetting collections and redemption of investments during 

the year than outlays, primarily the result of a $19.0 million increase in FY 2019 appropriations 

received and the timing of cash payments. In addition, $4.0 million in cancelled funds were 

returned to the U.S. Department of the Treasury. 

The $1.5 million, or 37.3 percent, increase in Prepayments was primarily due to $1.5 million in 

additional advances for contract support from the U.S. Department of the Interior. 

Investments of $141.3 million comprise approximately 44.9 percent of the Commission’s total 

assets as of September 30, 2019. This significant asset represents the balance of the Customer 

Protection Fund that is not needed to pay whistleblower awards or fund customer education 

initiatives and operating expenses of the fund. The $16.2 million, or 10.3 percent, decrease in 

investments was due to the redemption of investments to cover eligible expenses and obligations 

of the Customer Protection Fund during FY 2019, including $15.4 million for FY 2018 and FY 

2019 whistleblower awards ($8.4 million disbursed plus an additional $7.0 million accrued). 

The $5.4 million, or 15.5 percent, decrease in Property, Plant, and Equipment was the result of 

depreciation and disposals exceeding new asset purchases. 

Total Liabilities: As of September 30, 2019, the Balance Sheet reflects total liabilities of $135.5 

million. This is an increase of $65.9 million, or 94.8 percent, over FY 2018. The increase was 

primarily due to increases of $39.9 million in Custodial Liabilities, $15.4 million in Liability for 

Whistleblower Awards, $10.9 million in accounts payable, and $2.3 million in accrued payroll 

and annual leave, offset by a decrease of $2.5 million in Deferred Lease Liabilities. 

FY 2019 Total Liabilities 

(Composition) 

Liability for 

Whistleblower 

Accrued 

Payroll, 

Annual Leave, 

and Other 

16% 

Lease Accounts 

Liabilities Payable 

16% 16% 

Custodial 

Liabilities 

37% 

Deferred 

Awards 

15% 

40 
FY 2019 AGENCY FINANCIAL REPORT

41 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

 

 

 

 

The $39.9 million, or 346.8 percent, increase in Custodial Liabilities was directly related to the 

increase in Custodial Receivables discussed above. Custodial liabilities are recorded to offset the 

custodial receivables balance and increase or decrease to reflect outstanding receivables for civil 

monetary sanctions at any given point in time. Once custodial receivables are collected, the 

Commission transfers eligible collections to the Customer Protection Fund whenever the balance 

of the fund is below $100 million at the time the collection is received. Remaining amounts 

collected are transferred to the U.S. Department of the Treasury on September 30th each year. 

The $15.4 million, or 312.7 percent, increase in Liability for Whistleblower Awards was due to an 

increase in the estimated amount of pending whistleblower awards as a result of valid 

whistleblower claims on Commission-imposed sanctions that have already been collected. The 

number and amount of whistleblower awards are driven by the amount of sanctions collected in 

any given fiscal year and the contribution the whistleblowers made to the cases. Additional 

information on whistleblower awards is discussed in the Annual Report on the Whistleblower 

Program and Customer Education Initiatives available at www.whistleblower.gov/reports. 

The $10.9 million, or 107.3 percent, increase in Accounts Payable is primarily due to a $7.0 

million final whistleblower award issued just prior to year-end and the timing of billings received 

from the Commission’s vendors. The Commission estimates the unbilled amounts and records 

an accrual for goods and services received but not yet paid for as of the end of each reporting 

period. 

The $2.3 million, or 12.9 percent, increase in Accrued Payroll and Annual Leave is due to one 

additional workday accrued in the year-end payroll accrual, increases in average salary of 

approximately 4.0 percent, and increased annual leave balances of approximately 12 hours per 

employee. The increase in leave hours is most likely due to the lingering effect of holiday leave 

canceled during the government shutdown. 

Consistent with the utility of its commercial office space, the Commission records deferred lease 

liabilities representing lease expense amounts in excess of payments to date. The $2.5 million, or 

10.3 percent, decrease in Deferred Lease Liabilities was due to the recognition of these deferred 

costs spread over the life of the Commission’s leases. 
COMMODITY FUTURES TRADING COMMISSION

Total Net Position 

($ millions) 

125.4 

158.3 

58.5 

47.6 

-4.8 -0.7 

FY 2019 FY 2018 

Cumulative Results of 

Operations – All Other Funds 

Unexpended Appropriations -

All Other Funds 

Cumulative Results of 

Operations – Funds from 

Dedicated Collections 

 

 

 

 

Total Net Position: As of September 30, 2019, the Balance Sheet reflects a total net position of 

$179.1 million, a decrease of $26.1 million, or 12.7 percent, over FY 2018. The changes in each of 

the three components of the Commission’s net position (Cumulative Results of Operations— 

Funds from Dedicated Collections, Cumulative Results of Operations—All Other Funds, and 

Unexpended Appropriations—All Other Funds) are discussed separately below. 

Cumulative Results of Operations—Funds from Dedicated Collections decreased by $32.9 

million, or 20.8 percent, due to Customer Protection Fund expenses of $36.1 million offset by 

interest revenue of $3.2 million. As discussed above, the most significant cause of this decrease 

was due to new whistleblower awards of $30.7 million paid or accrued as of September 30, 2019. 

Cumulative Results of Operations—All Other Funds decreased by $4.1 million, or 585.7 percent, 

due to the net cost of operations exceeding total financing sources. Depreciation of $7.4 million 

was the largest single contributor to the excess of net cost over total financing sources. 

Cumulative Results of Operations—All Other Funds became negative at the end of FY 2018 

when unfunded liabilities exceeded Property, Plant and Equipment and non-custodial Accounts 

Receivable. This condition will resolve itself as the Deferred Lease Liabilities are amortized over 

time or when the Commission is able to invest in additional assets. 

Unexpended Appropriations—All Other Funds increased by $10.9 million, or 22.9 percent, due 

primarily to FY 2019 appropriations received of $268 million in excess of appropriations used of 

$253.1 million as a result of a $19.0 million increase in FY 2019 appropriations received and the 

timing of actual cash payments. In addition, approximately $4.0 million in cancelled funds were 

returned to Treasury on September 30, 2019. 

42 
FY 2019 AGENCY FINANCIAL REPORT

43 

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Statements of Net Cost 

The Statements of Net Cost present the components of the Commission’s gross and net cost of 

operations. Net cost is the gross cost incurred less any revenues earned from Commission 

activities. The Commission experienced a $4.0 million, or 1.3 percent, decrease in the total net 

cost of operations during FY 2019. 

Excluding the $4.2 million decrease in whistleblower awards paid or accrued by the Customer 

Protection Fund, total net costs of operations actually increased by approximately $487.7 

thousand, or 0.2 percent. This overall increase was the result of increases of $5.0 million in 

payroll, $759.2 thousand in imputed financing, $344.6 thousand in annual leave, and $307.1 

thousand in travel, offset by decreases of $5.6 million in contracts for goods and services and 

leases and $297.7 thousand in depreciation expense. 

Despite receiving an additional $19.0 million in appropriations in FY 2019, this slight increase in 

expenses is deemed reasonable because CFTC did not receive its final appropriation until 

February 15, 2019. The impact of this increase is evident in increased obligations on the 

Statement of Budgetary Resources, and will be reflected in the Statement of Net Cost in FY 2020 

as related goods and services are received and amounts are disbursed. 

In line with the Strategic Plan in effect during FY 2019, the Commission’s Statement of Net Cost 

is categorized by the following four strategic goals: 

• The focus of Strategic Goal One, Market Integrity and Transparency, is to recognize that 

derivatives markets provide a means for market users to offset price risks inherent in their 

businesses and to serve as a public price discovery mechanism. In FY 2019, excluding the 

$30.7 million net expense for whistleblower awards that is fully allocated to goal three, the 

Commission committed 25.0 percent of its resources to this goal, an increase of 0.8 

percent over FY 2018. 

• The focus of Strategic Goal Two, Financial Integrity and Avoidance of Systemic Risk, is to 

strive to ensure that Commission-registered DCOs, swap dealers, MSPs, and FCMs have 

the financial resources, risk management systems and procedures, internal controls, 

customer protection systems, and other controls necessary to meet their obligations so as 

to minimize the risk that the financial difficulty of any of these registrants, or any of their 

customers has systemic implications. In FY 2019, excluding the $30.7 million net expense 

for whistleblower awards that is fully allocated to goal three, the Commission committed 

33.4 percent of its resources to this goal, an increase of 0.3 percent over FY 2018. 

• Through Strategic Goal Three, Comprehensive Enforcement, the CFTC enforces the CEA 

and Commission regulations, and works to promote awareness of and compliance with 

these laws. In FY 2019, excluding the $30.7 million net expense for whistleblower awards 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

that is fully allocated to goal three, the Commission committed 36.6 percent of its 

resources to this goal, a decrease of 0.9 percent over FY 2018. 

• The focus of Strategic Goal Four, Domestic and International Cooperation and 

Coordination, is on how the Commission interacts with domestic and international 

regulatory authorities, market participants, and others affected by the Commission’s 

regulatory policies and practices. In FY 2019, excluding the $30.7 million net expense for 

whistleblower awards that is fully allocated to goal three, the Commission committed 5.0 

percent of its resources to this goal, a decrease of 0.3 percent over FY 2018. 

As reflected under each strategic goal above, the Commission’s strategic focus remained 

relatively stable from FY 2018 to FY 2019. While the statements of net cost report a $3.8 million 

decrease in gross costs for FY 2019, this decrease is mainly due to the $4.2 million decrease in 

whistleblower awards paid or accrued by the Customer Protection Fund and not a significant 

change in the Commission’s focus or available resources. 

To aid the financial statement reader in fully understanding the Commission’s strategic focus 

and how it changed from FY 2018 to FY 2019, the table below presents the gross costs by 

strategic goal excluding whistleblower awards. After adding back the whistleblower awards, the 

total gross costs in the table below ties to the total gross costs on the Commission’s Statements of 

Net Cost for FY 2019 and FY 2018. 

Gross Costs by Strategic Goal 

2019 2018 2019 % 2018 % % Change $ Change 

Strategic Goal One 

Market Integrity and Transparency 

$ 67,538,202 $ 65,362,175 25.0% 24.2% 0.8% $ 2,176,027 

Strategic Goal Two 

Financial Integrity and Avoidance of Systemic Risk 

$ 90,448,114 $ 89,447,245 33.4% 33.1% 0.3% $ 1,000,869 

Strategic Goal Three 

Comprehensive Enforcement 

(excluding Whistleblower Awards) 

$ 99,195,042 $ 101,314,075 36.6% 37.5% (0.9%) $ (2,119,033) 

Strategic Goal Four 

Domestic and International Cooperation and 

Coordination 

$ 13,621,378 $ 14,191,540 5.0% 5.3% (0.3%) $ (570,162) 

Gross Costs Excluding Whistleblower Awards $ 270,802,736 $ 270,315,035 100.0% 100.0% $ 487,701 

Whistleblower Awards $ 30,750,935 $ 34,988,988 $ (4,238,053) 

Gross Costs $ 301,553,671 $ 305,304,023 $ (3,750,352) 

Statements of Changes in Net Position 

The Statements of Changes in Net Position present the Commission’s cumulative net results of 

operations and unexpended appropriations for the fiscal year. The components of the changes in 

the Commission’s Net Position shown below are explained in the Total Net Position discussion 

in the Balance Sheets section above. 

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45 

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S

Statements of Changes in Net Position 

($ millions) 

Unexpended 

Appropriations - All Other 

Funds 

47.6 

58.5 

Cumulative Results of 

Operations - All Other 158.3 

Funds 

Cumulative Results of 10.9 

-0.7 

125.4 

Operations - Funds from 

Dedicated Collections -4.8 -32.9 

-4.1 

Beginning Change Ending 

 

Statements of Budgetary Resources 

The Statements of Budgetary Resources provide information about the provision of budgetary 

resources and its status as of the end of the year. Information in this statement is consistent with 

budget execution information and the information reported in the Budget of the U. S. 

Government, FY 2019. 

The changes in the Commission’s total budgetary resources from September 30, 2018, to 

September 30, 2019, can mostly be explained by the following three events: 

• The Commission obligated and outlaid $75.6 million from the Customer Protection Fund 

for payments to whistleblowers in FY 2018, reducing the unobligated balance from prior 

year budget authority, net.2 As disclosed in Note 12 to the financial statements, the 

Customer Protection Fund is funded through eligible disgorgement and penalty 

collections rather than appropriations. 

• The Commission reduced its outstanding unfunded lease deficiency by $22.7 million (see 

Note 10 for additional information). 

• The Commission received $19.0 million more in appropriations in FY 2019 over FY 2018. 

2 The cash disbursed included $45.5 million in awards that were previously reported as pending claims as of September 30, 2017, 

and an additional $30.1 million in new amounts awarded and disbursed during FY 2018. 
COMMODITY FUTURES TRADING COMMISSION

Total Budgetary Resources 

($ millions) 

162.3 

239.5 

132.8 

93.6 

FY 2019 FY 2018 

Other than 

Customer 

Protection Fund 

Customer 

Protection Fund 

 

 

 

 

For the year ending September 30, 2019, the Commission’s Total Budgetary Resources decreased 

by $38.0 million, or 11.4 percent. This decrease is primarily due to a $56.9 million decrease in 

Unobligated Balance from Prior Year Budget Authority, Net, offset by a $19.0 million increase in 

Appropriations received in FY 2019. 

The $56.9 million, or 70.4 percent, decrease in the Unobligated Balance from Prior Year Budget 

Authority, Net (beginning unobligated balance plus adjustments made during FY 2019) was 

primarily due to a $75.9 million, or 32.3 percent, reduction in available authority in the 

Customer Protection Fund as a result of amounts expended in the prior year, offset by a $22.7 

million reduction in negative unapportioned amounts for outstanding lease obligations funded 

in the prior year (FY 2018). 

New Budget Authority 

($ millions) 

268.0 

249.0 

3.0 

3.2 

.2 

FY 2019 FY 2018 

Other Offsetting Collections 

Customer Protection Fund 

Offsetting Collections 

Appropriations 

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For the year ending September 30, 2019, the Commission’s new budget authority increased by 

$19 million primarily due to an increase in annual appropriations received. Despite significantly 

higher average Treasury interest rates paid on Customer Protection Fund investments in 

overnight Treasury securities (2.3 percent in FY 2019 versus 1.5 percent in FY 2018), Customer 

Protection Fund Offsetting Collections decreased by $241.2 thousand, or 7.0 percent, due to a 

$16.2 million decrease in investment balance in order to fund outlays and Customer Protection 

Fund available fund balance that went uninvested during the government shutdown. 

New Obligations and Upward Adjustments 

($ millions) 

New obligations and upward adjustments decreased by $42.0 million, or 13.6 percent, primarily 

due to decreases in new obligations for whistleblower awards of $60.2 million, offset by increases 

in new obligations for goods and services and salaries and benefits of $15.0 million and $3.8 

million, respectively. The increase in new obligations for goods and services and salaries and 

benefits of $18.8 million is due to the $19.0 million increase in appropriations received in FY 

2019. 

247.1 

229.5 

20.9 

80.5 

FY 2019 

FY 2018 

Other than Customer 

Protection Fund 

Customer Protection 

Fund 

The $17.2 million, or 10.8 percent, decrease in Apportioned, Unexpired Accounts was primarily 

due to a decrease in the amounts available for apportionment for the Customer Protection Fund 

of $17.2 million, mainly as a result of the $15.4 million obligated for whistleblower awards. 

The $22.4 million, or 15.0 percent, increase in Unapportioned, Unexpired Accounts was largely 

the result of the $22.7 million reduction in unfunded lease obligations. As noted above, the 

Commission reduced its outstanding unfunded lease deficiency through funding from current 

year appropriations of $22.7 million. As reported in prior years, the total Unapportioned, 

Unexpired Accounts balance is negative because no funds have been appropriated or 

apportioned to fund the remaining lease obligations through FY 2025. These unfunded lease 

obligations remaining as of September 30, 2019, and 2018, are $126.7 million and $149.4 million, 

respectively. 
COMMODITY FUTURES TRADING COMMISSION

Agency Outlays, Net 

($ millions) 

249.8 

250.5 

10.3 

76.8 

FY 2019 

FY 2018 

Other than Customer 

Protection Fund 

Customer Protection 

Fund 

 

 

 

FY 2019 Total Cash Collections3 FY 2019 Total Disposition of Collections 

($ millions) ($ millions) 

2.3 

47.2 

REGISTRATION 

AND FILING FEES 

FINES, PENALTIES, 

AND FORFEITURES 

49.5 

0.0 

DEPARTMENT OF 

THE TREASURY 

CFTC CUSTOMER 

PROTECTION FUND 

 

 

 

Agency Outlays, Net decreased by approximately $67.1 million, or 20.5 percent, primarily due to 

decreases in outlays for whistleblower awards and contracts for goods and services of $67.2 

million and $6.1 million, respectively, offset by increases for salaries and benefits and leases of 

$5.6 million. Outlays in any given fiscal year are impacted by such things as appropriations 

available for obligations in the prior fiscal year, timing of cash payments, level of FTE, and 

whistleblower award activity. 

Statements of Custodial Activity 

This statement provides information about the sources and disposition of collections. CFTC 

transfers eligible funds from dedicated collections to the Customer Protection Fund when the 

balance falls below $100 million and other non-exchange revenue to the Treasury general fund. 

