Strategic Plan

COMMODITY FUTURES TRADING COMMISSION

Strategic Plan

AGENCY: Commodity Futures Trading Commission.

ACTION: Request for comments.

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SUMMARY: The Commodity Futures Trading Commission, in accordance with

the requirements of the Government Performance and Results Act, has

developed a draft Strategic Plan which was submitted to the Office of

Management and Budget on August 15, 1997. The Commission is now

soliciting comments on the draft plan.

DATES: Comments must be received on or before October 16, 1997.

ADDRESS: Comments on the strategic plan may be sent to Jean A. Webb,

Secretary, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street, NW, Washington, DC 20581. Comments may be

sent by facsimile transmission to (202) 518-5528 or by electronic mail

to [email protected]. Reference should be made to ``Strategic Plan.''

FOR FURTHER INFORMATION CONTACT: Madge A. Bolinger, Office of Financial

Management, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street, NW, Washington, DC 20581 (202) 418-5180.

SUPPLEMENTARY INFORMATION: The Government Performance and Results Act,

5 U.S.C. 306 (``GPRA''), requires all agencies to develop and submit

strategic plans to the Congress and the Office of Management and Budget

no later than September 30, 1997. The Commission has developed its

plan, ``Vision and Strategies for the Future: Facing the Challenges of

1997 through 2002,'' which establishes the goals, outcome objectives

and strategies for the next five years. Public comment is now being

sought on the strategic plan.

The Commission's draft Strategic Plan is set forth below.

Issued in Washington, DC, on September 8, 1997, by the

Commission.

Jean A. Webb,

Secretary to the Commission.

Vision and Strategies for the Future: Facing the Challenges of 1997

Through 2002

Commodity Futures Trading Commission Strategic Plan 1997-2002

August 1997

Draft

Table of Contents

Vision Statement

Mission Statement

Economic Benefits of Futures Trading

Profile of Market Users

Current Perspective on the Industry

U.S. Commodity Exchanges

Map of CFTC-Regulated Commodity Exchanges

Number of Registered Commodities Professionals

Number of Contract Markets

Volume of Trading

Managed Funds

Strategic Goals & Objectives

Goal One--The Marketplace

Goal Two--The Market Users

Goal Three--The Environment

Summaries of Outcome Objectives & Activities

Achieving the Goals: Strategies to Mission Performance--1997-2002

The Environment

The Strategies

Achieving the Goals: External Challenges--1997-2002.

The Challenges

The Strategies

Achieving the Goals: Internal Challenges--1997-2002.

The Challenges

The Strategies

Achieving and Measuring Performance

Achieving Performance

Measuring Performance: The Annual Performance Plan

Relating General Goals and Objectives to Performance Goals and

Program Evaluation.

Appendix

Understanding the Fundamental of Commodity Futures and Options

Addresses of the Commodity Exchanges & Designated Self-

Regulatory Organizations

CFTC Offices.

CFTC Team

Commission Concurrence

Publications and Information

Vision Statement

For the years 1997 through 2002, the Commodity Futures Trading

Commission will:

Preserve and promote the vital role America's commodity markets

play in establishing fair prices for goods and services and managing

the risks of their production, marketing, and distribution in the world

economy.

Mission Statement

The mission of the Commodity Futures Trading Commission (CFTC) is

to protect market users and the public from fraud, manipulation, and

abusive practices related to the sale of commodity futures and options,

and to foster open, competitive, and financially sound commodity

futures and option markets.

Background

The Commodity Futures Trading Commission was created by Congress in

1974 as an independent agency with the mandate to regulate commodity

futures and option markets in the United States. The agency's mandate

was renewed and expanded in 1978, 1982, 1986, 1992, and 1995.

Today, the CFTC is responsible for ensuring the economic utility of

futures markets by encouraging their competitiveness and efficiency,

ensuring their integrity, and protecting market participants against

manipulation, abusive trade practices, and fraud. Through effective

oversight regulation, the CFTC enables the commodity futures markets

better to serve their important function in the nation's economy of

providing a mechanism for price discovery and a means of offsetting

price risk.

Futures contracts for agricultural commodities have been traded in

the U.S. for 150 years and have been under federal regulation since the

1920s. In recent years, futures trading has expanded rapidly into many

new markets, beyond the domain of

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traditional physical and agricultural commodities. Futures and option

contracts are now offered in a vast array of financial instruments,

including foreign currencies, U.S. and foreign government securities,

and U.S. and foreign stock indices.

