MARCH 31, 1998

Mr. Chairman and Members of the Subcommittee:

I am pleased to appear before you this morning to discuss the President=s fiscal year 1999 budget request for the Commodity Futures Trading Commission (ACFTC@ or ACommission@). In my testimony today, I will provide the Subcommittee with an overview of the proposed budget for 1999, discuss the need for additional resources for the Commission=s programs and update you on highlights of fiscal year (AFY@) 1997, including the Commission=s efforts to streamline its rules and procedures and to relieve unnecessary regulatory burdens while maintaining important customer protections.



The President=s FY 1999 budget request for the Commission is $63.4 million. That sum represents an increase of $5.3 million (or nine percent) over FY 1998 appropriations. Approximately $3.9 million of the increase is necessary for the Commission to maintain its current level of services and operations. The remaining $1.4 million increase would support the addition of 20 full-time equivalent (AFTE@) staff years, a three percent increase in staffing. The budget request would provide the Commission with the resources needed effectively to perform its legislative mandate under the Commodity Exchange Act (ACEA@ or AAct@).



The Commission has a statutory mandate to oversee the nation=s futures and option markets, including on- and off-exchange transactions in futures and options. The Commission is responsible for ensuring the economic utility of these markets by guarding the integrity of the markets, protecting customers from fraud and other trading abuses, monitoring the markets to detect and to prevent price distortions and manipulation, and encouraging the competitiveness and efficiency of the nation=s futures exchanges. Through effective oversight regulation, the CFTC enables the commodity futures markets better to serve their vital functions in the nation=s economy, price discovery and hedging.

The Commission also 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, maintain financial integrity, use proper sales practices and provide adequate risk disclosures to their customers.

For well over a century, futures transactions have enabled producers, merchandisers and processors of agricultural commodities to protect against adverse price movements. In recent decades, market innovations have expanded to include contracts for other physical commodities such as metals and energy products. In addition, the derivatives industry has developed new on- and off-exchange futures and option products that have given financial institutions and others tools to protect against currency fluctuations, equity index variations, and interest rate changes. The proven utility of these on- and off-exchange derivative transactions has resulted in phenomenal growth in their trading volumes.

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 U.S. futures exchanges. The commodity futures and option markets have experienced dramatic growth. Exchange futures and option trading has increased by 100 percent in the last decade (from 275 million to 555 million contracts). In the last year alone the number of futures and option contracts traded on designated U.S. contract markets grew from 499 million in 1996 to nearly 555 million in 1997, an increase of more then 11 percent. The Commission=s regulatory program has 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 exercises oversight of the rapidly growing and evolving over-the-counter market in derivative instruments. The CFTC works with other U.S. financial regulators and with the international regulatory community to address disclosure and market integrity issues in the global market. This enormous market, currently estimated to have a notional value well in excess of $27 trillion world-wide, has emerged in the past decade.

Growing managed funds: The CFTC regulates commodity pool operators (ACPOs@) and commodity trading advisors (ACTAs@). Funds committed to professional management for futures trading have grown exponentially, from $115 million in 1975 to over $35 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 (ANFA@). Since 1986, the CFTC has approved over 450 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 assure that 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. 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 own oversight and enforcement programs. In 1995 Congress reaffirmed these obligations by adopting a reauthorization of the Commission 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 poses regulatory challenges to the CFTC, including the need to police futures and option trading advice and sales offered illegally via the Internet.



During the past four years, both the Administration and Congress have recognized the need for additional resources at the CFTC to maintain effective oversight over the growing and evolving futures and option markets. Accordingly, the CFTC has received increased appropriations to maintain current service levels from year-to-year, to provide additional resources to the Commission=s Division of Enforcement and to permit investments in technology to increase the Commission=s ability to conduct adequate market surveillance.

