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Goal Four Background and Context

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The fulfillment of the Commission’s mission and the achievement of our goals depend on a foundation of sound management and organizational excellence. This foundation is essential to support the work of the Commission in the Washington D.C. headquarters and three regional offices in Chicago, Kansas City, and New York. The Commission is committed to maintaining a well-qualified workforce supported by a modern support infrastructure that enables the Commission to achieve its programmatic goals. Building and sustaining this foundation requires continuous investments in people, management initiatives systems, and facilities.

Agency Direction. The Office of the Chairman and the Commissioners provide executive direction and leadership to the Commission—specifically as it develops and adopts agency policy that implements and enforces the CEA and implements the Dodd-Frank Act. This policy is designed to foster the financial integrity and economic utility of commodity futures, options, and swaps markets for hedging and price discovery, to conduct market and financial surveillance, and to protect the public and market participants against manipulation, fraud, and other abuses. Executive leadership, in this regard, is the responsibility of the Chairman and Commissioners and includes the offices of the Chairman: the Office of Public Affairs; Office of Legislative Affairs; Enterprise Risk Group; the Office of Inspector General; and the Office of Equal Employment Opportunity.

The Dodd-Frank Act brings, for the first time, comprehensive regulation to the swaps marketplace. Implementation of the Dodd-Frank Act will lower risk, promote transparency and protect the American public.

Office of the Executive Director. The Office of the Executive Director has implemented and will continue to refine its strategic planning and operational management program to support the growth of the Commission and its expanded authorities. This program supports business process improvements, efficiency, expanded capability and productivity throughout the Commission. Additionally, the Office will continue to drive and enhance its records management program to ensure the documentation produced pursuant to the Commission’s regulatory activity is accurately maintained. The Office of the Executive Director is comprised of the Office of Financial Management, the Office of Human Resources, the Office of Information Technology Services, the Office of Management Operations, the Office of the Secretariat, the Library and has responsibility for the Office of Proceedings.

Human Resources Management. The skilled employees of the Commission are fundamental to its ability to protect the integrity of the futures, options and swaps markets—especially in implementing legislation reforming oversight of these innovative and competitive financial services industries. To maintain America’s global leadership in setting new standards for market integrity and protection for market users, the Commission must have sufficient resources to attract, train, promote, and retain its professional workforce. These legislative and market changes mean employees need ongoing, robust training and other human resources programs that maintain the technical and supervisory skills necessary to manage an organization and a mission that have grown vastly more complex.

The Commission sets and implements strategic human resource initiatives each year, then evaluates the outcome to identify revised tactics to better meet those goals in the year ahead. This means not only strategically planning the composition of the future workforce, but also continuously improving the business processes necessary to efficiently acquire and support a much larger organization. A governance committee of senior managers draws on frequent employee input to develop responsive programs that will support long-term goals with a knowledgeable, diverse and productive 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. This transparent, participative governance process has successfully built and maintained a comprehensive pay and benefits program as mandated by Section 10702 of Public Law 107-171, the Farm Security and Rural Investment Act of 2002 (FSRIA). CFTC has measured performance under a merit pay system for three years, with high and increasing positive feedback from employees on its effect in fostering a high-performing culture. The Commission implemented a revised awards program and completed its review of the system for classifying its mission-critical positions, implementing the resulting changes. Next steps include further review of supervisory and executive compensation, as well as continuous streamlining and automation of human resources business processes to support both data-driven strategic plans and their efficient execution. This ongoing strategic management of human capital initiative commits the agency to 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.

Information Technology Management. The Commission’s ability to fulfill its mission successfully depends on the collection, analysis, communication and presentation of information in forms useful to Commission employees and other interested parties, such as the industry it regulates, Federal, state, and international agencies with which we cooperate, the Congress, and the American public. A secure modern information technology infrastructure is a vital tool that enables the Commission to serve these stakeholders effectively. The Commission is making a concerted effort to use commercial best practices when developing and maintaining its IT systems, applications and infrastructure, deploying a modern data analysis, reporting, messaging, archiving, and document management solution. The Commission’s FY 2012 Budget includes approximately $66 million for information technology. The resources will allow the Commission to make improvements in information technology by increasing data processing and storage capacity, implementing hardware and software for staff working on activities related to new regulatory authorities, enhancing existing systems, and developing new systems critical to maintaining adequate market oversight and innovating new ways to assure transparency. See Appendix 4 for a more detailed summary of the information technology budget.

Information technology investments needed for Dodd-Frank not only support Strategic Goal Four but also span objectives and outcomes across Strategic Goals One, Two, and Three. Investments in SDR data aggregation, order data collection and standardization, and advanced computing platforms for high-frequency, algorithmic trading surveillance and enforcement primarily support Strategic Goal Two and Strategic Goal Three as do investments for systems integration of existing large trader and trade systems with swaps data, systems enhancements for aggregated position limit surveillance, and significant upgrades to the FILAC system for SEFs and SDRs. Increases in investments in capital equipment, telecommunication services, support services, legal information services, and operations and maintenance for all infrastructure, systems and services are required in particular to support the implementation of Dodd-Frank with respect to swap markets. However, these investments generally support the oversight of all markets under Commission supervision.

As a result of the growth of trade and order volumes, the amount of reported trade and order data has grown multifold. Because of that data growth, the Commission is frequently engaged in more complex and time sensitive information analysis efforts. The Commission is actively engaged in modernizing the technology base of core, mission-critical market surveillance systems – automating detection methods to identify and analyze market manipulation and trade practice violations in a global environment. In relation to Dodd-Frank requirements, the Commission will be working to standardize the collection of order data. This data also is important for analysis associated with high frequency and algorithmic trading.