Collections primarily consist of fines, penalties, and forfeitures assessed and levied against 

businesses and individuals for violations of the CEA or Commission regulations. They also 

include other non-exchange revenues such as registration, filing, appeal fees, and general 

receipts. The Statement of Custodial Activity reflects total cash collections for FY 2019 in the 

amount of $49.5 million, a decrease of $808.0 million, or 94.2 percent, over FY 2018. These 

custodial collections are driven by enforcement actions in any given fiscal year as well as the 

violators’ ability to pay. Of the $49.5 million in FY 2019 cash collections, all $49.5 million was 

3 Total cash collections includes $14.6 thousand, or <$0.1, in general proprietary receipts 

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transferred to the Treasury because the Customer Protection Fund balance exceeded $100 

million so no collections were eligible to be transferred to it. 

Historical experience has indicated that a high percentage of custodial receivables prove 

uncollectible. An allowance for uncollectible accounts has been established and included in the 

accounts receivable on the Balance Sheet. Although historical experience has indicated that a 

high percentage of custodial receivables prove uncollectible, the Commission determines the 

collectability of each individual judgment based on knowledge of the financial profile of the 

debtor obtained through the course of the investigation and litigation of each case, including 

efforts to identify and freeze assets at the beginning of cases, when any remaining assets are most 

likely to be recoverable. Accounts are re-estimated quarterly based on account reviews and the 

agency’s determination that changes to the net realizable value are needed. 

Financial Risks Occurring During the Reporting Period 

The most significant financial risk occurring during the reporting period was a direct result of 

the curtailment of operations during the government shutdown that occurred from December 

22, 2018, to January 25, 2019. During this time period, the Commission was unable to pay 

invoices in a timely manner, resulting in a delay in payments to contractors for goods and 

services already provided, and an increase in prompt pay interest once operations were back up 

and running. 

With the increase in payments to whistleblowers, the Commission also may encounter the 

possible risk of time lag in making payments to whistleblowers if the balance of the Customer 

Protection Fund is not sufficient to make timely payments to whistleblowers. This risk is 

minimized in that there is a level of due process involved in approving whistleblower claims that 

should provide the Commission with sufficient time to replenish the Customer Protection Fund, 

as necessary. 

Other than the extended government shutdown, there were no unanticipated financial risks 

occurring during the reporting period. 

Limitations of Financial Statements 

Management has prepared the accompanying financial statements to report the financial 

position and operational results for the CFTC for FY 2019 and FY 2018 pursuant to the 

requirements of Title 31 of the U.S. Code, section 3515 (b). 

While these statements have been prepared from the books and records of the Commission in 

accordance with GAAP for Federal entities and the formats prescribed by OMB Circular A-136, 

Financial Reporting Requirements, these statements are in addition to the financial reports used 
COMMODITY FUTURES TRADING COMMISSION

 

to monitor and control budgetary resources, which are prepared from the same books and 

records. 

The statements should be read with the understanding that they represent a component of the 

U.S. Federal government, a sovereign entity. One implication of this is that the liabilities 

presented herein cannot be liquidated without the enactment of appropriations, and ongoing 

operations are subject to the enactment of future appropriations. 

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Management Assurances 

Analysis of Systems, Controls, and Legal Compliance 

Management Overview 

The CFTC is committed to management excellence and recognizes the importance of strong 

financial systems and internal controls to ensure accountability, integrity, and reliability. This 

operating philosophy has permitted the Commission to make significant progress in 

documenting and testing its internal controls over reporting, as prescribed in OMB Circular A123, Management’s Responsibility for Enterprise Risk Management and Internal Control. The 

graph below depicts all five components of the internal control process that must be present in an 

organization to ensure an effective internal control process. 

 Control Environment is the foundation for an internal control system. It represents 

management’s commitment to encourage the highest level of integrity and 

personal/professional standards, and promotes internal control through our leadership 

philosophy and operational style. 

 Risk Assessment is the identification and analysis of risks associated with business 

processes, financial reporting, financial systems, controls and legal compliance in the 

pursuit of agency goals and objectives. 

 Control Activities are the actions supported by management policies and procedures to 

address risk, e.g. performance reviews, status of funds reporting, and asset management 

reviews. 

 Information and Communication ensure the agency’s control environment, risks, 

control activities, and performance results are communicated throughout the agency. 

 Monitoring is the assessment of internal control performance to ensure the internal 

control processes are properly executed and operating effectively in compliance with 

agency policies and procedures. 
COMMODITY FUTURES TRADING COMMISSION

 

Control 

Environment 

Risk Assessment 

Control Activities 

Monitoring 

The Commission relies on its performance management and internal control framework to 

ensure: 

 divisions and mission support offices achieve the intended strategic objectives and 

performance goals efficiently and effectively; 

 maintenance and use of reliable, complete, and timely data for decision-making at all 

levels; and, 

 compliance with applicable laws and regulations. 

Statement of Assurance 

The Statement of Assurance is required by the Federal Managers’ Financial Integrity Act of 1982 

(FMFIA) and OMB Circular A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control. The assurance is for internal controls over operational 

effectiveness (we do the right things to accomplish our mission) and operational efficiency (we 

do things right). 

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M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S 

Statement of Assurance 

 

 

 

 

 

“CFTC management is responsible for establishing and maintaining effective internal controls and 

financial management systems that meet the objectives of the Federal Managers’ Financial Integrity 

Act of 1982 (FMFIA). In accordance with OMB Circular A-123, Management’s Responsibility for 

Enterprise Risk Management and Internal Control, CFTC conducted an assessment of the 

effectiveness of its internal controls and financial management systems to support reliable financial 

reporting, effective and efficient programmatic operations, and compliance with applicable laws and 

regulations and financial management systems requirements. Based on the results of this assessment, 

the CFTC can provide reasonable assurance that its internal controls and financial management 

systems met the objectives of FMFIA and were operating effectively as of September 30, 2019. No 

material weaknesses were found in the design or operation of CFTC’s internal controls or financial 

management systems. 

These reviews include an assessment of CFTC’s safeguarding of assets, the use of budget authority, 

and other laws and regulations that could have a material effect on the financial statements, in 

accordance with the requirements of Appendix A to OMB Circular A-123, Management of Reporting 

and Data Integrity Risk. Based on the results of these reviews, the CFTC can provide reasonable 

assurance that its internal controls over reporting were operating effectively as of September 30, 2019. 

No material weaknesses were found in the design or operation of internal controls over reporting. 

The CFTC also reviews the United States Department of Transportation Quality Control Review of 

Controls Over the Enterprise Services Center Report conducted in accordance with the American 

Institute of Certified Public Accountants (AICPA) Statements on Standards for Attestation 

Engagements (SSAE 18) provided by the shared service provider maintaining our financial 

management system. The report addresses requirements outlined in Appendix D of OMB Circular A123, Compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA) and 

OMB Circular A-136. Based on the results of these reviews, the CFTC elects to provide reasonable 

assurance that its financial management systems are in compliance with applicable provisions of the 

FFMIA as of September 30, 2019.” 

Heath P. Tarbert 

Chairman 

November 7, 2019 
COMMODITY FUTURES TRADING COMMISSION

Management’s Assessment of Internal Control 

 

 

 

 

The objectives of the Commission’s internal controls are to provide reasonable assurance that: 

 Obligations and costs are in compliance with applicable laws; 

 Assets are safeguarded against waste, loss, unauthorized use, or misappropriation; 

 Revenues and expenditures applicable to Commission operations are properly recorded 

and accounted for to permit the preparation of accounts and reliable to financial and 

statistical reports and to maintain accountability over assets; and 

 All programs are efficiently and effectively carried out in accordance with applicable laws 

and management policy. 

During FY 2019, the Commission reviewed key components of its internal controls and financial 

management systems, in accordance with FMFIA and OMB guidelines. As part of this review, 

the Commission evaluates information obtained from reviews conducted by the Government 

Accountability Office (GAO) and the Office of the Inspector General (OIG). These reviews are 

helpful in assessing whether the Commission’s systems and controls comply with the standards 

established by FMFIA. 

In addition, managers throughout the Commission are responsible for ensuring that effective 

controls are implemented in their areas of responsibility. Individual assurance statements from 

division and office heads serve as a primary basis for the Chairman’s assurance that internal 

controls are adequate and operating effectively. The assurance statements are based upon each 

office’s evaluation of progress made in correcting any previously reported problems, as well as 

new problems identified by the OIG, GAO, other management reports, and the management 

environment within each office. CFTC has worked vigorously to continually improve its controls 

program and assess its effectiveness at accomplishing the FMFIA requirements. Examples of 

some of the FY 2019 work performed to support the assessment of compliance with FMFIA and 

Internal Controls over Reporting (ICOR) include, but are not limited to, the following: 

 Development of the Data Quality Plan (DQP) to ensure data quality, assessment and 

reconciliation of quarterly spending data submitted in compliance with the Digital 

Accountability and Transparency Act of 2014 (Data Act); 

 Fraud risk assessments to identify and reduce the risk of fraud based on the Fraud 

Reduction and Data Analytics Act of 2015; 

 Pay and benefits assessment based on the authority of Section 10702 of the Public Law 

107-171, Farm Security and Rural Investment Act of 2002; 

 Management and internal control reviews conducted with the express purpose of 

assessing internal controls; 

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FMFIA Section 2, Management Control 

FMFIA Section 4, Financial Management Systems 

 

FFMIA, Financial Management Systems 

Summary of Current Financial System and Future Strategies 

 

 Management control reviews conducted with the express purpose of assessing 

compliance with applicable laws, regulations, and government-wide policies; and 

 Information security compliance as required by the Federal Information Security 

Management Act (FISMA). 

The Commission has no declared material weaknesses under FMFIA for FY 2019 in the area of 

reporting that hinders preparation of timely and accurate financial statements. 

The Commission declared no nonconformance within our financial systems under FMFIA 

during FY 2019 and FY 2018. The independent auditors’ reports for FY 2019 and 2018 disclosed 

no instances of noncompliance or other matters within our financial systems that were required 

to be reported under Generally Accepted Government Auditing Standards (GAGAS) and OMB 

Bulletin 19-03, Audit Requirements for Federal Financial Statements. 

As an agency reporting under the Accountability of Tax Dollars Act of 2002, the Commission is 

not subject to the requirements of FFMIA. However, based on the robust assessments that the 

Commission has conducted to ensure compliance with FMFIA, CFTC is able to elect to provide 

reasonable assurance that its financial management systems comply with: 

 Federal financial management system requirements; 

 Applicable Federal accounting standards; and 

 The U.S. Standard General Ledger (USSGL) at the transaction level. 

Since FY 2007, the CFTC has leveraged a financial management systems platform operated by 

the U.S. Department of Transportation’s Enterprise Services Center (ESC), an OMB-designated 

financial management service provider. The Commission implemented an integrated end-to-end 

procurement management system through ESC, which provides a timely, efficient and consistent 

contract management process and facilitates required Data Act reporting. The Commission’s 

financial management systems strategy for FY 2020 includes the continued monitoring, 

evaluation and oversight of the financial management system operated by its shared services 

provider. As a result, the CFTC is able to accumulate, analyze, and present reliable financial 

information, and provide timely information for managing current operations and reporting 

financial information to central agencies. 
56 COMMODITY FUTURES TRADING COMMISSION

FINANCIAL SECTION 

Report of the Independent Auditor 

Principal Financial Statements

Notes to the Financial Statements 

Required Supplementary Information 

(Unaudited) 
FY 2019 AGENCY FINANCIAL REPORT

57 

F I N A N C I A L

Report of the Independent Auditor

Independent Auditors’ Report 

Chairman and Inspector General of 

U.S. Commodity Futures Trading Commission: 

Report on the Financial Statements 

 

 

We have audited the accompanying financial statements of the U. S. Commodity Futures Trading 

Commission (CFTC), which comprise the balance sheets as of September 30, 2019 and 2018; the related 

statements of net cost, changes in net position, custodial activity, and budgetary resources for the fiscal 

years then ended, and the related notes to the financial statements (hereinafter referred to as the financial 

statements). 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in 

accordance with accounting principles generally accepted in the United States of America; this 

responsibility includes the design, implementation, and maintenance of internal control relevant to the 

preparation and fair presentation of financial statements that are free from material misstatement, whether 

due to fraud or error. 

Auditors’ Responsibility 

 

 

 

Our responsibility is to express an opinion on the fiscal years 2019 and 2018 financial statements of 

CFTC based on our audits. We conducted our audits in accordance with auditing standards generally 

accepted in the United States of America; the standards applicable to financial audits contained in 

Government Auditing Standards issued by the Comptroller General of the United States; and Office of 

Management and Budget (OMB) Bulletin No. 19-03, Audit Requirements for Federal Financial 

Statements. Those standards and OMB Bulletin No. 19-03 require that we plan and perform the audit to 

obtain reasonable assurance about whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in 

the financial statements. The procedures selected depend on the auditors' judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. 

In making those risk assessments, the auditor considers internal control relevant to the entity' s 

preparation and fair presentation of the financial statements in order to design audit procedures that are 

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of 

the entity' s internal control. Accordingly, we express no such opinion. 

An audit also includes evaluating the appropriateness of the accounting policies used and the 

reasonableness of significant accounting estimates made by management, as well as the overall 

presentation of the financial statements. 
COMMODITY FUTURES TRADING COMMISSION

 

 

Other Matter 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditors’ Report 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion. 

Opinion 

In our opinion, the financial statements referred to above present fairly, in all material respects, the 

financial position of the U.S. Commodity Futures Trading Commission as of September 30, 2019 and 

2018, and its net costs of operations, changes in net position, custodial activity, and budgetary resources 

for the fiscal years then ended in accordance with accounting principles generally accepted in the United 

States of America. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Message from the 

Chairman, Management and Discussion Analysis section, and Other Accompanying Information section 

of this report is presented to supplement the basic financial statements. Such information, although not a 

part of the basic financial statements, is required by the Federal Accounting Standards Advisory Board. 

We have applied certain limited procedures, which consisted principally of inquiries of management 

regarding the methods of preparing the information and comparing the information for consistency with 

management’s responses to our inquiries, the basic financial statements, and other knowledge we 

obtained during our audit of CFTC’s financial statements. However, we did not audit this information 

and, accordingly, we express no opinion on it. 

Other Reporting Required by Government Auditing Standards 

Internal Control over Financial Reporting 

In planning and performing our audit of CFTC’s financial statements as of and for the year ended 

September 30, 2019, in accordance with generally accepted government auditing standards, we 

considered CFTC’s internal control over financial reporting as a basis for designing audit procedures that 

are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, 

but not for the purpose of expressing an opinion on the effectiveness of CFTC’s internal control over 

financial reporting. Accordingly, we do not express an opinion on the effectiveness of CFTC’s internal 

control over financial reporting. We limited internal control testing to those necessary to achieve the 

objectives described in OMB Bulletin No. 19-03. We did not test all internal control relevant to operating 

objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, such that there is a reasonable possibility that a material misstatement of the entity's 

financial statements will not be prevented, or detected and corrected, on a timely basis. A significant 

deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a 

material weakness, yet important enough to merit attention by those charged with governance. 

Our consideration of internal control over financial reporting was for the limited purpose as described in 

the first paragraph of this section and was not designed to identify all deficiencies in internal control over 

financial reporting that might be material weaknesses or significant deficiencies and therefore material 

weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during 

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F I N A N C I A L

 

 

 

Purpose of the Other Reporting Required by Government Auditing Standards

 

 

 

Independent Auditors’ Report 

our fiscal year 2019 audit we did not identify any deficiencies in internal control over financial reporting 

that we considered to be material weaknesses, as defined above. However, material weaknesses may exist 

that have not been identified. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether CFTC’s fiscal year 2019 financial statements are 

free of material misstatements, we performed tests of CFTC’s compliance with certain provisions of 

applicable laws, regulations, contracts, and grant agreements, which noncompliance could have a direct 

and material effect on the determination of material amounts and disclosures in CFTC’s financial 

statements, and certain provisions of other laws specified in OMB Bulletin No. 19-03. However, 

providing an opinion on compliance with those provisions was not an objective of our audit, and 

accordingly, we do not express such an opinion. 

The results of our tests of compliance as described in the preceding paragraph, disclosed an instance of 

noncompliance or other matters that is required to be reported herein under Government Auditing 

Standards or OMB Bulletin No. 19-03 and which is described in Exhibit I. 

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance with 

selected provision of applicable laws, regulations, contracts, and grant agreements, and the results of that 

testing, and not to provide an opinion on the effectiveness of CFTC's internal control or on compliance. 

This communication is an integral part of an audit performed in accordance with U.S. generally accepted 

government auditing standards in considering internal controls and compliance with laws, regulations, 

contracts, and grant agreements which could have a material effect on CFTC’s financial statements. 

Accordingly, this communication is not suitable for any other purpose. 

Allmond & Company, LLC 

November 7, 2019 

Lanham, MD 
COMMODITY FUTURES TRADING COMMISSION

Potential Anti-deficiency Act (ADA) violation 

 

 

 

 

 

 

 

 

 

Independent Auditors’ Report 

Exhibit I 

Compliance and Other Matters 

One management review is ongoing within the agency, which has or may identify an ADA violation, as 

follows: 

• In FY 2014, CFTC did not freeze the pay of certain senior official pursuant to an FY 2014 

government wide appropriation provision that has remained in each subsequent appropriation 

including FY 2018 appropriation. This issue is under management review. 