Economic Benefits of Futures Trading

Why Were Futures Markets Created?

The frantic shouting and signaling of bids and offers on the

trading floor of a futures exchange undeniably convey an impression of

chaos. The reality, however, is that chaos is what futures markets

replaced. Prior to the establishment of central grain markets in the

mid-nineteenth century, the nation's farmers carted their newly

harvested crops over plank roads to major population and transportation

centers each fall in search of buyers. The seasonal glut drove prices

to give-away levels and, indeed, to throw-away levels as grain often

rotted in the streets or was dumped in rivers and lakes for lack of

storage. Come spring, shortages frequently developed and foods made

from corn and wheat became barely affordable luxuries. Through the

year, it was each buyer and seller for him- or herself, with neither a

place nor a mechanism for organized, competitive bidding. The first

central markets were formed to meet that need. Eventually, contracts

were entered into for forward as well as for spot (immediate) delivery.

So-called forwards were the forerunners of present day futures

contracts.

Spurred by the need to manage price and interest rate risks that

exist in virtually every type of modern business, today's futures

markets have also become major financial markets. Participants include

mortgage bankers as well as farmers, bond dealers as well as grain

merchants, and multinational corporations as well as food processors,

lending institutions, and individual speculators.

Futures prices arrived at through competitive bidding are

immediately and continuously relayed around the world by wire and

satellite. A farmer in Nebraska, a merchant in Amsterdam, an importer

in Tokyo, and a speculator in Ohio have simultaneous access to the

latest market-derived price quotations. And, should they choose, they

can establish a price level for future delivery--or for speculative

purposes--simply by having their broker buy or sell the appropriate

contracts. Images created by the fast-paced activity of the trading

floor notwithstanding, regulated futures markets are a keystone of one

of the world's most orderly, envied, and intensely competitive

marketing systems.

Indeed, it is an example of a classical free market with many

buyers and sellers, no one of whom has dominant market power, achieving

an equilibrium price level through open exchange of supply and demand

information.

Economic Benefits

In a competitive market economy, there is general agreement among

economists that a market for a product would be perfectly competitive

if:

many buyers and sellers met openly, and no one

individually controlled the market;

the commodity was standardized so all knew the grade and

quality of the product being traded; and

buyers and sellers could enter the market freely, and

participants had full knowledge of available supply and demand for

their product.

While no market meets that ideal, futures markets come closer to it

than most others and yield significant economic benefits:

Price Discovery. With many potential buyers and sellers

competing freely, futures trading is a very efficient means of

determining the price level for a commodity. This is commonly referred

to as price discovery.

Hedging Risk. Futures markets give producers, processors,

and users of commodities and financial instruments a means of passing

the price risks inherent in their businesses to traders who are willing

to assume those risks. In other words, commercial users of the markets

can hedge--enter into an equal and opposite transaction to their cash

market position in order to reduce the risk of financial loss due to a

change in price--and, through hedging, lower their costs of doing

business. This results in a more efficient marketing system and,

ultimately, lower costs for consumers.

Market Information. Since futures markets are national and

worldwide in scope, they act as a focal point for the collection and

dissemination of statistics and vital market information.

Profile of Market Users

Hedgers

The details of hedging can be somewhat complex, but the principle

is simple. Hedgers are individuals and firms which make purchases and

sales in the futures market solely for the purpose of establishing a

known price level for something they later intend to buy or sell in the

cash market (such as at a grain elevator or in the bond market). In

this way, they attempt to protect themselves against the risk of an

unfavorable price change in the interim. Or hedgers may use futures to

lock in an acceptable differential between their purchase cost and

their selling price.

The number and variety of hedging possibilities are extensive. A

cattle feeder can hedge against a decline in livestock prices, and a

meat packer or supermarket chain can hedge against an increase in

livestock prices. Borrowers can hedge against higher interest rates,

and lenders against lower interest rates. Investors can hedge against

an overall decline in stock prices, and those who anticipate having

money to invest can hedge against an increase in the overall level of

stock prices.

Whatever their hedging strategy, a common denominator is that

hedgers willingly give up the opportunity to benefit from favorable

price changes in order to achieve protection against unfavorable price

changes. In essence, they acquire a form of price insurance.

