The mission of the CFTC is to protect market users, consumers and the public at large from fraud, manipulation, and other abusive practices, and systemic risk, related derivatives that are subject to the Commodity Exchange Act (CEA or the Act) and to foster open, transparent, competitive, and financially sound markets.  Congress established the CFTC as an independent agency in 1974. The CFTC administers the CEA, 7 U.S.C. Section 1, et. seq.  The CEA established a comprehensive regulatory structure to oversee the volatile futures trading complex, including futures trading in all goods, articles, services, rights and interests; commodity options trading; and leverage trading in gold and silver bullion and coins.

To meet changing market conditions, CFTC's mandate has been renewed and expanded several times since its inception. Most recently, and in response to the 2008 financial crisis, the scope of CFTCs mission grew dramatically in 2010 by the enactment of the Dodd-Frank Act, which expanded CFTC's mission to include oversight of the previously unregulated over-the-counter (OTC) swaps marketplace.

The Dodd-Frank Act  amended the CEA to establish a comprehensive new regulatory framework for swaps, as well as enhanced authorities over historically regulated entities. Title VII of the Dodd-Frank Act, which relates to swaps, was enacted to reduce systemic risk, increase transparency and promote market integrity within the financial system by:

• Providing for the registration and  regulation of swap dealers and major swap participants;
• Imposing clearing and trade execution requirements on standardized derivatives products;
• Creating robust recordkeeping and real-time reporting regimes; and
• Enhancing the Commission's rulemaking and enforcement authorities to include all registered entities and intermediaries subject to the Commission's oversight.

The U.S. derivatives markets play a critical role in empowering legitimate, prudential, and non-speculative hedging strategies through transference of price risk.  It is therefore essential to protect the financial stability of these markets are by ensuring they are transparent, open and competitive.  To this end, CFTC has consulted closely and acted in conjunction with other regulators on Dodd-Frank implementation, including the Securities and Exchange Commission (SEC), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and international regulatory counterparts in Europe and Asia. CFTC has made significant progress in the area of Dodd-Frank Act rule writing, having finalized 40 rules and eight final orders to date¹, including most of the foundational requirements for substantive swaps market reform including:

• The Commission has adopted final rules establishing registration and regulatory requirements for SDRs, which will gather data on all swaps transactions, including for credit default swap (CDS) indices.
• The CFTC has made significant progress on central clearing for the swaps market. Numerous rules establishing new DCO operational and risk management requirements have been completed.
• The CFTC has completed key rules on transparency that, for the first time, provide a detailed and up-to-date view of the physical commodity swaps markets. As a result, regulators can police for fraud, manipulation and other abuses.
• The CFTC completed rules, guidance and acceptable practices for designated contract markets (DCMs).  DCMs will be able to list and trade swaps, helping to bring the benefit of pre-trade transparency to the swaps marketplace.

The remaining rules will be largely completed in FY 2013, including:

• The initial clearing requirement determination,
• Transparency rules for minimum block sizes and swap execution facilities (SEFs),
• An international approach to margin requirements for uncleared swaps, and
• How legal and regulatory regimes around the globe should interface in swaps market reform.

Dodd-Frank Act Rules with Significant Resource Requirements

The Dodd-Frank Act amended the CEA to establish a comprehensive new regulatory framework for swaps, as well as enhanced authorities over historically regulated entities.  The Commission has undertaken an ambitious schedule for finalizing the rules necessary to expand its scope, bringing protection to market users and the public from fraud, manipulation, abusive practices and systemic risk related to swaps and fostering open, competitive, and financially sound markets.

While the Commission established a significant set of rules in response to the new authorities granted under the Dodd-Frank Act, only a subset have impact on the Commission's workload and hence resources.  The following summarizes the major Dodd-Frank Act rules and indicates which mission activities are impacted by the new regulatory requirements.

Impact of major rules related to core principles and other registration requirements by Mission Activity

Title	Reference	REG	PR	SVL	EXM	ENF	E&L	INT'L	DATA
Core Principles and Other Requirements for DCMs	17 CFR Parts 1, 16, and 38
Derivative Clearing Organization General Provisions and Core Principles	17 CFR Parts 1, 21, 39, 140
Swap Data Repositories: Registration Standards, Duties and Core Principles	17 CFR Part 49
Registration of Swap Dealers and Major Swap Participants	17 CFR Parts 3, 23, and 170
(Proposed) Core Principles and Other Requirements for Swap Execution Facilities	76 FR 1214
Business Conduct Standards for Intermediaries	Multiple

Table Key

Acronym	Mission Activity2
REG	Registration and Registration Compliance
PR	Product Reviews
SVL	Surveillance, including Data Acquisition and Analytics
EXM	Examinations
ENF	Enforcement
E&L	Economic and Legal Analysis
INT'L	International Policy Coordination
DATA	Data Infrastructure and Technology Support

Impact of major rules related to swap products by Mission Activity

Title	Reference	REG	PR	SVL	EXM	ENF	E&L	INT'L	DATA
Definition of Swaps, Swap Dealer, Major Swap Participants	Multiple
Swap Data Recordkeeping and Reporting Requirements	17 CFR Part 45
Reviews of Swaps for Clearing Requirement Determination	Multiple
Real-Time Public Reporting of Swaps Transaction Data	17 CFR Part 45
Large Trader Reporting for Physical Commodity Swaps	17 CFR Parts 15 and 20
Block Sizes (Proposed)	Multiple

Table Key

Acronym	Mission Activity3
REG	Registration and Registration Compliance
PR	Product Reviews
SVL	Surveillance, including Data Acquisition and Analytics
EXM	Examinations
ENF	Enforcement
E&L	Economic and Legal Analysis
INT'L	International Policy Coordination
DATA	Data Infrastructure and Technology Support

Strategic Response

The Commission's current Strategic Plan was published in February 2011. It integrated the expanded responsibilities under the Dodd-Frank Act. As a set of guiding principles for implementing new regulatory and mission activities, this plan provides direction during a time of uncertainty. These strategic goals were constructed in a focused way, lending credence to unifying goals found within CEA, as amended by the Dodd-Frank Act. Using this strategic plan, Commission activities will be aligned through 2015.

The Commission's strategic goals are:

• Goal One. Protect the public and market participants by ensuring market integrity, promoting transparency, competition and fairness and lowering risk in the system.
• 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.
• Goal Three. Protect the public and market participants through a robust enforcement program.
• Goal Four. Enhance the integrity of U.S. markets by engaging in cross-border cooperation, promoting strong international regulatory standards, and encouraging ongoing convergence of laws and regulation worldwide.
• Goal Five. Promote Commission excellence through executive direction and leadership, organizational and individual performance management, and effective management of resources.

These goals are as relevant today as when the Plan was formulated.  The Commission continually seeks to balance its regulatory mission requirements with its stewardship responsibilities to the American public.

The CFTC consists of five Commissioners. The President appoints and the Senate confirms the CFTC Commissioners to serve staggered five-year terms.  No more than three sitting Commissioners may be from the same political party.  With the advice and consent of the Senate, the President designates one of the Commissioners to serve as Chairman.  The Commission is headquartered in Washington D.C. with regional offices in Chicago, Kansas City and New York. At the end of FY 2012, the Commission employed 703 people and had a level of effort over the year of 687 FTE.

¹ October 19, 2012. (back to text)

² Agency Direction, Management and Administrative Support is not included, as rules have little to no direct impact on workload in this mission activity. (back to text)

³ Agency Direction, Management and Administrative Support is not included, as rules have little to no direct impact on workload in this mission activity. (back to text)