The proposed increase in funds for FY 1999 is necessary to enable the Commission to keep pace with the rapid growth in volume and the profound changes resulting from novel transactions, new trading systems, new market practices, advances in technology, and the globalization of the markets. The additional resources would be dedicated primarily to maintaining an effective enforcement, surveillance and oversight presence in these rapidly changing and growing markets. In addition, the Commission must remain responsive to technological developments, business changes, and market evolution so as not to burden innovation and financial market growth with regulatory inefficiencies and outmoded regulatory structures. The Commission began a comprehensive regulatory review and reform initiative in FY 1997, which is ongoing in FY 1998 and will continue into FY 1999. Without the requested additional resources, the Commission would not be suitably equipped to carry out effective enforcement, market surveillance and regulatory reform.

Much of the requested increase will be dedicated to the Division of Enforcement, which will receive an allocation of ten additional FTE staff years. That allocation of resources would make the Division=s employment level the strongest since FY 1992. The addition of these staff years would in effect complete the reorganization of the Division, which began in 1995. The ten additional FTEs will be devoted to investigation and prosecution of matters involving fraud, quick-strike cases, and large, complex cases, including manipulation cases. The Division=s new flexible organizational structure will allow the Enforcement program to devote necessary staff to respond appropriately without detracting from a strong enforcement presence across the industry.

The Commission=s FY 1999 budget request would also add five FTE staff years to further the Commission=s market surveillance efforts. These FTEs are necessary to continue the effort started in 1997 to implement new software for the integrated market surveillance system and to maintain an effective surveillance program for a dynamic industry. One of the major enhancements of the system is the ability to obtain and analyze daily large trader option data. (Previously large trader option data was obtained on a weekly basis.) The system also has the benefit of reducing the overall reporting burden of certain commodity professionals, who will report large trader data only to the CFTC rather than to multiple exchanges. Full implementation of the new system, together with the Commission=s current surveillance system, will enhance the Commission=s ability to detect and deter price manipulation or other major market abuses.

The final five additional FTE staff years will be allocated to the Division of Trading and Markets. The Division of Trading and Markets has taken the lead in developing many of the regulatory reform initiatives that have been undertaken or are being considered by the Commission. A number of those initiatives are discussed in the Commission=s highlights of FY 1997 described below. Additional resources are needed to develop innovative regulatory approaches to address new product developments, market linkages, and trading mechanisms and to assure that clearing organizations, firms holding customer funds, and other commodity professionals operate safely and consistently with the public interest. The resources will also enhance Commission oversight of contract market standards and practices.

The requested increase in funding and staffing will strengthen the Commission and will increase its ability to oversee the growing and vital futures and option markets that are critical to our nation=s economy.




One of the Commission=s top priorities in FY 1997 and continuing into FY 1998 has been to modernize and to streamline its regulatory framework. Much of the Commission=s regulatory regime dates back to its early years as an agency. The explosive growth and change in our markets as well as revolutionary technological developments have necessitated a comprehensive review of the Commission=s regulations. The Commission must ensure that its rules have adapted to changes in the marketplace and continue to provide an effective level of regulation and public protection. Toward that end, the Commission has proposed or adopted a number of regulatory reform initiatives in the last year, some of which I would like to highlight here today.


Fast-Track Review for Contract Designations & Rule Changes

In FY 1997, the Commission implemented new "fast-track" procedures for processing certain contract designation applications and exchange rule changes. These procedures significantly streamlined the review process for most new exchange contracts and many exchange rules, permitting approval within ten days for many types of contracts and 45 days for certain other contracts.

Prior to the adoption of fast-track procedures, the Commission had already reduced its average contract approval time to about 90 days. During the seven months of FY 1997 that the fast-track rules were in place, 15 new contract designations were filed with the Commission, seven of which were eligible for fast-track treatment. The Commission approved all eligible contracts within the fast-track period. Even contracts not subject to the fast track procedures -- such as stock index futures contracts, which must be submitted to the Securities and Exchange Commission (ASEC@) for comment -- were approved in record time. For example, during FY 1997, the Commission approved the Chicago Mercantile Exchange=s (ACME@) E-Mini S&P 500 contract and the Chicago Board of Trade=s (ACBOT@) Dow Jones Industrial Average contract within days of receiving the statutorily required SEC comment letters.


