The Office of International Affairs (OIA) assists the Commission in responding to global market and regulatory changes by coordinating the Commission's international activities. OIA provides information and technical support to the Commission and to its other offices and divisions on international matters; comments on Commission rulemakings having foreign implications; analyzes foreign regulatory developments; develops regulatory information sharing arrangements; shares regulatory and fitness information with foreign authorities; and coordinates technical assistance to foreign jurisdictions. OIA represents the Commission in international organizations, organizes international conferences on behalf of the Commission, and provides technical comments to other U.S. financial regulators with respect to relevant international activities. During FY 2000, OIA contributed to this effort through the following activities:International Agreements.
The Commission has, in the last several years, cooperated with a large number of foreign regulatory authorities through formal memoranda of understanding and other arrangements to combat cross-border fraudulent and other prohibited practices that could harm customers or threaten market integrity. Cross-border information sharing among market regulators forms the linchpin of effective surveillance of global markets linked by products, participants, and information technology. During FY 2000, OIA finalized an arrangement with relevant United Kingdom market authorities that will facilitate the sharing of warehouse information. In addition, OIA finalized an exchange of letters between the Commission and the Italian Commissione Nazionale per le Societa e la Borsa (CONSOB) intended to facilitate the listing of equity-based futures contracts. OIA also completed a supplemental memorandum of understanding between the Commission and CONSOB that facilitates remote electronic access by futures markets participants in one jurisdiction to regulated futures markets in the other jurisdiction by establishing reciprocal information sharing arrangements regarding the initial and ongoing fitness and financial solvency of such remote members.
IOSCO Activities. A key partnership in the Commission's efforts to remain abreast of global financial issues is its membership in the International Organization of Securities Commissioners (IOSCO), an organization of 162 members from 101 countries. IOSCO's main purposes are to provide a machinery for exchanging information and expertise between regulatory authorities for the supervision of world securities and derivatives markets, to establish standards of best practice, to ensure market integrity, and to promote effective supervision and enforcement.
During FY 2000, OIA coordinated Commission activities within IOSCO and its Technical Committee, with special emphasis on issues raised by highly leveraged institutions, cross-border electronic trading mechanisms and clearing and settlement systems. OIA staff also coordinated the Commission's activities within the Technical Committee's Working Party on Secondary Markets. OIA staff participated in the development of the Working Party's survey on the regulation of electronic trading systems and the completion of a report that develops additional principles for the oversight of cross-border electronic systems. OIA staff worked on a joint task force of the Technical Committee and the Basle Banking Committee's Committee on Payment and Settlement Systems which is examining standards for cross-border settlement. OIA staff have continued to participate actively in Technical Committee drafting groups that are preparing surveys for a high level assessment on the extent to which IOSCO's Objectives and Principles of Securities Regulation ("Core Principles") have been implemented by member jurisdictions. OIA also prepared answers to the first set of such assessment surveys.
Interagency Coordination. The Commission also contributes to the initiatives of the Department of the Treasury to encourage global financial stability. During FY 2000, OIA coordinated the Commission's comments to the Department of the Treasury on various position papers prepared by the following three Financial Stability Forum's (FSF) working groups: highly-leveraged institutions, capital flows, and off-shore centers. Staff also drafted comments on papers prepared by the FSF's task force on implementation of international standards and participated in planning sessions for U.S.-Taiwan subcabinet level discussions.
Other Analysis, Training and Assistance. OIA provides assistance to domestic and international regulators through publications, training, and other forms of assistance. OIA provided an updated analysis of a survey, Regulation of Over-the-Counter Derivatives Transactions (1999), which is available on the Commission's website at www.cftc.gov. OIA staff organized the annual meeting for international regulators during the Futures Industry Association's (FIA) conference in Boca Raton, Florida, and the Commission's annual training seminar in Chicago. The seminar offers foreign authorities intensive training and course work for conducting oversight of futures trading for market integrity and customer protection purposes. The seminar this year included a plenary session with the Chicago Federal Reserve Bank and a day in Washington organized in cooperation with the International Finance Corporation.
