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The FY 2012 Budget for Administrative Management and Support is $51,209,000 and 165 FTE, of which $11,372,000 and 35 FTE relate to Dodd-Frank. The 35 FTE increase are allocated to the following subprograms: Information Technology (30), Management Operations (3), and Human Resources (2).

In FY 2012, the Administrative Management and Support subprogram requests a total of 165 FTE, an increase of 40 FTE over the FY 2011 level. These resources respond to several needs. First, the agency staff will grow 62 percent between the FY 2010 actual FTE of 605 and the FY 2012 budget request of 983. Services provided by OED must expand to support that growth. Second, the Dodd-Frank legislation places new requirements on the agency, and staff members are needed, especially in the technology area, to ensure that the agency can meet those requirements. Finally, some areas of administration and management support have been either not staffed or understaffed in previous years as the agency choose to apply its limited resources to program rather than administrative functions. A number of those areas, such as planning and business management, are now trying to catch up.

The 40 FTE requested for the Administrative Management and Support subprogram includes five (5) FTE to support an increase in responsibilities for existing authorities and 35 FTE to support new responsibilities under Dodd-Frank. The resources requested are as follows:

• 30 FTE for information technology support for Dodd-Frank and one (1) FTE to support existing authorities
• Two (2) FTE to support existing human resources needs and two (2) to support growth under Dodd-Frank
• Two (2) FTE for management operations to support existing authorities and three (3) staff to support an increase in activities under Dodd-Frank.

Although this is an increase over the previous year, it represents a shrinking percentage of the agency total. In FY 2010, non-IT administrative resources were 10.6 percent of total FTE. Administrative support represents 9.6 percent and 7.4 percent of FTE respectively for FY 2011 and FY 2012. In FY 2010, IT administrative resources were 9.6 percent of total FTE. Administrative support represents 9.1 percent and 9.4 percent of FTE respectively for FY 2011 and FY 2012.

The Commission’s $66 million IT budget includes the following:

• $10 million for investments in CFTC SDR data aggregation, order data collection and standardization, and advanced computing platforms for high-frequency, algorithmic trading surveillance and enforcement. In FY 2012, based on the current analysis of high frequency, algorithmic trading, the CFTC must invest in advanced massively parallel computing systems to mine large volumes of unstructured and structured data for effective market surveillance and enforcement;
• $9 million for systems integration of existing large trader and trade systems with swaps data, for systems enhancements such as aggregated position limit surveillance, and significant upgrades to the FILAC system for SEFs and SDRs;
• $14 million for equipment and software. Staff increases require additional personal computers and communications devices, as well as increases in secure mobile storage devices, software licenses, and service usage fees;
• $5 million for telecommunication services. Additional IT resources will be required to provide increased communication capacity and bandwidth increases, data storage, and server computing capacity. The CFTC also anticipates a substantial increase in teleconferencing and Webcasting to support the collaboration required to implement Dodd-Frank authorities;$24 million for financial and legal information services, operations and maintenance, systems analysis for ISS, TSS, eLaw, as well as other mission supporting systems and general operational support; and
• $4 million for IT supplies, operations, and maintenance including intra-governmental payments or cross-services agreements with other government agencies for Internet access and Web site maintenance, personnel payroll system, GSA telephone services, and COOP facilities.

Exchange-traded futures products are mature from a product-development standpoint and are supported by a consistent set of processes and systems. OTC products vary significantly not only by asset class, but also by maturity and by supporting business process and system. While industry can target IT investments toward mature products to achieve economies of scale, regulators must be able to evaluate a variety of structured and unstructured data from a variety of automated, partially-automated, and manual systems. In FY 2012, CFTC will continue developing and maintaining systems to correlate data across several OTC asset classes with data from exchange traded futures. Though regulators are to have direct access to SDRs, there will be an increase in the amount and frequency of data exchanges between different regulators which will result in the development of new standards, systems interfaces, and new system development.

