Offices of the Chairperson
Office of International Affairs
The Commission created the Office of International Affairs within the Offices of the Chairperson effective July 23, 1997. In announcing the creation of the Office, Chairperson Brooksley Born stated that: ''Over the past several years we have witnessed enormous growth in the international marketplace--new exchanges have been established around the world, trading volume has soared, new regulatory bodies have been created, and the need for cooperation has become paramount. In order to keep abreast of these global changes and to continue its leading role in international initiatives, the Commission is establishing an Office of International Affairs.''
The office will enhance the Commission's ability to meet the challenges posed by the globalization of financial markets in three important ways:
- to respond quickly to market crises that have global systemic implications;
- to remain an effective supervisor in a global marketplace where no one regulator has all of the information or resources to regulate its markets or its firms; and
- to eliminate unnecessary impediments to global business while preserving core protections for markets and customers.
During the fiscal year, OIA and its predecessor office in the Division of Trading and Markets accomplished the following:
- Organized, in conjunction with U.K. and Japanese regulators, an international conference in London. At the conference, representatives from 17 of the world's leading commodity futures markets issued a communiqu` setting out their proposals for the supervision of international commodity futures markets. Thereafter, staff completed an analysis of survey results on contract design and currently is working with conference participants to develop standards of best practice in contract design, market surveillance and information sharing.
- Developed and participated with U.S. exchanges and U.K. regulators and exchanges in an international 'stress test.' The test assessed the responses by exchanges and regulators to a hypothetical failure of a firm in the U.S. which resulted in international implications.
- Provided technical information to U.K. regulators on our market surveillance regulatory system. The staff also commented on the U.K. regulator's major reassessment of trading and regulations at the London Metal Exchange.
- Worked with the staff of the U.K. SIB, co-chair of the Windsor Conference, to amend the March 1996 Declaration on Cooperation and Supervision of International Futures Exchanges and Clearing Organizations. The Declaration is a mechanism for the sharing of information prompted by the occurrence of large exposures. The amendment permitted a broader number of market authorities to sign the agreement.
- Participated in the work of the Quadrilateral Group, a collaborative effort among U.K. and U.S. banking, securities and futures supervisors. The group developed an information-sharing framework to obtain information in an emergency, particularly concerning financial groups with cross-border and cross-sectoral responsibilities.
- Facilitated information sharing with foreign regulators.
- Within IOSCO, participated directly in the development of reports on best practices in the areas of margin and default procedures. Staff participated in the development of standards regarding the protection of client assets. Staff directed the effort within IOSCO to develop a guidance on information sharing which categorizes the type of information that regulators can be expected to share during various market or firm events. OIA is participating in the drafting of a statement of ''Core Principles'' by the Technical Committee on what constitutes an effective regulatory system. OIA worked on the Internet Task Force initiative to coordinate IOSCO's inquiries into the cross-border issues raised by the use of the Internet. Finally, OIA provided assistance to the Commission at meetings of the Technical Committee of IOSCO.
- Provided technical assistance with respect to the Commission's representation within COSRA. COSRA adopted standards of best practice for the supervision of independent auditors and is developing investor education material.
- Participated in and provided technical assistance to the International Regulators Meeting held in conjunction with the FIA Conference in Boca Raton, Florida, in March 1997. At that meeting, participants discussed issues related to cross-border stress testing, generic risk disclosure, recognition of netting arrangements and regulatory issues raised by the Internet.
- Organized 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.
- Coordinated with IOSCO in the updating of International Regulation of Derivative Markets, Products and Financial Derivatives. The report contains a description of various models or approaches to regulation of derivative markets based upon regulatory summaries prepared pursuant to a common framework of analysis.
- Developed a new report, 1997 Status Report on Exchange-Traded Derivatives Markets in Emerging and Developing Countries. The report provides an overview of selected economic, regulatory and exchange data with respect to exchange-traded derivatives in various nations.
