CFTC Chair Behnam Defends Fiscal 2024 Budget Request

CFTC Chair Rostin Behnam requested an annual budget of $411 million for fiscal year 2024, a 12.6% increase over the 2023 budget.

In testimony before the House Subcommittee on Agriculture, Rural Development, Food and Drug Administration, Mr. Behnam focused on the CFTC’s priorities for the coming year based on developments in the derivatives markets, including (i) massive growth in trading volume in exchange-traded futures and options, (ii) the technology sector's increasing influence over the industry and (iii) cybersecurity risks.

Mr. Behnam requested specific dollar amounts to continue and expand CFTC operations within the following areas:

• Division of Enforcement - $70.6 million. Mr. Behnam highlighted the CFTC enforcement agenda and noted, in particular, the absence of authority to directly regulate spot trading in digital assets, other than through anti-fraud authority.
• Division of Market Oversight - $36.1 million. Mr. Behnam anticipated that in the coming year, the DMO will continue registering new trading platforms, in addition to new entities offering innovative derivatives products. He stated that new products including digital asset derivatives and the underlying cash markets create unique risks and require careful review by the DMO for compliance. Following the emergence of new technologies and increasing cyber attacks, Mr. Behnam said that implementing system safeguard oversights are "crucial" to the stability of the economy.
• Division of Clearing and Risk - $35 million. As cybersecurity risks continue to threaten the financial system, Mr. Behnam underscored the importance of automated systems of clearinghouses, in addition to their corresponding business continuity and disaster recovery plans. Mr. Behnam said that the DCR requires (i) tools to aid examiners in identifying potential areas of risk and (ii) analysts with expertise in quantitative risk and financial engineering.
• Market Participants Division - $28.4 million. Mr. Behnam said that the MPD provides policy and regulatory guidance to market participants. He explained that recently, this has involved the MPD (i) ensuring that the rise in retail participants are brought under the "regulatory fold" while analyzing associated risks as well as additional protections needed by retail participants and (ii) identifying weakness in third-party service provider and vendor relationships.

Additionally, Mr. Behnam said that the CFTC is requesting funds to support the CFTC’s development of metadata and visualization tools to expand the CFTC’s ability to collect and analyze market and industry data.

Mr. Behnam also touched on the "overwhelming success" of the CFTC’s Whistleblower Program which is supported by funds allocated by Dodd-Frank through the Customer Protect Fund. He advocated for amendments to the permitted use of the fund to allow the CFTC to implement new investor protection programs to help inform market participants.