OIA staff also provided technical assistance to the Commission's Global Markets Advisory Commission, responded to requests from domestic and international financial regulators on the Commission's program, and continued to provide regulatory and fitness information requested by numerous foreign regulatory agencies, and acted as an intermediary when foreign regulators request fitness information from the National Futures Association (NFA).Office of Legislative and Intergovernmental Affairs
The Office of Legislative and Intergovernmental Affairs (OLIA) facilitates communications between the Commission and Congress, other Federal agencies and state governments. OLIA monitors legislative and regulatory activities at the Federal and state levels, advises the Commission and its staff on legislative matters, and responds to inquiries in a timely manner. OLIA assisted in the preparation of congressional testimony for Chairman William Rainer on three occasions in FY 2000. OLIA also assisted in coordination of the testimony of C. Robert Paul, General Counsel of the Commission on five occasions in FY 2000.
Chairman Rainer testified before the Senate Committee on Agriculture, Nutrition, and Forestry regarding the report of the President's Working Group on Financial Markets on over-the-counter derivatives; before the Senate Committee on Banking, Housing, and Urban Affairs regarding the financial marketplace of the future; and before a joint hearing of the Senate Committee on Agriculture, Nutrition, and Forestry and the Committee on Banking, Housing, and Urban Affairs regarding S. 2697, The Commodity Futures Modernization Act of 2000.
The General Counsel testified before the House Subcommittee on Risk Management, Research and Specialty Crops and later before the House Committee on Banking and Financial Services regarding the report of the President's Working Group on Financial Markets on over-the-counter derivatives. The General Counsel testified three times on H.R. 4541, The Commodity Futures Modernization Act of 2000. He testified before the House Subcommittee on Finance and Hazardous Materials; the House Subcommittee on Risk Management, Research and Specialty Crops; and the House Committee on Banking and Financial Services.
OLIA also coordinated communications between the Commission and the Senate Appropriations Subcommittee on Agriculture, Rural Development and Related Agencies and between the Commission and the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies in regard to appropriations for Commission operations during FY 20001. In addition, OLIA coordinated communications between the Commission and the General Accounting Office on various reviews of Commission programs and activities.Office of Public Affairs
The Office of Public Affairs (OPA) is the Commission's liaison with the news media, producer and market user groups, academic and business institutions, and the general public. OPA provides information covering the regulatory mandate of the Commission to protect the public from fraud and to ensure the integrity of the markets, the economic role of the futures markets, new market instruments and regulatory initiatives, global regulatory developments and cooperative undertakings, Commission enforcement actions, customer protection issues, the CFTC's website, and other diverse functions and accomplishments of the Commission.
During FY 2000, OPA assisted over 1,000 domestic and foreign news correspondents, as well as those with a business or academic interest in the Commission's regulatory activities, policies, goals, and accomplishments. In addition to issuing press releases and advisories, both paper-based and electronic via the Internet, covering the CFTC's regulatory and enforcement activities, OPA publishes, updates, and distributes a series of Backgrounders. The Backgrounders highlight and explain important policy issues and initiatives, technical matters, and salient aspects of the Commission's regulatory mandate. For example, OPA Backgrounders explain in detail the Commitments of Traders report; provide an overview of commodity pool operator and commodity trading advisor rules and regulations; and describe global cooperation through information-sharing and memoranda of understanding with other financial market regulators, the CFTC's market surveillance program, speculative limits, and foreign exchange-traded instrument approvals and exemptions. OPA also responded to inquiries from the media and general public concerning the CFTC's most recently published Consumer Advisories that alert the public and potential customers to the warning signs of possible fraudulent activity and offer precautions that individuals should take before committing funds. The Commission published two new Consumer Advisories in FY 2000: Beware of Promises of Easy Profits From Buying Precious Metals and Other Commodities and Beware of Internet Websites Selling Commodity Trading Systems that Guarantee High Profits with Minimal Risks.
