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Outcome Objective 1.2

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Outcome Objective 1.2: Markets are effectively and efficiently monitored to ensure early warning of potential problems or issues that could adversely affect their economic vitality.

Performance Measure 1.2.1



Performance Measure 1.2.1: Percentage of derivatives clearing organization applications demonstrating compliance with core principles.
Status: Effective
Data Source: DCO applications(s) for registration.
Verification: Agency files containing applications, staff reviews, memoranda to the Commission, and proposed Orders.
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
ACTUAL
FY 2010
PLAN
FY 2010
N/A1 N/A1 100% 100% 100%
1No applications for registration as a DCO were received in FY 2007 and FY 2008. (back to text)

Lead Program Office

Division of Clearing and Intermediary Oversight

FY 2010 Performance Results

100%

Performance Analysis & Review

DCIO met the performance target for FY 2010. Two DCO applications were subject to DCIO staff review during FY 2010. One applicant was required to resubmit its application due to its inclusion of a credit default swap service during the submission period. After resubmission under the fast track mode, DCIO staff determined, within 90 days, that the application complied with core principles. The second DCO application was removed from the fast track and placed on the 180 day track. Both applications were determined to comply with core principles and approved by the Commission.

Performance Highlights

None to report.

Performance Measure 1.2.2



Performance Measure 1.2.2: Ratio of contracts surveilled per economist.
Status: Adequate
Data Source: Exchanges submit data to the Commission on all traded contracts, which are maintained in the Commission’s database.
Verification: Data is validated by internal program edits and quality checks in central database.
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
ACTUAL
FY 2010
PLAN
FY 2010
46 46 44 51 13

Lead Program Office

Division of Market Oversight

FY 2010 Performance Results

51

Performance Analysis & Review

The target ratio of contracts surveilled per economist is above ideal levels. For this reason, an “Adequate” status of Performance Result has been selected despite the fact that the actual number of contracts surveilled per economist surpassed the performance plan. To increase the efficiency of the surveillance efforts of DMO, similar contracts on the same underlying commodity are generally analyzed together. Even though the number of contracts increased during the year, the increase was mostly due to additional products on existing commodities. These additional products may not materially add to the economists’ surveillance burden. Thus, they were not counted as distinct contracts for the purpose of arriving at the relevant ratio.

Performance Highlights

The number of contracts surveilled per economist has risen sharply due to the continued growth in number of contracts, including cleared-only swaps and SPDCs. This growth has coincided with significant increases in number of participants and volumes traded within each contract. Market Surveillance economists exhibit very high productivity, but their numbers and resources are severely lagging the growth of the industry they have to oversee. Deployment of more advanced information technology in surveillance does not fully compensate for the increase in workload and complexity. To preserve some level of adequacy, economists constantly have to triage which contracts to watch at each time, but this cannot prevent some erosion in the quality of surveillance.

Performance Measure 1.2.3



Performance Measure 1.2.3: Percentage of contract expirations without manipulation.
Status: Effective
Data Source: Surveillance reports and large trader position reports.
Verification: Economists daily track and monitor futures expirations and economic fundamentals.
ACTUAL
FY 2007
ACTUAL
FY 2008
ACTUAL
FY 2009
ACTUAL
FY 2010
PLAN
FY 2010
99.9% 99.9% 99.9% 99.9% 99.9%

Lead Program Office

Division of Market Oversight

FY 2010 Performance Results

99.9%

Performance Analysis & Review

This measurement examines the number of contract expirations without manipulation compared to the total number of futures and option expirations. The total number of expirations may vary throughout the year as different contracts enter and exit the market.

Performance Highlights

During this fiscal year, DMO has enhanced its data collection, information processing, and surveillance analyses to try to keep pace with the rapidly growing and changing futures and swaps markets. Special calls were issued to swap dealers to gain insight into the activities of traders active in both futures and swaps. DMO started to receive and analyze position data, initially on a quarterly basis then on a monthly basis, to provide an empirical data set for policy analysis and transparency through dissemination of aggregate data to the public, and to detect possible manipulative schemes.

 

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