Information Technology. A total of 30 FTE are requested for technology related to staff growth and additional responsibilities that flow from Dodd-Frank. These additional FTE will be used in the following manner:

• Sixteen (16) FTE will support systems and services associated with implementing new responsibilities under Dodd-Frank. Fourteen (14) of those 16 FTE will implement new software technology solutions and address information management requirements and two (2) of those 16 FTE will increase data transparency through the CFTC intranet and Internet.
• Two (2) FTE will enhance information security and IT planning to ensure that CFTC systems are secure and well-managed.
• Twelve (12) FTE will provide the infrastructure support required by staff growth in the regions and headquarters. Of those 12 FTE, six (6) will provide desktop services, three (3) will support telecommunications services, and three (3) will support network services and production operations, including network security.

Of the $66 million above, approximately $25 million will be required to implement the Dodd-Frank Act. Dodd-Frank adds participants, facilities, and data repositories for each of the current OTC asset classes: interest rates, equity indexes, currency, commodities, and credit default. While the industry can target certain IT investments toward a particular asset class in order to reduce and share implementation costs, regulators must be able to assimilate, correlate, and aggregate information across all asset classes and exchange-traded products and participants. CFTC must build new technology solutions to support expanded responsibilities, as follows:

• Develop robust, mission-oriented systems for automated surveillance and the comprehensive analysis solutions that are essential to the transparency objectives of Dodd-Frank;
• Deploy IT systems to support new business requirements, integrate and expand existing systems, and develop new systems;
• Identify and adopt industry data standards to increase the reliability, accuracy, and transparency of collected information, including order data for disruptive trade practice analysis;
• Conduct extensive business and industry analysis to support regulation of the complex and diverse new instruments, including integration with current systems;
• Support increased collaboration and data sharing with other Federal, state, and foreign regulators;
• Increase public transparency of information through the agency’s public Web site;
• Integrate oversight of OTC and exchange traded futures to ensure robust financial risk surveillance, market surveillance, and economic analysis. Associating OTC data with futures data will be essential to understanding a market participant’s financial exposure and market position across the futures and OTC marketplaces; and
• Develop and maintain capabilities to retain OTC swap information not reported to an SDR.

Office of Human Resources. The Commission must recruit develop, compensate, and retain an engaged, high-performing workforce as the agency grows and changes. Unless our employees remain equal to the constantly-evolving challenges involved in protecting the integrity of the swaps, futures and option markets, the Commission will lack assurance it can meet its mission goals. As the agency grows and adds new responsibilities under Dodd-Frank, it must establish a strong training and professional development program to strengthen and expand both the technical and managerial skills of its workforce. The addition of two (2) FTE for the training program will expand this function from three (3) FTE to a total of five (5) FTE.

Office of Management Operations. The Office of Management Operations will be directly affected by the substantial growth in staff resulting from the new regulatory authorities. It will require two additional staff in the regional offices and one in headquarters to support the acquisition and construction of the agency’s critical space management needs, to ensure adequate contingency planning, and to provide for the increase of responsibility in the area of personnel security for background investigations and issuance of the HSPD-12 credential for all staff. With the projected significant increase in staff, additional support in the New York and Kansas City regional offices is critical. At this time there is only one staff person in Kansas City and staff is projected to increase from 26 to 70 employees, and in New York there are currently two staff persons supporting 86 staff, with a projected increase to 121.

As the CFTC undergoes the substantial expansion of its regulatory authority, it will require an appropriate level of growth in program and administrative support. If the requested level of resources is not received the Commission will be substantially thwarted in its mission with regard to: recruiting, hiring, training/cross-training and integrating new staff ─ most with highly specialized expertise; addressing personnel security requirements and managing the agency’s facilities; and ensuring that immediate tasks and challenges do not displace the need for sound strategic and annual planning to ensure resources are wisely invested and not squandered.

In addition, consequences for the Office of Information and Technology Services not receiving requested resources will be a curtailment of the Commission’s ability to keep pace with the industry data growth and the need for more effective and complex information analysis. The Commission will not be able to sustain and continue improvements supporting trade practice surveillance, trader account identification, large trader reporting, economic analysis, and litigation support. Without the ability to leverage these resources, the Commission will not be able to continue current levels of surveillance and analysis, resulting in less transparent futures markets and a greater risk of market fraud, manipulation and excessive speculation. Specifically, the following investments begun in FY 2011 would be curtailed:

• Collecting OTC information not reported to an SDR;
• Aggregating information in a commodity data warehouse to correlate data across several OTC asset classes;
• Associating OTC data with data from exchange traded futures; and
• Implementing advanced computing platforms for monitoring and surveillance of high frequency, algorithmic trading.