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 Chairperson Brooksley Born on six occasions in FY 1997. Two of the hearings involved the Commission's appropriations for FY 1998. At the close of FY 1997, a House/Senate conference committee had completed work on the FY 1998 agriculture appropriations bill, but the bill was awaiting final approval of the House and Senate. The conference committee measure would provide $58,101,000 for the Commission, a $3,000,000 increase over FY 1997 appropriations. OLIA assisted in the preparation of testimony related to Congressional consideration of bills to amend the Commodity Exchange Act (CEA). The bills, S. 257 and H.R. 467, are pending before the Senate Committee on Agriculture, Nutrition and Forestry and the House Subcommittee on Risk Management and Specialty Crops, respectively. Chairperson Born also testified on other issues, addressing Congress' interest in agricultural trade options and the Commission's role in risk management education under the Federal Agriculture Improvement and Reform (FAIR) Act of 1996.
Office of Public Affairs
The Office of Public Affairs (OPA) serves as the Commission's liaison with the news media, producer and market user groups, educational groups, and the general public. OPA provides information about the regulatory mandate of the Commission, the economic role of the futures markets, new market instruments, market regulation, enforcement actions, customer protection issues, the CFTC's Internet website and the diverse functions of the Commission.
During FY 1997, OPA assisted more than 2,300 domestic and foreign news correspondents, as well as those with a business or academic interest in the Commission's regulatory activities, policies, and accomplishments. In addition to issuing press releases and advisories covering the CFTC's regulatory and enforcement activities, OPA publishes and updates a series of Backgrounders. The Backgrounders highlight and explain important policy issues and initiatives and salient aspects of the Commission's regulatory mandate. For example, OPA Backgrounders describe affinity fraud and commodity scams, transborder fraud and enforcement activities, international enforcement, bilateral and multilateral regulatory and enforcement information sharing agreements, and cooperation between the CFTC and the states.
OPA publishes a variety of brochures and educational materials about the CFTC, the futures industry and the futures and option markets. Brochures address customer protection issues in English, Spanish and Chinese. OPA's Quarterly Review, a quarterly summary of CFTC activities and priorities, the Weekly Advisory, a weekly newsletter reporting on Commission activities, and the Daily News Clips, a daily compilation of media stories and articles relevant to CFTC regulatory concerns, provide timely and important information about the Commission to the media and others.
During the year, OPA continued to assist with various aspects of the Commission's Internet website (http://www.cftc.gov). The CFTC website includes information about the Commission's Commitments of Traders (COT) reports; selected FCM (futures commission merchant) financial data; the Proceedings Bulletin, which contains information about the CFTC's administrative and injunctive actions, its statutory disqualification from registration proceedings, and its reparations program, which is available for resolving disputes between commodity customers and commodity professionals. Also available are the texts of the Weekly Advisory, Backgrounders, Chairperson and Commissioner speeches, press releases, enforcement actions, CFTC interpretative letters, CFTC opinions and orders, biographies of the Commissioners, CFTC brochures and a glossary of industry terms. In addition, the website allows the CFTC to receive information from the general public concerning possible misconduct or suspected wrongdoing involving futures and options.
OPA continues to play a critical role in the Commission's hosting of foreign and academic visitors to the Commission. During FY 1997, OPA conducted 19 briefing sessions for foreign regulators and exchange officials, as well as academic representatives, to acquaint them with the U.S. futures markets and the Commission's functions and regulatory responsibilities. OPA conducts briefings for media representatives on proposed rules, regulations, and enforcement activities, as well as other technical issues.
OPA informs the general public and potential customers of the availability of current Commission enforcement and disciplinary information in the National Futures Association's toll-free Customer Protection Information Hotline (1-800-676-4632). The Customer Protection Hotline helps customers verify the registration status and disciplinary history of firms and individuals in the commodity industry. OPA provided input for a chapter on commodity investment fraud for inclusion in the 1997 edition of the Consumer's Resource Handbook, published by the U.S. Office of Consumer Affairs.
