TESTIMONY OF
BROOKSLEY BORN
CHAIRPERSON
COMMODITY FUTURES TRADING COMMISSION
BEFORE THE
HOUSE COMMITTEE ON APPROPRIATIONS
SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT,
FDA, AND RELATED AGENCIES
MARCH 6, 1997

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to discuss with you the President's fiscal year 1998 budget request for the Commodity Futures Trading Commission ("CFTC" or "Commission").

CFTC'S BUDGET REQUEST
As you know, the President's fiscal year 1998 budget request for the Commission is $60,101,000, with a staffing level of 600. This request represents an increase of $5 million over the fiscal year 1997 appropriation. Approximately $4 million of that request is required for the Commission to sustain its current services level, and $1 million is to fund the requested 20 additional staff years.

The Commission recognizes that this Subcommittee and Congress face difficult fiscal decisions this year. Nonetheless, we believe that the increase the President has requested for fiscal 1998 is not only justified but essential if the Commission is to continue to strengthen its enforcement and market surveillance programs as well as to carry out its other statutory responsibilities fully and effectively.

OVERVIEW OF FUNDING LEVELS AND OPERATIONAL EFFECTS
The Commission enforces the requirements of the Commodity Exchange Act ("Act" or "CEA"). It is responsible for ensuring the integrity of the U.S. futures and option markets, protecting customers from fraud and other trading abuses, monitoring the markets to detect and to prevent price distortions and manipulation, and maintaining the competitive strength of the nation's exchanges. We continue to work to protect the vital economic functions of hedging and price discovery performed by our futures and option exchanges. Prices established by domestic futures exchanges affect what we pay at the grocery store, the service station, and copper plumbing and our lumber. Similarly, prices on the exchanges assist producers and processors in obtaining fair prices for their commodities.

The Commission oversees 64,000 commodity professionals who trade on the floor of the exchanges or represent customers. Our goal is to ensure that these firms and individuals meet standards of fitness and maintain financial integrity, use proper sales practices and provide adequate risk disclosures to their customers.

These responsibilities have become more challenging in the face of dramatic market growth and innovation. Examples of this growth and the great expansion of the Commission's oversight and regulatory responsibility include the following:

Increased exchange trading volume: The CFTC supervises all trading of futures and option contracts on eleven U.S. futures exchanges. The commodity futures and option markets have experienced and continue to experience dramatic growth. They have expanded from agricultural markets to markets in futures and options on financial instruments, such as interest rates, stock indices and foreign currencies, and commodities of global significance , such as energy and metals. Exchange futures and option trading has more than doubled in the last decade (from 216 million to 495 million contracts) -- an increase of 131%. This growth is expected to continue with a volume of 562 million contracts projected for 1998 (an increase of 160% over 1986). CFTC's programs have encouraged this healthy growth by assuring market participants around the world that our markets are safe, fair and transparent.

Growth of over-the-counter derivatives: The CFTC, along with other financial regulators, exercises general oversight of the rapidly growing and evolving over-the-counter market in derivative instruments. It has responsibility to address fraud and manipulation in significant portions of that market. The CFTC also works with the international regulatory community to address disclosure and market integrity issues in the market. This enormous market, currently estimated to be in excess of $50 trillion world-wide, has developed in the past decade.

Growing managed funds: The CFTC regulates commodity pool operators and commodity trading advisors. Funds committed to professional management for futures trading have grown exponentially, from $115 million in 1975 to over $25 billion today, not counting hedge funds also registered as commodity pools. This area of financial investment includes a growing number of pension and mutual funds. The Commission has worked with industry groups and other regulators to improve and to simplify disclosure requirements which allow customers to make informed investment decisions.

Rapid innovation: The CFTC approves all contracts traded on futures and option exchanges and all rules of such exchanges and the National Futures Association. Since 1986, the CFTC has approved over 400 new contracts for trading on exchanges. Many of these new, innovative contracts have brought new market users within CEA protection for the first time. The CFTC has worked closely with both the exchanges and industry representatives to make certain new contracts will create hedging opportunities and enhance price discovery and price basing of the underlying commodities.

