Divisions
Chief Economist

The Office of Chief Economist (OCE) provides economic support and advice to the Commission, conducts research on policy issues facing the Commission, and educates and trains Commission staff. The OCE plays an integral role in the preparation of new financial market regulations by providing economic expertise and analysis of cost-benefit considerations underlying those regulations.  As new financial market regulations are implemented, the OCE will assess the impact of these regulations on derivatives markets.

Product Review of Products

Products and Rules Introduced by Designated Contract Markets, Swap Execution Facilities and Swap Data Repositories. The OCE will support the Commission's functions with respect to the review and approval of products to be made available for trading. The OCE will also participate in the evaluation of the real time reporting process, including the determination of block trade threshold levels. The OCE will conduct economic analysis pertaining to exchange traded contracts and block trade levels so that such contracts maintain the market's price discovery function and offer market participants who use these contracts sufficient ability to hedge their risk.

Surveillance, Including Data Acquisition and Analytics

Swap Data Acquisition and Analytics for Oversight and Surveillance. The OCE will help evaluate the reporting requirements applied to swap market participants. The OCE will also conduct economic and statistical analysis of swaps data that would be reported to SDRs.

Enforcement

The OCE will provide significant analytical support to the Commission's enforcement program to police the markets for fraud, manipulation and other abuses. Specifically, the OCE will provide economic expertise for the analysis and evaluation of data pertaining to anti-manipulation and disruptive trading practice violations in both futures and swap markets.

Economic Analysis

The OCE maintains an economic research program focused on the quantitative analysis of the ever-evolving changes in trading technology, trading instruments, and types of market participants. Specifically, the OCE focuses its quantitative research program to analyze the following four broad areas:

  • Analysis of the composition of speculative market participants in futures and options markets;
  • Analysis of the linkages between futures, option, swap, securities, and cash markets;
  • Analysis of the effects of swap markets and swap market participants on market structure; and
  • Analysis of high frequency and algorithmic trading.

The analysis of the composition of speculative market participants provides input into the Commission's policy decisions on the potential impact of these traders in markets.  Such analyses include identifying certain categories of traders and whether their individual or collective positions or trading activity impact price, volatility, or liquidity in markets.

The analysis of the linkages between various markets helps to assess the transmission mechanisms between derivatives markets and securities and cash markets in order to monitor systemic risk issues.  Such analysis includes identifying correlations among various markets and asset classes and determining whether an event in one market may trigger similar events in other markets.

The analysis of the effects of SEFs and swap market participants on the market structure of derivatives markets provides input into the Commission's assessment of new market participants and trading venues.  Further, economic analysis will serve as the basis for many studies mandated after the Dodd-Frank Act regulations are in effect.

The analysis of high frequency and algorithmic trading provides tools to help the Commission's surveillance and enforcement divisions to detect disruptive trading patterns and participants who attempt to manipulate markets.

FY 2014 Budget Overview by Mission Activity

Breakout of Chief Economist Request by Mission Activity
Dollars in Thousands
  FTE Salaries and Expenses IT Total
Product Reviews 1 $240 $0 $230
Surveillance, including Data Acquisition and Analytics 2 480 0 480
Enforcement 2 480 0 480
Economic and Legal Analysis 20 4,760 0 4,760
Total 25 $5,960 $0 $5,960

Chief Economist Request by Mission Activity

Pie chart showing the Chief Economist Request by Mission Activity. Values are as follows:

Product Reviews: 4%.
Surveillance, including Data Acquisition and Analytics: 8%.
Enforcement: 8%.
Economic and Legal Analysis: 80%.

Top FY 2012 Accomplishments

Participated in the preparation of proposed and all finalized Dodd-Frank rulemakings, especially with respect to the consideration of costs and benefits.

In support of the Commission's transparency objective, developed a new, weekly swaps report for public dissemination. The report provides an aggregated view of the risks and developments in the swaps market utilizing data that were not previously reported to regulators or regulated entities. The Dodd-Frank Act requires the Commission to provide a swaps market report on a semiannual and annual basis (H.R. 4173-322); the weekly reporting frequency will significantly exceed the required frequency. The proposed report also includes an extensive data dictionary and explanatory notes in support of its transparent nature.

Provided economics support to the CFTC Technology Advisory Committee, particularly through leadership of the Subcommittee on Automated and High Frequency Trading.

Provided quantitative and economic analyses for at least eight enforcement investigations.

Organized the 2nd annual CFTC Research Conference to discuss key issues in derivatives markets.

Provided economic and market expertise in evaluating DCM submission reviews.

Provided economic and litigation support.

Provided economic and derivatives market expertise to FSOC subcommittees.

Top FY 2013 President's Budget & Performance Planned Outcomes

Participation in all proposed and finalized Dodd-Frank rulemakings, especially with respect to the consideration of costs and benefits.

Participation in the implementation of Dodd-Frank rules, including entity and product review, review of trading and clearing facilities, valuation of complex swaps, and positions limits.

Provide specialized quantitative and economic analyses for enforcement investigations as necessary.

Host the 3rd annual CFTC Research Conference on key issues in derivatives markets and develop publically available white papers on Commission-related topics.

Preparation of market simulation and reconstruction model and automated simulated alerts.

Relaunch the Commitment of Traders Report to provide improved transparency and align the report with the newly launched swaps report.

Publication of transparency measures based on transaction level data.

Top FY 2014 President's Budget & Performance Planned Outcomes

Participation in the implementation of Dodd-Frank rules, including entity and product review, review of trading and clearing facilities, valuation of complex swaps, and positions limits.

Participation in data collection and analysis of swaps, futures, and options data.

Provide quantitative analysis of trading strategies of market participants in derivatives markets.

Provide specialized quantitative and economic analyses for enforcement investigations as necessary.

Host the 4th annual CFTC Research Conference on key issues in derivatives markets and develop publicly available working papers on Commission-oriented topics and publications in peer-reviewed journals.