Reporting and Disclosure Requirements

The Commission also streamlined many of its reporting and disclosure requirements. The agency amended its reporting requirements to permit filing by large traders of CFTC Form 40, Statement of Reporting Trader, only when requested by the Commission rather than annually. In an important development for CFTC registrants who are also SEC registrants, the Commission adopted rule amendments to harmonize certain financial reporting requirements with the requirements of the SEC. The Commission also approved in principle two-part risk disclosure documents for commodity pool offerings, which potentially would highlight the core information required to be provided to customers.

In early September 1997, the Commission proposed amendments to its rules reducing the risk disclosure obligations of futures commission merchants (AFCMs@) and introducing brokers (AIBs@) as to financially sophisticated customers. The Commission approved the rules on February 20, 1998, and expects the rule amendments to speed the account opening process for the customers identified in the rule. The rule provides flexibility to FCMs and IBs to design their own disclosure of risk by eliminating certain mandatory risk disclosure information and procedures. This proposal responded directly to industry calls to permit different regulatory treatment of sophisticated customers where appropriate.


Electronic Media

The Commission has adopted a number of initiatives designed to take advantage of the increased efficiencies and reduced costs made possible through the use of electronic media. In June 1997, the Commission paved the way for FCMs to use electronic media to communicate with their customers. The Commission=s Advisory permits FCMs to deliver confirmations and account statements solely by electronic media to customers who consent to electronic transmission in lieu of receiving paper documents. Also in June, the Commission authorized CTAs and CPOs to provide risk disclosure documents to their customers via electronic media. The Commission=s interpretation enables CPOs and CTAs to provide customers with a risk disclosure summary and a hyperlink connection to the entire risk disclosure document.

The Commission also adopted measures to permit the electronic filing of documents with the Commission. In April 1997, the Commission adopted a rule allowing CTAs and CPOs to file their required disclosure documents with the Commission electronically. The Commission has also undertaken a program to permit FCMs to file required financial reports with the Commission electronically. These electronic media initiatives should increase the timeliness of information flow, reduce the administrative costs of commodity professionals and allow members of the industry and their customers to reap the benefits of technological advances.


Streamlined Requirements for Commodity Professionals

The Commission=s streamlining efforts have brought significant benefits to FCMs, CTAs and their customers. For example, in June 1997, the Commission approved an interpretation permitting streamlined procedures for allocation of customer orders which are bunched for execution by CTAs. The Commission provided relief to FCMs with respect to the capital treatment of short option positions to permit more FCMs to carry such positions for customers and to facilitate efficient use of capital without creating undue financial risk.


Delegations to the National Futures Association

To improve the efficient use of Commission resources, the Commission has focused on whether it could delegate additional functions to the NFA. The NFA is a self-regulatory organization of commodity professionals designated by the Commission under the CEA to perform certain regulatory functions. During the past year, the Commission delegated additional authority to NFA in several areas including registration decisions relating to floor brokers and floor traders with disciplinary histories, various registration and processing functions relating to non-U.S. firms, and the review of disclosure documents required to be filed by CPOs and CTAs.



During FY 1997, the Commission focused enforcement efforts on matters involving allegations of fraud in a variety of contexts. For example, the Division of Enforcement pursued cases against commodity professionals which failed to register with the Commission, as required, and which violated the anti-fraud provisions of the Commodity Exchange Act. The Division filed cases alleging fraud in the offer and sale of various off-exchange instruments, including precious metals contracts and foreign currency contracts marketed to the general public. The Division also pursued cases against firms and individuals using fraudulent advertising and solicitations.

In FY 1997, the Division of Enforcement also investigated allegations related to certain hedge-to-arrive contracts involving grain elevators. As a result, in FY 1997 the Commission filed three separate administrative complaints alleging violations of various provisions of the CEA and Commission regulations in connection with certain of these hedge-to-arrive contracts. The Commission filed an additional complaint in FY 1998. The Division of Enforcement continues to investigate other individuals and entities in connection with hedge-to-arrive contracts.