Expanded Congressionally mandated responsibilities: The CFTC's authority and responsibilities have grown substantially since the Commission was created in 1975. After three years of intense Congressional scrutiny, Congress passed the Futures Trading Practices Act of 1992 giving the CFTC a number of new responsibilities to ensure market integrity. Ongoing activities include enforcing the heightened audit trail standards for exchanges and improving the CFTC's oversight and enforcement programs. In 1995 Congress reaffirmed these obligations by adopting a reauthorization of the Commission, which authorized appropriations through fiscal year 2000.

Growing internationalization of the markets: Financial and commodities markets are becoming increasingly global, further increasing the complexity of the CFTC's oversight responsibilities. The agency must respond promptly and effectively to international developments, such as the collapse of Barings Plc. and the issues surrounding Sumitomo Corporation's copper trading. The agency has ongoing responsibilities to ensure that its regulatory framework is capable of responding to the domestic implications of problems arising anywhere in the world. It has become a leader in encouraging international cooperation and improvement of regulation abroad.

Technology developments: The exchanges, commodity professionals and users of the markets are turning to newly developed technology to cope with the huge growth in this industry. Likewise, the CFTC has had to augment its staff as well as its hardware and software to keep pace with the growth in the markets. Technology also presents some increasing regulatory challenges to the CFTC, including the need to police futures and option trading advice and sales offered illegally via the Internet.

CFTC RESOURCES
Despite its increasing responsibilities, the CFTC's budget remained essentially flat from fiscal year 1992 through fiscal year 1994. Consequently, the Commission reduced personnel, substantially cut non-staffing expenses, and delegated additional duties to self-regulatory organizations. The CFTC also deferred computer upgrades and systems development for important market surveillance and other activities. In short, the Commission and its staff were stretched very thin, and it became extremely difficult to provide the oversight and enforcement presence on which market users and the economy at large depend.

Over the past three years, the Administration and Congress have recognized the need for a stronger CFTC and have provided for an increase in staffing, particularly in enforcement personnel. The budgetary support of the agency in recent years has reflected the recognition of the critical need to supervise the futures and option markets effectively and to enforce the laws against fraud and manipulation in those markets.

In fiscal year 1998, the requested increase will be used to continue enhancing the Commission's enforcement and surveillance programs and slightly to expand its industry oversight activities. Approximately 75 percent of the program increase will be dedicated to enforcement activities to increase its investigative activities, litigation support and cooperative law enforcement efforts.

Additional funding will also allow the Commission to continue the efforts started in fiscal year 1996 to redesign and implement an integrated market surveillance system which will assist Commission staff in monitoring systemic risks in the marketplace. One of the major enhancements of the system will be the ability to obtain and analyze daily option large trader data along with daily futures large trader data. Currently, we receive futures large trader data daily, but options data is only available on a weekly basis. The system will reduce the overall reporting burden of certain commodity professionals, who will report large trader data only to the CFTC rather than to multiple exchanges.

This increase will also provide the resources to sustain the necessary level of oversight over the compliance programs of the futures and option exchanges and the National Futures Association.

The President's fiscal year 1998 budget request will increase the Commission's staffing level by about 3%. This slight increase would restore some of the erosion in staffing in the early 1990s and would put the CFTC at an authorized staffing level 3% lower than its fiscal year 1992 authorized staffing level.

The requested increase in funding and staffing is well justified and will benefit agricultural producers and processors, financial services firms, energy concerns and many other sectors of the economy that depend on the price discovery and risk-shifting functions of futures and option markets.

HIGHLIGHTS OF FISCAL YEAR 1996

ENFORCEMENT
As mentioned earlier, the majority of the budgetary increases that the Commission has received since fiscal year 1995 have been for the enforcement program. In fiscal year 1995, the Commission began restructuring and enhancing its Division of Enforcement, and that effort continues today. A strong, effective enforcement program is one of the Commission's top priorities. Our goal is to send a strong message that fraudulent activity and other violations of the CEA will be promptly and thoroughly investigated and proceeded against vigorously. As a result of the Commission's civil injunctive actions in fiscal year 1996, approximately $6.4 million in customer funds and other assets were placed under the protection of receivership.

