CFTC Budget Testimony Provides Insight into Agency Agenda

February 12th, 2015

Yesterday, February 11, 2015, Timothy Massad, Chairman of the Commodity Futures Trading Commission (CFTC), testified before the House of Representatives’ Appropriations Committee’s Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies. Chairman Massad testified in support of President Obama’s requested budget increase for the agency.  For Fiscal Year (FY) 2016 the CFTC has requested a $72 million budget increase to $322 million.

The proposed budget allocation and priorities outlined in Chairman Massad’s testimony provide insight into what to expect from the CFTC this year.  Of the $72 million additional requested funds, $28 million would be allocated to technology infrastructure. The agency already plans to commit $51 million in technology investments, with or without the increase.

When discussing the CFTC’s surveillance, investigatory and regulatory agendas, high frequency trading and foreign exchange trading emerged as two apparent priorities.  Chairman Massad explained that the agency’s surveillance tactics would have to become more sophisticated to keep up with increasingly complex high speed markets.  Chairman Massad said that the agency is planning on conducting “more time-intensive and inherently complex investigations,” with specific reference to high frequency trading.  He also stated that recent instances of foreign exchange manipulation, “underscore the importance of examining retail foreign exchange dealers.”  The agency may work with the National Futures Association (NFA) to review and revise foreign exchange trading rules.

Cybersecurity was also a common theme throughout the testimony. Chairman Massad said, “cybersecurity is a major risk to our financial system today, and therefore we must devote greater resources to this important challenge. We must engage in more frequent and more in-depth examinations to assess the readiness of these institutions to meet these challenges.”

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