The following section includes high-level discussion of each of the five strategic goals and the tactical goal for Dodd-Frank rule making, as well as a detailed analysis and review of each performance measure (shortfalls and successes). The accomplishments demonstrate significant progress made in FY 2011 toward the achievement of the Commission's mission and strategic goals. However, in some areas progress was hampered by a significant number of staffing resources that were reallocated from existing authorities to implementing the new authorities under the Dodd-Frank Act. The law gave the CFTC and Securities and Exchange Commission (SEC) oversight of the more than $300 trillion swaps market. The Commission and SEC are working hard to write new rules to make the swaps market more transparent and safer for the American public.
Budget constraints arising out of a continuing resolution lasting throughout a large portion of FY 2011 only added to the performance challenges faced by the Commission with its expansive role. You will find in the chart below a trend comparing the request vs. appropriation dollars for the CFTC budget between FY 2008 – FY 2012. Continued budget constraints on the agency over a time of expanding responsibility has resulted in having to reallocate staff resources to new and high risk areas on an ongoing basis, preventing the Commission from achieving a number of performance targets related to existing authorities. The Commission's Annual Performance Report (APR) reflects this resource challenge as staff diligently work towards finalizing each Dodd-Frank rule and executing legacy responsibilities.
As Commission efforts continue to focus on finalizing rules related to the Dodd-Frank Act, there will be some performance measures described in the Strategic Plan dependent upon their completion. As a result, 6 of the 54 performance measures were considered "Not Applicable" during the FY 2011 reporting period and were removed from the detailed analysis and review section of the annual report. An additional measure was also categorized as "Not Applicable", remaining in development from the onset of the Strategic Plan newly implemented in FY 2011. An update is provided for this measure. As the Commission completes work on rulemaking and data become available for these measures, they will be published along with relevant analysis and review narrative in subsequent Annual Performance Reports. The following identifies the specific performance measures considered "Not Applicable":
The performance measures in the annual report are rated as: Exceeded, Met, or Not Met. Overall results for the Commission's performance measures are depicted in the following table:
|# of Measures1||Exceeded||Met||Not Met|
|% of Total||21%||36%||43%|
|1 Excludes 7 performance measures categorized as "Not Applicable" for FY 2011. (back to text)|
The Commission anticipates continuing performance challenges as its FY 2012 appropriation is significantly below the requested budget, as illustrated in the "CFTC Budget" table above. The CFTC, therefore, remains severely inhibited in its ability to acquire the staff and technology necessary to fulfill the Commission's post Dodd-Frank mission and make substantial performance gains. In light of ongoing resource constraints, Commission staff is reviewing its performance targets to determine if adjustments are warranted.
In addition to budgetary constraints, another significant factor that is straining staff resources in FY 2012 is the ongoing bankruptcy proceedings and investigation of MF Global, Inc. (MF Global). On Monday, October 31, 2011, MF Global reported to the Commission a "material shortfall" of hundreds of millions of dollars in segregated customer funds. Earlier that same day MF Global filed for Chapter 7 bankruptcy.
The CFTC's focus with respect to MF Global is two-fold: 1) returning as much money as possible to MF Global customers and determining what went wrong with segregated funds and 2) pursuing the investigation, identifying possible violations of the Commodity Exchange Act or Commission Regulations and taking appropriate action.2 Dozens of staff members (including auditors, attorneys, and investigators) in New York, Chicago, and Washington, D.C. are committed to these actions. The information the Commission learns during this work may be relevant to the Commission as it considers appropriate policy responses or regulatory changes. Commission staff is coordinating its MF Global investigation with other regulators both domestically and overseas, and is working closely with the SIPA Trustee to provide whatever support he needs to resolve issues with commodity customer accounts.
|Fiscal Year||Met/Exceeded||Not Met||Results Not
The Commission's Annual Performance Report (APR), issued in February 2012 as part of its Congressional Budget Justification in conjunction with the President's Budget, presents a more detailed analysis of performance results for FY 2011.
The focused rule writing efforts required by the Dodd-Frank Act are not being treated as a "Strategic Goal", but as a tactical goal that has an Objective, Strategy and Performance Measure. Approximately 20 to 30 percent of the CFTC staff was diverted from their usual functions to work on Dodd-Frank Act related activities throughout FY 2011.
The CFTC began preparing for the task of writing rules for the swaps marketplace by identifying 30 areas of rulemaking to implement the Dodd-Frank Act (Appendix C in the Strategic Plan lists the 30 areas). It was found that some of these areas only required one rule, while others required more. Teams have been assigned to each rule grouping. Where proposed and interim final rules have been issued, the Commission is affording as much opportunity as practicable for public comment both through written submissions and public meetings. The Commission fully considers the comments and continues to offer this opportunity as additional proposed rules are developed. The CFTC has and will continue to work with the SEC and other regulators to maximize consistency and minimize overlap or duplication. All information will be considered in developing the best possible final rule.
The Dodd-Frank Act set a timeframe of 360 days (or less in a few instances) for completion of the rules, but the Commission was unable to accomplish this for several reasons. Primarily, the delay was a matter of capacity for rule consideration. With all rules, the CFTC has taken and will take a thoughtful and balanced approach – the clock will not be the driver. The Commission actively seeks and takes into full consideration public comments regarding the costs, benefits, and economic effects of proposed rules. Other activities and events contributing to the delay include:
Despite the above limitations, the Commission was able to accomplish the following Dodd-Frank Act related rulemaking tasks through September 30, 2011:
As of this writing, the CFTC anticipates completion of the vast majority of the rules by March 2012 and essentially all rules by July 2012 - within 24 months of enactment of the Dodd-Frank Act. The Commission was able to accomplish the following tasks during the first quarter of FY 2012:
2 On November 8, 2011, Chairman Gensler signed a statement of non-participation in enforcement and various other matters involving MF Global. On November 9, 2011, the Commission voted to designate Commissioner Jill Sommers the Senior Commissioner with respect to the MF Global investigation, pending bankruptcy cases, and other actions to locate or recover customer funds or determine the reasons for shortfalls in customer accounts. The information in this paragraph is summarized by Commission staff based upon Commissioner Sommers' testimony on December 8, 2011, before the U.S. House of Representatives, Committee on Agriculture, Washington, DC. The statements regarding MF Global contained in this paragraph were prepared by Commission staff; Chairman Gensler did not participate in the drafting or review of any statement regarding MF Global. (back to text)