In the CFTC’s 2008 Performance and Accountability Report, the Inspector General identified two of the agency’s most serious management challenges in its 2008 Assessment of the Commission. Due to an increasingly rapid move towards highly sophisticated electronic markets, and especially, in light of the recent economic events in the financial system the Commission recognizes the consequence of operating without next generation surveillance systems and new staff competencies and skill sets. In 2009, the Commission took strategic action in addressing these two high priority issues as described below:
The Commission is committed to further developing its Trade Surveillance System (TSS). TSS includes new database technologies as well as integrated commercial software products that when fully deployed will allow staff to keep pace with the ever-changing industry in an adaptive and responsive manner. When fully developed and implemented, TSS will provide CFTC staff with greatly enhanced access to trade data and the tools to analyze that data.
As part of this effort, the Office of Information Technology Services (OITS) and the DMO are executing a multi-year plan. Together, they have modernized the computer environment that processes trade level data and awarded a contract to Actimize. Actimize delivered a wash trading model and data analysis tool in the last quarter of 2008 and staff are developing business solutions for additional models. As part of this effort, the Commission awarded contracts to two vendors to supplement and support the current CFTC TSS development and implementation efforts. The contractors will work directly with business users and CFTC technical staff to develop business requirement documents, technical specifications, project plans, testing plans, and other project artifacts used to support the CFTC’s Trade Practice Surveillance Program.
The Commission is actively working with all of the exchanges to ensure standardized data submission in the Financial Information Exchange Mark-up Language (FIXML). All exchanges will be submitting trade data in FIXML by mid-2010. Currently, the Commission is receiving trade data for CME and CBOT in FIXML and is in the process of working with other exchanges to receive their trade data in FIXML.
As part of its effort to modernize its electronic surveillance capabilities, the Commission issued an Advanced Notice of Proposed Rulemaking to collect account ownership and control information for all trading accounts from the exchanges (passed on from firms) on a regular basis. Once the Commission adopts a final rule and is collecting the information, the ownership and control data will be incorporated into TSS and Integrated Surveillance System (ISS), the Commission’s market surveillance large trader database.
Expenditures to develop a state-of-the-art, sophisticated trade surveillance system directly support CFTC’s responsibility to ensure market integrity in order to foster open, competitive, and financial sound markets. Upgrades to TSS will allow staff to better detect novel and complex abusive practices in today’s high-speed, high-volume global trading environment. Moreover, TSS will fill a vacuum in inter-market surveillance that only the Commission can address.
During FY 2009, the long-standing Commission focus on strategic human resource initiatives yielded notable advances in both program development and operational success. The Commission met its ambitious hiring commitments while instituting numerous new programs to enhance its ability to attract, retain, and develop employees. Key to this effort is the governance committee of senior managers that draws on frequent employee input to develop programs that will support long-term mission goals with knowledgeable, diverse, and productive human capital. This transparent, participative process helps assure that employees value and understand each human resource management initiative. The goal is a workforce that reacts and adapts quickly in terms of size, skills, and composition to meet changes in the industry, technology and/or statutory or regulatory developments. The governance process has contributed to annual successes in the development and implementation of a comprehensive pay and benefits program mandated by FSRIA. Due to this process of employee involvement, the Commission has matched its statutory compensation benchmark in ways that employees accept and in ways that recognize employee accountability for results. For example, the CFTC is in its second full year of measuring performance under a merit pay system to foster a performance culture. By basing compensation on a performance management system that addressed employee interest in greater two-way communication about goals and results, the Commission has advanced its ability to set and reach mission goals.
This process results in the engagement of all employees and managers in the continuous improvement in the agency’s capacity to manage its human capital strategically. Several important programmatic and operational advances demonstrated the success of this approach during FY 2009. In addition to completing the second annual merit pay cycle in July, the agency brought the benefits portion of its total compensation to the level at the statutory benchmark agencies. These benefits changes were designed based on employee input to the effect that the total package needed to accommodate individual needs to the extent possible.
In response, CFTC increased the agency health insurance premium contribution from 72-75 percent to a full 85 percent on July 19 and initiated an annual Life Cycle payment ($400 in 2009) in September that reimburses employee expenses related to health and wellness.
The Office of Human Resources (OHR) also completed its first comprehensive Professional Development and Succession Management Program policy document, to better support effective use by employees and managers of the many online and on-the-job knowledge management resources and opportunities available at CFTC. Most importantly, the total impact of these efforts to support agency programs and mission is clearly demonstrated by the fact CFTC met its goals to hire new and replacement employees on time and with hiring managers commenting on the excellent quality of the candidates.
By publicly committing in this manner to a serious, ongoing strategic management of human capital initiative, the agency is improving its ability to: 1) plan for anticipated change in workforce composition; 2) target and recruit employees to fill critical skill deficiencies; 3) support employee development; 4) identify and justify staff resources needed to perform statutory mandates; and 5) implement the Title V-exempt CT pay plan envisioned by FSRIA.
In FY 2009, OHR helped build agency capacity to meet this commitment through several operational improvements. These included a review of its business processes that identified areas for improvement that streamlined hiring, including providing training to hiring officials and obtaining their input. OHR assured that the agency was aware of and used all available flexibilities to attract applications and assure acceptance of offers from top candidates, such as paid advertising, varied appointment authorities, recruitment bonuses, and salaries above the minimum of the grade for superior qualifications. Senior managers supported this targeting of recruitment in the areas of greatest mission need by developing detailed business cases for their FTE requests, which describe how each position would support priority mission-critical functions. OHR then worked with selecting officials to further review precise position requirements and recruitment criteria for each approved vacancy, to help assure assembly of the best possible candidate pool to meet the exact mission support needs. The result of these operational improvements was on-time completion of the FY 2009 hiring program.
Next steps in this process include completion of the ongoing review of the agency’s position classification program, to assure it adequately describes and compensates the competencies, including supervisory and executive-level skills, needed in each position in order to meet its mission. The CFTC is also preparing an improved process to orient new hires to the agency and their job responsibilities, to better support their rapid contribution to program results. These efforts will continue building agency capacity to acquire, integrate, and engage the human capital essential to meeting the goals of the CFTC strategic plan.