It should be noted that even at the level of resources requested, a number of significant programs remain unstaffed or understaffed. For example, the budget request does not include resources to support the consumer education functions required under Dodd-Frank and conducted by all other Federal financial agencies.

The fulfillment of the Commission’s mission and the achievement of its goals depend on a foundation of sound management, organizational excellence and engaged and productive staff. This foundation is essential to support the work of the Commission in the Washington D.C. headquarters and three regional offices in New York, Chicago, and Kansas City. The Commission is committed to maintaining a well-qualified, skilled and diverse workforce supported by a modern infrastructure and support services that enable staff to achieve programmatic goals. Building and sustaining this foundation requires continuous review and investment in people, technology, management initiatives and facilities.

Staff in the Administrative Management and Support subprogram ensure Commission compliance with Federal laws, regulations and requirements enacted by Congress and imposed by the OMB, the U.S. Treasury, the Government Accountability Office (GAO), and the Office of Personnel Management. The Executive Director serves as the Chief Operating Officer (COO) responsible for the effective and efficient allocation and use of resources. The COO also develops and implements management and administrative policy and programs, functions and services of the Commission. The program’s broad ranging mandate is centrally managed and administered through the offices of the Executive Director: Human Resources (OHR); Financial Management (OFM); Information and Technology Services (OITS); Management Operations; Secretariat; and the Library. In addition, the Executive Director has administrative responsibility for the Office of Proceedings, the Commission’s adjudicative office.

OED staff:

• Formulate budget and resource authorization strategies;
• Formulate, justify and execute the Commission’s annual budget;
• Deliver best practices in human capital resource strategies and management;
• Supervise the allocation and utilization of agency resources;
• Promote and foster best business practices for resource utilization;
• Develop and implement annual resource management plans;
• Promote management controls and financial integrity;
• Manage space leases and Commission assets;
• Manage the Commission’s technical and information infrastructure;
• Develop and implement the Commission’s automated information systems;
• Ensure the acquisition, quality, accessibility, storage and retention of mission critical trading data;
• Manage security, continuity and emergency preparedness programs;
• Deliver administrative support services;
• Ensure development of agency records management and retention program; and
• Deliver the library services of the Commission.

The five 5 FTE request for the Administrative Management and Support subprogram supporting the existing authorities are allocated as follows:

• One (1) FTE for information technology;
• Two (2) FTE for human resources; and
• Two (2) FTE for management operations.

Information Technology. The requested one (1) FTE for information technology will focus on systems and services for market and financial risk monitoring and oversight, leading increased integration of CFTC systems and processes for monitoring registered entities, market and financial risk, market integrity, and trade practice as well as systems and processes for enforcement and economic analysis.

Office of Human Resources. Currently, the agency has no compensation specialist. As the agency grows by 62 percent between FY 2010 and FY 2012, it needs a specialist to oversee the agency’s compensation strategy, not only to attract and retain the staff the agency requires, but also to help the agency manage the authority to set its own pay levels with reference to other Federal financial regulatory agencies. Another FTE will expand the employee relations staff by 33 percent, a reasonable increase as the agency grows substantially. These staff members provide information and support to managers and to individual employees to ensure that staff members are well-managed and that concerns are addressed promptly.

Office of Management Operations. The Office of Management Operations will require two additional staff in headquarters to support the building operations and space management assignments, as well as management of its physical assets, and the provision of adequate physical security for all staff.

The Office of the Executive Director is already performing the expansive list of functions above with extremely tight resources. Without the level of resources for these existing programs, the Administrative Management and Support program would be hard pressed to continue to meet its goal of ensuring that the agency has a highly-qualified, high-performing workforce with the tools and resources staff members need to meet the agency’s mission.

In addition, resources requested for Office of Information and Technology Services directly support the Commission’s ability to fulfill its mission, which continues to depend heavily on the collection, storage, accessibility, manipulation and analysis of voluminous amounts of data from futures market participants. The continuing increase in the volume and complexity of the data collected requires constant investments in and sustained support of IT systems and resources to enable staff to fully monitor the markets, promote greater market transparency and efficiency, and support market integrity. The Commission must continue to leverage highly competent skilled IT resources to employ 21st century technology in protecting the American people.

