The fissure between President Trump and the Commodities Futures Trading Commission (CFTC) on the fiscal year 2018 budget was on display at a House hearing.
Acting CFTC Chair Christopher Giancarlo testified in front of the House Appropriations Committee, justifying his budget request for the agency of $281.5 million for the upcoming previous.
“To effectively oversee the evolving derivatives markets, the Commission is requesting $281.5 million and 739 full-time equivalents (FTE) for fiscal year 2018 operations.” Giancarlo stated in his opening remarks. “This is an increase of $31.5 million and 36 FTE over the FY 2017 level. The $31.5 million in additional funds is not a formulaic or superficial number, but a thorough and informed assessment of what the CFTC needs to execute its mission in FY 2018.
“I would like to note, that under my direction the Commission has utilized its ability to provide a budget directly to the Congress. This is the first budget submission under my leadership, and I thought it important to articulate the needs of the Commission based on my perspective and vision for a renewed and refocused CFTC. I bring to this process my experience, not in politics, but as a former senior executive of a publicly-traded company. In business, everything we did – every expenditure and every investment — had to contribute to shareholder value. The P&L was our scorecard and it didn’t lie. We were either adding value to our enterprise or we were looking for another line of work.”
President Trump, when he submitted his budget proposal to Congress, requested only $250 million for the agency.
That number is the exact same as it has been for the previous two years.
The budget request was supported by both Giancarlo, a Republican, and his Democrat colleague Sharon Bowen, a CFTC commissioner.
Though the agency is supposed to have five commissioners, Giancarlo and Bowen are the only two commissioners currently serving.
Democrats on the committee were supportive of the request with Sanford Bishop, a Democrat from Alabama calling the CFTC a “financial first responder.”
Specifically, the issue of technology took on priority.
According to Giancarlo, his agency is asking for $57 million in technology related funds versus $42 million received in 2017.
Giancarlo noted that high frequency trading and algorithmic trading are changing profoundly the way that derivatives need to be regulated.
Spoofing and front running are just two of the most well-known scams associated with algorithmic trading which the CFTC needs to investigate.
Giancarlo recounted an anecdote made by hockey legend Wayne Gretzky who said, “I skate to where the puck is going to be, not where it has been.”
“This request is to try to skate to where the puck is going,” Giancarlo
Giancarlo recently started LabCFTC, which is a fintech and regtech initiative at the CFTC.
President Trump submitted his budget in May 2017; the total government spending projections in fiscal year 2018 would be just north of $4 trillion, making the CFTC’s budget a tiny portion of the budget.
The budget process will be long and arduous. The fiscal year starts in September and Congress will need to pass a budget before then.
While the President makes a budget proposal- as President Trump did in May- it will be the job of Congress to pass the actual budget, meaning the actual outlay to the CFTC is still to be determined.
Since all budget matters start in the appropriations committees, Giancarlo testified in front of that committee on his budget request.