Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

CFTC Commissioners Scott O’Malia (R) and Bart Chilton (D) have joined the fray over President Obama’s recently released budget for fiscal year 2012 by releasing statements in recent days regarding the budget’s allocation for CFTC spending. The President’s budget requests $308 million for the CFTC (a 45 percent increase over fiscal year 2011) and proposes to hire 316 additional staff (a 47 percent increase), plus an additional 218 contractors. To pay for some of this increase, the budget requests Congress to provide authority for the CFTC to impose user fees on market participants.

Commissioner O’Malia “strongly oppose[s]” the budget’s unauthorized user fee or “transaction tax” as a disingenuous effort to hide what will amount to an increased in the federal deficit. The Commissioner provided the following additional criticisms regarding the budget:

– It fails to outline a strategy for utilizing technology as a means to leverage staff resources and to keep pace with sophisticated trading practices in the market.
– It neglects reliance on self regulatory organizations such as exchanges and clearinghouses, or the Natural Futures Association.
– It provides for 85 additional full time employees to investigate fraud, but none for the purpose of fraud prevention through customer education and outreach.

By contrast, Commissioner Chilton stated that the budget presents an “admirable equilibrium” between fiscal restraint and the needed resources for market oversight and enforcement, noting that the agency’s regulatory purview has expanded from roughly $5 trillion in annualized trading to hundreds of trillions. While he expressed a preference for annual appropriations from Congress as opposed to imposition of a user fee on market participants, Commissioner Chilton stated that “if the choice is between user fees or inadequate resources to fund oversight and enforcement, then we need to pull the trigger on user fees.”

Leave a Reply

Your email address will not be published. Required fields are marked *