Even at the level of resources requested, a number of significant programs remain unstaffed or understaffed. For example, the agency has expanded the resources devoted to strategic and annual planning to three (3) FTE, but could only do so by reducing the resources allocated to other administrative support functions. Other functions, including the agency’s budget office, records and privacy program, and regional management remain understaffed.

Administrative Management & Support Request by Subprogram
($ in thousands)

Subprogram	FY 2011		FY 2012		Change
	Budget	FTE	Budget Request	FTE	Budget	FTE
Administrative Management & Support	$15,942	64.00	$22,358	73.00	$6,416	9.00
Information Technology	$15,493	61.00	$28,851	92.00	$13,358	31.00
TOTAL	$31,435	125.00	$51,209	165.00	$19,774	40.00

Dodd-Frank Included Above in Administrative Management & Support Request
($ in thousands)

Program Activity	FY 2011		FY 2012		Change
	Budget	FTE	Budget Request	FTE	Budget	FTE
Dodd-Frank – Administrative Management & Support	$0	0.00	$1,625	5.00	$1,625	5.00
Dodd-Frank – Information Technology	$0	0.00	$9,747	30.00	$9,747	30.00
TOTAL	$0	0.00	$11,372	35.00	$11,372	35.00

Administrative Management & Support Request by Goal
($ in thousands)

Outcomes	FY 2011		FY 2012		Change
	Budget	FTE	Budget Request	FTE	Budget	FTE
GOAL ONE: Protect the economic functions of the commodity futures, options and swaps markets.
1.1 Futures, options and swaps markets that accurately reflect the forces of supply and demand for the underlying commodity and are free of disruptive activity.	$1,097	4.36	$2,002	6.45	$905	2.09
1.2 Oversee markets which can be used effectively by producers, processors, financial institutions, and other firms for the purposes of price discovery and risk shifting.	1,784	7.09	6,083	19.60	4,299	12.51
Subtotal Goal One	$2,881	11.45	$8,085	26.05	$5,204	14.60
GOAL TWO: Protect market users and the public.
2.1 Violations of Federal commodities and swaps laws are detected and prevented.	$2,156	8.57	$2,870	9.25	$714	0.68
2.3 Customer complaints against persons or firms falling within the jurisdiction of the Commodity Exchange Act are handled effectively and expeditiously.	548	2.18	1,009	3.25	461	1.07
Subtotal Goal Two	$2,704	10.75	$3,879	12.50	$1,175	1.75
GOAL THREE: Foster open, competitive, and financially sound markets.
3.1 Clearing organizations and firms holding customer funds have sound financial practices.	$229	0.91	$1,506	4.85	$1,277	3.94
3.3 Markets are free of trade practice abuses.	175	0.70	2,110	6.80	1,935	6.10
Subtotal Goal Three	$404	1.61	$3,616	11.65	$3,212	10.04
GOAL FOUR: Organizational and Management Excellence.
4.1 A productive, technically competent, competitively compensated, and diverse workforce that takes into account current and future technical and professional needs of the Commission.	$4,025	16.00	$6,207	20.00	$2,182	4.00
4.2 A modern and secure information system that reflect the strategic priorities of the Commission.1	9,858	39.19	13,594	43.80	3,736	4.61
4.3 An organizational infrastructure that efficiently and effectively responds to and anticipates both the routine and emergency business needs of the Commission.	3,773	15.00	6,207	20.00	2,434	5.00
4.4 Financial resources are allocated, managed and accounted for in accordance with the strategic priorities of the Commission.	4,025	16.00	4,966	16.00	941	0.00
4.5 Commission’s mission is fulfilled and goals are achieved through sound management and organizational excellence provided by executive leadership.	3,765	15.00	4,655	15.00	890	0.00
Subtotal Goal Four	$25,446	101.19	$35,629	114.80	$10,183	13.61
TOTAL	$31,435	125.00	$51,209	165.00	$19,774	40.00
1 Represents Office of Information Technology Services dollars and staff resources not otherwise allocated to Goals 1, 2, or 3. (back to text)

Administrative Management & Support FY 2012 Budget by Goal

Goal	Percentage
Goal One	16%
Goal Two	7%
Goal Three	7%
Goal Four	70%

 

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