In FY 1997, the Commission reviewed and approved 51 applications for new futures and option contracts. Several of these contracts reflect innovative approaches designed to meet specialized hedging needs. For example, the Commission approved contracts based on inflation-indexed debt instruments issued by the U.S. Treasury, including the CBOT inflation-indexed Treasury bond, long-term Treasury note, and medium-term Treasury note futures and option contracts. These contracts, the first based on inflation-indexed debt securities, were designed specifically to deal with the unique hedging needs of institutions exposed to risk arising from holding the inflation-indexed instruments recently issued by the U.S. Treasury.



The CFTC, along with British and Japanese authorities, co-sponsored an international regulators conference on physical delivery markets in London in November 1996. Regulators from 17 countries issued a Communiqué agreeing on certain basic principles of regulation of such markets. The participants also agreed on a year-long work program for the development of international Abest practices@ standards on contract design, market surveillance, and information sharing. Such best practices standards were agreed upon at a meeting of international regulators on October 31, 1997, in Tokyo. To date 17 regulators from 16 countries have subscribed to the standards. International best practices standards help to protect the U.S. markets from the impact of events on foreign markets due to poor market regulation abroad. They also assist in leveling the international regulatory playing field for markets and commodity professionals.



In late July 1997, the Commission created, within the Office of the Chairperson, an Office of International Affairs to enable the Commission to continue its leading role in international regulatory initiatives and to keep abreast of global changes. Over the past several years, there has been enormous growth in the international marketplace. New exchanges have been established around the world, foreign trading volume has grown, new regulatory bodies have been created abroad, and the need for cooperation and understanding among international regulators and exchanges has become paramount. The Office of International Affairs will enhance the Commission=s ability: (1) to respond quickly to market crises that have global systemic implications; (2) to remain an effective supervisor in a global marketplace where no one regulator has all the information or resources to regulate its markets or its firms; and (3) to eliminate unnecessary impediments to global business while preserving core protections for markets and customers. The Office of International Affairs will play a key role in an evolving process toward international harmonization of regulations which ensure market innovation and access while maintaining needed customer and market protections.



Agricultural options -- both on- and off-exchange -- were traded in the United States at least from the time of the Civil War until the 1930s. However, concerns about fraudulent sales practices, failure to perform over-the-counter obligations, and the use of exchange-traded options to manipulate the prices of agricultural commodities prompted numerous industry and government efforts to limit or eliminate trading in agricultural options. In 1936, Congress banned all sales of options on certain agricultural commodities listed in the CEA. In 1982, Congress lifted the 1936 statutory ban, allowing the Commission to permit options on certain agricultural commodities listed in the Act. The Commission permitted exchange trading in these agricultural options in 1984. However, the regulatory ban on off-exchange agricultural options remains.

In May 1997, the Commission=s Division of Economic Analysis issued a White Paper on this issue. The paper analyzed: (1) the current regulatory environment; (2) recent developments in agriculture that have expanded the need for risk-shifting strategies; (3) the benefits and risks of agricultural trade options; and (4) possible ways to strike a balance between the benefits and the risks. The staff analysis identified, for the consideration of the Commission, risks and benefits of lifting the ban. The Commission sought public comment on the issue through a Federal Register notice and by holding meetings in Bloomington, Illinois and Memphis, Tennessee.

The Commission published a proposal in the November 4, 1997 Federal Register to establish a three-year pilot program that would lift the ban on certain agricultural trade options subject to regulatory protections. Under the rules as proposed, entities which handle the agricultural commodity in normal cash market channels would be able to offer to buy or sell options on that commodity with other commercial counterparties for business-related uses. These options would require physical delivery of the commodity if exercised and could not be repurchased, resold or otherwise canceled prior to the expiration or exercise of the option. Entities offering to buy or sell the options would be required to become registered as agricultural trade option merchants, to report to the Commission on their transactions, to provide their customers with disclosure statements and to safeguard their customers' premiums. As a condition of registration, such entities would be required to meet a financial requirement, successfully complete a proficiency exam and periodically attend ethics training. The Commission also proposed to exempt from the prohibition and the other proposed rules described above individuals or entities which have a net worth in excess of $10 million. Finally, the Commission proposed to remove the prohibition on the offer and sale of agricultural options for physicals on designated exchanges. The Commission is currently considering all comments received on its proposal and expects to conclude its consideration of the matter soon.