Case Highlights
During fiscal year 1996, resources were devoted to significant cases which not only addressed the specific wrongdoing alleged in a particular complaint, but also communicated to the public the Commission's concern with a specific area or highlighted the Commission's view regarding the significance of acts and practices that have the potential to cause significant harm to markets, customers, and market participants. Those cases include the following:

• The filing and simultaneous settlement of an administrative action against Deloitte & Touche and one of its former partners. The Commission's order found that the partner failed to conduct an audit of a futures commission merchant ("FCM") in accordance with generally accepted auditing standards and failed to investigate properly and to report on material inadequacies in the FCM's internal controls. Deloitte was held liable for the partner's violations. Deloitte agreed to pay a $100,000 civil penalty and to comply with certain undertakings. The partner agreed to the entry of a cease and desist order and a Commission censure. In re Deloitte & Touche, CFTC Docket No. 96-10 (filed September 26, 1996).

• The filing and simultaneous settlement of an administrative action against Fenchurch Capital Management, Ltd. The Commission's order found that Fenchurch attempted to manipulate and did manipulate the value of its position in ten-year U.S. Treasury note futures contracts by cornering the available supply of the cheapest-to-deliver notes. According to the Commission's order, Fenchurch increased its position in the issue through a series of repurchase transactions at a time when the notes were in tight supply. Fenchurch exacerbated the tightness in the supply of the cheapest-to- deliver notes by increasing its position and intentionally withholding the notes from the market. Fenchurch's conduct took place after expiration of trading on the futures contract, while those holding short positions in the market were preparing to make delivery. The Commission's action and its underlying investigation were coordinated with the Securities and Exchange Commission ("SEC") and the Chicago Board of Trade ("CBT"), both of which filed related charges. The Federal Reserve Bank of New York also assisted the Division in its investigation. In settling the CFTC's action, Fenchurch consented to the entry of a cease and desist order and to various undertakings related to its Treasury market trading. Fenchurch also agreed to conduct a review of its policies and procedures and, if necessary, to formulate and to implement reforms of those policies and procedures. Fenchurch agreed to pay a civil monetary penalty of $600,000, which also satisfied Fenchurch's obligations under the SEC's consent order of permanent injunction. In re Fenchurch Capital Management, Ltd. [Current Transfer Binder] Comm. Fut. L. Rep. (CCH) � 26,747 (CFTC July 10, 1996).

Also, resources were devoted to enhance a "quick strike" enforcement response capability. This effort has resulted in instituting injunctive actions within weeks, or even days, of discovering suspected illegal activity. To date, examples of notable cases brought by the Commission using this new capability include the following:

• The filing of an injunctive complaint against Donald Chancey and a firm controlled by him alleging violations of the anti-fraud and registration provisions of the CEA and Commission regulations in connection with an unregistered commodity pool operator. According to the complaint, the defendants solicited individuals to invest in a pool by making misrepresentations that the funds would be invested in silver futures and that the past trading of the pool had been profitable. The complaint alleges that the defendants placed few actual trades and that those resulted in losses. The defendants allegedly used some of the funds solicited to pay purported interest to certain earlier investors and converted the majority of the funds to their own use. The day the complaint was filed, the federal district court entered an ex parte order freezing the defendants' assets and protecting and granting the Commission access to books and records. The court also appointed a temporary equity receiver. The Division used the Internet to inform the public about this enforcement action and to solicit information concerning the whereabouts of Chancey, who disappeared before the Commission filed its action against him. The Division posted a picture of the defendant on its homepage and later posted notices publicizing the court sanctioned auction of the defendants' property. CFTC v. Donald B. Chancey, et al. No. 7:96-CV-61 (M.D. Ga. filed July 1, 1996).

• An injunctive action filed against Ken Willey. Willey allegedly defrauded pool participants by distributing account statements which misrepresented the changes in net asset value and income and loss realized by individual participants. According to the complaint, the defendant illegally received investor funds in a name other than that of a commodity pool and commingled pool property with assets of other persons. The day the complaint was filed, the federal district court entered a consent order of preliminary injunction freezing Willey's assets, protecting and granting Commission access to books and records, and enjoining future violations of the nature alleged. Subsequently, the court entered an order finding Willey in contempt and ordering him jailed until he complied with the preliminary injunction. After six months of incarceration, Willey was released from jail without ever complying with the order to produce books and records. In the interim a receiver was appointed, and a motion for summary judgment was filed by the Commission on all counts except fraud. The Commission is awaiting the outcome of the summary judgment motion and a distribution of assets to investors by the receiver. CFTC v. Ken Willey, Civ. No. 96-0200 (E.D. Wash. filed April 19, 1996).
  

