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The OGC provides legal services and support to the Commission by engaging in defensive, appellate, and amicus curiae litigation; assisting the Commission in the performance of its adjudicatory functions; providing legal advice and support for Commission programs; drafting and assisting other program areas in preparing Commission regulations; interpreting the CEA; and providing advice on legislative and regulatory issues.

In FY 2013, OGC will continue to support the CFTC’s efforts to implement the swap regulatory structure mandated by the Dodd-Frank Act (in addition to its ongoing regulatory review work regarding the agency’s existing authorities over futures contracts and commodity options).  More specifically, OGC will provide legal analysis and counsel in the following areas, among others:

Registration of Swap Execution Facilities and Designated Contract Markets.  OGC is requesting one FTE for review of registration applications of SEFs and DCMs.  The Commission anticipates that, beginning in the second quarter of FY 2012 through FY 2013, four DCMs will file for registration and another 26 SEFs will file for temporary registration.  The Commission is under a statutory mandate of 180 days to complete an application of a DCM.  In addition, the Commission is mindful of the competitive nature of the derivatives market and the advantages a registered SEF could garner over one operating under a temporary registration.  Given these constraints, the Commission sees the need to complete the full application reviews of both DCMs and SEFs as expeditiously as possible.  OGC will continue its existing participation in the inter-divisional review of DCM registration applications, and will extend that role to the review of SEF registration applications as well.  OGC will provide legal review of registration applicants’ compliance with existing and new core principles as applied to trading in swaps.  OGC review also will assure the legal sufficiency of Commission actions with respect to DCM and SEF registration applications, including that they are consistent with statutory requirements, the Commission’s rules implementing those requirements, and past precedents. 

Registration of Swap Dealers and Major Swap Participants:  OGC is requesting one FTE for review of registration applications of swap dealers and major swap participants.  OGC will provide legal review of registration applicants’ compliance with new requirements such as internal and external business conduct standards.  OGC review also will assure the legal sufficiency of Commission actions with respect to swap dealer and major swap participants registration applications, including that they are consistent with statutory requirements, the Commission’s rules implementing those requirements, and past precedents.  The Commission also anticipates potential registration issues that may arise regarding foreign-domiciled entities that may be required to register as swap dealers or major swap participants.  Legal analysis by OGC with respect to the extra-territorial application of the Dodd-Frank Act to these entities will be critical to resolution of these cross-border issues. 

Products and rules introduced by designated contract markets, swap execution facilities and swap data repositories.  OGC is requesting two FTE for review of products and rules introduced by DCMs, DEFs, and SDRs.  OGC review will assure that Commission actions with respect to the rules of registered entities are consistent with statutory requirements, the Commission’s rules implementing those requirements, and past precedents.  In addition, the Dodd-Frank Act provides the Commission with new authority to determine that certain event contracts (which may be futures, options, or swaps) are contrary to the public interest based on the application of specified statutory criteria.  OGC review will assure the legal sufficiency of Commission determinations in implementing this novel authority. 

Mandatory clearing determination. DFA imposes a new requirement on the CFTC to review, evaluate, and make a determination concerning a swap as to whether the swap should be cleared — i.e., a mandatory clearing determination — as well as evaluate the initial eligibility or continuing qualification of the DCO to clear such a swap. OGC is requesting one FTE for review of the mandatory clearing determinations.   In making these mandatory clearing determinations, the Commission must take into account several factors specified in the statute.  OGC review will assure the legal sufficiency and consistency of Commission determinations in implementing this novel authority. 

Registration of derivatives clearing organizations, rules review, applications for portfolio margining. OGC is requesting one FTE for review of DCO registrations, rule reviews, and portfolio margining applications.  The requirement that swaps subject to the mandatory clearing requirement be cleared by a registered DCO is one of the cornerstones of the protections implemented by Title VII of the Dodd-Frank Act.  OGC will provide legal review of DCO applicants’ compliance with new core principles as applied not only to swaps, but also to futures and options as well.  OGC review also will assure the legal sufficiency of Commission actions with respect to DCO registration applications, including that they are consistent with statutory requirements, the Commission’s rules implementing those requirements, and past precedents. 

Interpretation and Guidance: OGC is requesting one FTE to perform the increased activity related to interpretations and guidance regarding the application of the Dodd-Frank Act and the Commission’s implementing rules. OGC review of interpretations and guidance will assure their legal sufficiency, as well as the necessary consistency across the Commission.  Additionally, OGC will manage the process for interpretative guidance that relate to joint rules with the SEC.  OGC will also be actively involved in the preparation of interpretations relating to jurisdictional issues arising under the Dodd-Frank Act and implementing rules.  In particular, the Commission has proposed, in its joint product definitions proposed rulemaking with the SEC, separate processes for market participants to obtain guidance from the agencies with respect to whether an instrument under Title VII is a swap or a security-based swap, and with respect to the regulation of mixed swaps.  OGC will be managing these processes for interpretive guidance relating to these joint definitional rulemakings.