Title 31 U.S. Code (U.S.C.) Section 1517 Prohibited Obligations and Expenditures states: 

(a) An officer or employee of the United States Government or of the District of Columbia 

government may not make or authorize an expenditure or obligation exceeding – 

(1) An apportionment; or 

(2) The amount permitted by regulations prescribed under section 1514(a) of this title. 

(b) If an officer or employee of an executive agency or of the District of Columbia government 

violates subsection (a) of this section, the head of the executive agency or the Mayor of the 

District of Columbia, as the case may be, shall report immediately to the President and Congress 

all relevant facts and a statement of actions taken. A copy of each report shall also be transmitted 

to the Comptroller General on the same date the report is transmitted to the President and 

Congress. 

Recommendation: We recommend that CFTC’s management complete the investigation into the potential 

ADA violation noted and report to the appropriate parties, as necessary. 

MANAGEMENT’S RESPONSE 

Management concurs with the recommendation. 

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Independent Auditors’ Report 

Exhibit I 

Status of Prior Year Findings and Recommendations 

The following table provides the fiscal year (FY) 2019 status of all recommendations included in the 

Independent Auditors' Report on the Commodity Futures Trading Commission’s FY 2018 Financial 

Statements (November 8, 2018). 

FY 2018 

Finding 

FY 2018 Recommendation FY 2019 

Status 

Potential 

AntiDeficiency Act 

Violation 

Recommendation: 

Complete the investigation into the potential ADA violation noted and 

report to the appropriate parties, as necessary. 

Open 
COMMODITY FUTURES TRADING COMMISSION

Principal Financial Statements 

Commodity Futures Trading Commission 

BALANCE SHEETS 

As of September 30, 2019 and 2018 

20,983,576 10,121,627 

Actuarial FECA Liabilities (Note 1N) 478,449 454,559 

Accrued Payroll 5,779,774 4,901,912 

Annual Leave 12,672,973 11,544,538 

Deferred Lease Liabilities (Note 7) 21,494,054 23,970,026 

Liability for Whistleblower Awards (Note 8) 20,280,146 4,913,875 

Deposit Fund Liabilities 445,754 369,175 

Contingent Liabilities (Note 9) - 38,696 

Total Liabilities $ 135,453,485 $ 69,521,937 

NET POSITION 

Unexpended Appropriations - All Other Funds $ 58,465,701 $ 47,626,826 

Cumulative Results of Operations - Funds from Dedicated Collections 125,439,162 158,337,598 

Cumulative Results of Operations - All Other Funds (4,800,343) (783,772) 

Total Net Position - Funds from Dedicated Collections (Note 12) 125,439,162 158,337,598 

Total Net Position - All Other Funds 53,665,358 46,843,054 

Total Net Position $ 179,104,520 $ 205,180,652 

TOTAL LIABILITIES AND NET POSITION $ 314,558,005 $ 274,702,589 

2019 2018 

ASSETS 

Intragovernmental: 

Fund Balance With Treasury (Note 2) $ 86,407,483 $ 66,320,101 

Investments (Note 3) 141,300,000 157,518,375 

Accounts Receivable (Note 4) 1,167 3,692 

Prepayments (Note 1H) 2,663,914 1,596,970 

Total Intragovernmental 230,372,564 225,439,138 

Custodial Receivables, Net (Note 4) 51,364,449 11,497,175 

Accounts Receivable, Net (Note 4) 53,415 40,975 

General Property, Plant and Equipment, Net (Note 5) 

Prepayments (Note 1H) 

29,738,196 

3,029,381 

35,176,845 

2,548,456 

TOTAL ASSETS $ 314,558,005 $ 274,702,589 

LIABILITIES 

Intragovernmental: 

Accounts Payable $ 436,014 $ 454,015 

Custodial Liabilities 51,364,449 11,497,175 

Employer Contributions and Payroll Taxes Payable 1,432,636 1,171,806 

FECA Liabilities (Note 1N) 85,660 84,533 

Total Intragovernmental 53,318,759 13,207,529 

Accounts Payable 

The accompanying notes are an integral part of these financial statements. 

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Commodity Futures Trading Commission 

STATEMENTS OF NET COST 

For the Years Ended September 30, 2019 and 2018 

2019 2018 

NET COST BY GOAL 

GOAL ONE: MARKET INTEGRITY AND TRANSPARENCY 

Gross Costs 

Less: Earned Revenue 

$ 67,538,202 

(62,079) 

$ 65,362,175 

(10,334) 

NET COST OF OPERATIONS -- GOAL ONE $ 67,476,123 $ 65,351,841 

GOAL TWO: FINANCIAL INTEGRITY AND AVOIDANCE OF SYSTEMIC RISK 

Gross Costs $ 90,448,114 $ 89,447,245 

Less: Earned Revenue (83,138) (14,142) 

NET COST OF OPERATIONS -- GOAL TWO $ 90,364,976 $ 89,433,103 

GOAL THREE: COMPREHENSIVE ENFORCEMENT 

Gross Costs $ 129,945,977 $ 136,303,063 

Less: Earned Revenue (91,178) (16,019) 

NET COST OF OPERATIONS -- GOAL THREE $ 129,854,799 $ 136,287,044 

GOAL FOUR: DOMESTIC AND INTERNATIONAL COOPERATION AND COORDINATION 

Gross Costs $ 13,621,378 $ 14,191,540 

Less: Earned Revenue (12,520) (2,244) 

NET COST OF OPERATIONS -- GOAL FOUR $ 13,608,858 $ 14,189,296 

GRAND TOTAL 

Gross Costs $ 301,553,671 $ 305,304,023 

Less: Earned Revenue (248,915) (42,739) 

TOTAL NET CO ST OF OPERATIONS $ 301,304,756 $ 305,261,284 

The accompanying notes are an integral part of these financial statements. 
COMMODITY FUTURES TRADING COMMISSION

 

Commodity Futures Trading Commission 

STATEMENTS OF CHANGES IN NET POSITION 

For the Years Ended September 30, 2019 and 2018 

Dedicated 

Collections 

2019 Consolidated 

Total 

All Other 

Funds 

UNEXPENDED APPROPRIATIONS: 

BEGINNING BALANCES, OCTOBER 1 $ - $ 47,626,826 $ 47,626,826 

BUDGETARY FINANCING SOURCES: 

Appropriations Received - 268,000,000 268,000,000 

Other Adjustments (+/-) - (4,032,357) (4,032,357) 

Appropriations Used - (253,128,768) (253,128,768) 

Total Budgetary Financing Sources - 10,838,875 10,838,875 

TOTAL UNEXPENDED APPROPRIATIONS, SEPTEMBER 30 $ - $ 58,465,701 $ 58,465,701 

CUMULATIVE RESULTS OF OPERATIONS: 

BEGINNING BALANCES, OCTOBER 1 $ 158,337,598 $ (783,772) $ 157,553,826 

BUDGETARY FINANCING SOURCES: 

Appropriations Used - 253,128,768 253,128,768 

Nonexchange Interest Revenue (Note 3) 3,206,457 - 3,206,457 

OTHER FINANCING SOURCES: 

Imputed Financing Sources (Note 1M) - 8,054,524 8,054,524 

Total Financing Sources 3,206,457 261,183,292 264,389,749 

Net Cost of Operations (36,104,893) (265,199,863) (301,304,756) 

Net Change (32,898,436) (4,016,571) (36,915,007) 

TOTAL CUMULATIVE RESULTS OF OPERATIONS, SEPTEMBER 30 $ 125,439,162 $ (4,800,343) $ 120,638,819 

NET POSITION $ 125,439,162 $ 53,665,358 $ 179,104,520 

UNEXPENDED APPROPRIATIONS: 

BEGINNING BALANCES, OCTOBER 1 $ - $ 50,591,522 $ 50,591,522 

BUDGETARY FINANCING SOURCES: 

Appropriations Received - 249,000,000 249,000,000 

Other Adjustments (+/-) - (454,135) (454,135) 

Appropriations Used - (251,510,561) (251,510,561) 

Consolidated 

Total 

All Other 

Funds 

Dedicated 

Collections 

2018 

Total Budgetary Financing Sources - (2,964,696) (2,964,696) 

TOTAL UNEXPENDED APPROPRIATIONS, SEPTEMBER 30 $ - $ 47,626,826 $ 47,626,826 

CUMULATIVE RESULTS OF OPERATIONS: 

BEGINNING BALANCES, OCTOBER 1 $ 196,336,209 $ 4,225,293 $ 200,561,502 

BUDGETARY FINANCING SOURCES: 

Appropriations Used - 251,510,561 251,510,561 

Nonexchange Interest Revenue (Note 3) 3,447,675 - 3,447,675 

OTHER FINANCING SOURCES: 

Imputed Financing Sources (Note 1M) - 7,295,372 7,295,372 

Total Financing Sources 3,447,675 258,805,933 262,253,608 

Net Cost of Operations (41,446,286) (263,814,998) (305,261,284) 

Net Change (37,998,611) (5,009,065) (43,007,676) 

TOTAL CUMULATIVE RESULTS OF OPERATIONS, SEPTEMBER 30 $ 158,337,598 $ (783,772) $ 157,553,826 

NET POSITION $ 158,337,598 $ 46,843,054 $ 205,180,652 

The accompanying notes are an integral part of these financial statements. 

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Commodity Futures Trading Commission 

STATEMENTS OF BUDGETARY RESOURCES 

For the Years Ended September 30, 2019 and 2018 

2019 2018 

BUDGETARY RESOURCES 

Unobligated Balance from Prior Year Budget Authority, Net (Note 10A) 

Appropriations 

Spending Authority from Offsetting Collections 

TOTAL BUDGETARY RESOURCES 

$ 23,928,531 

$ 295,144,893 

268,000,000 

3,216,362 

$ 80,863,263 

$ 333,115,209 

249,000,000 

3,251,946 

STATUS OF BUDGETARY RESOURCES 

New Obligations and Upward Adjustments 

Unobligated Balance, End of Year 

Apportioned, Unexpired Accounts 

$ 268,029,495 

142,982,838 

$ 310,043,029 

160,197,074 

Unapportioned, Unexpired Accounts (126,714,806) (149,078,415) 

Unexpired Unobligated Balance, End of Year 16,268,032 11,118,659 

Expired Unobligated Balance, End of Year 10,847,366 11,953,521 

Unobligated Balance, End of Year (Total) 27,115,398 23,072,180 

TOTAL BUDGETARY RESOURCES $ 295,144,893 $ 333,115,209 

OUTLAYS, NET 

Outlays, Net $ 260,156,840 $ 327,283,911 

Distributed Offsetting Receipts (14,569) (1,939) 

AGENCY OUTLAYS, NET $ 260,142,271 $ 327,281,972 

The accompanying notes are an integral part of these financial statements. 
COMMODITY FUTURES TRADING COMMISSION

 

Commodity Futures Trading Commission 

STATEMENTS OF CUSTODIAL ACTIVITY 

For the Years Ended September 30, 2019 and 2018 

2019 2018 

Registration and Filing Fees $ 2,243,849 $ 602,108 

Fines, Penalties, and Forfeitures 47,229,052 856,913,686 

General Proprietary Receipts 

TOTAL CUSTODIAL REVENUE 

SOURCES OF CASH COLLECTIONS: 

14,569 1,939 

Total Cash Collections 49,487,470 857,517,733 

Change in Custodial Receivables 39,867,274 6,214,855 

TOTAL CUSTODIAL REVENUE $ 89,354,744 $ 863,732,588 

DISPOSITION OF COLLECTIONS 

AMOUNTS TRANSFERRED TO: 

Department of the Treasury $ (49,487,470) $ (857,517,733) 

Total Disposition of Collections (49,487,470) (857,517,733) 

Change in Custodial Liabilities (39,867,274) (6,214,855) 

NET CUSTODIAL ACTIVITY $ - $ -

The accompanying notes are an integral part of these financial statements. 

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Notes to the Financial Statements 

As of and for the Fiscal Years Ended September 30, 2019 and 2018 

Note 1 Summary of Significant Accounting Policies 

A. Reporting Entity 

The Commodity Futures Trading Commission (CFTC or Commission) is an independent 

agency of the executive branch of the Federal Government. Congress created the CFTC in 

1974 under the authorization of the Commodity Exchange Act (CEA) with the 

mandate to regulate commodity futures and option markets in the United States. The 

agency’s mandate was renewed and expanded under the Futures Trading Acts of 

1978, 1982, and 1986; under the Futures Trading Practices Act of 1992; under the 

CFTC Reauthorization Act of 1995; under the Commodity Futures Modernization Act of 

2000; and under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010 (Dodd-Frank Act, or the Act). Congress passed the Food, Conservation, and Energy 

Act of 2008, which reauthorized the Commission through FY 2013. In the absence of 

formal reauthorization, CFTC has continued to operate through annual appropriations. 

The CFTC is responsible for ensuring the economic utility of futures markets by 

encouraging their competitiveness and efficiency, ensuring their integrity, and protecting 

market participants against manipulation, abusive trade practices, and fraud. 

On July 21, 2010, the Dodd-Frank Act was signed into law, significantly expanding the 

powers and responsibilities of the CFTC. According to Section 748 of the Act, there is 

established in the U.S. Department of the Treasury (Treasury) a revolving fund known as 

the CFTC Customer Protection Fund. The Customer Protection Fund shall be available 

to the Commission, without further appropriation or fiscal year limitation, for a) the 

payment of awards to whistleblowers; and b) the funding of customer education initiatives 

designed to help customers protect themselves against fraud or other violations of this 

Act or the rules and regulations thereunder. 

B. Basis of Presentation 

The financial statements have been prepared to report the financial position and 

results of operations for the CFTC, as required by the Accountability of Tax Dollars Act 

of 2002. They are presented in accordance with the form and content requirements 

contained in OMB Circular A-136, Financial Reporting Requirements, as amended. 

The principal financial statements have been prepared in all material respects from the 

agency’s books and records in conformity with U.S. generally accepted accounting 

principles (GAAP), as prescribed for the Federal government by the Federal Accounting 

Standards Advisory Board (FASAB). The application and methods for applying these 

principles are appropriate for presenting fairly the entity’s assets, liabilities, financial 

position, net cost of operations, changes in net position, budgetary resources, and custodial 

activities. Accounting standards allow certain presentations and disclosures to be 

modified, if needed, to prevent the disclosure of classified information. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The books and records of the agency served as the source of information for preparing the 

financial statements in the prescribed formats. All agency financial statements and reports 

used to monitor and control budgetary resources are prepared from the same books and 

records. The statements should be read with the understanding that they are for a 

component of the U.S. Government, a sovereign entity. 

The Balance Sheets present the financial position of the agency. The Statements of Net 

Cost present the agency’s operating results; the Statements of Changes in Net Position 

display the changes in the agency’s equity accounts. The Statements of Budgetary 

Resources present the sources, status, and uses of the agency’s resources and follow the 

rules for the Budget of the U.S. Government. The Statements of Custodial Activity 

present the sources and disposition of collections for which the CFTC is the fiscal 

agent, or custodian, for the Treasury General Fund Miscellaneous Receipt accounts. 

Throughout these financial statements, assets, liabilities, revenues and costs have been 

classified according to the type of entity with whom the transactions were made. 

Intragovernmental assets and liabilities are those from or to other federal entities. 

Intragovernmental earned revenues are collections or accruals of revenue from other 

federal entities, and intragovernmental costs are payments or accruals to other federal 

entities. The CFTC does not transact business among its own operating units, and therefore, 

intra-entity eliminations were not needed. 

C. Budgetary Resources and Status 

The CFTC is funded through congressionally approved appropriations. The CFTC is 

responsible for administering the salaries and expenses of the agency through the 

execution of these appropriations. 

Congress annually enacts appropriations that provide the CFTC with the authority to 

obligate funds within the respective fiscal year for necessary expenses to carry out 

mandated program activities. All appropriations are subject to quarterly apportionment as 

well as Congressional restrictions. 

The CFTC’s budgetary resources for FY 2019 consist of: 

 Unobligated balances of resources brought forward from the prior year, 

 Recoveries of obligations made in prior years, and 

 New resources in the form of appropriations and spending authority from 

offsetting collections. 

Unobligated balances associated with resources expiring at the end of the fiscal year 

remain available for five years after expiration only for upward adjustments of prior year 

obligations, after which they are canceled and may not be used. All unused monies 

related to canceled appropriations are returned to Treasury and the canceled authority is 

reported on the Statements of Budgetary Resources and the Statements of Changes in Net 

Position. 

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D. Entity and Non-Entity Assets 

Assets consist of entity and non-entity assets. Entity assets are those assets that the 

CFTC has authority to use for its operations. Non-entity assets are those held by the 

CFTC that are not available for use in its operations. Non-entity assets held by the 

CFTC include deposit fund balances, custodial fines, interest, penalties, and administrative 

fees receivable. 

E. Fund Balance with Treasury 

Fund Balance with Treasury is the aggregate amount of the CFTC’s funds with Treasury in 

general, receipt, revolving, and deposit fund accounts. Appropriated funds recorded in 

general fund expenditure accounts are available to pay current liabilities and finance 

authorized purchases. Revolving fund custodial collections recorded in the deposit 

fund and miscellaneous receipts accounts of the Treasury are not available for agency 

use. At fiscal year-end, receipt account balances are returned to Treasury or transferred to 

the Customer Protection Fund. 

The CFTC does not maintain bank accounts of its own, has no disbursing authority, and 

does not maintain cash held outside of Treasury. Treasury disburses funds for the agency 

on demand. 

Spending authority from offsetting collections is recorded in the agency’s expenditure 

account and is available for agency use subject to certain limitations. 