FRAUD IN FOREIGN CURRENCY FUTURES AND OPTIONS
An important part of the Commission's Enforcement program in recent years has focused on the fraudulent off-exchange sales of foreign currency futures and option contracts to the public. These cases typically involve boiler room operations that seek to lure in the vulnerable through high-pressure sales tactics and false promises of quick riches. In recent years, we have seen a rise in cases of "affinity fraud," in which members of a particular ethnic or religious groups are targeted as victims of the fraudulent activity.

The Commission has brought 19 cases involving the illegal sale of foreign currency futures or option contracts to the general public since 1990. In those cases, more than 3,200 customers invested over $250 million in foreign currency schemes, much of which was lost.

One of these cases, Dunn v. CFTC, U.S. (1997), rev'g 58 F.3d 50 (2d Cir. 1995) was decided by the Supreme Court about two weeks ago. In that case the Commission alleged that the defendants had solicited and accepted funds from approximately 400 customers and that Dunn had informed customers that they had suffered losses of at least $95 million at the time the defendants ceased operations. The Supreme Court decided the narrow issue of whether futures and options are treated the same under the so-called Treasury Amendment, which exempts from the CEA some transactions in foreign currencies that would otherwise be covered by the CFTC's jurisdiction. The Court concluded that options are treated in the same manner as futures under the Treasury Amendment.

Our enforcement experience demonstrates that fraud of the retail public is rampant in this area and will require a strong enforcement presence for the foreseeable future. The Commission strongly believes that, whether through judicial interpretation of the existing statutory provisions or through the legislative initiatives now pending before both Houses of Congress, its authority vigorously to pursue the investigation and prosecution of foreign currency futures and option scams targeted at public customers should be affirmed.

EXCHANGE CONTRACT DESIGNATION
In fiscal year 1996, the Commission approved 92 new futures and option contracts -- an approval rate of one every 2.7 work days. Many of the innovative new contracts approved by the Commission were designed to meet specialized hedging needs of firms in the agricultural sector. For example, the Commission approved five CBT corn yield insurance futures contracts based on the states of Illinois, Indiana, Nebraska and Ohio as well as the U.S. as a whole. These contracts were designed to provide a vehicle for crop insurance companies and other commercial and agricultural entities to hedge financial risk related to fluctuations in the yields of corn.

Early in fiscal year 1997, the Commission proposed rules for new "fast-track" procedures for processing exchanges' contract designation applications and rule changes. Those rules were adopted by the Commission last week on February 27, 1997. Under the rules, certain contract applications may be approved within 10 days following receipt by the Commission, while other contracts may be approved within 45 days. Most exchange rules will go into effect within 10 days after they are filed with the Commission.

HEDGE-TO-ARRIVE CONTRACTS
Recently, a number of agricultural producers have used various grain contracts referred to as hedge-to-arrive ("HTA") contracts. High grain prices experienced in fiscal year 1996 and the "rolling forward" of these contracts created financial strains on some grain elevators and producers. As a result, on May 15, 1996, the Commission's Division of Economic Analysis released statements of policy and guidance regarding HTA contracts. In the first statement the Division stated that it would not base a determination of the legality of any such contracts existing as of May 15, 1996, under the forward contract exclusion of the CEA solely on the fact that the parties entered into a subsequent agreement to use cash payments to unwind these contracts. The second statement provided guidance regarding the risk implications of particular features of these contracts. On November 13, 1996, the Commission filed three administrative complaints involving HTA contracts, which are currently pending before the CFTC's administrative law judges.

MARKET OVERSIGHT
The CFTC's mandate requires it to oversee the activities of futures and option exchanges, the National Futures Association ("NFA"), an industry self-regulatory organization, and commodity professionals. These oversight activities are designed to protect customer funds, to prevent trading and sales practice abuses, and to ensure the financial integrity of regulated firms. The CFTC's ongoing oversight activities include the following: financial and sales practice audits; rule enforcement reviews; trade practice investigations; review of margin, clearance and settlement rules; and activities ensuring that firms carrying customer funds are adequately capitalized and have properly segregated customer funds from firm funds.