In December 1996, the Commission voted unanimously to notify the CBOT under section 5a(a)(10) of the CEA that the delivery terms of the CBOT corn and soybean futures contracts no longer accomplish the statutory objectives of Apermit[ting] the delivery of any commodity . . . at such point or points and at such quality and locational price differentials as will tend to prevent or diminish price manipulation, market congestion, or the abnormal movement of such commodity in interstate commerce.@ That decision was based on a substantial reduction of the delivery capacity in Chicago under the CBOT contracts.

The Commission=s notification gave the CBOT until March 4, 1997, to submit proposed amendments to its corn and soybean contracts to achieve the statutory objectives. On April 15, 1997, the CBOT approved proposed contract changes. Nearly 700 comments were received by the Commission relating to the CBOT=s proposed delivery amendments, many expressing objections. On September 15, 1997, the Commission published a proposed order to change and to supplement the CBOT=s proposed amendments for the corn and soybean futures contracts. After providing the CBOT an opportunity to be heard, the Commission issued its final order on November 7, 1997.

Since issuance of the final order, the CBOT has submitted new terms for its corn and soybean futures contracts for the Commission to consider. The CBOT=s board of directors, on February 10, 1998, approved additional revisions to its current proposal. The CBOT=s full membership approved the additional revisions on March 19, 1998. The revised proposal has since been submitted to the Commission and is currently under review.



Accurate audit trails have been an aim of the Commission since its inception. In the past year, the Commission reviewed compliance with statutory and regulatory requirements regarding audit trails and dual trading in order to assure that trade monitoring systems are in place which, to the extent practicable, enable effective detection, deterrence, and prosecution of trading abuses, as required.

During 1997 the Commission took action on all pending exchange petitions for exemption from the statutory dual trading ban provisions of the CEA, except for the New York Mercantile Exchange=s (ANYMEX@) petition. (NYMEX asked for a delay in Commission action in light of its recent relocation to new facilities with new audit trail systems.) The Commission issued unconditional dual trading exemptions to the Commodity Exchange, Inc. (ACOMEX@), the Coffee, Sugar & Cocoa Exchange (ACSCE@) and the New York Cotton Exchange (ANYCE@), each of which demonstrated that it met the statutory requirements.

On November 7, 1997, the Commission issued separate proposed orders granting the CME and the CBOT conditional dual trading exemptions in 7 and 13 affected contract markets, respectively. In addition, the Commission granted the CME an unconditional dual trading exemption for its S&P 500 futures contract market. The Commission's proposals to grant conditional exemptions for the other affected contract markets were based on the Commission's finding that the exchanges= trade monitoring systems for these markets did not meet all the requirements of the Act and Commission regulations. Specifically, neither exchange was able to demonstrate that 90 percent or more of its imputed trade times are reliable, precise, and verifiable as demonstrated by being imputed within a timing window of two minutes or less. Both the CME and the CBOT were provided opportunities to present written and oral comments to the Commission, and each has done so. The Commission expects to issue final orders for both exchanges shortly.



The Commission has taken several steps designed to make information and assistance more available to the general public. In addition to its Internet monitoring and surveillance program, commenced in FY 1996, the Commission has used its home page on the World Wide Web as a means of providing the public with brief summaries of the types of abuses commonly investigated and prosecuted by the CFTC. The Commission=s website also provides descriptions of recently filed cases and encourages the public to report suspected abuses by providing an electronic questionnaire that can be filled out by visitors to the website. The website also includes information about individuals and firms who are the subjects of pending enforcement actions or who have been found liable for violating federal commodities laws in an administrative or a civil action previously brought by the Commission. Similarly, the website includes the names of individuals and firms with sanctions in effect. Finally, the website provides individuals with the Commission=s entire reparations complaint package.