In addition to the above areas which relate to the implementation of DFA, OGC is requesting 7 FTE to support Commission-wide legal analysis in the following areas:

Litigation:  OGC is requesting one FTE and paralegal contract support to supplement the appellate litigation team.  OGC represents the Commission in court cases in the U.S. Supreme Court, Courts of Appeals, and other Federal and State courts when the Commission appears as intervenor or amicus curiae or as either appellant or appellee in any appeals court or when suit is brought against the Commission.  Following the implementation of DFA, the CFTC could face rulemaking challenges.  OGC expects that the rulemaking challenges will be time and resource intensive, and therefore, is requesting additional resources to support this program.

Legislative and Intergovernmental Affairs: OGC is requesting two additional FTE for Legislative and Intergovernmental Affairs. OGC monitors, reviews, and comments on proposed legislation affecting the Commission or the derivatives industry, and prepares technical assistance regarding draft legislation as requested by members of Congress or their staff.  OGC expects this workload to increase substantially in FY 2013 when Congress is expected to consider reauthorization legislation for the CEA and will likely undertake a thorough review of the substantial amendments that were enacted as part of the Dodd-Frank Act.  OGC also reviews and analyzes jurisdictional issues and liaisons with other Federal regulators as necessary to address specific matters implicating the regulatory interests of multiple agencies.  In FY 2012 and FY 2013, OGC will continue to support the activities of the Financial Stability Oversight Committee, and will require additional legal resources in areas such as banking and securities law, given the need for cross-disciplinary coordination and consistency to effectively implement the Dodd-Frank Act.   To support this increase in workload, OGC requests an additional two FTE.

General Law: OGC is requesting three additional FTE in the area of General Law.  One of these FTE will support the Information Governance program and ensure compliance with CEA Section 8 confidentiality provisions.  Under the Dodd-Frank Act, the Commission will begin capturing, and have access to, substantial amounts of data related to swaps which will be protected under Section 8.  Having the appropriate staff to oversee the protection of the statutory confidentiality of this data will be critical.  The additional FTE will also support the Commission in interpreting and applying the Administrative Procedure Act in regulatory actions taken to implement the Dodd-Frank Act, as well as the Regulatory Flexibility Act, and the Paperwork Reduction Act.  These FTE will also counsel the Commission to ensure compliance with the Sunshine Act and the Federal Advisory Committee Act. 

Ethics:  OGC is requesting one additional FTE to support the Ethics program.  OGC advises the Commission and its staff with respect to all matters related to the Commission’s ethics standards and compliance with its Code of Conduct, as well as with government-wide ethics regulations promulgated by the Office of Government Ethics.  To maintain adequate response times for ethics issues and process the required ethics forms as the agency and its new responsibilities grow pursuant to the Dodd-Frank Act, OGC will need an additional FTE in FY 2013

Provided legal counsel on the Dodd-Frank Act and created a Commission-wide process for preparation of over 50 rulemakings.

Issued five guidance documents to staff on issues relating to Dodd-Frank Act rulemakings.

Created communication process with other financial regulators to coordinate rules related to the Dodd-Frank Act, where possible.

Implemented new software to better manage the Commission’s FOIA process and handled a record number of FOIA requests.

Created a Commission-wide e-Discovery program and implemented new policies, processes, and tools to facilitate information governance throughout the Commission.

Represented the CFTC in appellate, bankruptcy, and human resource litigation.

Analyzed 112 recommended enforcement cases and settlements to assure legal sufficiency and conformity with precedent.

Provide legal counsel on implementation of all Dodd-Frank Act requirements.

Design and implement processes for assuring consistency in interpretations related to the provisions of the Dodd-Frank Act and regulations thereunder.

Defend litigation arising out of rulemaking challenges.

Support other Divisions by analyzing legal issues associated with activities such as registrations, international coordination, product and rule reviews, exchange trading, exercising new enforcement authorities, and clearing mandates.

Adapt organizational structure and develop strategic initiatives to better meet legal needs in light of the Commission’s re-structuring, and to increase efficiency and effectiveness.

Enhance the Commission’s ethics program by implementing further ethics training and enhancing responsiveness to ethics inquiries.

Provide technical assistance to Congress and Commission on CEA reauthorization legislation.

Defend litigation arising out rulemaking challenges and appeals in enforcement actions.

Support other Divisions by analyzing legal issues associated with activities such as registrations, international coordination, product and rule reviews, exchange trading, exercising new enforcement authorities, and clearing mandates.

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