EXCHANGE AUDIT TRAIL STANDARDS
The Commission has devoted considerable effort to encouraging compliance with the enhanced exchange audit trail standards that became effective in October 1995 for high volume exchanges. The enhanced audit trail standards, which were mandated by the Futures Trading Practices Act of 1992, require these exchanges to demonstrate that their trade records are unalterable, continuous, independently timed, and properly sequenced to the extent practicable. In late 1994 and early 1995, the Commission tested each high volume exchange's audit trail system and provided recommendations for system improvements. The exchanges were informed that adoption of the recommendations would place them within a "safe harbor" for good faith efforts to comply with the enhanced standard. Two of the four exchanges tested adopted all of the recommendations, and the Commission determined that they are in the safe harbor. In fiscal year 1996, the Commission staff re-tested the audit trail systems of the other two exchanges, the Chicago Mercantile Exchange (CME) and the CBT, to determine whether they were in compliance with the heightened standards.

On August 12, 1996, the Commission issued a report which addressed exchange compliance with the heightened audit trail standards. The report outlines further steps to be taken by the exchanges and the Commission to assure future compliance and to address pending exchange dual trading petitions. The Commission has been proceeding with the plan set forth in the report to address those petitions.

The Commission has recently re-tested the Comex Division of the New York Mercantile Exchange and is currently testing the New York Cotton Exchange (NYCE). NYCE recently qualified as a large-volume exchange subject to the heightened audit trail standards under the Act.

THE CLOSE OF CBT'S MARCH WHEAT FUTURES CONTRACT
On March�20, 1996, in the final few minutes of trading on the CBT March 1996 wheat futures contract, the price rose an unprecedented $2.30 per bushel to $7.50. Regulatory reviews of the March wheat expiration were conducted by CFTC and CBT staff, which reviewed records and conducted interviews to determine whether the CBT properly enforced its rules and whether any violations of the CEA may have occurred. On November 26 1996, the Commission made public a staff report which included a detailed analysis of the matter. Based on the report, the Commission instituted a review of the adequacy of six disciplinary actions initiated and settled by the CBT and made a number of recommendations to the CBT to improve its procedures which is still ongoing.

CHICAGO BOARD OF TRADE DELIVERY POINTS
On December 18, 1996, the Commission notified the CBT that, in the Commission's view, its corn and soybean contracts no longer met requirements under Section 5a(a)10 of the CEA of providing delivery terms which "tend to prevent or diminish price manipulation, market congestion, or the abnormal movement of such commodity in interstate commerce." This action was prompted by the failure of the CBT to respond to changes in the cash grain markets, including a number of warehouse closings at its primary delivery point in Chicago. During 1995 the delivery capacity in Chicago was reduced by about 50% as three of the six regular elevators at that location ceased normal operations. In late 1996 a fourth warehouse announced intentions to cease operation. Nevertheless, in October 1996, the CBT membership rejected proposals of CBT's Board to expand delivery capacity under the futures contracts. Problems in the expiration of CBT's 1996 grain futures contracts (other than March 1996) were avoided only as a result of intensive monitoring of the markets by the CFTC and the CBT.

Following the requirements of the CEA, the CBT has until March 4, 1997, to adopt and submit contract amendments to correct the deficiency. The CBT has formed a task force to formulate contract changes. We understand that this task force will make recommendations to the Exchange's executive committee on March 3, 1997, and that on March 4 the recommendations will be presented to the entire Board.

The Commission's December 18, 1996 letter also requested the CBT to review the terms of its wheat contract and to report back to the Exchange by April 18 (120 days). We understand that this matter is also under study at the CBT.

INTERNATIONAL ACTIVITIES
The Commission continued its coordination and cooperation with foreign regulators during fiscal year 1996. Major international activities of the Commission included the following:

• Coordination and cooperation with foreign regulators concerning Sumitomo Corporation's copper trading.

• Co-sponsorership of a conference with Japan's Ministry of International Trade and Industry (MITI) and the U.K. Securities and Investment Board (SIB) on November 25-26, 1996, concerning regulatory issues posed by commodity futures markets. Seventeen countries responsible for the supervision of the world's leading commodity futures markets issued the London Communiqu� at the conclusion of the conference. The Communiqu� sets out the proposal of the authorities to strengthen the supervision of these markets world-wide, particularly in the areas of the contract design, market surveillance including large trader reporting mechanisms, and information sharing. The CFTC is actively engaged in the work program the authorities agreed to undertake to accomplish that goal.

