Appendix 5. FY 2014 Planned Resources by Strategic Goal
Goal Two Planned Resources

Goal Two: Protect the public and market participants by ensuring the financial integrity of derivatives transactions, mitigation of systemic risk, and the fitness and soundness of intermediaries and other registrants.

In fostering financially sound markets, the Commission's main priorities are to avoid disruptions to the system for clearing and settling contract obligations and to protect the funds that customers entrust to FCMs. Clearing organizations and FCMs are integral to the financial integrity of derivatives transactions Рtogether, they protect against the financial difficulties of one trader becoming a systemic problem.  Several aspects of the regulatory framework that contribute to the Commission achieving Goal Two are: 1) requiring that market participants post margin to secure their ability to fulfill financial obligations; 2) requiring participants on the losing side of trades to meet their obligations, in cash, through daily (sometimes intraday) margin calls; 3) requiring FCMs to maintain minimum levels of operating capital; and, 4) requiring FCMs to segregate customer funds from their own funds.

The Commission works with the exchanges and the NFA to closely monitor the financial condition of the FCMs themselves, who must provide the Commission, exchanges and NFA with various monthly and annual financial reports. The exchanges and NFA conduct routine, periodic audits and daily financial surveillance of their respective member FCMs. As a regulator, the Commission reviews the audit and financial surveillance programs of the exchanges and NFA and also monitors the financial condition of FCMs directly, as appropriate. This includes reviewing each FCM's exposure to risk from large customer positions that it carries. The Commission also conducts extensive daily surveillance of risks posed by traders, firms and DCOs and periodically reviews clearing organization procedures for monitoring risks and protecting customer funds.

The Commission works with the NFA to ensure that those seeking registration as intermediaries meet high qualification and fitness standards through the registration process. The Commission also drafts and interprets rules that apply to the conduct of business by these intermediaries.

With the implementation of the Dodd-Frank Act, the Commission has substantially greater responsibilities, including oversight of newly registered derivatives dealers, as well as implementation of enhanced compliance requirements for intermediaries and new core principle requirements for DCOs. The Commission also will be responsible for determining the initial eligibility or the continuing qualification of a DCO to clear swaps, as well as for the review of swaps submitted to the Commission for a determination as to whether the swaps are required to be cleared. The Commission also will be implementing new statutory provisions regarding review of new rules and rule amendments submitted by DCOs. In addition, the scope of the Commission's reviews of DCOs, DSROs, and intermediaries will be expanded to include swap transactions and swap intermediaries.

Breakout of Goal Two Request by Mission Activity
Dollars in Thousands
Mission Activities FY 2013 FY 2014 Change
  Budget FTE Budget Request FTE Budget FTE
Registration and Registration Compliance $14,120 54 $16,920 65 $2,800 11
Product Reviews 4,940 19 4,770 18 -170 -1
Surveillance, including Data Acquisition and Analytics 16,190 54 16,210 51 20 -3
Examinations 26,980 115 32,900 138 5,920 23
Enforcement 0 0 0 0 0 0
Economic and Legal Analysis 10,980 45 11,160 45 180 0
International Policy Coordination 230 1 0 0 -230 -1
Data Infrastructure and Technology Support 0 0 0 0 0 0
Agency Direction, Management and Administrative Support 5,160 22 5,010 21 -150 -1
Total Goal Two $78,600 310 $86,970 338 $8,370 28

Breakout of Goal Two Request by Mission Activity

Pie chart showing the Breakout of Goal Two Request by Mission Activity. Values are as follows:

Registration and Registration Compliance: 19%.
Product Reviews: 5%.
Surveillance, including Data Acquisition and Analytics: 19%.
Examinations: 38%.
Economic and Legal Analysis: 13%.
Agency Direction, Management and Administrative Support: 6%.

Breakout of Goal Two Request by Division
Dollars in Thousands
  FY 2013 FY 2014 Change
  Budget FTE Budget Request FTE Budget FTE
Agency Direction $2,110 9 $1,910 8 -$200 -1
Administrative Management  and Support 3,050 13 3,100 13 50 0
Chief Economist 3,050 13 2,620 11 -430 -2
Clearing and Risk 23,920 102 26,940 113 3,020 11
Data and Technology 8,960 13 9,250 12 290 -1
Enforcement 0 0 0 0 0 0
General Counsel 7,030 30 6,680 28 -350 -2
International Affairs 0 0 0 0 0 0
Inspector General 0 0 0 0 0 0
Market Oversight 0 0 0 0 0 0
Swap Dealer and Intermediary Oversight 30,480 130 36,470 153 5,990 23
Total $78,600 310 $86,970 338 $8,370 28

Breakout of Goal Two Request by Division

Pie chart showing the Breakout of Goal Two Request by Division. Values are as follows:

Agency Direction: 2%.
Administrative Management and Support: 3%.
Chief Economist: 3%.
Clearing and Risk: 31%.
Data and Technology: 11%.
General Counsel: 8%.
Swap Dealer and Intermediary Oversight: 42%.