Dissent by Commissioner Scott D. O’Malia
Fiscal Year 2014 Budget Request
April 10, 2013
I respectfully dissent from the fiscal year 2014 budget submission for the Commission. This submission seeks an improbable funding request of $315 M, an increase of 52 percent above the current funding level of $206.6 million as provided in the fiscal year Continuing Resolution.1 Given the vast deficit spending challenges this country is facing, I do not believe it is fiscally prudent for the Commission to make broad unsubstantiated appeals for massive budget increases without specifically identifying its mission needs and priorities.
While I cannot support an expansive request for additional funding, I welcome the Office of Data and Technology’s (ODT’s) detailed request for FY 2014 that includes mission specific investments. Unfortunately, if previous experience is any indicator of future action, any funding shortfalls from the request will result in a pro-rata distribution in spending for all divisions, due to a lack of prioritization among the Commission functions. As I have said repeatedly since joining the Commission, I support a separate statutory provision that would provide an independent funding allocation for technology so that a reduced overall budget will not result in a reduction in ODT funding.
This is especially important in light of the fact that for the past two years, a CFTC Inspector General Assessment of the most serious management challenges facing the CFTC2 identified two areas where the Commission must make immediate improvements: 1) the “Efficient Deployment of Information Technology Resources” and 2) “Expanding Delivery of Customer Protection Resources and Consumer Education.” I believe that both areas of weakness can be mitigated by prioritizing a sustained and specific investment in technology.
The Commission frequently highlights the precipitous rise in trading volume over the past decade as a justification for the massive staff increase. It bears noting, however, that the vast increase in trading was facilitated by computer-based trading. If the Commission is going to keep pace with growth and technological innovation in these markets, it must make automated surveillance the foundation of its oversight and compliance program.
Finally, remarkably, the Commission, in its budget request and justification of “Mission Activities” and “Divisions” (pages 15-38), fails to address one of its most serious regulatory oversight challenges – customer protection. This is a glaring oversight in mission priorities in light of the recent failures by MF Global and Peregrine Financial. While Exhibit 2 (pages 81-82) highlights mission responsibilities and budget allocation to the whistleblower program and customer education office, it fails to show how the Commission is going to address the shortcomings in its oversight and surveillance programs related to the MF Global and Peregrine matters.
1 Public Law 112-175 Continuing Appropriations Act (through 3/27/2013).
Last Updated: April 10, 2013