F. Investments 

The CFTC has the authority to invest amounts deposited in the Customer Protection Fund 

in short-term market-based Treasury securities. Market-based Treasury securities are debt 

securities that the Treasury issues to Federal entities without statutorily determined interest 

rates. Although the securities are not marketable, the terms (prices and interest rates) 

mirror the terms of marketable Treasury securities. Investments are carried at their 

historical cost basis which approximates fair value due to their short-term nature. 

Interest earned on the investments is a component of the Fund and is available to be 

used for expenses of the Customer Protection Fund. Additional details regarding 

Customer Protection Fund investments are provided in Note 3. 

G. Accounts Receivable, Net 

Accounts receivable consists of amounts owed by other federal agencies and the public to 

the CFTC and is valued net of an allowance for uncollectible amounts. The allowance is 

based on past experience in the collection of receivables and analysis of the outstanding 

balances. Accounts receivable arise from reimbursable operations, earned refunds or the 

Civil Monetary Sanctions program. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

 

H. Prepayments 

Payments to federal and non-federal sources in advance of the receipt of goods and 

services are recorded as prepayments and recognized as expenses when the related 

goods and services are received. Intragovernmental prepayments reported on the Balance 

Sheet were made primarily to the U.S. Department of Interior for contract support. 

Prepayments to the public were primarily for software maintenance and subscription 

services. 

I. General Property, Plant and Equipment, Net 

Furniture, fixtures, equipment, information technology hardware and software, and 

leasehold improvements are capitalized and depreciated or amortized over their useful 

lives. 

The CFTC capitalizes assets annually if they have useful lives of at least two years and an 

individual value of $25,000 or more. Bulk or aggregate purchases are capitalized when the 

individual useful lives are at least two years and the purchase is a value of $25,000 or more. 

Property, plant and equipment that do not meet the capitalization criteria are expensed 

when acquired. Depreciation for equipment and amortization for software is computed on 

a straight- line basis using a 5-year life. Leasehold improvements are amortized over the 

remaining life of the lease. The Commission’s assets are valued net of accumulated 

depreciation or amortization. 

J. Liabilities 

The CFTC’s liabilities consist of actual and estimated amounts that are likely to be paid as a 

result of transactions covered by budgetary resources for which Congress has appropriated 

funds or funding, or are otherwise available from reimbursable transactions to pay amounts 

due. 

Liabilities include those covered by budgetary resources in existing legislation, those not 

requiring budgetary resources, and those not yet covered by budgetary resources. The 

CFTC liabilities not requiring budgetary resources include deferred lease liabilities, 

deposit funds, and custodial revenue deemed collectible but not yet collected at fiscal yearend. Liabilities that are not yet covered by budgetary resources but will require budgetary 

resources in the future include: 

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 Intragovernmental Federal Employees’ Compensation Act (FECA) liabilities, 

 Annual leave benefits that will be funded by annual appropriations as leave is taken, 

 Actuarial FECA liabilities, 

 Liability for whistleblower awards, 

 Contingent liabilities, and 

 Advances received for reimbursable services yet to be provided. 

K. Accounts Payable 

Accounts payable consists primarily of contracts for goods or services, such as operating 

leases, leasehold improvements, software development, information technology, 

telecommunications, and consulting and support services. 

L. Accrued Payroll and Benefits and Annual Leave Liability 

The accrued payroll liability represents amounts for salaries and benefits owed for the time 

since the payroll was last paid through the end of the reporting period. Total accrued payroll 

is composed of amounts to be paid to CFTC employees as well as the related 

intragovernmental payable for employer contributions and payroll taxes. The annual leave 

liability is the amount owed to employees for unused annual leave as of the end of the 

reporting period. At the end of each quarter, the balance in the accrued annual leave 

account is adjusted to reflect current balances and pay rates. Sick leave and other types of 

non-vested leave are expensed astaken. 

The agency’s employees participate in the Civil Service Retirement System (CSRS) or the 

Federal Employees’ Retirement System (FERS). On January 1, 1987, FERS went into effect 

pursuant to Public Law 99-335. Most employees hired after December 31, 1983, are 

automatically covered by FERS and Social Security. Employees hired prior to January 1, 

1984, could elect to either join FERS and Social Security or remain in CSRS. 

For employees under FERS, the CFTC contributes an amount equal to one percent of the 

employee’s basic pay to the tax deferred Thrift Savings Plan and matches employee 

contributions up to an additional four percent of pay. FERS and CSRS employees can 

contribute a portion of their gross earnings to the plan up to Internal Revenue Service limits; 

however, CSRS employees receive no matching agency contribution. 

M. Retirement Plans and Other Employee Benefits

The CFTC imputes costs and the related financing sources for its share of retirement benefits 

accruing to its past and present employees that are in excess of the amount of contributions 

from the CFTC and its employees, which are mandated by law. The Office of Personnel 

Management (OPM), which administers federal civilian retirement programs, provides the 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

cost information to the CFTC. The CFTC recognizes the full cost of providing future 

pension and Other Retirement Benefits (ORB) for current employees as required by 

Statement of Federal Financial Accounting Standards (SFFAS) 5, Accounting for Liabilities of 

the Federal Government. 

Full costs include pension and ORB contributions paid out of the CFTC’s appropriations 

and costs financed by OPM. The amount financed by OPM is recognized as an imputed 

financing source. Reporting amounts such as plan assets, accumulated plan benefits, or 

unfunded liabilities, if any, is the responsibility of OPM. 

Liabilities for future pension payments and other future payments for retired employees who 

participate in the Federal Employees Health Benefits Program and the Federal Employees 

Group Life Insurance Program are reported by OPM rather than CFTC. 

N. FECA Liabilities 

FECA provides income and medical cost protections to covered federal civilian employees 

injured on the job, to employees who have incurred work-related occupational diseases and 

to beneficiaries of employees whose deaths are attributable to job-related injuries or 

occupational diseases. The FECA program is administered by the U.S. Department of Labor 

(DOL), which pays valid claims against the CFTC and subsequently seeks reimbursement 

from the CFTC for these paid claims. Accrued FECA liabilities represent amounts due to 

DOL for claims paid on behalf of the agency. 

In addition, the Commission’s actuarial FECA liability represents the liability for future 

workers compensation benefits, which includes the expected liability for death, disability, 

medical, and miscellaneous costs for approved cases. The Commission records an estimate 

for the FECA actuarial liability using the DOL’s FECA model. The model considers the 

average amount of benefit payments incurred by the Commission for the past three fiscal 

years, multiplied by the medical and compensation liability to benefits paid ratio for the 

whole FECA program. 

O. Leases 

The CFTC does not have any capital lease liabilities. The operating leases consist of 

commercial property for the CFTC’s headquarters and regional offices. Lease expenses are 

recognized on a straight-line basis. 

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P. Deposit Funds 

Deposit funds are expenditure accounts used to record monies that do not belong to the 

Federal government. They are held awaiting distribution based on a legal determination or 

investigation. The CFTC Deposit Fund is used to collect and later distribute collections of 

monetary awards to the appropriate victims as restitution. The cash collections recorded in 

this fund are offset by a Deposit Fund liability. Activities in this fund are not fiduciary in 

nature because they are not legally enforceable against the government. 

Q. Net Position 

Net position consists of unexpended appropriations and cumulative results of operations. 

Unexpended appropriations are appropriations that have not yet been used to acquire 

goods and services or provide benefits. Appropriations are considered expended, or used, 

when goods and services have been acquired by the CFTC or benefits have been provided 

using the appropriation authority, regardless of whether monies have been paid or payables 

for the goods, services, or benefits have been established. 

Cumulative results of operations represent the excess of budgetary or other financing 

sources over expenses since inception. Cumulative results of operations are derived from 

the net effect of capitalized assets, expenses, exchange revenue, and unfunded liabilities. 

R. Revenues 

The CFTC receives reimbursement and earns revenue for the following activities: 

 Reimbursement for travel, subsistence, and related expenses from non-federal 

sources for attendance at meetings or similar functions that an employee has been 

authorized to attend in an official capacity on behalf of the Commission; 

 Reimbursement for Intergovernmental Personnel Act Mobility Program 

assignments from state and local governments, institutions of higher education, 

and other eligible organizations for basic pay, supplemental pay, fringe benefits, 

and travel and relocation expenses; and 

 Reimbursement from non-federal sources for registration fees to cover the cost of 

expenses related to the CFTC's annual International Regulators Conference. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

S. Net Cost of Operations 

Net cost of operations is the difference between the CFTC’s expenses and its earned revenue. 

The presentation of program results by strategic goals is based on the CFTC’s current 

Strategic Plan established pursuant to the Government Performance and Results Act of 1993 

(GPRA). 

The mission statement of the CFTC is to protect market users and the public from fraud, 

manipulation, and abusive practices related to the sale of commodity and financial futures 

and options, and to foster open, competitive, and financially sound futures and option 

markets. For FY 2019, the mission was accomplished through the following four strategic 

goals, each focusing on a vital area of regulatory responsibility: 

 Goal 1: Market Integrity and Transparency. The focus of Market Integrity and 

Transparency is to recognize that derivatives markets provide a means for market users 

to offset price risks inherent in their businesses and to serve as a public price discovery 

mechanism. 

 Goal 2: Financial Integrity and Avoidance of Systemic Risk. The focus of Financial 

Integrity and Avoidance of Systemic Risk is to strive to ensure that Commissionregistered derivatives clearing organizations, swap dealers, major swap participants, and 

futures commission merchants have the financial resources, risk management systems 

and procedures, internal controls, customer protection systems, and other controls 

necessary to meet their obligations so as to minimize the risk that the financial difficulty 

of any of these registrants, or any of their customers has systemic implications. 

 Goal 3: Comprehensive Enforcement. Through the goal of Comprehensive 

Enforcement, the CFTC enforces the CEA and Commission regulations, and works to 

promote awareness of and compliance with these laws. 

 Goal 4: Domestic and International Cooperation and Coordination. Domestic and 

International Cooperation and Coordination focuses on how the Commission interacts 

with domestic and international regulatory authorities, market participants, and others 

affected by the Commission’s regulatory policies and practices. 

To advance its mission goals and objectives, the CFTC will achieve Commission-wide 

excellence by empowering strong, enterprise-focused leaders, maintaining a highperforming and engaged workforce, and ensuring effective stewardship of resources. 

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T. Custodial Activity 

The CFTC collects penalties and fines levied against firms for violation of laws as described 

in the CEA as codified at 7 U.S.C. § 1, et seq, and the Commodities Futures Modernization 

Act of 2000, Appendix E of Public Law 106-554, 114 Stat. 2763. Unpaid fines, penalties and 

accrued interest are reported as custodial receivables, with an associated custodial liability. 

The receivables and the liability are reduced by amounts determined to be uncollectible. 

Revenues earned and the losses from bad debts are reported to Treasury. 

Collections made by the CFTC during the year are deposited and reported into designated 

Treasury miscellaneous receipt accounts for: 

 Registration and filing fees, 

 Fines, penalties and forfeitures, and 

 General proprietary receipts. 

At fiscal year-end, custodial collections made by the CFTC are either returned to Treasury 

or when determined eligible, transferred to the Customer Protection Fund. The CFTC does 

not retain any amount for custodial activities including reimbursement of the cost of 

collection. 

U. Use of Management Estimates 

The preparation of the accompanying financial statements in accordance with accounting 

principles generally accepted in the United States of America requires management to make 

certain estimates and assumptions that directly affect the results of reported assets, 

liabilities, revenues, expenses, and custodial activities. Actual results could differ from these 

estimates. 

V. Reconciliation of Net Outlays and Net Cost of Operations 

In accordance with OMB Circular A-136, the Commission reconciles its budgetary outlays 

with its net cost of operations. 

W. Funds from Dedicated Collections 

The Customer Protection Fund was established to operate a whistleblower program and 

support customer education initiatives. See Note 1A for a description of the purpose of the 

Customer Protection Fund and its authority to use revenues and other financing sources. 

Deposits into the Customer Protection Fund are credited from monetary sanctions 

collected by the Commission in a covered judicial or administrative action where the full 

judgment is in excess of $1,000,000 and the collection is not otherwise distributed to victims 
COMMODITY FUTURES TRADING COMMISSION

 

 

of a violation of the Dodd-Frank Act or the underlying rules and regulations, unless the 

balance of the Customer Protection Fund at the time the monetary judgment is collected 

exceeds $100 million. No new legislation was enacted as of September 30, 2019, that 

significantly changed the purpose of the fund or redirected a material portion of the 

accumulated balance. 

Note 2 Fund Balance with Treasury 

A. Reconciliation to Treasury 

There are no differences between the fund balances reflected in the CFTC Balance Sheets and 

the balances in the Treasury accounts. 

B. Fund Balance with Treasury 

Fund Balance with Treasury as of September 30, 2019, and 2018, consisted of the following: 

 

2019 2018 

Unobligated Fund Balance 

Available $ 2,299,197 $ 3,426,145 

Unavailable 10,821,543 11,871,422 

Obligated Balance Not Yet Disbursed 72,840,989 50,653,359 

Non-Budgetary Fund Balance with Treasury 445,754 369,175 

TOTAL FUND BALANCE WITH TREASURY $ 86,407,483 $ 66,320,101 

Obligated and unobligated balances reported for the status of Fund Balance with Treasury 

differ from the amounts reported in the Statement of Budgetary Resources due to the fact 

that budgetary balances are supported by amounts other than Fund Balance with Treasury. 

These amounts include Customer Protection Fund investments, uncollected payments from 

Federal sources, and unfunded lease obligations. 

Note 3 Investments 

The CFTC invests amounts deposited in the Customer Protection Funds in overnight shortterm Treasury securities. Treasury overnight certificates of indebtedness are issued with a 

stated rate of interest to be applied to their par amount, mature on the business day 

immediately following their issue date, are redeemed at their par amount at maturity, and 

have interest payable at maturity. 

The overnight certificates are Treasury securities whose interest rates or prices are 

determined based on the interest rates or prices of Treasury-related financial instruments 

issued or trading in the market, rather than on the interest rates or prices of outstanding 

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marketable Treasury securities. The Commission may invest in other short-term or longterm Treasury securities at management’s discretion. 

The Commission’s investments as of September 30, 2019, and 2018, were $141,300,000 and 

$157,518,375, respectively. Related nonexchange interest revenue for the years ended 

September 30, 2019, and 2018, was $3,206,457 and $3,447,675, respectively. 

Intragovernmental Investments in Treasury Securities 

The Federal Government does not set aside assets to pay future claims or other expenditures 

associated with funds from dedicated collections deposited into the Customer Protection 

Fund. The dedicated cash receipts collected by the Commission as a result of monetary 

sanctions are deposited in the Treasury, which uses the cash for general Government 

purposes. As discussed above and in Note 1F, the Commission invests the majority of these 

funds in Treasury securities. These Treasury securities are an asset of the Commission and a 

liability of the Treasury. Because the Commission and the Treasury are both components of 

the Government, these assets and liabilities offset each other from the standpoint of the 

Government as a whole. For this reason, the investments presented by the Commission do 

not represent an asset or a liability in the U.S. Government-wide financial statements. 

Treasury securities provide the Commission with authority to draw upon the Treasury to 

pay future claims or other expenditures. When the Commission requires redemption of 

these securities to make expenditures, the Government finances those expenditures out of 

accumulated cash balances, by raising taxes or other receipts, by borrowing from the public 

or repaying less debt, or by curtailing other expenditures. This is the same manner in which 

the Government finances all expenditures. 

Note 4 Accounts Receivable, Net 

Accounts receivable consist of amounts owed the CFTC by other Federal agencies and the 

public. Accounts receivable are valued at their net collectible values. Non-custodial accounts 

receivable are primarily for overpayments of expenses to other agencies, or vendors, and 

repayment of employee benefits. Historical experience has indicated that most of the noncustodial receivables are collectible and that there are no material uncollectible amounts. 

Custodial receivables (non-entity assets) are those for which fines and penalties have been 

assessed and levied against businesses or individuals for violations of the CEA or 

Commission regulations. Violators may be subject to a variety of sanctions including fines, 

injunctive orders, bars or suspensions, rescissions of illegal contracts, and disgorgements. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

An allowance for uncollectible accounts has been established and included in accounts 

receivable on the balance sheets. Although historical experience has indicated that a high 

percentage of custodial receivables prove uncollectible, the Commission determines the 

collectability of each individual judgment based on knowledge of the financial profile of the 

debtor obtained through the course of the investigation and litigation of each case, 

including efforts to identify and freeze assets at the beginning of cases, when any remaining 

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

account reviews and the agency’s determination that changes to the net realizable value are 

needed. 