The Commission is in the process of fully implementing the Trade Surveillance System (TSS), which will allow the Division of Market Oversight to better detect and assess a range of possible trade practice violations and market manipulation scenarios. TSS information is also being used by the Office of the Chief Economist for economic analyses and by the Division of Enforcement for investigatory purposes. The TSS implementation is an essential component of the technology modernization being undertaken at the Commission. This system takes advantage of state-of-the-art commercially available software to enhance market surveillance capability over the expanding and diverse electronic trading platforms. Several new custom trade practice surveillance models, reports, and alerting mechanisms are being developed. The full implementation of TSS will facilitate the full utilization of trade-related data, around which considerable market and trade practice analysis is based.

CFTC uses the Integrated Surveillance System (ISS) to receive end of day positions from large traders active in commodity markets. The Commission is engaged in a significant modernization of this mission critical system, which was originally developed as a tool for market analysts to monitor market conditions. This system will be modernized to focus on more automated market manipulation detection and reporting, increased internal and external data transparency through enhanced report generation, improved case management to track market surveillance activities, integration of large trader data with intraday trading activity, improved automated collection of data from industry participants, and enhanced capabilities to manage position limit monitoring. The modernization of ISS will also include the functionality to monitor aggregate position limits across markets as called for under Dodd-Frank. Continuing to enhance ISS to meet new regulatory requirements and keep pace with industry change is an essential initiative that will be part of the technological foundation of the Commission’s 21st century surveillance program in the global economy.

To more effectively oversee the futures, options and swaps markets, the Commission will be integrating existing systems such as TSS and ISS with new systems created to support Dodd-Frank requirements. Additionally, data linkages between swaps and futures data will need to be established to conduct financial risk surveillance, market surveillance, economic analysis, and enforcement investigations across the combined swaps and futures markets.

The Commission continues to upgrade its information technology management capabilities in the areas of analytics, statistical processing and market research. In FY 2010, the Commission implemented new and emerging software technology that enhance and leverage our current information assets. With this effort, the Commission is concentrating on leading edge technology that can be applied throughout the organization, using this new capability to assist staff in conducting market research that impacts policy decisions and provides the interpretive analysis necessary for Congressional inquiries and inter-agency programs.

The eLaw Program provides law office automation and modernization by seamlessly integrating technology and work processes to support managers and staff across the Commission in their investigative, trial, and appellate work. eLaw provides support in the areas of case planning, case management, litigation, and document management. The eLaw program has been an essential component of the Commission’s successful execution of its enforcement objectives. With the eLaw program, the Commission has a state-of-the-art technology base to conduct investigations and bring enforcement actions through the analysis of massive quantities of data. We are finalizing the expansion of this system into the Office of Proceedings and planning further expansion into the Office of General Counsel. Additional technical enhancements are being introduced as the existing eLaw suite of products are upgraded or expanded. One recent expansion of the eLaw suite is the addition of audio analytics capability. Audio analytics software has being phased-in to complement the investigative process. Another such expansion is the application of computer forensics technologies to collect and analyze data acquired in support of enforcement investigations. Based on the successful application of forensic analysis at the Commission, this program area is expected to grow in support of future enforcement activities. and the Commission’s intranet Web site, Open Interest, are being enhanced as part of an initiative to enhance both external and internal transparency of information. The objective for both sites is to provide a more dynamic, accessible and informative Web site with rich multi-media content and Web 2.0 services. The Web site was reengineered in FY 2010 and will continue to be enhanced to implement the transparency and data reporting requirements of Dodd-Frank. To improve internal information sharing and collaboration, an evaluation and functional assessment of the Open Interest intranet will be performed. Completion of these initiatives will ensure that the Commission’s Web sites comply with government best practices, legal requirements, and industry guidelines, while leveraging emerging Internet technologies.

The Commission’s ability to fulfill its mission depends on the collection, analysis, communication, and presentation of information in forms that are easily retrieved and useful to Commission employees, the regulated industry, Federal, state, and international agencies, the Congress, and the American public. The Commission is in the process of defining requirements for a new Records and Document Management System to modernize, centralize and automate the management of the Commission’s information resources. When complete, the new system will transform the Commission’s document management practices, technical solutions, and business process.

To effectively implement and sustain the modernization of the mission critical surveillance systems, the improved Internet and intranet Web sites, and implementation of a document management system, the Commission will use enterprise architecture and data architecture best practice frameworks, tools and processes. This approach will ensure the development of an information management strategy that will transform a growing data stream and growing data analysis requirements into a Commission-wide information management environment. This strategic initiative will examine current capabilities, emerging data needs, data governance, data organization, data privileges, and software capabilities to provide an information architecture framework that supports current mission requirements. The resulting solution will provide the CFTC with more effective information analysis capability by modernizing the Commission existing data management environment.

Management Operations. The Office of Management Operations provides support to Commission staff by ensuring the timely delivery of products and services, the safety and security of all employees, and operations and maintenance of the facilities at Headquarters and in the regional offices. Many improvements in critical administrative service areas have occurred during the last few years, including the development of a property management system for non-capitalized, sensitive items, hiring a chief of security, and better tools for planning and managing space and construction requirements to meet the requirements of additional personnel.

Financial Management. Improved accountability for performance, together with unquestionable fiscal integrity, serves as key mission delivery cornerstones. Effective financial management systems and services facilitate Commission performance, and earning unqualified audit opinions demonstrates financial accountability. Reliance on Department of Transportation systems and accounting services ensures that the financial resources entrusted to the Commission are well managed and judiciously deployed. The Budget and Performance and Accountability Report permit the public to see how well programs perform, and the cost incurred to achieve that performance.


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