During FY 1997, the Office of Proceedings implemented a new case tracking system. The new system tracks the progress of each case from receipt through disposition in the Office of Proceedings, appeal to the Commission and appeal to Federal court. This system not only assists case management within the agency, but allows the Office of Proceedings to provide better information on the status of cases in response to public inquiries.

The Commission took additional steps during FY 1997 to make more extensive use of automation to streamline financial and fiscal processing. For example, the Commission now has the capability to transmit electronic disbursement requests to the Philadelphia Finance Center, thereby eliminating the need for magnetic tape generation and costs associated with overnight delivery. In addition, the Commission can now make disbursements directly to financial institutions for vendors and employees and has implemented an electronic travel manager system that reduces paperwork and increases productivity.


The Commission has been engaged in conducting analyses and taking corrective actions related to the so-called Year 2000 problem since 1993. The Commission=s internal systems needed to be Year 2000 compliant at that time in order to process futures and option contracts with expiration and delivery dates in the year 2000. The Commission implemented modifications to our mission-critical mainframe systems to accomplish correct turn-of-the-century processing. At that same time the Commission adopted a policy that all new systems developed would be Year 2000 compliant.

In response to OMB Bulletin 96-02, our other mainframe systems are also being reengineered and converted to Year 2000 compliant client/server-based systems. That work is scheduled to be completed by September 1999. During the next 24 months, we will be reviewing, correcting and testing equipment and software so as to ensure the Commission=s compliance.

The Commission is also working with the regulated industry and other regulators on Year 2000 compliance matters. Last year, the Commission contacted each of the futures exchanges about its responsibilities as a self-regulatory organization (ASRO@) to ensure internal compliance, as well as the compliance of its member firms. More recently the Commission has requested that SROs produce additional materials that will demonstrate such compliance. In addition, the Commission has sent a questionnaire to FCMs asking them to report material facts on their compliance plans.

Finally, the Commission is working with other regulators, the Futures Industry Association and the Securities Industry Association to develop stress testing for computer systems in advance of the year 2000. This cooperative effort should help determine domestic and global preparedness of the financial markets.



Last year I expressed the Commission=s concerns with legislation pending before the Senate and House Agriculture Committees (S. 257 and H.R. 467, respectively) to amend the CEA. In the Commission=s view the bills, if adopted, would result in pervasive deregulation of our futures and option markets, posing dangers to the public interest. While both bills remain pending before the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture, we understand that no action is currently scheduled. The Commission has addressed many of the issues raised in the bills and, as illustrated above, has adopted regulatory reform measures to meet many of the concerns underlying the bills.

The Commission has reconstituted its Financial Products Advisory Committee (AFPAC@) to serve as a forum for industry members to discuss the Commission=s regulatory reform proposals. The Commission welcomes any regulatory reform suggestions from the industry, market participants, members of Congress and other interested persons.

Separately, the CFTC has been monitoring the progress of the Financial Services Act of 1997 (H.R. 10). The Commission=s review of the proposed legislation has revealed that it could create conflicts with the CEA, and the Commission has recommended that the bill should include a general savings clause making clear that the legislation is not intended to affect the provisions of the CEA or the jurisdiction of the CFTC.


The Commission appreciates this opportunity to report to the Subcommittee on its accomplishments of the past year and to reiterate its commitment to fulfilling its statutory mandate to oversee the United States= vibrant futures and option markets. As we look ahead to FY 1999, the Commission seeks additional appropriations to complete its restructuring of the Division of Enforcement, to improve its market surveillance abilities, and to respond to the changes in the markets with adoption of regulatory reform initiatives. We look forward to working with Congress on these matters, and I would be happy to respond to any questions you may have.

Thank you.