OPA publishes brochures and educational materials about the CFTC, the futures industry, and the futures and options markets. OPA also provides timely and important information about the Commission to the media and others through the Weekly Advisory, a weekly print and electronic newsletter reporting on Commission activities, and the Daily News Clips, a daily compilation of media stories and articles relevant to CFTC regulatory concerns. In FY 2000, OPA continued to post information on the Commission's website (www.cftc.gov), including general and enforcement press releases, Backgrounders, the texts of the Weekly Advisory, CFTC brochures, speeches by the Chairman and Commissioners, biographies of the Commissioners, a summary of exemptive, no-action and interpretative letters, enforcement complaints and settlement orders, and a glossary of futures industry terms.
During FY 2000, OPA conducted four briefing sessions for market professionals, producer groups, academic representatives, and foreign-based news media representatives to acquaint them with the Commission's recent regulatory activities and responsibilities. OPA also conducts briefings for domestic and foreign media representatives on a broad range of current topics, including proposed and final rulemakings, ongoing regulatory developments, enforcement and customer protection activities, and technical issues, as well as breaking news events. In addition, OPA participated in the activities of the Year 2000 Joint Public Information Center that were aimed at ensuring a coordinated response among key financial public affairs officials of U.S. financial regulators to Year 2000 inquiries from the general public, the media, and market participants.
As part of its ongoing activities to support the Commission's customer education effort, OPA informs the news media, the general public, and potential market participants of the availability of current Commission enforcement and disciplinary information through the NFA's toll-free Customer Protection Information Hotline (800-676-4NFA ). The Hotline helps futures and options customers verify the registration status and disciplinary history of firms and individuals in the commodity industry. OPA also provided updated information for the 2001 Edition of The Consumer Action Handbook's section dealing with commodity investment fraud, entitled: Investing Wisely. The General Services Administration's Consumer Information Center publishes The Consumer Action Handbook.
In addition, OPA continued to cooperate with consumer protection organizations nationwide, including the National Fraud Information Center, the General Services Administration's Consumer Information Center, the Alliance Against Fraud in Telemarketing, the American Association of Retired Persons, Better Business Bureaus, the National Consumers League, and the U.S. Postal Service in a concerted effort to fight commodity futures and options fraud aimed at the general public.
OPA continued to enhance other public outreach initiatives and activities during FY 2000, including expanding its efforts to make exemptive, no-action, and interpretative letters and other written communications more readily available to the media, the public, and other interested parties, particularly via the CFTC's website.
During the fiscal year, OPA continued to work closely with the Commission's advisory committees on agriculture, global markets, and technology to provide information to meeting participants and the media regarding committee activities, deliberations, and recommendations. In this regard, OPA assisted with media and external affairs related to the Agricultural Advisory Committee's discussion of deregulatory initiatives, contract market designation and exchange rule changes, Commission reauthorization issues, and final rules on agricultural trade options. OPA also provided media and communications support to the Global Markets Advisory Committee's meeting to discuss regulatory parity across borders, rule amendments and related initiatives to harmonize international regulatory treatment of institutional customers, and other issues. OPA also provided communications support to the Technology Advisory Committee's discussion of oversight of electronic order routing and execution systems, and common trading platforms and common clearing. In addition, OPA handled media and market interest related to two Commission Roundtables that focused on technology issues and regulation of exchange-traded derivatives.
OPA handled extensive media coverage of other FY 2000 Commission initiatives, including: the Commission's proposal to establish a new regulatory framework; policy issues related to the placement of terminals in the U.S. by foreign boards of trade; the application and approval of the first Internet-based exchange (FutureCom Exchange); proposals for futures exchange demutualization and restructuring; amendments to Part 30 of the Commodity Exchange Act; and the agreement between the CFTC and the Securities and Exchange Commission to reform the Shad-Johnson accord.
