Goal Two: Protect the public and market participants by ensuring the financial integrity of derivatives transactions, mitigation of systemic risk, and the fitness and soundness of intermediaries and other registrants.

In fostering financially sound markets, the Commission's main priorities are to avoid disruptions to the system for clearing and settling contract obligations and to protect the funds that customers entrust to FCMs. Clearing organizations and FCMs are integral to the financial integrity of derivatives transactions – together, they protect against the financial difficulties of one trader becoming a systemic problem.  Several aspects of the regulatory framework that contribute to the Commission achieving Goal Two are: 1) requiring that market participants post margin to secure their ability to fulfill financial obligations; 2) requiring participants on the losing side of trades to meet their obligations, in cash, through daily (sometimes intraday) margin calls; 3) requiring FCMs to maintain minimum levels of operating capital; and, 4) requiring FCMs to segregate customer funds from their own funds.

The Commission works with the exchanges and the NFA to closely monitor the financial condition of the FCMs themselves, who must provide the Commission, exchanges and NFA with various monthly and annual financial reports. The exchanges and NFA conduct routine, periodic audits and daily financial surveillance of their respective member FCMs. As a regulator, the Commission reviews the audit and financial surveillance programs of the exchanges and NFA and also monitors the financial condition of FCMs directly, as appropriate. This includes reviewing each FCM's exposure to risk from large customer positions that it carries. The Commission also conducts extensive daily surveillance of risks posed by traders, firms and DCOs and periodically reviews clearing organization procedures for monitoring risks and protecting customer funds.

The Commission works with the NFA to ensure that those seeking registration as intermediaries meet high qualification and fitness standards through the registration process. The Commission also drafts and interprets rules that apply to the conduct of business by these intermediaries.

With the implementation of the Dodd-Frank Act, the Commission has substantially greater responsibilities, including oversight of newly registered derivatives dealers, as well as implementation of enhanced compliance requirements for intermediaries and new core principle requirements for DCOs. The Commission also will be responsible for determining the initial eligibility or the continuing qualification of a DCO to clear swaps, as well as for the review of swaps submitted to the Commission for a determination as to whether the swaps are required to be cleared. The Commission also will be implementing new statutory provisions regarding review of new rules and rule amendments submitted by DCOs. In addition, the scope of the Commission's reviews of DCOs, DSROs, and intermediaries will be expanded to include swap transactions and swap intermediaries.

Breakout of Goal Two Request by Mission Activity
Dollars in Thousands

Mission Activities	FY 2013		FY 2014		Change
	Budget	FTE	Budget Request	FTE	Budget	FTE
Registration and Registration Compliance	$14,120	54	$16,920	65	$2,800	11
Product Reviews	4,940	19	4,770	18	-170	-1
Surveillance, including Data Acquisition and Analytics	16,190	54	16,210	51	20	-3
Examinations	26,980	115	32,900	138	5,920	23
Enforcement	0	0	0	0	0	0
Economic and Legal Analysis	10,980	45	11,160	45	180	0
International Policy Coordination	230	1	0	0	-230	-1
Data Infrastructure and Technology Support	0	0	0	0	0	0
Agency Direction, Management and Administrative Support	5,160	22	5,010	21	-150	-1
Total Goal Two	$78,600	310	$86,970	338	$8,370	28

Breakout of Goal Two Request by Division
Dollars in Thousands

	FY 2013		FY 2014		Change
	Budget	FTE	Budget Request	FTE	Budget	FTE
Agency Direction	$2,110	9	$1,910	8	-$200	-1
Administrative Management  and Support	3,050	13	3,100	13	50	0
Chief Economist	3,050	13	2,620	11	-430	-2
Clearing and Risk	23,920	102	26,940	113	3,020	11
Data and Technology	8,960	13	9,250	12	290	-1
Enforcement	0	0	0	0	0	0
General Counsel	7,030	30	6,680	28	-350	-2
International Affairs	0	0	0	0	0	0
Inspector General	0	0	0	0	0	0
Market Oversight	0	0	0	0	0	0
Swap Dealer and Intermediary Oversight	30,480	130	36,470	153	5,990	23
Total	$78,600	310	$86,970	338	$8,370	28

Goal Three Planned Resources (Appendix 5)