Accounts receivable, net consisted of the following as of September 30, 2019, and 2018: 

2019 2018 

Custodial Receivables, Net: 

Civil Monetary Penalties, Fines, and Administrative Fees $ 207,552,850 $ 122,932,196 

Civil Monetary Penalty Interest 1,942,550 852,587 

Registration and Filing Fees 1,346,286 2,179,957 

Less: Allowance for Loss on Penalties, Fines, and Administrative Fees (157,522,132) (113,605,126) 

Less: Allowance for Loss on Interest (1,932,727) (840,061) 

Less Allowance for Loss on Registration and Filing Fees (22,378) (22,378) 

TOTAL CUSTODIAL RECEIVABLES, NET $ 51,364,449 $ 11,497,175 

Other Accounts Receivable 54,582 44,667 

TOTAL ACCOUNTS RECEIVABLE, NET $ 51,419,031 $ 11,541,842 

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$ 105,262,994 

$ 105,176,141 

Note 5 General Property, Plant and Equipment, Net 

Property, Plant and Equipment as of September 30, 2019, and 2018, consisted of the following:

Equipment 5 Years/Straight Line $ 41,114,736 $ (31,499,908) $ 9,614,828 

IT Software 

Software in Development 

5 Years/Straight Line 29,684,602 (25,290,789) 4,393,813 

Not Applicable 3,170,786 - 3,170,786 

Leasehold Improvements Remaining Life of Lease/Straight Line 31,292,870 (18,734,101) 12,558,769 

Accumulated 

Amortization/ 

Service Life and Method Cost Depreciation Net Book Value 

2019 

Major Class 

TOTAL GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET $ (75,524,798) $ 29,738,196 

Equipment 5 Years/Straight Line $ 39,362,988 $ (27,848,249) $ 11,514,739 

IT Software 5 Years/Straight Line 31,788,200 (25,752,071) 6,036,129 

Software in Development Not Applicable 2,732,083 - 2,732,083 

Leasehold Improvements Remaining Life of Lease/Straight Line 31,292,870 (16,398,976) 14,893,894 

Accumulated 

Amortization/ 

Service Life and Method Cost Depreciation Net Book Value 

2018 

Major Class 

TOTAL GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET $ (69,999,296) $ 35,176,845 

Depreciation and amortization expense for the years ended September 30, 2019, and 2018,

totaled $7,443,442 and $7,741,131, respectively. 

Note 6 Liabilities not Covered by Budgetary Resources 

As of September 30, 2019, and 2018, the following liabilities were not covered by budgetary 

resources: 

2019 2018 

Liabilities Not Requiring Budgetary Resources: 

Intragovernmental - Custodial Liabilities 

Deferred Lease Liabilities 

Deposit Fund Liabilities 

$ 51,364,449 

21,494,054 

445,754 

$ 11,497,175 

23,970,026 

369,175 

Total Liabilities Not Requiring Budgetary Resources $ 73,304,257 $ 35,836,376 

Other Liabilities Not Covered by Budgetary Resources: 

Intragovernmental - FECA Liabilities 

Annual Leave 

Actuarial FECA Liabilities 

Liability for Whistleblower Awards 

Contingent Liabilities 

TOTAL LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

$ 85,660 

12,672,973 

478,449 

20,280,146 

-

$ 106,821,485 

$ 84,533 

$ 52,872,577 

11,544,538 

454,559 

4,913,875 

38,696 

Liabilities not covered by budgetary resources of $106,821,485 and $52,872,577 represent 

78.86 and 76.05 percent of the Commission’s total liabilities of $135,453,485 and $69,521,937 

as of September 30, 2019, and 2018, respectively. 
COMMODITY FUTURES TRADING COMMISSION

 

 

Note 7 Leases 

The CFTC has operating leases in privately-owned buildings for its locations in Washington 

D.C., Chicago, New York, and Kansas City. The CFTC has no real property. Future 

estimated minimum lease payments are not accrued as liabilities and are expensed on a 

straight-line basis. 

As of September 30, 2019, future estimated minimum lease payments continue through FY 

2025 and are as follows: 

Fiscal Year Dollars 

2020 20,889,349 

2021 21,312,686 

2022 20,088,229 

2023 17,880,606 

2024 18,239,105 

Thereafter 18,603,371 

Total Future Scheduled Rent Payments $ 117,013,346 

Future Lease-Related Operating Costs (Estimated) 9,701,460 

TOTAL FUTURE MINIMUM LEASE PAYMENTS $ 126,714,806 

CFTC recognizes leases expenses on a straight-line basis because the Commission’s lease 

payment amounts vary at negotiated times and reflect increases in rental costs, and in some 

cases, allowances or credits from landlords. Consistent with the utility of its office space, the 

Commission records deferred lease liabilities representing expense amounts in excess of 

payments to date. The deferred lease liabilities at September 30, 2019, and 2018, were 

$21,494,054 and $23,970,026, respectively. 

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BUILDINGS (NON-FEDERAL) 

Location Lease Terms 

Washington, D.C. 

Lease of office space from October 5, 1995, through September 30, 2025, subject to 

annual escalation amounts1 and including allowances for leasehold improvements and 

rent offsets. 

New York Lease of office space from November 16, 2001, through April 30, 2022, with no 

escalation clauses or option to renew. 

Kansas City Lease of office space from April 1, 2011, through April 14, 2021, including allowances 

for leasehold improvements and rent offsets. 

Lease of office space from March 10, 2002, through June 30, 2022, including 

Chicago proportionate share of operating expenses and taxes for premises and allowances for 

leasehold improvements and rent offsets. 

1 If market rent were $100 per square foot with a 10 percent annual escalation and a $10 operating expense base, then 98 percent 

of the applicable market rent would be $98 per square foot with a 10 percent escalation and a $10 operating base. 

MULTIFUNCTION DEVICES (FEDERAL) 

Location Lease Terms 

Washington, D.C., New 

York, and Kansas City 

Two-year rental of multifunction printers through the U.S. Government Printing 

Office with three one-year options to renew. 

F I N A N C I A L

 

 

 

 

The following table describes the Commission’s existing lease arrangements for buildings and 

multifunction devices, including major asset categories by location and associated lease terms. 

Note 8 Liability for Whistleblower Awards 

As mentioned in Note 1A, the Customer Protection Fund will be used to pay awards to 

whistleblowers if they voluntarily provide original information to the CFTC that leads to 

the successful enforcement by the CFTC of a covered judicial or administrative action in 

which monetary sanctions exceeding $1 million are imposed. Whistleblowers are entitled to 

appeal any decisions by the Commission in regards to claims made against the Fund. 

At the time the whistleblower voluntarily provides information to CFTC, they have no 

guarantee or promise that the Commission will exchange funds in return for that 

information. In accordance with federal accounting standards, the Commission records 

liabilities for these nonexchange transactions when they are due and payable. The 

Commission therefore records a liability for pending whistleblower payment after the 

whistleblower has been formally notified of an award and the related sanction, or some 

portion thereof, has been collected. The liability will be paid when the appeal period has 

ended and the whistleblower has provided necessary banking information. As of September 

30, 2019, and September 30, 2018, the Commission recorded liabilities for pending 
COMMODITY FUTURES TRADING COMMISSION

 

 

payments to whistleblowers of approximately $20,280,146 and $4,913,875, respectively. 

During FY 2019, the Commission disbursed $8,384,664 in whistleblower awards, which 

included $3,783,174 from pending payments at the end of FY 2018 and $4,601,490 in new 

awards issued during the year. Accounts payable includes approximately $7,000,000 for 

awards that have been finalized as of September 30, 2019. 

In addition to the pending payments to whistleblowers, the Commission had 14 additional 

whistleblower claims currently under review as of September 30, 2019. These additional 

claims, depending on whether the whistleblowers are determined to be eligible for an award 

and the related sanctions have been collected, could result in total future payments ranging 

from $0 to $29,286,750. 

Note 9 Contingent Liabilities 

The CFTC records contingent liabilities for legal cases in which payment has been deemed 

probable and for which the amount of potential liability has been estimated, including 

judgments that have been issued against the agency and which have been appealed. 

Additionally, the Commission discloses legal matters in which an unfavorable outcome is 

reasonably possible. There were no legal matters deemed reasonably possible as of 

September 30, 2019. 

Note 10 Statements of Budgetary Resources 

The Commission corrected a violation of the recording statute in FY 2016 by recording its 

obligations for all future building lease payments in accordance with OMB Circular A-11. 

The recording of these previously unrecorded obligations resulted in negative unobligated 

balances in its salaries and expenses general expenditure funds because budgetary resources 

have not been made available to the Commission to fund these multi-year leases (see the 

Combining Statements of Budgetary Resources in the Required Supplementary Information 

section immediately following the notes). The effect on the status of the Commission’s 

budgetary resources and reconciliation to the U.S. Budget is detailed in the note disclosures 

below. 

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F I N A N C I A L

Note 10 Statements of Budgetary Resources (continued) 

A. Net Adjustments to Unobligated Balance Brought Forward, October 1 

The Unobligated Balance Brought Forward from the prior fiscal year has been adjusted for 

recoveries of prior year paid and unpaid obligations and other changes such as canceled 

authority. The Adjustments to Unobligated Balance Brought Forward, October 1, as of 

September 30, 2019, and 2018, consisted of the following: 

 

 

2019 2018 

Unobligated Balance Brought Forward, October 1 $ 23,072,180 $ 73,301,723 

Recoveries of Prior Year Obligations 4,888,708 8,015,676 

Other Changes in Unobligated Balance (4,032,357) (454,136) 

UNOBLIGATED BALANCE FROM PRIOR YEAR BUDGET AUTHORITY, NET $ 23,928,531 $ 80,863,263 

B. Undelivered Orders 

The amount of budgetary resources obligated for undelivered orders as of September 30, 

2019, and 2018, consisted of the following: 

2019 2018 

Undelivered Orders - Federal 

Paid $ 2,663,914 $ 1,596,970 

Unpaid 5,889,053 4,203,978 

Total Undelivered Orders - Federal $ 8,552,967 $ 5,800,948 

Undelivered Orders - Non-Federal 

Paid 

Unpaid 

Total Undelivered Orders - Non-Federal 

$ 3,029,381 

$ 168,064,124 

165,034,743 

$ 2,548,456 

$ 181,739,546 

179,191,090 

TOTAL UNDELIVERED ORDERS $ 176,617,091 $ 187,540,494 

The amount of undelivered orders represents the value of unpaid and paid obligations 

recorded during the fiscal year, and upward and downward adjustments of obligations that 

were originally recorded in a prior fiscal year. Non-federal unpaid undelivered orders 

include the Commission’s unfunded future lease payments as of September 30, 2019, and 

2018, as follows: 

2019 2018 

Unfunded Lease Obligations Brought Forward, October 1 $ 149,391,066 $ 172,353,400 

Change in Unfunded Lease Obligations (22,676,260) (22,962,334) 

TOTAL REMAINING UNFUNDED LEASE OBLIGATIONS $ 126,714,806 $ 149,391,066 
COMMODITY FUTURES TRADING COMMISSION

 

 

C. Explanations of Differences between the Statement of Budgetary Resources and 

Budget of the United States Government 

The CFTC had material differences between the amounts reported in the Statement of 

Budgetary Resources and the actual amounts reported in the Budget of the U.S. 

Government for FY 2018 related to unfunded lease obligations that are being funded each 

fiscal year through annual appropriations (see table below). These unfunded obligations will 

cease to be a reconciling difference when the last unfunded lease ends in FY 2025. 

Budgetary 

Resources 

CFTC FY 2018 Statement of Budgetary Resources $ 333,115,209 

Less Amounts in Customer Protection Fund (239,490,096) 

Less Amounts in Expired Accounts (13,734,337) 

Less New Budget Authority Used to Liquidate Deficiencies (22,304,808) 

Less Recovery of Prior Year Lease Obligations Due to Space Reduction (657,526) 

Plus Unfunded Lease Obligations Brought Forward, October 1 172,353,400 

Plus Rounding to Nearest Million (+/-) (281,842) 

BUDGET OF THE U.S. GOVERNMENT $ 229,000,000 

The Budget of the U.S. Government with actual numbers for FY 2019 has not yet been 

published. The expected publication date is February 2020. A copy of the Budget may be 

obtained from OMB’s website. 

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Note 11 Reconciliation of Total Net Cost of Operations to Net Outlays 

The schedule presented in this note reconciles the Total Net Cost of Operations reported in 

the Statements of Net Cost with Net Outlays reported in the Statements of Budgetary 

Resources. Differences between net costs and net outlays are primarily the result of timing 

differences and paying for assets that are used over more than one reporting period. 

2019 2018 

TOTAL NET COST OF OPERATIONS $ 301,304,756 $ 305,261,284 

Components of Net Cost That Are Not Part of Net Outlays: 

Depreciation and Amortization $ (7,443,442) $ (7,741,131) 

Gain/(Loss) on Disposal (91,859) (136,730) 

Increase/(Decrease) in Assets: 

Accounts Receivable 9,915 33,442 

Decrease in Prepayments - (2,720,618) 

(Increase)/Decrease in Liabilities: 

Accounts Payable (10,843,948) (817,623) 

Salaries and Benefits (1,138,692) 813,485 

Liability for Whistleblower Awards (15,366,271) 40,586,125 

Contingent liabilities 38,696 (38,696) 

Other liabilities (Unfunded leave, Unfunded FECA, Actuarial FECA) (1,153,452) (789,315) 

Other Financing Sources: 

Federal employee retirement benefit costs paid by OPM and imputed to CFTC (8,054,524) (7,295,372) 

Total Components of Net Cost That Are Not Part of Net Outlays $ (44,043,577) $ 21,893,567 

Components of Net Outlays That Are Not Part of Net Cost: 

Acquisition of capital assets 

Increase in Prepayments 

Nonexchange Interest Revenue (excluding interest receivable) 

Total Components of Net Outlays That Are Not Part of Net Cost 

$ 4,572,624 

$ 2,895,661 

1,547,869 

(3,224,832) 

$ 3,564,600 

$ 129,060 

-

(3,435,540) 

Outlays, Net $ 260,156,840 $ 327,283,911 

Distributed Offsetting Receipts (14,569) (1,939) 

AGENCY OUTLAYS, NET $ 260,142,271 $ 327,281,972 
COMMODITY FUTURES TRADING COMMISSION

 

Note 12 Funds from Dedicated Collections 

Funds from dedicated collections arise from disgorgement and penalty collections and are 

transferred to the Customer Protection Fund, established by the Dodd-Frank Act. The 

collections are transferred from the custodial receipt account if they are found to be eligible 

before the end of each fiscal year. In cases where the collection has been returned to 

Treasury, the Commission can recover the funds directly from Treasury. The collections 

will fund the Commission’s whistleblower awards program and customer education 

initiatives. 

The Dodd-Frank Act provides that whistleblower awards shall be paid under regulations 

prescribed by the Commission. An important prerequisite to implementation of the 

whistleblower awards program is the issuance of rules and regulations describing its scope 

and procedures. The Commission issued revised rules effective July 31, 2017. 

No eligible collections have been transferred into the fund since it reached its legislative 

maximum during FY 2014. The following chart presents the Fund’s balance sheets, 

statements of net costs, and statements of changes in net position as of and for the years 

ended September 30, 2019, and 2018: 

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Note 12 Funds from Dedicated Collections (continued) 

2019 2018 

BALANCE SHEETS 

Fund Balance with Treasury 

Investments 

Prepayments 

General Property, Plant and Equipment, Net 

TOTAL ASSETS 

$ 13,148,336 

$ 154,720,280 

141,300,000 

221,818 

50,126 

$ 7,293,399 

$ 164,904,864 

157,518,375 

-

93,090 

Accounts Payable 8,670,172 1,361,602 

Accrued Payroll 141,492 111,631 

Accrued Annual Leave 189,308 180,158 

Liability for Whistleblower Awards 20,280,146 4,913,875 

Total Liabilities $ 29,281,118 $ 6,567,266 

Cumulative Results of Operations - Funds from Dedicated Collections 125,439,162 158,337,598 

Total Net Position $ 125,439,162 $ 158,337,598 

TOTAL LIABILITIES AND NET POSITION $ 154,720,280 $ 164,904,864 

STATEMENTS OF NET COST 

Gross Costs $ 36,104,893 $ 41,446,286 

TOTAL NET COST OF OPERATIONS $ 36,104,893 $ 41,446,286 

STATEMENTS OF CHANGES IN NET POSITION 

Beginning Cumulative Results of Operations, October 1 $ 158,337,598 $ 196,336,209 

Nonexchange Interest Revenue 3,206,457 3,447,675 

Net Cost of Operations (36,104,893) (41,446,286) 

Net Change (32,898,436) (37,998,611) 

TOTAL NET POSITION, SEPTEMBER 30 $ 125,439,162 $ 158,337,598 
COMMODITY FUTURES TRADING COMMISSION

Required Supplementary Information (Unaudited)

Commodity Futures Trading Commission 

COMBINING STATEMENTS OF BUDGETARY RESOURCES BY MAJOR ACCOUNT 

For the Years Ended September 30, 2019 and 2018 

2019 Customer 

Protection Fund 

Salaries and 

Expense 

Information 

Technology Combined 

BUDGETARY RESOURCES 

Unobligated Balance from Prior Year Budget Authority, Net (Note 10A) 

Appropriations 

Spending Authority from Offsetting Collections 

$ 159,272,922 

-

3,024,893 

$ (143,858,784) 

218,000,000 

191,469 

$ 8,514,393 

50,000,000 

-

$ 23,928,531 

268,000,000 

3,216,362 

TOTAL BUDGETARY RESOURCES $ 162,297,815 $ 74,332,685 $ 58,514,393 $ 295,144,893 

New Obligations and Upward Adjustments 

Unobligated Balance, End of Year 

Apportioned, Unexpired Accounts 

Unapportioned, Unexpired Accounts 

$ 20,862,226 

141,435,589 

-

$ 195,322,004 

1,288,578 

(126,714,806) 

51,845,265 

258,671 

-

$ 268,029,495 

142,982,838 

(126,714,806) 

Unexpired Unobligated Balance, End of Year 

Expired Unobligated Balance, End of Year 

141,435,589 

-

(125,426,228) 