Speculators

If you were to speculate in futures contracts, the person taking

the opposite side of your trade on any given occasion could be a hedger

or another speculator-someone whose opinion about the probable

direction of prices differs from your own.

Speculators are individuals or firms who seek to profit from

anticipated increases or decreases in futures prices. In so doing, they

help provide the risk capital needed to facilitate hedging.

Someone who expects a futures price to increase would purchase

futures contracts in the hope of later being able to sell them at a

higher price. This is known as ``going long.'' Conversely, someone who

expects a futures price to decline would sell futures contracts in the

hope of later being able to buy back identical and offsetting contracts

at a lower price. The practice of selling futures contracts in

anticipation of lower prices is known as ``going short.''

One of the attractive features of futures trading is that it is

equally easy to profit from declining prices (by selling) as it is to

profit from rising prices (by buying).

Floor Traders

Floor traders, or locals, who buy and sell for their own accounts

on the trading floors of the exchanges, play an important role as

futures market participants. Like specialists and market makers at

securities exchanges, they help to provide market liquidity. If there

is not a hedger or speculator who is immediately willing to take the

other side of an order at or near the going price, there may be a floor

trader who

[[Page 48615]]

will do so, in the hope of being able to make an offsetting trade at a

small profit minutes or even seconds later. In the grain markets, for

example, there is frequently only one-fourth of a cent per bushel

difference between the prices at which a floor trader buys and sells.

Floor traders create more liquid and competitive markets. However,

it should be noted that unlike market makers or specialists, floor

traders are not obligated to maintain a liquid market or to take the

opposite side of customer orders.

Current Perspective on the Industry

U.S. Commodity Exchanges

There are 11 commodity exchanges in the United States, located in

six cities. These self-regulatory organizations are responsible,

subject to CFTC oversight, for the operation of the exchange and the

business conduct and financial responsibility of their member firms.

History

As the economy of the United States expanded during the early part

of the nineteenth century, the commodity exchanges evolved from

unorganized club-like associations into formalized exchanges. In 1848,

the first formal exchange, the Chicago Board of Trade, was established

with 82 members. And on March 13, 1851, the first contract was traded

on this exchange, encouraged by the trading standards, inspections

system, and weighing system prescribed by the board members.

Trading on the Chicago Board of Trade was considerable, and by 1870

futures trading also began on the New York Produce Exchange and the New

York Cotton Exchange. By 1885, the New York Coffee Exchange was

actively trading futures contracts. Since the second half of the

nineteenth century, the growth of these exchange institutions has been

steady and continuous-evolving into the 11 U.S. commodity exchanges,

designated as contract markets by the CFTC, that are used today.

The total volume of futures contract and option trading on all

exchanges in the United States now has a notional value of billions of

dollars per day. The commodity exchanges have become an indispensable

financial tool for the world's markets.

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Number of Registered Commodities Professionals

Companies and individuals who handle customer funds or give trading

advice must apply for registration through the National Futures

Association (NFA), a Congressionally authorized self-regulatory

organization subject to CFTC oversight.

The Commission regulates the activities of over 62,000 registrants:

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Number

Type of registered professional in 1997

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Associated Persons (Sales People)............................. 45,850

Commodity Pool Operators (CPOs)............................... 1,351

Commodity Trading Advisors (CTAs)............................. 2,606

Floor Brokers (FBs)........................................... 9,299

Floor Traders (FTs)........................................... 1,331

Futures Commission Merchants (FCMs)........................... 233

Introducing Brokers (IBs)..................................... 1,538

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Total................................................... 62,208

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Number of Contract Markets

Before an exchange may offer a contract for trading, the Commission

must review the terms and conditions of the proposed contract, as well

as subsequent rule amendments to the terms and conditions of the

contract, to ensure its economic viability. Improperly designed

contracts can increase the chance of cash, futures, or option market

disruptions and undermine the usefulness and efficiency of a market.

During fiscal 1996, the Commission designated 92 new futures and

option contracts, the highest number of new contracts in any single

fiscal year.

The Commission has seen the introduction of new and novel trading

instruments to handle a variety of financial risks, such as currencies,

inflation-indexed debt instruments, contracts based on various domestic

and foreign stock indices, as well as the risks inherent in the

agricultural sector of the economy. It is expected that this innovation

will continue as firms, companies, producers, processors, and others

turn to the commodity futures markets for hedge protection against

financial risk.

