February 24, 2011
Thank you all for joining us today for this important meeting regarding the implementation of the Dodd-Frank Act.
I am particularly interested in the proposed interpretive order regarding the Commission’s antidisruptive trading practices authority. In reading the comment letters we received in response to our Advance Notice of Proposed Rulemaking, two things stood out to me. First, there was widespread support for the goal of eliminating disruptive trading practice from our markets. Second, most commentators called for greater clarity to help them understand how we interpret the concept of a “disruptive practice.” I look forward to receiving the public’s comments to see if the proposed interpretive order adequately addresses these concerns.
As I have mentioned in previous open meetings, the CFTC is under serious strain at its current funding level. We lack the staff and technological resources necessary to implement Dodd-Frank and continue to fulfill our pre-Dodd-Frank duties under the Commodity Exchange Act. Our staff’s performance during this difficult time has been truly remarkable, as they have worked long hours to essentially do two very big jobs at once. However, without additional funding, the strain will only become worse in July, when much of Dodd-Frank goes into effect. At that point, in addition to our traditional oversight of the futures industry, we will also be regulating the swaps market – a market that has been estimated to be nine times larger than the futures market.
Even at the Administration’s requested funding level and with increased assistance from SROs, this would be a Herculean task.
More troublesome is the potential that the Commission may suffer a decrease in funding at this critical period. The House spending bill would cut the Commission’s already tight budget by nearly a third. The Commission is faced with very hard choices as to how to use our limited resources to enforce both Dodd-Frank and the Commodity Exchange Act. With a further cut in our budget, the Commission will have to abandon its principle based regulatory regime and adopt a prescriptive or even a restrictive regime. I am fearful this would have a negative impact on both the futures and swaps industries in the United States. There would essentially be no cop on the beat and no one to insure that our industry, which was largely untarnished during the financial meltdown, would not be to blame if another meltdown occurs.
I would like to once again thank the staff at the CFTC for all their hard work in regard to these very important proposed rules. Their dedication to their important work during this difficult time is what government service is all about.
Last Updated: February 24, 2011