CFTC / Economy / Fiscal policy / Regulation

The Dodd-Frank Act’s Effect on: The Commodity Futures Trading Commission

The Commodity Futures Trading Commission (CFTC), an independent agency, is charged with helping to regulate futures markets.

The CFTC Chairman, Gary Gensler, stated that, “the Wall Street reform bill (Dodd-Frank) will – for the first time – bring comprehensive regulation to the swaps market place.  Swap dealers will be subject to robust oversight.”

The Dodd-Frank Act, which empowers the CFTC to write new regulations, via Title VII, has caused the CFTC to enact 36 final rules, 7 final orders, and propose 65 new rules and regulations.  One rule, exempting swaps between affiliated entities within a corporate group of the clearing requirement, will cost $685.3 million and impose 1.76 million paperwork burden hours.

In total, the CFTC’s final rules are responsible for 1,865 pages of new regulation that will cost $4.55 billion and burden consumers and private financial institutions with 23.3 million hours of paperwork annually.  To put this in perspective, a person could walk to the moon and back 147 times.  The cost and burden figures would be even more glaring, but several of the final rules costs and burdens are shared with the Securities and Exchange Commission.

The mass of rulemakings and regulation from the CFTC has pushed their budget and staff to grow, immensely. The CFTC’s budget has ballooned from $168.8 million in FY 2010 to a proposed $308 million in FY 2013 (an 82.5 percent growth).  As well, the number of staff-years represented in the budget has gone from 650 to 1,015 (a 56 percent increase).

There is much more regulation and burden to come, though.  The CFTC notes that, “the Commission still has much work to do to effectively complete implementation of the Dodd-Frank Act and police the over-the-counter markets.”  In 1992, the CFTC wrote legislation that made market reports electronically deliverable saving paperwork hours.  Twenty years later, Dodd-Frank has turned the CFTC into an ever-hungry growing beast, costing billions of dollars and imposing mass amounts of paperwork burden hours.