The Inspector General (IG) conducted a FY 2010 Assessment addressing the Commission’s Most Serious Management Issues. The IG’s 2010 Assessment is located in the Other Accompanying Information section of the PAR at http://www.cftc.gov/About/CFTCReports/.
In FY 2010, two external evaluations involving the CFTC were conducted by the U.S. Government Accountability Office (GAO):
Financial Regulation: Clearer Goals and Reporting Requirements Could Enhance Efforts by CFTC and the SEC to Harmonize Their Regulatory Approaches, GAO-10-410, April 22, 2010
The conference report accompanying the Consolidated Appropriations Act of 2010 directed GAO to assess the joint report of the SEC and the CFTC on harmonization of their regulatory approaches. In October 2009, CFTC and SEC issued this report in response to the Treasury’s recommendation that the two agencies assess conflicts in their rules and statutes with respect to similar financial instruments. GAO’s objectives were to review: 1) how CFTC and SEC identified and assessed harmonization opportunities; 2) the agencies’ progress toward implementing the joint report’s recommendations; and 3) additional steps the agencies could take to reduce inconsistencies and overlap in their oversight.
To help ensure that CFTC and SEC are strategically positioned to implement the joint report’s recommendations and address remaining harmonization opportunities, the GAO recommended that as CFTC and SEC continue to develop the charter for the Joint Advisory Committee, the Chairmen of the CFTC and SEC take steps to establish, with associated timeframes, clearer goals for future harmonization efforts and requirements for reporting and evaluating progress toward these goals.
Specifically, the agencies could benefit from formalizing a plan to assess implementation of the joint report’s recommendations and harmonization opportunities that may not have been fully addressed by the joint report, such as differences in market structure and investor definitions. Such a plan could include goals for future harmonization efforts, such as timeframes for implementing the recommendations; assessment of whether remaining differences in statutes and regulations result in inconsistent regulation of similar products and entities that could lead to opportunities for regulatory arbitrage; and periodic reports to Congress on their progress, including the implementation and impact of the recommendations.
GAO’s findings and conclusion are available on its Web site at http://www.gao.gov.
Carbon Trading: Current Situation and Oversight Considerations for Policymakers, GAO-10-851R, August 19, 2010
GAO issued a letter in response to a Congressional request concerning carbon trading in the United States and various design and implementation issues to be considered in discussions about a possible national carbon trading program.
GAO briefed Congressional committee staff on the results of its work on July 23, 2010. Specifically, GAO provided information on: 1) carbon-related products currently traded in the United States and the extent of trading; 2) risks and challenges posed by these products; 3) the extent to which and how these products are regulated; and 4) issues that market observers identified for policymaker consideration as part of creating a national cap-and-trade carbon market.
The GAO recommended that the Chairman of the CFTC ensure that the interagency working group created by the Dodd-Frank Act explores: 1) how the design of any primary carbon market could affect the liquidity of any secondary market trading; 2) the structure of the secondary market, including the role OTC markets may play in carbon trading; and 3) the resources Federal regulators may need to effectively oversee domestic carbon markets.
GAO’s findings and conclusion are available on its Web site at http://www.gao.gov.