Office of the International Affairs
Table Of Contents
| Budget | FTEs | |
|---|---|---|
| Total Budget | $2,946,000 | 10 |
| Total Change | $566,000 | 1 |
| Program Activity | Percentage |
|---|---|
| International Affairs | 1% |
| All Other Programs | 99% |
| Program Activity | Percentage |
|---|---|
| International Affairs | 1% |
| All Other Programs | 99% |
Justification of the FY 2011 President’s Budget & Performance Plan
The Office of International Affairs (OIA) coordinates the Commission’s non-enforcement related international activities, represents the Commission in international organizations, such as IOSCO, coordinates Commission policy as it relates to U.S. Treasury global initiatives and provides technical assistance to foreign market authorities. These activities have as a common goal the promotion of internationally accepted standards of best practice, the development of supervisory cooperation arrangements in order to strengthen customer and market protections and the improvement of the quality and timeliness of international information sharing.
OIA’s work increasingly has focused on international initiatives that respond to the financial crisis and to volatility in energy and agricultural commodity markets. OIA represents the Commission in its capacity as co-chair of IOSCO’s Task Force on Commodity Futures Markets, which recently has been re-tasked by IOSCO to carry work forward on promoting practical ways to enhance the transparency of futures, cash and OTC physical commodity markets in energy and agricultural markets. Achieving greater transparency across all commodity markets will provide regulators with the data needed to understand better the composition and pricing mechanisms in these strategically important markets. OIA also has focused on strengthening the Commission’s ability to detect abusive trading practices, such as working closely with the U.K. regulatory authorities to enhance their supervision of linked oil contracts.
In FY 2011, the Office of International Affairs requests a total of 10 FTEs, an increase of one FTE over FY 2010.
Consequence of Not Receiving Requested Level of Resources
The financial crisis and volatility in global energy and agricultural commodity markets make clear that no one regulator alone can address successfully the impact of global activities on its national markets. As a result, the Commission must continue to participate fully in a variety of international forums to seek cooperative and coordinated solutions to these global market concerns.
For example, cooperative discussions with the U.K’s Financial Services Authority resulted in an agreement on steps to strengthen cross border supervision of energy markets. However, implementation of this agreement will require ongoing involvement by staff. The Commission intends to continue to work for greater commodity market transparency and global cooperation in surveillance and enforcement by co-chairing the IOSCO Task Force on Commodity Futures Markets, participating in a newly created IOSCO Task Force on Surveillance and in four IOSCO Technical Committee working groups that develop international standards of best practice.
Similarly, resources are needed to allow the Commission to participate in a broad range of regulatory development activities within IOSCO and the G20 structure that respond to issues revealed by the financial crisis, such as: cooperation and coordination in the areas of OTC regulation, central counterparty clearing standards, the monitoring and control of systemic risk, the protection of customer funds, and mechanisms to share systemically important information internationally. It is critical for the Commission to participate in this work, which effectively is creating international standards of best practice.
The Commission’s international agenda also includes responding to requests by the U.S. Treasury to participate in international dialogues (e.g., U.S.— China dialogue), providing technical assistance to developing market jurisdictions, and engaging in bilateral negotiations with foreign regulators to resolve cross-border issues. The need to participate in U.S. Treasury initiatives, many of which address critical issues addressing the financial crisis, has resulted in additional staffing needs. We expect these demands to increase. Finally, the Commission also is focusing on strengthening its supervision of registered entities such as clearing organizations and markets that are registered by both the Commission and a foreign regulator, and on ensuring that the recipients of regulatory exemptions remain in compliance with applicable requirements. Achieving this goal of greater due diligence and ongoing compliance monitoring will require the Commission to coordinate closely with foreign regulators.
Any diminution in resources would require the Commission to reduce its international program, thereby making it less able to advocate for international regulatory policies that help to ensure that commodity markets remain free from fraud, manipulation and other market abuses and reduce the possibility for regulatory arbitrage among jurisdictions. Cutbacks in resources would also greatly inhibit the Commission’s ability to address the need for enhanced supervision of cross-border activities.
| FY 2010 | FY 2011 | Change | ||||
|---|---|---|---|---|---|---|
| Budget Request |
FTE | Budget Request |
FTE | Budget Request |
FTE | |
| International Affairs | $2,380 | 9.00 | $2,946 | 10.00 | $566 | 1.00 |
| Total | $2,380 | 9.00 | $2,946 | 10.00 | $566 | 1.00 |
| Outcomes | FY 2010 | FY 2011 | Change | |||
|---|---|---|---|---|---|---|
| Budget Request |
FTE | Budget Request |
FTE | Budget Request |
FTE | |
| GOAL ONE: Protect the economic functions of the commodity futures and option markets. | ||||||
| None | ||||||
| GOAL TWO: Protect market users and the public. | ||||||
| None | ||||||
| GOAL THREE: Foster open, competitive, and financially sound markets. | ||||||
| 3.1 Clearing organizations and firms holding customer funds have sound financial practices. | $0 | 0.00 | $0 | 0.00 | $0 | 0.00 |
| 3.2 Commodity futures and option markets are effectively self-regulated. | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3.3 Markets are free of trade practice abuses. | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3.4 Regulatory environment responsive to evolving market conditions. | 2,380 | 9.00 | 2,946 | 10.00 | 566 | 1.00 |
| Subtotal Goal Three | $2,380 | 9.00 | $2,946 | 10.00 | 566 | 1.00 |
| Total | $2,380 | 9.00 | $2,946 | 10.00 | $566 | 1.00 |