Office of International Affairs
The Office of International Affairs (OIA) assists the Commission in responding to global market and regulatory changes. OIA provides information and technical support on international matters and coordinates the Commission's international activities, including representation in international organizations. During the fiscal year, OIA contributed to this effort through the following activities:
· Helped plan, implement, and conduct work that culminated in the Tokyo Conference in October 1997 and the issuance of the Tokyo Communiqué and Guidances. These documents established international standards for the design of physical delivery derivatives contracts, market surveillance and information sharing.
· Published the Survey on the Effect of the Investment Services Directive on the Regulation of Firms Established Outside the European Economic Area.
· Assisted the Commission's two separate initiatives to amend the Declaration on Cooperation and Supervision of International Futures Markets and Clearing Organizations. Through these initiatives, restrictive language which had prevented certain regulators of commodities markets from joining that arrangement was removed, and the application of the Declaration to manipulative or other abusive information was clarified.
· Worked on the development of a financial supervisory memorandum of understanding among the Commission, the U.S. Securities and Exchange Commission, the U.K. Financial Services Authority (FSA), and the Bank of England. This was the first formal understanding among U.S. and U.K. securities, futures and banking regulators.
· Contributed to the G-7 Financial Stability Agenda initiative of the U.S. Treasury by providing information for and comment on the development of Ten Key Principles for Information Exchange which were adopted by the G-7 in 1998.
· Participated in drafting committees within the International Organization of Securities Commissions (IOSCO), which produced the following reports that the IOSCO Technical Committee issued in 1998:
Report on Objectives and Principles of Securities Regulation, which sets out 30 principles of securities and derivatives regulation intended to protect investors; ensure that markets are fair, efficient and transparent; and reduce systemic risk.
The Application of the Tokyo Communiqué to Exchange-Traded Financial Derivatives Contracts, which concludes that many of the aspects of the October 1997 Tokyo Communiqué on Supervision of Commodity Futures Markets and accompanying guidance on best practices for contract design, market surveillance and information-sharing are applicable to the oversight of financial derivatives markets and contracts.
Securities Activity on the Internet: Report of the Internet Task Force to the Technical Committee, which provides guidance on the effect of the Internet on securities regulation and sets out five key principles that should be considered when formulating policies regarding specific activities on the Internet. Both the Division of Enforcement and OIA served on the Internet Task Force and contributed to the final report.
· Coordinated the Commission's contributions to IOSCO's Year 2000 activities, which focus on increasing the state of preparedness by jurisdictions for the Year 2000 computer problem.
· Provided technical assistance with respect to the Commission's representation within the Council of Securities Regulators of the Americas (COSRA).
· Participated in, and provided technical assistance to, the International Regulators Meeting held in conjunction with the FIA Conference in Boca Raton, Florida, in March 1998.
· 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.
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 seven occasions in FY 1998; two of the seven hearings before Congressional committees involved Commission appropriations for FY 1999.
OLIA assisted in the preparation of testimony for an oversight hearing on the Commission's Strategic Plan and Annual Performance Plan prepared under the requirements of the Government Performance Results Act (GPRA) before the House Subcommittee on Risk Management and Specialty Crops; an oversight hearing on the Commission's Year 2000 computer preparations before the Senate Committee on Agriculture, Nutrition and Forestry; and hearings regarding over-the-counter (OTC) derivatives markets before the House Subcommittee on Risk Management and Specialty Crops, the House Committee on Banking and Financial Services, and the Senate Committee on Agriculture, Nutrition and Forestry.
OLIA also facilitated the nomination process for Commissioner James Newsome and the renomination of Commissioner Barbara Holum. In addition, OLIA coordinated communi-cations between the Commission and the General Accounting Office (GAO) 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, 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 1998, OPA assisted more than 2,350 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 efforts, bilateral and multilateral regulatory and enforcement information-sharing agreements, and cooperation between the CFTC and the states.
OPA publishes brochures and educational materials about the CFTC, the futures industry and the futures and option markets. 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. In FY 1998, OPA supplied information for the Commission's redesigned Internet website (www.cftc.gov), including the texts of the Weekly Advisory, Backgrounders, speeches by the Chairperson and Commissioners, press releases, biographies of the Commissioners, CFTC brochures and a glossary of industry terms.
During FY 1998, OPA conducted 17 briefing sessions for foreign regulators, exchange officials, and 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 through the National Futures Association's toll-free Customer Protection Information Hotline (800-676-4632). The Hotline helps customers verify the registration status and disciplinary history of firms and individuals in the commodity industry. OPA also provided information for a chapter on commodity investment fraud for inclusion in the 1998 edition of the Consumer Resource Handbook, which is published by the U.S. Office of Consumer Affairs.
OPA educates and informs the news media, potential customers, and the public about fraudulent commodity investment schemes. OPA works with organizations such as the U.S. 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 1998, OPA informed the financial news media, both domestic and international, about new multilateral mechanisms for sharing information and overseeing markets, such as the Memorandum of Understanding signed between the CFTC, SEC, Bank of England, and the Financial Services Authority setting forth a pragmatic approach for cooperating and sharing supervisory information, and the publication by regulatory authorities from 15 jurisdictions of guidance papers to strengthen the supervision of the international derivatives markets.
OPA enhanced public outreach activities during FY 1998. The Office continued its efforts to streamline 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 to provide information to participants and the media regarding advisory committee activities and deliberations, including minutes of the meetings. For example, during FY 1998, OPA assisted with media and external affairs related to a meeting of the Commission's Agricultural Advisory Committee at which the Commission detailed the specifics of a three-year pilot program for agricultural trade options. OPA prompted extensive media coverage of public meetings the Commission held in Washington, D.C., to discuss the Commission's concept release on over-the-counter derivatives and the application of the Cantor Financial Futures Exchange for designation as a contract market. OPA also handled the tremendous foreign and domestic media interest generated by the Commission's enforcement action against the Sumitomo Corporation of Japan.
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 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 1998, the Commission held 62 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. The Commission received 17,421 items of correspondence in FY 1998, with 447 pieces being controlled by the Secretariat for preparation of the Commission's response.
The Secretariat processed and published 247 items in the Federal Register during FY 1998. 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 and performs the research necessary for a response. In FY 1998, the staff responded to over 2,000 such requests from both 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 the indices. During FY 1998, the staff, with support from the Office of Information Resources Management and the Freedom of Information Act Office, revised and expanded areas of the Commission's website for which the Office of the Secretariat is responsible. The revised website allows the Office of the Secretariat to post and update the Commission's public comment files. 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. 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 process and respond to requests filed under these statutes and prepare the annual reports to Congress describing Commission activities in these areas. During FY 1998, the staff received and processed 426 FOIA requests. The FOIA Office staff also work 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 1998, the Commission received more than 550 such requests. The FOIA Office staff ensure 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.
In FY 1998, Commission records frequently requested under FOIA were made available on the Commission's website in compliance with the Electronic Freedom of Information Amendments of 1996. Staff, assisted by the Office of the General Counsel, finalized regulations to streamline the processing of requests for confidential treatment.
Office of the Inspector General
The Office of the Inspector General (OIG) conducts and supervises audits and investigations of programs and operations of the CFTC. The OIG also 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 1998, the OIG monitored CFTC's compliance with the Federal Manager's Financial Integrity Act and continued a comprehensive review of the information requirements of CFTC's Enforcement Division. The OIG conducted final audits of imprest funds in Washington, D.C., New York and Los Angeles; reviewed proposed and final CFTC and exchange rules and regulations; and conducted investigations of allegations of impropriety lodged against CFTC employees.