There are currently over 230 separate actively traded contracts on

the United States exchanges. This number has grown by 105% over the

number of contracts traded just a decade ago and is expected to reach

nearly 280 contracts by the year 1999.

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Volume of Trading

Volume of trading is measured in number of contracts traded. The

volume of trading on the U.S. exchanges has risen nearly 130% in the

decade since 1986.

During FY 1996, there were 494,502,868 futures and option contracts

traded. Volume is expected to rise to over 579 million contracts in FY

1999.

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Managed Funds

Investment management professionals have been using managed futures

for more than 20 years. Recently, there has been a surge in pooled and

managed money and an increasingly large segment of the population has

money invested in the futures markets, either directly or indirectly,

through pension funds or ownership of shares in publicly held companies

that participate in the markets. Institutional investors such as

corporate and public pension funds, insurance companies, and banks are

increasingly using managed futures to diversify their portfolios.

Over the last decade, from 1986 through 1996, the amounts of money

under management has grown exponentially from less than $2 billion to

nearly $26 billion.

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Over the past 15 years, the profile of the typical commodity pool

has changed significantly. Fifteen years ago, commodity pools were

offered with the expectation that maximum contributions would be $1

million. Most pools were single-advisor pools, with the CPO acting as

CTA for the pool. Pools were designed for speculative trading, and

there were no ``principal-protected'' pools, tiered pools, or

dynamically managed pools.

Today, the pool universe is comprised of:

Single and multiple advisor pools;

Multi-media pools-that is, pools that invest in securities

and futures as well as other investments, including ``hot issues'' of

U.S. securities, off-exchange instruments, and international markets;

Pools which use leverage and isolate particular forms of

return, such as the mortgage pre-payment option;

Principal-protected pools; and

Pools which invest in other pools.

Strategic Goals and Objectives

The mission of the Commodity Futures Trading Commission is

accomplished through three strategic goals, each focusing on a vital

area of regulatory responsibility. The goals are highlighted here, and

defined in terms of outcome objectives and related activities on the

charts which follow.

Goal One--The Marketplace

Protect the economic functions of the commodity futures and option

markets.

The focus of this goal is the marketplace. If the United States

commodity futures markets are protected from and free of abusive

practices and influences, they will better operate to fulfill their

vital role in our market economy and the global economy-accurately

reflecting the forces of supply and demand and serving market users by

fulfilling an economic need.

Goal Two--The Market Users

Protect market users and the public.

The focus of the second goal is protection of the firms and

individuals--market users--who come to the marketplace to fulfill their

business and trading needs. Market users must be protected from

possible wrongdoing on the part of the firms and commodity

professionals with whom they deal to access the marketplace, and they

must be assured that the marketplace is free of fraud, manipulation,

and abusive trading practices.

Goal Three--The Environment

Foster open, competitive, and financially sound markets.

The third goal focuses on several important outcomes--effective

industry self-regulation, firms and financial intermediaries with sound

business, financial, and sales practices, and responsive and flexible

regulatory oversight.

Summaries of Outcome Objectives and Activities--Goal #1

Goal #1: Protect the economic junctions of the commodity futures and

option markets.]

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Outcome objective Activity

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Foster futures and option 1. Collect and analyze daily U.S.

markets that accurately futures and options data for all

reflect the forces of supply actively trading contracts to detect

and demand for the underlying congestion and/or price distortion and

commodity and are free of respond quickly to potentially

disruptive activity. disruptive situations.

[[Page 48620]]

2. Monitor the markets to determine how

conditions and factors observed may

impact individual registrants or the

markets in general (e.g., price

volatility, supply conditions,

activities of affiliated companies of

registrants, over-the-counter

derivatives trading, manipulative or

fraudulent practices, etc.), to deter

potentially negative situations and to

take appropriate action.

3. Conduct timely review of contract

market designation applications and

changes to applications to determine if

they are economically viable and do not

pose a likelihood of disruption in the

cash, futures, and option markets.

4. Conduct weekly market surveillance

meetings of the Commission to analyze

market information, to discuss

potentially disruptive situations and

conditions, and to respond quickly to

market crises.

5. Respond to market emergencies and

disruptive activities swiftly and

effectively.

6. Maintain a current understanding of

market functions and developments

through research.

7. Identify possible manipulation and

other abusive trading practices for

investigation and possible enforcement

or criminal action.

8. Investigate possible manipulation and

other abusive trading practices.