4,436,909 

258,671 

6,410,457 

16,268,032 

10,847,366 

Total Unobligated Balance, End of Year 141,435,589 (120,989,319) 6,669,128 27,115,398 

TOTAL BUDGETARY RESOURCES $ 162,297,815 $ 74,332,685 $ 58,514,393 $ 295,144,893 

Outlays, Net 

Distributed Offsetting Receipts 

$ 10,345,063 

-

$ 204,714,251 

(14,569) 

$ 45,097,526 

-

$ 260,156,840 

(14,569) 

AGENCY OUTLAYS, NET $ 10,345,063 $ 204,699,682 $ 45,097,526 

STATUS OF BUDGETARY RESOURCES 

OUTLAYS, NET 

$ 260,142,271 

2018 Customer 

Protection Fund 

Salaries and 

Expense 

Information 

Technology 

BUDGETARY RESOURCES 

Combined 

Unobligated Balance from Prior Year Budget Authority, Net (Note 10A) $ 236,280,890 $ (163,971,689) $ 8,554,062 $ 80,863,263 

Appropriations - 201,000,000 48,000,000 249,000,000 

Spending Authority from Offsetting Collections 3,209,206 42,740 - 3,251,946 

TOTAL BUDGETARY RESOURCES $ 239,490,096 $ 37,071,051 $ 56,554,062 $ 333,115,209 

STATUS OF BUDGETARY RESOURCES 

New Obligations and Upward Adjustments $ 80,540,550 $ 179,500,940 $ 50,001,539 $ 310,043,029 

Unobligated Balance, End of Year 

Apportioned, Unexpired Accounts 158,636,895 1,014,937 545,242 160,197,074 

Unapportioned, Unexpired Accounts 312,651 (149,391,066) - (149,078,415) 

Unexpired Unobligated Balance, End of Year 158,949,546 (148,376,129) 545,242 11,118,659 

Expired Unobligated Balance, End of Year - 5,946,240 6,007,281 11,953,521 

Total Unobligated Balance, End of Year 158,949,546 (142,429,889) 6,552,523 23,072,180 

TOTAL BUDGETARY RESOURCES $ 239,490,096 $ 37,071,051 $ 56,554,062 $ 333,115,209 

OUTLAYS, NET 

Outlays, Net $ 76,767,593 $ 201,170,882 $ 49,345,436 $ 327,283,911 

Distributed Offsetting Receipts - (1,939) - (1,939) 

AGENCY OUTLAYS, NET $ 76,767,593 $ 201,168,943 $ 49,345,436 $ 327,281,972 

88 
FY 2019 AGENCY FINANCIAL REPORT

89 

O T H E R I N F O R M A T I O N

OTHER INFORMATION 

INSPECTOR GENERAL’S FY 2019 ASSESSMENT

SUMMARY OF AUDIT AND MANAGEMENT ASSURANCES

PAYMENT INTEGRITY

FRAUD REDUCTION REPORT

REDUCE THE FOOTPRINT 

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

Inspec tor General’s FY 2019 Assessment 

U.S. COMMODITY FUTURES TRADING COMMISSION 

OFFICE OF INSPECTOR GENERAL 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

TO: Heath P. Tarbert, Chairman 

Brian D. Quintenz, Commissioner 

Rostin Behnam, Commissioner 

Dawn Stump, Commissioner 

Dan M. Berkovitz, Commissioner 

FROM: A. Roy Lavik, Inspector General 

DATE: August 19, 2019 

SUBJECT: Inspector General’s Assessment of the Most Serious 

Management and Performance Challenges Facing the 

Commodity Futures Trading Commission 

The Reports Consolidation Act of 2000 (RCA) requires the Inspector General to 

summarize the “most serious management and performance challenges facing 

the agency” and briefly assess the Agency’s progress in addressing those 

challenges.1 The Government Performance and Results Modernization Act of 

2010 defines major management challenges as “programs or management 

functions, within or across agencies, that have greater vulnerability to waste, 

fraud, abuse, and mismanagement (such as issues identified by the Government 

Accountability Office as high risk or issues identified by an Inspector General) 

where failure to perform well could seriously affect the ability of an agency to 

achieve its mission or goals.”2 

To complete our assessment we relied on data contained in the CFTC financial 

statement audit and Agency Financial Report, representations by agency 

management, and our knowledge of industry trends and CFTC operations. This 

memorandum fulfills our duties under the RCA. 

1 P.L. 106-531, § 3, 114 STAT. 2537 (Nov. 22, 2000), codified at 31 USC § 3516(a). 

2 P.L. 111-352, § 3, 124 STAT. 3870 (Jan. 4, 2011), codified at 31 U.S.C. § 1115(h)(5). 

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FY 2019 AGENCY FINANCIAL REPORT

91 

O T H E R I N F O R M A T I O N

 

 

 

 

CFTC’s Progress on Last Year’s Management and Performance 

Challenges 

For FY2018, we identified management and performance challenges in the 

areas of cybersecurity, information technology (IT) modernization, stresstesting, and management’s ability to enhance its business operations to lower 

cost. We acknowledge CFTC’s efforts during FY 2019 to operate and enhance 

business practices within its appropriation, and acknowledge the 

Commission’s leadership changes to improve industry oversight. In this 

regard, we recognize that CFTC has taken steps to sharpen market intelligence 

and risk surveillance through enhanced quantitative data analytical 

capabilities. Particularly noteworthy are CFTC’s recent efforts to ingest order 

book data,3 and its aspiration to use machine learning to monitor the market.4 

Fiscal Year 2019 Management and Performance Challenges 

We reiterate our FY 2018 challenges for FY2019 and add data governance as 

an emerging challenge for FY 2019.5 During this year, we issued Review of 

CFTC’s Data Governance Program: Integrated Surveillance System (June 7, 

2019), which reported that CFTC’s Data Governance program could be 

improved, specifically with regard to confidential trade information. CFTC is 

already taking positive steps regarding data governance; we acknowledge the 

Commission’s recently proposed Data Protection Initiative with approval. In 

addition, while we recognize that CFTC is migrating parts of its network to 

cloud-based solutions, it has yet to formalize a mature enterprise architecture 

project plan for capital investment planning and execution for IT 

transformation (as previously recommended). My office will continue to 

undertake work that addresses these challenges. 

3 See, CFTC Market Intelligence Branch, Division of Market Oversight staff report, Updated Report Agricultural Block Trade Analysis, October 2018. 

4 See, Keynote Address of Chairman Giancarlo, Quantitative Regulation: Effective Market 

Regulation in a Digital Era, November 7, 2018; Remarks of Daniel Gorfine, Director of 

LABCFTC, LABCFTC: Developments and Discoveries, June 11, 2019. 

5 With regard to IT modernization, President Trump has called for agencies, including CFTC, to

modernize legacy technology infrastructures to reduce costs, mitigate cybersecurity risks, and 

deliver improved services to the American people. (May 15, 2018). 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

Cc: Anthony Thompson, Executive Director 

Jaime Klima, Chief of Staff 

Kevin S. Webb, Chief of Staff 

John Dunfee, Chief of Staff 

Daniel J. Bucsa, Chief of Staff 

Erik F. Remmler, Chief of Staff 

92 
FY 2019 AGENCY FINANCIAL REPORT

93 

O T H E R I N F O R M A T I O N

 

 

 

 

Summary of Audit and Management Assurances 

Summary of FY 2019 Financial Statement Audit 

Audit Opinion: Unmodified 

Restatement: No 

MATERIAL WEAKNESSES BEGINNING BALANCE NEW RESOLVED CONSOLIDATED ENDING BALANCE 

Total Material Weaknesses 0 0 

Summary of Management Assurances 

 

 Unmodified 

 

 

 

 

 

 

 

 

 

 

 

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

Statement of Assurance: 

M EGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE 

Total Material Weaknesses 0 0 

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2) 

Statement of Assurance: Unmodified 

MATERIAL WEAKNESSES BEGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE 

Total Material Weaknesses 0 0 

CONFORMANCE WITH FEDERAL FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS (FMFIA § 4) 

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

NON-CONFORMANCES BEGINNING BALANCE NEW RESOLVED CONSOLIDATED REASSESSED ENDING BALANCE 

Total Non-Conformances 0 0 

COMPLIANCE WITH SECTION 803(A) OF THE FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT (FFMIA) 

Agency Auditor 

1. Federal Financial Management System Requirements No lack of compliance noted 

2. Applicable Federal Accounting Standards No lack of compliance noted 

3. USSGL at Transaction Level No lack of compliance noted 

ATERIAL WEAKNESSES B

 DEFINITION OF TERMS 

Beginning Balance: The beginning balance must agree with

the ending balance from the prior year. 

New: The total number of material weaknesses/nonconformances identified during the current year. 

Resolved: The total number of material weaknesses/nonconformances that dropped below the level of materiality

in the current year. 

Consolidated: The combining of two or more findings. 

Reassessed: The removal of any finding not attributable 

to corrective actions (e.g., management has 

reevaluated and determined that a finding does not 

meet the criteria for materiality or is redefined as more

correctly classified under another heading (e.g., Section

2 to a Section 4 and vice versa)). 

Ending Balance: The year-end balance that will be the

beginning balance of next year. 
COMMODITY FUTURES TRADING COMMISSION

 

Payment Integrity 

The Improper Payments Information Act of 2002, as amended by the Improper Payments 

Elimination and Recovery Act of 2010 and the Improper Payments Elimination and Recovery 

Improvement Act of 2012, requires agencies review all programs and activities they 

administer and identify those which may be susceptible to significant improper payments. 

The OMB guidance provided in Circular A-136, Financial Reporting Requirements, and 

Appendix C, Requirements for Payment Integrity Improvement, of Circular A-123, 

Management’s Responsibility for Enterprise Risk Management and Internal Control, require 

agencies to report detailed information related to the Commission’s efforts to eliminate 

improper payments, which is outlined below. 

Payment Reporting 

The Commission does not administer grant, benefit or loan programs. CFTC’s most 

significant expenses are payroll and benefits for its employees, which are administered by the 

U.S. Department of Agriculture’s National Finance Center (NFC) and the OPM. CFTC’s 

most significant non-payroll expenses are its payments to vendors for goods and services 

used during the course of normal operations and monetary awards to eligible whistleblowers 

who voluntarily provide the CFTC with original information about violations of the CEA 

that leads the CFTC to bring enforcement actions that result in monetary sanctions exceeding 

$1 million. 

Based on the results of transaction testing applied to a sample of FY 2019 vendor payments, 

consideration of risk factors, and reliance on the internal controls in place over the payment 

and disbursement processes, the Commission has determined that none of its programs and 

activities carried out in the normal course of business are susceptible to significant improper 

payments at or above the threshold levels set by OMB. In addition, while the Commission 

disbursed $8.4 million in whistleblower payments during FY 2019, the review of each 

individual award by the Commission’s Claims Review Staff limits the likelihood that the 

whistleblower award program would be susceptible to significant improper payments. 

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FY 2019 AGENCY FINANCIAL REPORT

95 

O T H E R I N F O R M A T I O N

 

Significant erroneous payments are defined as annual erroneous payments in the program 

exceeding both $10 million and 1.5 percent, or $100 million of total annual program 

payments. In accordance with Appendix C of Circular A-123, the Commission is not 

required to determine a statistically valid estimate of erroneous payments or develop a 

corrective action plan if the program is not susceptible to significant improper payments. 

Recapture of Improper Payments 

The Commission does not administer grant, benefit or loan programs. Implementation of 

recapture auditing, if determined to be cost-effective, would apply to the Commission’s 

contract payments because payments to vendors total more than $1 million annually. The 

Commission determined that implementing a payment recapture audit program for contract 

payments is not cost-effective. In making this determination, the Commission considered its 

low improper payment rate based on testing conducted over the previous three years and 

determined that benefits or recaptured amounts associated with implementing and 

overseeing the program would not exceed the costs of a payment recapture audit program, 

including staff time and payments to contractors. 

The Commission utilizes cost-efficient matching techniques to review all vendor payments to 

identify significant overpayments at a low cost per overpayment. The Commission has not 

identified a significant number or amount of improper payments since it began its analysis. 

In addition to contract payments, recapture auditing may also be considered for the 

Commission’s monetary awards to whistleblowers, if determined to be cost-effective, when 

payments to whistleblowers total more than $1 million annually. The amount of 

whistleblower awards will vary depending on the number and amount of covered 

enforcement actions in a given year, as well as the extent of original information provided by 

whistleblowers that led to the actions. However, the Commission has determined that 
COMMODITY FUTURES TRADING COMMISSION

 

 

implementing a payment recapture audit program for monetary awards to whistleblowers 

would not be cost-effective due to the effective design and operation of the internal controls 

in place for the program. As noted above, the review of each individual award by the 

Commission’s Claims Review Staff limits the likelihood that the whistleblower award 

program would be susceptible to significant improper payments or that payment recapture 

audits would be beneficial. 

The Commission will continue to monitor the potential for improper payments across all 

programs and activities it administers and assess whether implementing payment recapture 

audits for each program would be cost-effective. 

Government wide Do Not Pay Initiative 

The Do Not Pay (DNP) solution is a government wide initiative mandated by the Improper 

Payments Elimination and Recovery Improvement Act of 2012 to screen payment recipients 

before a contract award or payment is made in order to eliminate payment errors before they 

occur. The Commission has integrated the solution into its existing processes as part of 

efforts to identify and prevent improper payments. The Commission’s shared services 

provider utilizes the DNP Business Center, on the Commission’s behalf, to perform online 

searches and screen payments against the DNP databases to augment data analytics 

capabilities. Based on the results of the reviews to date, the DNP initiative has not identified 

any improper payments. 

96 

Table 1. Results of the Do Not Pay Initiative in Preventing Improper Payments 

($ in thousands) 

NUMBER (#) OF 

PAYMENTS 

REVIEWED FOR 

POSSIBLE 

IMPROPER 

PAYMENTS 

DOLLARS ($) OF 

PAYMENTS 

REVIEWED FOR 

POSSIBLE 

IMPROPER 

PAYMENTS 

NUMBER (#) 

OF 

PAYMENTS 

STOPPED 

DOLLARS ($) 

OF 

PAYMENTS 

STOPPED 

NUMBER (#) OF 

POTENTIAL 

IMPROPER 

PAYMENTS 

REVIEWED AND 

DETERMINED 

ACCURATE 

DOLLARS ($) OF 

POTENTIAL 

IMPROPER 

PAYMENTS 

REVIEWED AND 

DETERMINED 

ACCURATE 

4,515 $90,388 0 $0 0 $0 
FY 2019 AGENCY FINANCIAL REPORT

97 

O T H E R I N F O R M A T I O N

 

Fraud Reduction Report 

Background 

The Fraud Reduction and Data Analytics Act of 2015 requires agencies to annually 

report on the progress of the agency in implementing financial and administrative 

controls to identify and assess fraud risks and design and implement control activities in 

order to prevent, detect, and respond to fraud, including improper payments. 

OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and 

Internal Control, states that management has overall responsibility for establishing 

internal controls to manage the risk of fraud. The Standards for Internal Control in the 

Federal Government issued by the Government Accountability Office (the Green Book, 

GAO-14-704G, September 2014) sets internal control standards for federal entities. The 

Commission uses the framework established in the Green Book as the foundation of its 

internal controls program to design, implement, operate, and assess internal controls to 

achieve operational, reporting, and compliance objectives. 

As defined in the Green Book, fraud involves obtaining something of value through 

willful misrepresentation. Types of fraud include fraudulent financial reporting, 

misappropriation of assets, and corruption. Whether an act is fraud is a determination to 

be made through the judicial or other adjudicative system and is beyond management’s 

professional responsibility for assessing risk. Waste is the act of using or expending 

resources carelessly, extravagantly, or to no purpose. Abuse involves behavior that is 

deficient or improper when compared with behavior that a prudent person considers 

reasonable and necessary in operational practice given the facts and circumstances. This 

includes the misuse of authority or position for personal gain or for the benefit of 

another. Waste and abuse do not necessarily involve fraud or illegal acts. Under Principle 

8—Assess Fraud Risk (one of the 17 principles of internal control), the Green Book states 

that management should consider the potential for fraud when identifying, analyzing, 

and responding to risks. 
COMMODITY FUTURES TRADING COMMISSION

 

Fraud Risk Management 

In July 2015, GAO issued A Framework for Managing Fraud Risks in Federal Programs 

(the Framework, GAO-15-593SP) to aid program managers in managing fraud risks. This 

risk-based framework consists of the following four components: 

1. Commit—Commit to combating fraud by creating an organizational culture and 

structure conducive to fraud risk management. 

2. Assess—Plan regular fraud risk assessments and assess risks to determine a fraud 

risk profile. 

3. Design and Implement—Design and implement a strategy with specific control 

activities to mitigate assessed fraud risks and collaborate to help ensure effective 

implementation. 

4. Evaluate and Adapt—Evaluate outcomes using a risk-based approach and adapt 

activities to improve fraud risk management. 

In addition, the Framework reflects activities related to monitoring and feedback 

mechanisms, which include ongoing practices that apply to all four concepts above. 

In FY 2019 and 2018, the Commission performed a qualitative risk assessment to assess 

fraud risk for each transaction cycle and sub-process within the cycle as part of our 

annual FMFIA internal control testing. The basis for this qualitative risk assessment is the 

GAO Green Book’s Principle 8 and the Framework. The fraud risk was assessed as low for 

both years. 

