Budget choices imperil US CFTC data storage-O’Malia


Tue Jan 25, 2011 4:30pm EST

* CFTC could run out of room to store data by Oct

* O’Malia-CFTC has chosen more staff over technology

* Says Gensler playing “chicken” with Congress on funding

NEW YORK, Jan 25 (Reuters) – The U.S. futures regulator is poised to run out of room to store data by October, just as it takes on oversight of the vast over-the-counter swaps market, because of cutbacks to its technology budget, a top Republican official at the agency said on Tuesday.

The Commodity Futures Trading Commission, like all government departments and agencies, has had its funding for fiscal 2011 frozen at 2010 levels.  The CFTC has said it needs a massive funding boost to carry out its share of the Dodd-Frank financial reform law, but lack of congressional action on the budget and Republican threats to cut spending have forced the CFTC to prioritize spending.

Scott O’Malia, a Republican commissioner, criticized CFTC Chairman Gary Gensler for hiring more staff to carry out new regulations, while letting automated policing systems languish.

“In my opinion, the chairman is playing a game of ‘chicken’ with Congress over the CFTC technology budget, and that is not a game where anyone wins,” O’Malia said in prepared remarks to a derivatives industry conference held by the Tabb Group, a financial markets advisory firm.

“Drastic cutbacks in technology will reduce our investment in data storage to the point where the commission is estimated to run out of data storage by October of this year,” he said.

O’Malia did not detail in his prepared remarks what would happen if the CFTC ran out of room to store data.

The CFTC will cut more than $11 million from its technology budget this year, O’Malia said. Its total budget is $169 million, but it wanted at least a 50 percent hike for the current year.

O’Malia called the budget limitations “self-imposed,” and noted that the CFTC has hired more than 75 employees this year, swelling its ranks to 682 people and its payroll by $15 million.

Read more here.


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