Protect the public and market participants by ensuring market
integrity, promoting transparency, competition and fairness and lowering risk in the system.
FY 2012 INVESTMENT
Net Cost: $59.2 Million
Staffing: 196 FTE
Derivatives markets are designed to provide a means for market users to offset price risks inherent in their businesses and to act as a public price discovery platform from which prices are broadly disseminated for public use. For derivatives markets to fulfill their role in the national and global economy, they must operate efficiently and fairly, and serve the needs of market users. The markets best fulfill this role when they are open, competitive, and free from fraud, manipulation, and other abuses such that the prices discovered on the markets reflect the forces of supply and demand.
The Commission strives to assure that Goal One is effectively met through the combined use of five oversight strategies: 1) the review of new contracts and rules and changes to contracts and rules; 2) continual surveillance of trading activity in the futures and swaps markets; 3) the review of regulated exchanges, DCMs and SEFs, to ensure that they are fulfilling their self-regulatory obligations; 4) the review of registered swap data repositories to ensure that they are fulfilling their reporting and recordkeeping requirements; and 5) the adoption of policies and strategies to promote market transparency.
Goal One Key Results
During FY 2012, the Commission completed the review process on 229 new product certifications, 21 foreign stock index certification reviews, 34 product-related rule filing reviews, and 490 rule certifications.
The Commission designated two contract markets and provisionally registered one SDR.
In order to enhance the Commission's surveillance program, it developed new analysis tools to increase to efficiency to evaluate price movements and market events including tools to connect transaction and position databases, a method for determining participants' contributions to price formation, pre-arranged trading violation detection and block trading violation detection.
In fulfillment of a charge from the Dodd-Frank Act, the Commission proposed rules for ownership and control reports and SEFs. The Commission finalized new rules that were common to registered entities (Part 40), rules governing the registration of SDRs (Part 49) and the reporting and recordkeeping requirements of swap data (Parts 43, 45, and 46). Additionally, the Commission finalized new rules for DCMs including new principles and governance requirements.
Commission staff began using SDR facilities to analyze swaps and continued to work with industry to implement data standards and improve data quality, focusing on standards for legal entity identifies, unique swap identifiers, large trader position and open interest reporting as well as harmonizing data across SDRs and addressing other Dodd-Frank Act reporting requirements.
The Commission also completed a preliminary assessment of order message data that will support the routine surveillance of pre-trade activity and provide more transparency into high frequency and algorithmic trading.