U.S. Commodity Futures Trading Commission
Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581
www.cftc.gov

April 10, 2013

Dear Chairwoman Mikulski, Senator Shelby, Chairman Rogers and Representative Lowey:

As swaps market reforms are have now becoming a reality, the Commodity Futures Trading Commission (CFTC) needs the resources to match the responsibilities Congress charged the agency with in overseeing this vast marketplace.

The CFTC has a significantly expanded mission and scope.  The CFTC's hardworking staff is just 7 percent more than we were 20 years ago though the futures market, which the agency has traditionally overseen, has grown fivefold.  In addition, the CFTC now directly oversees the swaps market—eight times bigger and far more complex than the futures markets.

Simply put, the CFTC is not the right size for the new and expanded mission Congress has directed it to perform.

Market implementation of swaps reforms means additional resources for the CFTC are all the more essential.  Investments in both technology and people are needed for effective oversight of these markets—like having more cops on the beat.

For the first time, swap transaction data has started to be reported to the public and to regulators.  We need the staff and technology to access, review and analyze this critical market data.  For the first time, 75 entities have registered as swap dealers and two as major swap participants (MSPs).  We need people to answer their questions and work with the National Futures Association on the necessary oversight of these swap dealers and MSPs to ensure market integrity.  For the first time, the public will benefit from the risk reduction and greater access to the swaps market that comes from centralized clearing.  As a significant portion of the interest rate and credit default swap market has been moved into central clearing, we need people to regularly examine clearinghouses.

Furthermore, as market participants expand their technological sophistication, CFTC technology upgrades are critical for market surveillance and to enhance customer fund protection programs.

Without sufficient funding for the CFTC, the nation cannot be assured this agency can closely monitor for the protection of customer funds in the futures and swaps markets.  Without sufficient funding, we will not be able to implement more regular and more in-depth examinations of clearinghouses, trading platforms, and major market intermediaries the CFTC oversees.  Without sufficient funding, we cannot be sufficiently responsive to the hundreds of incoming questions and requests regarding implementation of reform.  Without sufficient funding, we cannot utilize our enforcement arm to its fullest potential to go after bad actors in the markets.  And without sufficient funding for the CFTC, the nation cannot be assured that this agency can effectively enforce essential rules that promote transparency and lower risk to the economy.

Therefore, I am pleased to transmit the CFTC's Budget and Performance Estimate for FY 2014.  It estimates the need for an appropriation of $315,000,000 and 1,015 staff-years for the agency.  This amount is a $7,000,000 increase in funding and no increase in FTEs over the President's FY 2013 Budget of $308,000,000.

In addition, I am pleased to present the CFTC's Annual Performance Report (APR) for FY 2012, which provides a detailed analysis of the CFTC's execution of its mission.  As described in the report, the agency's performance is affected by the challenges of limited resources.  The Commission has validated the accuracy, completeness, and reliability of the performance data contained in this report.

I am available to discuss this budget request and to answer any questions you may have.

cc:

Executive Summary