OPA educates and informs the news media, potential customers, and various publics about fraudulent commodity investment schemes. OPA works with organizations like the Office of Consumer Affairs, the U.S. General Services Administration's Consumer Information Center, the Alliance Against Fraud in Telemarketing, the American Association of Retired Persons, Better Business Bureaus, and the National Consumers League. In addition, OPA makes a particular effort to target regional media outlets where the Commission has initiated enforcement actions. During FY 1997, OPA informed the financial and agricultural news media, both domestic and international, about multilateral mechanisms for sharing information and managing risk, such as the CFTC's cross-border testing of market emergency coordination procedures, the Declaration on Cooperation and Supervision covering international futures markets, and the Memorandum of Understanding signed with the U.S. Department of Agriculture to provide assistance to the USDA's risk management education effort.
OPA enhanced public outreach activities during FY 1997. The Office streamlined procedures to make no-action, interpretative, and exemption letters and other written communications more readily available to the public and the media. OPA worked closely with the Commission's advisory committees and public roundtables. OPA provided information to participants and the media regarding advisory committee and roundtable activities and deliberations, including minutes of the meetings. For example, during FY 1997, OPA assisted with media and external affairs related to a meeting of the Commission's Agricultural Advisory Committee at which the Commission released a staff paper entitled Policy Alternatives Relating to Agricultural Trade Options and Other Risk-Shifting Contracts. OPA prompted extensive media coverage of public meetings the Commission held in Memphis, Tennessee, and Bloomington, Illinois, to discuss lifting the prohibition on certain agricultural trade options with members of the industry and the public. OPA also covered a public Roundtable discussion hosted by the Commission, which focused on exchange order and trade automation.
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 ample 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 pending adjudicatory matters, are closed to the public by law. All other meetings are open to the public, with audio/video recording and photography allowed.
One day before an open meeting, the Secretariat releases 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 1997, the Commission held 114 meetings.
Once the Commission has reached a decision to take an action, has agreed on the language of a document, and has 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. The Commission received more than 15,000 items of correspondence in FY 1997, with 452 pieces being controlled by the Secretariat for preparation of the Commission's response.
The Secretariat processed and published 263 items in the Federal Register during FY 1997. 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.
The Records Section, which maintains the Commission's official records, receives and responds to requests for information from those records, performing any research necessary for a response. In FY 1997, the staff responded to over 2,000 such requests from both the Commission staff and the public. The Records Section staff also maintains and updates on a daily basis several large automated indices and produces reports compiled from these indices. During FY 1997, with support from the Office of Information Resources Management, the Records Section staff assumed responsibility for processing ''fast-track'' and other exchange submissions, processing public comment letters received via electronic mail, and posting CFTC Federal Register notices on the Commission's website. The staff continued to refine automated systems and convert official files to microfiche, in accordance with Commission and federal regulations. E-mail submissions should be addressed to: firstname.lastname@example.org.
Freedom of Information Act Office
The Freedom of Information Act Office oversees the Commission's compliance with the Freedom of Information Act (FOIA), Privacy Act, and 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 staff processes and responds to requests filed under these statutes and prepares the legally mandated annual reports to Congress describing Commission activities in these areas. During FY 1997, the staff received and processed more than 500 FOIA requests. The FOIA Office staff 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 sensitive records submitted to the Commission by firms or individuals are filed with the FOIA Office. In FY 1997, the Commission received more than 700 such requests. The FOIA Office staff ensures that the requirements of Commission regulations regarding requests for confidential treatment are met before responding to any FOIA request for records subject to a request for confidential treatment.
Also in FY 1997, the staff prepared a ''Guide to CFTC Information'' and assisted the Office of the General Counsel in drafting regulations which implement provisions of the Electronic Freedom of Information Act Amendments of 1996.
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 Chairperson and the Congress informed about problems, deficiencies, and the progress of corrective action in programs and operations.
During FY 1997, the OIG monitored CFTC's compliance with the Federal Manager's Financial Integrity Act and initiated a review of the information requirements of CFTC's Enforcement Division. The OIG audited imprest funds in Washington, D.C. and the regional offices, reviewed proposed and final CFTC and exchange rules and regulations, and conducted investigations of allegations of impropriety lodged against CFTC employees.