9. Institute enforcement cases

concerning manipulation and other

abusive trading practices.

10. Sanction violators.

2. Oversee markets which can 1. Conduct timely review of contract

be used effectively by market designation applications, and

producers, processors, changes to applications, to determine

financial institutions, and if they are economically viable and do

other firms for the purposes not increase the likelihood of

of price discovery and risk disruption in the cash, futures, and

shifting. option markets.

2. Participate in the President's

Working Group on Financial Markets to

ensure coordination of information and

efforts among U.S. financial

regulators.

3. Maintain a current understanding of

market functions and developments

through research.

4. Provide materials and information on

the functions and utility of the

markets to the public through public

Commission meetings, through public

roundtables, advisory committee

meetings, symposia, U.S. Department of

Agriculture publications, press

releases, advisories, etc.

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Summaries of Outcome Objectives and Activities--Goal #2

[Goal #2: Protect market users and the public.]

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Outcome objective Activity

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Promote compliance with and 1. Identify and investigate possible

deter violations of federal fraudulent and other illegal activities

commodities laws. relating to the commodity futures and

option markets and their registrants.

2. Bring injunctive actions, including

using ``quick-strike'' efforts to

protect assets and to stop egregious

conduct.

3. Bring administrative cases involving

manipulation, fraud, and other

violations.

4. Hear administrative cases.

5. Sanction violators.

6. Inform the public and the industry

concerning allegations of wrongdoing

and associated legal actions, including

through publications and through

Commission orders and reports

describing the alleged violations and

the Commission's legal and policy

analysis.

7. Collect sanctions and civil monetary

penalties against violators.

8. Cooperate with the exchanges, the

National Futures Association, other

federal agencies, state governments and

law enforcement entities, and foreign

authorities to gain information for law

enforcement purposes and to provide

enforcement assistance as necessary and

appropriate.

9. Monitor the Internet and other

communication media for fraudulent

activities

and other possible violations of the

Act.

10. Resolve appeals in administrative

enforcement matters and self-regulatory

organization adjudicatory actions.

2. Require commodities 1. Oversee the National Futures

professionals to meet high Association registration program.

stand- ards.

2. Require testing, licensing, and

ethics training for commodities

professionals.

3. Maintain regulations and oversight to

ensure the effective use of disclosure

documents by commodities professionals.

4. Investigate and bring administrative

registration cases arising out of

alleged statutory disqualification and

obtain suspensions, revocations,

conditions, or restrictions of

registration.

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3. Provide a forum for 1. Provide a reparations program for

effectively and expeditiously commodities market users to make claims

handling customer complaints relating to violations of the Act.

against persons or firms

registered under the Act.

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Summaries of Outcome Objectives & Activities--Goal #3

[Goal #3: Foster open, competitive, and financially sound markets.]

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Outcome objective Activity

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1. Ensure sound financial 1. Promulgate regulations to ensure

practices of clearing sound business, financial, and sales

organizations and firms practices in firms participating in the

holding customer funds. commodities industry.

2. Review and oversee self-regulatory

organization audit and financial

practices.

3. Identify possible financial,

capitalization, segregation, and

supervision violations for

investigation and possible prosecution.

4. Investigate possible financial,

capitalization, segregation, and

supervision violations.

5. Bring cases concerning financial,

capitalization, segregation, and

supervision violations.

6. Sanction violators.

2. Promote and enhance 1. Ensure effective self-regulatory

effective self-regulation of organization enforcement programs.

the commodity futures and 2. Review and approve self-regulatory

option markets. organization rules and rule amendments.

3. Conduct rule enforcement reviews of

self-regulatory organizations

(financial practices, sales practices,

trade practices, and audit trail).

4. Review and oversee self-regulatory

organization audit and financial

practices.

5. Review adequacy of self-regulatory

organization disciplinary actions.

6. Conduct direct audits of clearing

organizations and firms handling

customer money to ensure compliance

with capitalization and segregation

rules.

7. Promulgate regulations to ensure

effective self-regulation by exchanges,

clearing organizations, and registered

futures associations.

3. Facilitate the continued 1. Coordinate and cooperate with global

development of an effective, financial services regulators to share

flexible regulatory vital information and develop

environment responsive to appropriate global standards in the

evolving market conditions. commodities industry as markets emerge

and evolve.

2. Participate in the International

Organization of Securities Commissions

and represent the Commission at

international meetingsconcerning

commodity regulation.