In addition to assessing fraud risk, the Commission also conducted tests of transactions 

in FY 2019 and FY 2018 to detect fraudulent activity, such as: 

• Performed testing for various control activities in the Travel Management 

transaction cycle to include reasonableness of estimated travel costs, questionable 

travel purchases, and duplicate payments; 

• Selected purchase cards samples based on unusual merchant names and 

performed testing to assess the existence of fraud; 

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FY 2019 AGENCY FINANCIAL REPORT

99 

O T H E R I N F O R M A T I O N

 

 

 

• Performed testing for various control activities in the Human Resource 

transaction cycle to include Time and Attendance records and Special Payment 

Processing System (SPPS) transactions; and, 

• Performed testing for various control activities in the Procurement transaction 

cycle to include completeness, accuracy and validity of contract awards, invoices, 

and contract closeouts. 

Results 

The Commission did not detect any fraudulent activity. In FY 2020, the Commission will 

respond to the related recommendations that arose from its testing and continue to 

strengthen its internal controls posture to ensure the risk of fraud remains at the lowest 

level possible. The Commission remains committed to maintaining an environment that 

is conducive to fraud risk management and keeping fraud risk at a minimum. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

 

 

Reduce the Footprint 

There are no plans for expanding CFTC space in the near term, and we are continuing our efforts to 

increase utilization of existing space. In FY 2019, the CFTC engaged with the General Services

Administration (GSA) to provide real estate support and solutions for continuing requirements of the 

Commission’s three regional offices in FY 2021 and FY 2022; and headquarters in FY 2025. The New

York Regional Office and the Chicago Regional Office space will both occupy federal office space and

leased space was selected for the Kansas City Regional Office (KCRO). The new space aligns with the

CFTC’s committment to reduce its footprint to 180 usable square feet (USF) per person.

Operation and Maintenance Costs – Direct Lease Buildings

(Including Pass-Through and Utilities Where Applicable)1

$ in thousands

 

 

 

Facility

FY 2015

Baseline

FY 2016 

Actual

FY 2017 

Actual

FY 2018 

Actual

FY 2019 

Actual

Washington, DC $15,319 $9,6102 $17,350 $17,854 $18,260

Chicago 2,370 2,389 2,386 2,479 $2,644

New York 2,300 2,478 2,512 2,613 $2,663

Kansas City 578 581 578 8113 $432

COOP Site 93 94 99 111 $165

Total $20,660 $15,152 $22,925 $23,868 $24,164

Change from FY 2015 Baseline -$5,508 $2,265 $3,208 $3,504

Rentable Square Feet

In square feet

 Facility

FY 2015

Baseline

FY 2016 

Actual

FY 2017 

Actual

FY 2018 

Actual

FY 2019 

Actual

Washington,

DC 289,295 289,295 289,295 289,295 289,295

Chicago 60,412 60,412 60,412 60,412 60,412

New York 61,510 61,510 61,510 61,510 61,510

Kansas City 24,362 24,362 24,362 16,440 16,440

Total 435,579 435,579 435,579 427,657 427,657

Change from FY 2015 Baseline 0 0 -7,922 -7,922

1 In addition to the base rent, the tenant also pays a proportionate share of building operating costs incurred by the landlord, 

which may not be billed for two years past the fiscal year reported.

2

Actual rent for 2016 was $15,966,288. Three rental credits totaling $6,355,815 were applied resulting in a one-time reduction

in costs.

3

Includes $360K buyout to eliminate 6th floor space at KCRO.

100 
FY 2019 AGENCY FINANCIAL REPORT

101 

O T H E R I N F O R M A T I O N

Civil Monetary Penalty Adjustment for Inflation 

The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIA) requires agencies to periodically adjust civil penalties for inflation if either the amount of the penalty or the maximum 

penalty is set by law. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 

2015 (2015 Act) amended the FCPIA and required the Commission to: make an initial 

“catch-up” inflation adjustment in FY 2016, and make adjustments for inflation going 

forward under guidance of the OMB, potentially on an annual basis. 

The Commission administers the following sections of the CEA that provide for civil monetary 

penalties: 

• Section 6(c) of the CEA, 7 U.S.C. 9—Prohibition Regarding Manipulation and False 

Information; 

• Section 6b of the CEA, 7 U.S.C. 13a—Non-Enforcement of Rules of Government or Other 

Violations; Cease and Desist Orders, Fines and Penalties, Imprisonment, Misdemeanor, 

Separate Offenses; and 

• Section 6c of the CEA, 7 U.S.C. 13a-1—Enjoining or Restraining Violations. 
COMMODITY FUTURES TRADING COMMISSION

Details about the current penalty level and the date of the most recent inflationary adjustment for 

each civil monetary penalty within the jurisdiction of the Commission are reflected in the table 

below1. 

 

 

 

 

Penalty 

(Name of 

Penalty) 

Authority 

(Statute) 

Date of 

Previous 

Adjustment 

Date of 

Current 

Adjustment 

Current Penalty Level 

($ Amount) 

Location for Penalty 

Update Details 

CIVIL MONETARY PENALTIES IMPOSED BY THE COMMISSION IN AN ADMINISTRATIVE ENFORCEMENT 

ACTION 

For a civil penalty 

against any 

person (other 

than a registered 

entity, as that 

term is defined in 

Section 1a(4) of 

the CEA) 

Section 6(c) of 

the Commodity 

Exchange Act 

(7 U.S.C. 9) 

3/6/2018 2/11/2019 For penalties imposed by 

the Commission in 

administrative 

enforcement proceedings 

for violations from 

November 2015 to 

present, not more than the 

greater of $165,227 (for 

non-manipulation 

violations) or $1,191,842 

(for manipulation or 

attempted manipulation 

violations) or triple the 

monetary gain to such 

person for each such 

violation. 

Federal Register Vol. 84, 

Page 3103 (February 11, 

2019) 

https://www.cftc.gov/sites 

/default/files/2019-

02/2019-01852a.pdf 

For a civil 

monetary penalty 

against any 

registered 

entity or any 

director, officer, 

agent, or 

employee of any 

registered entity, 

as that term is 

defined in Section 

1a(40) of the CEA 

Section 6b of the 

Commodity 

Exchange Act 

(7 U.S.C. 13a) 

3/6/2018 2/11/2019 For penalties imposed by 

the Commission in 

administrative 

enforcement proceedings 

for violations from 

November 2015 to 

present, not more than the 

greater of $910,158 (for 

non-manipulation 

violations) or $1,191,842 

(for manipulation or 

attempted manipulation 

violations) or triple the 

monetary gain to such 

person for each such 

violation. 

Federal Register Vol. 84, 

Page 3103 (February 11, 

2019)2 

https://www.cftc.gov/sites 

/default/files/2019-

02/2019-01852a.pdf 

1 Criminal authorities may also seek fines for criminal violations of the CEA (See Sections 6(d), 9, 7 U.S.C. 13, 

13 (d), 13 (e), and 13b. The FCPIA does not affect criminal penalties. 13(c), 

2 These adjusted penalties apply only with respect to violations occurring on or after November 2, 2015, the 

effective date of the 2015 Act. 

102 
FY 2019 AGENCY FINANCIAL REPORT

103 

 Penalty 

(Name of 

Penalty) 

Authority 

(Statute) 

Date of 

Previous 

Adjustment 

Date of 

Current 

Adjustment 

Current Penalty Level 

($ Amount) 

Location for Penalty 

Update Details 

CIVIL MONETARY PENALTIES IMPOSED BY A DISTRICT COURT IN A CIVIL INJUNCTIVE ENFORCEMENT 

ACTION 

For a civil 

monetary penalty 

assessed against 

any person 

For penalties imposed by a 

District Court in civil 

injunctive enforcement 

proceedings for violations 

from November 2015 to 

present, not more than the 

greater of $182,031 (for 

non-manipulation 

violations) or $1,191,842 

(for manipulation or 

attempted manipulation 

violations) or triple the 

monetary gain to such 

person for each such 

violation. 

Section 6c of 

the Commodity 

Exchange Act 

(7 U.S.C. 13a-1) 

3/6/2018 2/11/2019 Federal Register Vol. 84, 

Page 3103 (February 11, 

2019)3 

https://www.cftc.gov/sites 

/default/files/2019-

02/2019-01852a.pdf 

O T H E R I N F O R M A T I O N

 

See also the Commission’s website, Inflation Adjusted Civil Monetary Penalties 

(https://www.cftc.gov/LawRegulation/Enforcement/InflationAdjustedCivilMonetaryPenalties/index.htm) 

3

 These adjusted penalties apply only with respect to violations occurring on or after November 2, 2015, the 

effective date of the 2015 Act. 
104 COMMODITY FUTURES TRADING COMMISSION

APPENDIX 

CFTC CUSTOMER PROTECTION FUND

WHY ARE THE MARKETS IMPORTANT TO ME? 

CFTC OVERSIGHT OF REGULATED ENTITIES

CFTC GLOSSARY 
FY 2019 AGENCY FINANCIAL REPORT

105 

A P P E N D I X

 

 

CFTC Customer Protection Fund 

Section 748 of the Dodd-Frank Act established the CFTC Customer Protection Fund (CPF). The 

CPF is a permanent appropriation, but must be apportioned annually by OMB. Customer 

Protection Funds are available for the payment of whistleblower awards and education efforts 

that focus on helping the public to protect themselves against fraud and other violations of the 

CEA. The CFTC is authorized to deposit civil monetary penalties, disgorgements, and interest it 

collects in covered administrative or judicial enforcement actions into the CPF, whenever the 

balance in the fund at the time of the deposit is less than or equal to $100 million. 

In 2012, the Commission established the WBO and the Office of Customer Education and 

Outreach (OCEO) to administer the Whistleblower and Customer Education Programs. 
COMMODITY FUTURES TRADING COMMISSION

 

FY 2019 Highlights of the Whistleblower Program 

The WBO raises awareness and increases the public’s understanding of the Whistleblower 

Program through outreach to various stakeholders—such as industry and professional groups, 

other government agencies, SROs, academia, and potential whistleblowers—who may be traders 

as well as hedgers, farmers, ranchers, producers, and commercial end users. WBO staff exhibit or 

speak at industry conferences, answer questions about the program posed directly to the WBO by 

whistleblowers or their counsel, and distribute written materials in person at conferences or 

through the Whistleblower Program website. 

In particular, during FY 2019, WBO staff coordinated with Division of Enforcement staff 

assigned to particular task forces to prepare public “alerts” on key substantive areas: virtual 

currencies, foreign corrupt practices, insider trading, and violations of the Bank Secrecy Act, 

including failures in anti-money laundering or suspicious activity reporting programs. The goal 

of these alerts is to help market participants better understand what information would make a 

helpful whistleblower tip in those substantive areas. 

In FY 2019, the CFTC issued five orders granting awards to whistleblowers for providing 

valuable information about violations of the CEA. That total of five awards equals the highest 

number of awards issued in a single year in the Whistleblower Program’s history. Those awards 

amounted to more than $15 million. 

Management of the Office of Customer Education and Outreach 

The OCEO administers the Customer Education Program with public education initiatives 

designed to help customers protect themselves against fraud and other violations of the CEA. 

OCEO serves as the focal point for customer dialogue by working to initiate and maintain 

ongoing conversations with various customer groups, including producers and end-user 

customers, who use futures, options, and swaps to manage risk; financial customers such as 

associations, pension funds, and municipalities; and retail customers who historically have been 

most at-risk for fraud. CFTC utilizes a multimedia approach that includes customer advisories, 

digital engagement, press engagement, brochures, in-person engagements, and strategic 

partnerships to inform customers and identify emerging issues or learning needs. 

106 
FY 2019 AGENCY FINANCIAL REPORT

107 

A P P E N D I X

 

 

The Commission utilizes an alliance-based outreach strategy that involves partnerships with 

Federal and state agencies as well as nonprofit and industry groups. In addition, OCEO provides 

new and engaging educational content for CFTC.gov and contributes to improving the 

Commission’s overall online presence through the use of better technology, increased emphasis 

on search engine optimization, and smarter use of social media. 

In FY 2019, OCEO completed its reorganization, becoming a sub-office of the Office of Public 

Affairs. During this interim period, OCEO conducted a macro literature review of fraud and 

victimization research as well as in-depth demographic research to identify customer needs and 

media preferences. The goal of the report was to identify possible new initiatives and promising 

practices for the office. Effectively communicating fraud avoidance information and warnings 

about developing fraud threats requires approaches that cut through the noise, reach at-risk 

customers, and clearly provides available protections and actionable solutions. 

OCEO also continued to educate the public about virtual currencies, teaming with LabCFTC in 

the presentation of the first FinTech Forward conference in October 2018 and the second in 

October 2019. OCEO drafted and published customer advisories on virtual currency related 

topics and conducted public presentations—both in-person and online—about avoiding virtualcurrency related fraud. These efforts were part of an ongoing effort to educate customers about 

fraud and violations that have been identified in connection with the purchase and trading of 

virtual currencies. This effort will continue through FY 2020 and beyond, using digital outreach 

to provide just-in-time education to help customers make more informed decisions, print 

materials that will be distributed through direct engagements or through stakeholder groups, and 

in-person events designed to reach customers who are most interested in virtual currencies or 

commonly targeted by fraud. OCEO will also extend this work through engagements with 

international financial educators as well as by partnering with other federal agencies. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

Why Are the Markets Important to Me? 

A Primer in Futures Markets 

A futures contract is an agreement to purchase or sell a commodity for delivery in the future: 1) 

at a price that is determined at initiation of the contract; 2) that obligates each party to the 

contract to fulfill the contract at the specified price; 3) that is used to assume or shift price risk; 

and 4) that may be satisfied by delivery or offset. The CEA generally requires futures contracts to 

be traded on regulated exchanges, with futures trades cleared and settled through clearinghouses, 

referred to as DCOs. To that end, futures contracts are standardized to facilitate exchange 

trading and clearing. 

Although a futures contract agreement is set today, the person selling (for example, a farmer 

marketing bushels of wheat) will not receive payment and the buyer (in this case, a bakery) will 

not receive goods purchased until the predetermined delivery date agreed to in the contract, 

which in this example, is December 1. The farmer benefits from this agreement because he is 

certain as to the amount of money he will earn from the farming operation, even if the price of 

wheat changes between today and December 1. Similarly, the bakery buying the wheat also 

benefits by knowing how much the wheat will cost on December 1 and it will be better positioned 

to estimate its baking costs and set prices for its products. Finally, even though the actual price of 

wheat on December 1 (when the contract is fulfilled) may be greater or less than the price agreed 

upon in the December 1 contract, the contract price is fixed and both the farmer and the bakery 

are bound by their agreement. Most futures contracts are not settled with the actual physical 

delivery of the commodity, but by entering into opposite (offsetting) futures contracts, which 

serve to close out the original positions, with profits or losses dependent on the direction in 

which the price of the contracts have moved relative to those positions. 

Speculators may also buy or sell such futures contracts. The speculator buying a futures contract 

for December wheat believes the value of the wheat in December will be higher than the price he 

or she is paying for the contract today. As time passes, and December draws closer, traders may 

try to predict whether the cost of December wheat will rise or fall, and this may cause the value of 

that futures contract to fluctuate. For example, if traders expect an especially bad harvest, then 

the price of December wheat will rise, and the speculator can sell that futures contract for 

December wheat for more than he or she paid. 

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109 

Over the years, the futures markets have become increasingly diversified from their agricultural 

beginnings. Futures based on other physical commodities, such as metals, beginning in the 1970s, 

and energy products, during the 1980s, were developed. Since being introduced in the 1970s, 

financial futures contracts based on interest rates, foreign currencies, Treasury bonds, security 

indexes, and other products have far outgrown the agricultural contracts in trading volume. 

Share of Futures Trading Activity by Sector 

0% 20% 40% 60% 80% 100% 

Agriculture 

Precious Metals 

Interest Rate 

Foreign Exchange 

Energy 

Equity Index 

All Other 

1980 

2019 

A P P E N D I X

 

 

 

Source: Futures Industry Association; 2019 data as of July 25, 2019 

Since 1980, the share of on-exchange commodity futures trading activity in the agricultural sector 

decreased from 64 percent of trading activity to 4.9 percent of activity. The share of the equity 

index, energy, foreign exchange and other contract activity increased from less than 6 percent of 

trading activity in 1980 to 46 percent activity in 2019. 
COMMODITY FUTURES TRADING COMMISSION

 

 

A Primer in Swaps Markets 

Generally speaking, a swap is an exchange of one set of cash flows for another, typically netted. 

Swaps can be used to hedge risks arising from changing commodity prices, interest rates, credit 

spreads, foreign exchange rates, and other economic quantities. 

For example, a company that manufactures metal bottles plans to buy 50 metric tons of 

aluminum from its regular suppliers in six months, but wants to hedge against the risk of rising 

aluminum prices. It can enter into a one-year swap, agreeing in six months to pay $2,000 per 

metric ton for 50 tons of aluminum, or $100,000, in exchange for receiving the price of 50 metric 

tons of aluminum that prevails in 6 months. This swap, which is separate from the purchase of 

aluminum, locks in a cost of $100,000 for the aluminum needs of this manufacturer in six 

months. 

If the price of aluminum at the end of the six months happens to be $2,500 per ton, the 

manufacturer will buy the 50 tons from its suppliers at that prevailing price, for a total of 

$125,000. At the same time, as specified by the swap, the manufacturer will pay the agreed upon 

$100,000 and receive the price of 50 tons at the prevailing price, that is, $125,000. Because the 

swap payments are netted, the manufacturer receives $25,000. The $25,000 proceeds from the 

swap offset the price increase in aluminum, so the manufacturer’s total cost of obtaining the 

aluminum is $100,000. 