• Active participation in the International Organization of Securities Commissions' ("IOSCO") Technical Committee and its Working Parties.

• The conduct of the CFTC's sixth annual training seminar for foreign futures regulators, covering the operation of U.S. futures markets and the U.S. regulatory system governing futures trading. This seminar brought together 79 participants from 29 foreign nations.

• The adoption of a multilateral understanding, Declaration on Cooperation and Supervision of International Futures Exchanges and Clearing Organizations ("Declaration"), by eighteen international futures regulators as a result of a joint CFTC-SIB initiative.

• The execution of a Memorandum of Understanding with New Zealand on September 19, 1996, concerning consultation and mutual assistance in the exchange of information in connection with enforcement matters.

• Continued information sharing and cooperation with foreign authorities. In fiscal year 1996, the CFTC made over 50 requests for assistance to 38 foreign authorities. The CFTC also responded to over 55 requests for information from more than 25 foreign authorities.

REGULATORY COORDINATION AND REFORM
Regulatory coordination and reform remain an important part of the CFTC's agenda. The CFTC is a member of the President's Working Group on Financial Markets along with the Treasury Department, the SEC, and the Federal Reserve Board of Governors. The Working Group continues to meet regularly to coordinate regulatory policy. The CFTC also works closely with other agencies, including the U.S. Departments of Agriculture and Energy.

The Commission is committed to the elimination of unnecessary regulatory burdens and is currently reviewing its regulations to streamline them as appropriate in light of the Commission's mandate to protect the public interest in our futures and option markets. The new fast-track approval procedures adopted last week and described above are part of this effort.

PENDING LEGISLATION
Bills to amend the CEA have been introduced in Congress, S. 257 and H.R. 467. In testimony before the Senate Committee on Agriculture, Nutrition and Forestry on S. 257, the Commission presented its view that the bill would result in the pervasive deregulation of our futures and option markets and thus would pose grave dangers to the public interest. The changes included in the bill would radically alter the regulatory system that has allowed our futures exchanges to become the strongest and most respected in the world and would leave those who use and rely on the integrity of those markets exposed and unprotected. For these reasons, the Commission strongly opposes the provisions of the bill which would eliminate federal oversight and regulation of futures and option exchange trading.

The CFTC was created in 1975 because Congress recognized the need for an expert, independent agency to protect the important national interests that are served by futures and option markets and to ensure market integrity through oversight of the exchanges and the thousands of intermediaries who invest individual, pension and corporate funds in these markets. The price-discovery and risk-shifting functions of these markets, long utilized by agricultural producers and processors, are now essential to the economic well-being of many sectors of the U.S. economy. While the safety and integrity of the futures markets are as important as ever to agricultural processors, producers, and consumers, they are now equally important to financial institutions, multinational corporations, mutual fund advisors and participants in the cash markets for energy, metals and many other products. These bills would adversely affect the safety and integrity of our markets.

We do not yet know whether the outcome of the legislative process will result in any significant changes in the Commission's mandate. Any major changes in its legislative authority would likely take a period of time to implement. As to fiscal year 1998, the Commission believes the demands on its resources would actually be greater if the legislation were to pass since many rule changes and other Commission actions would be necessary to implement the more significant proposals in the draft legislation. Furthermore, a major shift in emphasis and resources from market oversight and supervision of regulated persons to enforcement activities would likely be necessary.

The Commission recognizes the need to ensure that the CEA adapts to changes in the market place and thus continues to provide an effective level of regulation and public protection. We are committed to working with Congress to improve the Act through legislative amendments.

CONCLUSION
The CFTC is committed to building on the achievements of the last several years to fulfill its Congressional mandate and to keep pace with a complex, dynamic marketplace. To accomplish this goal and to make essential improvements to our enforcement, surveillance and oversight programs, the Commission requires the proposed increase in its fiscal year 1998 appropriation. This increase will enable the Commission to heighten its surveillance of major market centers and to ensure that its surveillance system upgrade stays on schedule. It will sustain the necessary level of oversight over the compliance programs of the exchanges and the NFA. Additional funding also will enable the Commission's enforcement program to respond more quickly to fraud, manipulation and other wrongdoing in the marketplace, to provide a greater level of customer protection and better to promote market integrity.

Thank you, Mr. Chairman. I would be happy to respond to any questions.