Strategic Goal Two
Strategic 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. |
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Net Cost: $43.7 Million Staffing: 155 FTE |
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.
Accomplishments related to progress in achieving this goal include:
- Refined and extended automated surveillance systems to improve staff's ability to conduct market, trade practice, and financial and risk oversight.
- Enhanced the financial oversight systems to increase usability and to process bank and mutual fund data, variation margin data, and credit default swap data for currently-registered DCOs.
- Performed risk analysis and stress-testing on 500,000 large trader and clearing member positions to ascertain those with significant risk and confirm that such risks are being appropriately managed.
Goal Two performance measure results are depicted in the following table:
| # of Measures1 | Exceeded | Met | Not Met | |
|---|---|---|---|---|
| Goal Two | 15 | 3 | 7 | 5 |
| % of Total | 20% | 47% | 33% | |
 67%  |
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| 1 Excludes 3 performance measures categorized as "Not Applicable" for FY 2011. (back to text) | ||||