If, on the other hand, the price of aluminum at the end of the six months happened to fall to 

$1,500 per ton, then the manufacturer buys 50 tons from its suppliers at that price, for a total of 

$75,000. The manufacturer then settles the swap by paying $25,000, which is the difference 

between $100,000 (fixed by the terms of the swap) and receiving the market price of $1,500 on 50 

tons, or $75,000. Once again, the total cost of obtaining the aluminum is $100,000. Hence, 

because of the swap, whether the price of aluminum rises or falls, the manufacturer’s realized 

cost is $100,000. Note that, in the case when the price turns out to be $1,500 per ton, it appears 

that the manufacturer loses money on the swap—it pays the difference between $100,000 and 

$75,000—but that is just part of the hedging strategy that locks in a cost of $100,000. 

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111 

A P P E N D I X

Terms of the 

Swap 

Contract 

Two Possible Outcomes 

of the Swap Transaction 

Tons of Aluminum: 50 50 50 

Price/ Metric Ton: $2,000 $2,500 $1,500 

Contract Price: $100,000 

Manufacturer Pays Fixed Price: $100,000 $100,000 

Manufacturer Receives Floating Price: $125,000 $75,000 

Manufacturer’s Net Receipt or 

Payment Depending on Prevailing 

Price on Agreed Upon Date of 

Swap: 

$25,000 ($25,000) 

Before the Dodd-Frank Act, swaps were traded over-the-counter and were mostly bilateral, that 

is, strictly between the two counterparties to the swap. Since then, as envisioned by the DoddFrank Act, much of the swaps market trades on regulated execution facilities; is reported to 

regulators; and—particularly in the case of interest rate swaps and credit default swaps—is 

centrally cleared, that is, the two counterparties to a swap legally face a clearinghouse. These 

changes have greatly enhanced the Commission’s ability to monitor trading activity and risk in 

swap markets. Considerable effort is expended at the CFTC to improve its ability to process, 

understand, and analyze the swaps market data it receives. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

CFTC Oversight of Regulated Entities 

Which Entities does CFTC regulate? 

Associated Person The term associated person of a swap 

dealer or major swap participant means a 

person who is associated with a swap 

dealer or major swap participant as a 

partner, officer, employee, or agent (or 

any person occupying a similar status or 

performing similar functions), in any 

capacity that involves the solicitation or 

acceptance of swaps; or the supervision of 

any person or persons so engaged. 

Commodity Pool Operator A person engaged in a business similar to 

an investment trust or a syndicate and 

who solicits or accepts funds, securities, or 

property for the purpose of trading 

commodity futures contracts or 

commodity options. The commodity pool 

operator either itself makes trading 

decisions on behalf of the pool or engages 

a commodity trading advisor to do so. 

Commodity Trading Advisor A person who, for pay, regularly engages 

in the business of advising others as to the 

value of commodity futures or options or 

the advisability of trading in commodity 

futures or options, or issues analyses or 

reports concerning commodity futures or 

options. 

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113 

A P P E N D I X

 

 

 

Derivatives Clearing Organization A clearing organization or similar entity 

that, in respect to a contract (1) enables 

each party to the contract to substitute, 

through novation or otherwise, the credit 

of the derivatives clearing organization 

for the credit of the parties; (2) arranges 

or provides, on a multilateral basis, for 

the settlement or netting of obligations 

resulting from such contracts; or (3) 

otherwise provides clearing services or 

arrangements that mutualize or transfer 

among participants in the derivatives 

clearing organization the credit risk 

arising from such contracts. 

Designated Contract Market A board of trade or exchange designated 

by the CFTC to trade futures or options 

under the CEA. 

Exempt Derivatives Clearing 

Organization 

The CEA also permits the Commission to 

conditionally or unconditionally exempt a 

clearing organization from registration 

for the clearing of swaps if the 

Commission determines that the clearing 

organization is subject to comparable, 

comprehensive supervision and 

regulation by appropriate government 

authorities in the clearing organization's 

home country. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

Floor Broker A person with exchange trading 

privileges, who, in any pit, ring, post, or 

other place provided by an exchange for 

the meeting of persons similarly engaged, 

executes for another person any orders for 

the purchase or sale of any commodity for 

future delivery. 

Floor Trader A person with exchange trading privileges 

who executes his own trades by being 

personally present in the pit or ring for 

futures trading. 

Foreign Board of Trade A foreign board of trade means a board of 

trade, exchange or market located outside 

the U.S., its territories or possessions, 

whether incorporated or unincorporated, 

where foreign futures or foreign options 

transactions are entered into. 

Futures Commission Merchant Individuals, associations, partnerships, 

corporations, and trusts that solicit or 

accept orders for the purchase or sale of 

any commodity for future delivery on or 

subject to the rules of any exchange and 

that accept payment from or extend credit 

to those whose orders are accepted. 

Introducing Broker A person (other than a person registered 

as an associated person of a futures 

commission merchant) engaged in 

soliciting or accepting orders for the 

purchase or sale of any commodity for 

future delivery on an exchange who does 

not accept any money, securities, or 

property to margin, guarantee, or secure 

any trades or contracts that result. 

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115 

A P P E N D I X

 

 

 

 

 

Major Swap Participant An Major Swap Participant is a person 

who maintains a substantial position in 

any of the major swap categories, 

excluding positions held for hedging or 

mitigating commercial risk and positions 

maintained by certain employee benefit 

plans for hedging or mitigating risks in 

the operation of the plan, or whose 

outstanding swaps create substantial 

counterparty exposure that could have 

serious adverse effects on the financial 

stability of the U.S. banking system or 

financial markets, or any financial entity 

that is highly leveraged relative to the 

amount of capital such entity holds and 

that is not subject to capital requirements 

established by an appropriate Federal 

banking agency and that maintains a 

"substantial position" in any of the major 

swap categories. 

Retail Foreign Exchange Dealer A retail foreign exchange dealer is an 

entity that acts, or offers to act, as a 

counterparty to an off-exchange foreign 

currency transaction with a person who is 

not an eligible contract participant and 

the transaction is either: a futures 

contract, an option on a futures contract 

or an option contract (except options 

traded on a securities exchange); or 

offered or entered into, on a leveraged or 

margined basis, or financed by the 

offeror, counterparty or person acting in 

concert with the offeror or counterparty 

on a similar basis. 
COMMODITY FUTURES TRADING COMMISSION

 

 

Swap Data Repository Swap data repositories are entities created 

by the Dodd-Frank Wall Street Reform 

and Consumer Protection Act to provide 

a central facility for swap data reporting 

and recordkeeping. 

Swap Dealer An entity such as a bank or investment 

bank that markets swaps to end users. 

Swap dealers often hedge their swap 

positions in futures markets. 

Swap Execution Facility A trading facility that operates under the 

regulatory oversight of the CFTC for the 

trading and processing of swaps. 

Systemically Important DCO A Systematically Important DCO is a 

DCO registered with the CFTC that has 

been designated as systematically 

important by the Financial Stability 

Oversight Council. 

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FY 2019 AGENCY FINANCIAL REPORT

117 

A P P E N D I X

 

 

Trading Entities 

Clearing Entities 

Data Repositories 

Registered Futures 

Association 

Registrants: 

Intermediaries 

•Derivatives Clearing Organization (DCO)-Enables parties to a 

contract to substitute the credit of the derivatives clearing 

organization for the credit of the parties, arranges for the 

settlement or netting of obligations, or provides clearing services. 

•Number of DCOs as of 9/2019: 16 

• Exempt Derivatives Clearing Organization-A non-U.S. clearing 

organization clearing proprietary positions of U.S. persons may be 

exempt DCO from registration, subject to conditions established by 

the CFTC. 

•Number of Exempt DCOs as of 9/2019: 4 

• Systemically Important DCOs (SDCO)-A DCO that has been 

designated by the Financial Stability Oversight Council to be 

systemically important. 

• Number of SDCOs as of 9/2019: 2 

• Swap Data Repository (SDR)-Any person who collects and 

maintains information or records of transactions or positions or the 

terms and conditions of swaps entered into by third parties. 

•Number of SDRs as of 9/2019: 3 

•CFTC Role: Registers SDRs, conducts rule enforcement 

reviews to ensure compliance with real-time public 

reporting of swap transaction and pricing data and 

compliance with core principles. 

•National Futures Association (NFA)-an independent self-regulatory 

organization for U.S. futures and derivatives markets 

•Number of Registered Futures Associations as of 9/2019: 1 

•CFTC Role: Oversees and examines the NFA and other 

self-regulatory organizations. 

• An intermediary-A person or organization who acts on behalf of 

another in connection with futures, swaps, or options trading. The 

CFTC registration process is handled through the National Futures 

Association. 

•Number of Futures Commisison Merchants as of 9/2019: 65 

•Number of Major Swap Participants as of 9/2019: 0 

•Number of Retail Foreign Exchange Dealers as of 9/2019: 3 

•Number of Swap Dealers as of 9/2019: 107 (provissionally 

registered) 

•Number of Commodity Pool Operators as of 9/2019: 1,475 

• Number of Commodity Trading Advisors as of 9/2019: 1,996 

• Number of Associated Persons as of 9/2019: 47,842 

•Number of Introducing Brokers as of 9/2019: 1,129 

• Number of Floor Brokers as of 9/2019: 2,724 

• Number of Floor Traders as of 9/2019: 485 

•CFTC Role: Develops regulations, orders, and 

interpretive statements to swap dealers, futures 

commission merchants and other intermediaries. With 

respect to registered intermediaries, the CFTC conducts 

varying levels of review of regulatory applications, financial 

and other business data, and examinations to determine 

compliance with the CEA and Commission regulations. The 

NFA, an SRO, conducts a direct examination program for swap 

dealers and intermediaries. By virtue of this, the Commission

leverages the significant resources of the NFA to meet 

examination workload demands, while preserving and focusing

finite CFTC resources. Through its direct oversight of NFA, the 

CFTC receives the results of NFA examinations of swap dealers 

and intermediaries. 

•Designated Contract Market (DCM)-Exchanges designated to trade 

futures or options. 

•Number of DCMs as of 9/2019: 15 

• Swap Execution Facility (SEF)-A trading facility that trades and 

processes swaps. 

•Number of SEFs as of 9/2019: 20 

• Foreign Board of Trade (FBOT)-any board of trade, exchange or 

market located outside of the U.S. where foreign futures or foreign 

options transactions are entered. 

•Number of FBOTs as of 9/2019: 21 

•CFTC Role: CFTC registers new exchanges and foreign 

boards of trade, conducts examinations of exchange 

compliance programs, including system safeguards, 

reviews products listed by exchanges and rules and rule 

amendments submitted by exchanges. CFTC shares 

regulatory authority with the FBOT's home regulator 

authority regarding oversight over direct access trading. 

•CFTC Role: CFTC prepares regulations, orders, 

guidance regarding DCOs, reviews applications for DCO 

registration and DCO rule submissions, and conducts 

examinations to ensure compliance by DCOs with the 

Commodity Exchange Act and Commission regulations. 
COMMODITY FUTURES TRADING COMMISSION

 

 

 

 

 

 

 

 

 

 

CFTC Glossary 

Because the acronyms of many words and phrases used throughout the futures and swaps 

industries are not readily available in standard references, the Commission’s Office of Public 

Affairs compiled a glossary to assist members of the public. A guide to the language of the 

futures and swaps industry is located online at: 

https://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/glossary_uv.html 

This and the online glossary is not all-inclusive, nor are general definitions intended to state or 

suggest the views of the Commission concerning the legal significance, or meaning of any word 

or term. Moreover, no definition is intended to state or suggest the Commission’s views 

concerning any trading strategy or economic theory. 

U.S. Federal Laws 

CEA ......................Commodity Exchange Act 

Dodd-Frank.........Dodd-Frank Wall Street Reform 

and Consumer Protection Act 

FCPIA...................Federal Civil Penalties Inflation 

Adjustment Act 

FECA ....................Federal Employees’ Compensation 

Act 

FISMA ..................Federal Information Security 

Management Act 

FFMIA..................Federal Financial Management 

Improvement Act 

FMFIA..................Federal Managers’ Financial 

Integrity Act 

GPRA....................Government Performance and 

Results Act 

CFTC Divisions and Offices 

DCR...................... Division of Clearing and Risk 

DMO .................... Division of Market Oversight 

DOE ..................... Division of Enforcement 

DSIO ................... Division of Swap Dealer and 

Intermediary Oversight 

OCE...................... Office of the Chief Economist 

OCEO .................. Office of Customer Education and 

Outreach 

ODT ..................... Office of Data and Technology 

OED ..................... Office of the Executive Director 

OGC ..................... Office of the General Counsel 

OIA....................... Office of International Affairs 

OIG....................... Office of the Inspector General 

WBO .................... Whistleblower Office 

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FY 2019 AGENCY FINANCIAL REPORT

119 

A P P E N D I X

U.S. Federal Departments and Agencies 

CFTC ....................U.S. Commodity Futures Trading 

Commission 

DHS ......................U.S. Department of Homeland 

Security 

FDIC.....................Federal Deposit Insurance 

Corporation 

GAO .....................U.S. Government Accountability 

Office 

GSA.......................U.S. General Services 

Administration 

NFC ......................U.S. Department of Agriculture’s 

National Finance Center 

OMB .....................Office of Management and Budget 

OPM .....................Office of Personnel Management 

SEC .......................U.S. Securities and Exchange 

Commission 

Treasury ...............U.S. Department of the Treasury 

USDA ...................U.S. Department of Agriculture 

Other Abbreviations and Industry Terms 

AP .........................Associated Person 

CME......................Chicago Mercantile Exchange Inc. 

CMIO ...................Chief Market Intelligence Officer, 

CFTC 

COTS....................Commercial Off-the-Shelf 

CPMI ....................Committee on Payments and 

Market Infrastructures 

CPO ......................Commodity Pool Operator 

CSRS..................... Civil Service Retirement System 

CTA......................Commodity Trading Advisor 

DCM .................... Designated Contract Market 

DCO..................... Derivatives Clearing Organization 

DNP ..................... Do Not Pay 

DSRO ................... Designated Self-Regulatory 

Organization 

ENN ..................... Entity-Netted Notional 

EMMoU .............. Enhanced Multilateral MOU 

Concerning Consultation and 

Cooperation and the Exchange of 

Information 

EU......................... European Union 

FASAB ................. Federal Accounting Standards 

Advisory Board 

FBOT.................... Foreign Board of Trade 

FCM ..................... Futures Commission Merchant 

FERS..................... Federal Employees Retirement 

System 

FinTech................ Financial Technology 

FSB ....................... Financial Stability Board 

FSOC.................... Financial Stability Oversight 

Council 

FTE....................... Full-time Equivalent 

FY ......................... Fiscal Year 

GAAP................... U.S. Generally Accepted 

Accounting Principles 

GAGAS................ Generally Accepted Government 

Auditing Standards 
COMMODITY FUTURES TRADING COMMISSION

GUUG ..................FSB’s Working Group on UTI/UPI 

Governance 

IB...........................Introducing Broker 

ICE ........................Intercontinental Exchange 

IOSCO..................International Organization of 

Securities Commissions 

ISDA .....................International Swaps and 

Derivatives Association 

IT...........................Information Technology 

IT-IRB ..................Information Technology 

Investment Review Board 

MOU.....................Memorandum of Understanding 

MSP ......................Major Swap Participant 

NFA ......................National Futures Association 

NFC ......................National Finance Center 

OTC......................Over-the-Counter 

RegTech................Regulatory Technology 

ReSG .....................FSB’s Resolution Steering Group 

RFED.................... Retail Foreign Exchange Dealer 

SBR ....................... Statement of Budgetary Resources 

SD ......................... Swap Dealer

SDR ...................... Swap Data Repository 

SEF........................ Swap Execution Facility 

SFFAS................... Statement of Federal Financial 

Accounting Standards 

SIDCO ................. Systemically Important DCO 

SOS....................... Schedule of Spending 

SRO ...................... Self-Regulatory Organization 

SSE........................ System Safeguards Examination 

TCR ...................... Tip, Complaint, or Referral Form 

UK ........................ United Kingdom 

UPI ...................... Unique product identifiers 

UTI ...................... Unique transaction identifiers 

WBO APP .......... Whistleblower Application Form 

120 
FY 2019 AGENCY FINANCIAL REPORT

 

 

We Welcome Your Comments 

Thank you for your interest in the CFTC’s FY 2019 Agency Financial Report. 

We welcome your comments on how we can make the report more informative 

for our readers. Please send feedback to chibberd@cftc.gov or to: 

CFTC 

Financial Management Branch 

1155 21st Street NW 

Room 4406 

Washington, DC 20581 

This FY 2019 Agency Financial Report and prior year documents are available 

on the CFTC website at: 

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

121 
 

This report is in the public domain. Authorization to reproduce it in whole or 

in part is granted. While permission to reprint this publication is not necessary, 

the citation should be: Commodity Futures Trading Commission, FY 2019 

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

Photographs in this document are proprietary and prior permission from the 

photographer is required for any use or reproduction of the photographs. 

Page Photo Credits 

CFTC Photos: Pages 5, 10, 11, 17, 20, 101 

Clark Studios Photos: Pages 21, 26, 27 

Connor Studios: Pages 17, 19, 23, 24, 29, 116 

Adobe Stock Images: Pages Front and Back Cover, 4, 8, 22, 25, 56, 89, 104, 122