OPA also handled the significant media interest generated by the Commission's enforcement activities during FY 2000, including enforcement actions against S. Jay Goldinger and Capital Insight Brokerage, Inc.; David M. Mobley, Sr., and Maricopa International Investment Corporation, and other defendants; IMC Common Enterprise; National Bullion and Coin, Inc.; and, fifteen cases involving alleged fraudulent promotion of commodity trading systems over the Internet. OPA also responded to media interest in the Commission's participation with other regulatory authorities in two "Internet Surf Day" sessions aimed at uncovering fraudulent promotion of commodity investment schemes on the Internet.Office of the Secretariat
The Office of the Secretariat provides administrative support for official Commission activities. The Secretariat coordinates the preparation and dissemination of policy documents and controls the flow of information to the Commission. The Secretariat distributes official Commission documents to the staff, other government organizations, exchange officials, and interested members of the public.
The Secretariat coordinates and schedules the Commission's meetings and meeting agendas, ensuring that the Commissioners have time to review all relevant materials prior to each meeting. The Secretary attends and tapes all Commission meetings and maintains the official minutes of the meetings. Some meetings, such as those concerning market surveillance, enforcement, or adjudicatory matters, are closed to the public by law. Other meetings are open to the public, with audio/video recording and photography allowed.
One day before an open meeting, the Secretariat releases the documents to be discussed in the meeting. Following the meeting, the Secretariat provides transcripts, cassette recordings, or minutes of the meeting upon request. The Secretariat also monitors Commission compliance with the Government in the Sunshine Act as it applies to all meetings attended by a quorum of Commissioners. During FY 2000, the Commission held 50 meetings.
Once the Commission has reached a decision to take an action, agreed on the language of a document, and directed that the document be issued, the Secretary signs the document on the Commission's behalf. The Secretary also keeps and authorizes the use of the official Commission seal and receives all official Commission correspondence. In FY 2000, the Secretariat controlled 245 pieces of correspondence for preparation of the Commission's response.
The Secretariat processed and published 153 items in the Federal Register during FY 2000. The Secretariat also received and responded to hundreds of requests from the public for information about current or past Commission activities or copies of publicly available records.Records Section.
The Records Section maintains the Commission's official records, receives and responds to requests for information from those records, and performs the research necessary for a response. The Records Section staff also maintains and updates on a daily basis several large automated indices and produces reports compiled from the indices. During FY 2000, the Records Section supported the Commission's website by updating daily the Federal Register and public comment files and by publishing periodically popular Freedom of Information Act (FOIA) releases. The staff continued to refine automated systems and convert official files to microfiche, in accordance with Commission and Federal regulations, and to process exchange submissions, public comment letters, and requests for public information received by electronic mail and through electronic forms on the Commission's website.Freedom of Information Act Office.
The FOIA Office oversees the Commission's compliance with the FOIA, the Privacy Act, and the Government in the Sunshine Act. These statutes provide public access to government records and meetings and protect an individual's right to privacy. The FOIA Office processes and responds to requests filed under these statutes and prepares annual reports to Congress describing Commission FOIA activities. During FY 2000, the staff received and processed 403 FOIA requests. The FOIA Office also works with the Office of the General Counsel and the Office of the Executive Director to update the Commission's Privacy Act systems notices when a Commission action creates a new system of records or affects existing record systems.
All requests for confidential treatment of records submitted to the Commission by firms or individuals are filed with the FOIA Office. In FY 2000, the Commission received more than 619 such requests. The FOIA Office ensures that the requirements of Commission regulations are met before responding to any FOIA request for records that are subject to a request for confidential treatment.Office of the Inspector General
The Office of the Inspector General (OIG), established on April 14, 1989, conducts and supervises audits and investigations of programs and operations of the CFTC and reviews existing and proposed legislation and regulations. The OIG recommends policies to promote economy, efficiency, and effectiveness in Commission programs and operations, and to prevent and detect fraud and abuse. The OIG keeps the Chairman and the Congress informed about problems, deficiencies, and the progress of corrective action in programs and operations.
During FY 2000, the OIG monitored CFTC's compliance with the Federal Manager's Financial Integrity Act and the Government Performance and Results Act, conducted an audit of the Commission's lease of space in Washington, D.C., and continued a comprehensive review of the information requirements of CFTC's Enforcement Division. The OIG reviewed proposed and final CFTC and exchange rules and regulations, and conducted investigations of allegations of impropriety lodged against CFTC employees.