The Commodity Futures Trading Commission requested a 2017 fiscal year budget of US $330 million, which permits the employment of 897 full-time persons. This represents an increase of US $80 million or 32 percent over current levels. The CFTC’s current budget for its 2016 fiscal year is unchanged from its budget for its prior fiscal year. According to CFTC Chairman Timothy Massad in testimony before the US House Committee on Agriculture last week, “it has become increasingly challenging to carry out our duties at our current funding level.”
Compliance Weeds: In the middle of its formal budget submission to Congress (page 19), the Commodity Futures Trading Commission noted that “[s]taff has also been conducting [future commission merchant] compliance reviews regarding Regulation 1.73, which requires FCMs to conduct screening of orders, to stress test customers and proprietary positions, to evaluate their ability to meet initial margin requirement and make variation margin payments, and to evaluate their ability to liquidate positions quickly.” Under the CFTC rule, FCMs are required to formally establish and maintain written procedures to comply with CFTC Rule 1.73 (click here to access a copy of the rule). The beginning of the year is a good time to double check that these procedures are sufficiently robust and reflect actual firm practices. It is never helpful to have written procedures that contradict day-to-day practices.