3. Participate in the President's

Working Group on Financial Markets to

ensure coordination of information and

efforts among U.S. financial

regulators.

4.Provide exemptive, interpretive, or

other relief as appropriate to foster

the development of innovative

transactions, trading systems, and

similar arrangements.

4. Promote markets free of 1. Identify possible trade practice

trade practice abuses. violations for investigation and

possible enforcement proceedings.

2. Investigate possible trade practice

violations.

3. Bring cases concerning trade practice

violations.

4. Bring enforcement proceedings against

violators.

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Achieving The Goals: Strategies to Mission Performance--1997-2002

The Environment

The environment in which the Commodity Futures Trading Commission

operates and works is dynamic. Futures and option markets are fluid.

New products, as well as changes in terms and conditions of existing

contracts, are common. Increasing globalization of the financial

markets also presents challenges and opportunities to the agency's

mission performance.

Accomplishing our mission will require a commitment continually to

assess the external and internal issues and trends that may affect our

mission and the way in which we must respond to meet it successfully.

Evaluating and adjusting our plan will ensure that potential problems

or weaknesses are managed before they develop into crises.

The Strategies

To fulfill our commitment, we must develop and employ various

strategies which focus on achieving results. These strategies will

define the basis for developing policies, making decisions, taking

actions, allocating resources and defining program direction. They will

clarify why the organization exists, what it does, and why it does it--

providing a bridge to understanding how we connect to our environment.

Achieving The Goals: External Challenges--1997-2002

The Challenges

The Commodity Futures Trading Commission faces challenges external

to the organization which may significantly alter its ability to meet

its goals, its outcome objectives, and even its mission, depending on

the weight of their influence and the timing of their occurrence.

We have identified ten such factors that may impact strategic

planning at the CFTC.

The volume of trading in futures and commodity options--which is

influenced, in turn, by external economic factors such as interest rate

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volatility, commodity price volatility in general, and events and

conditions specific to individual commodity markets.

The number and sophistication of market users--including the

increasing number of institutional users trading as fiduciaries.

The variety of markets traded--in recent years, the CFTC has

designated futures and option markets on a wide range of commodities,

instruments, and indices. These have included: dairy products, such as

milk and cheese; various energy products including: electricity;

various currency and cross-currencies; inflation-indexed U.S. Treasury

bonds; foreign interest rates; boneless beef; pollution rights; crop

yields; and a wide range of foreign and domestic stock indices.

The growing use of over-the-counter (OTC) derivatives--such use may

increase exchange trading volume as dealers in such OTC instruments

attempt to hedge their resulting risk exposures. Often it also requires

analysis of such OTC instruments for purposes of determining the

appropriate regulatory framework.

Structural changes in the financial services industry--such as the

diversification into overseas markets, and the convergence of the

securities, commodities, insurance, and banking industries.

Events that destabilize the commodity markets--such as the 1987

stock market break, the 1995 collapse of Barings Bank, and the copper

market events precipitated by the Sumitomo Corporation in 1996.

The globalization of financial markets--broadening the needs for

market surveillance, analysis of intermarket relationships, cross-

border enforcement efforts, and cooperation and information sharing

with foreign authorities.

The effect of federal laws and policies--on the U.S. economy, such

as the deregulation of the energy industry and changes in farm subsidy

policies, spawning change and innovation such as new types of crop

insurance.

The advancement in technology--which continues to introduce

challenges in many areas-alternatives to the ``open-outcry'' method of

trading commodity futures on the exchange floor, enhanced methods for

timing and tracking trading transactions, on-line filing of financial

information by market users, electronic marketing and trading of

financial and risk-hedging products, and trading commodity futures and

options on a global, 24-hour real-time basis.

The standards, resources, and priorities of other organizations and

jurisdictions--such as self-regulatory organizations, other federal and

state law enforcement agencies, and foreign authorities.

The Strategies

Develop a Responsive and Flexible Regulatory Posture--It is not

possible to predict which external influences ultimately will affect

the commodity futures and option industry over the next five years.

However, certain trends observed in the past few years are likely to

continue. In order to fulfill its goal of being a flexible and

responsive regulatory body, the Commission must develop strategies to

ensure that the appropriate reactions and responses to these trends are

developed.

Innovation

Respond to innovation through the timely review of new and

novel trading instruments.

Develop a capability of understanding the underlying

economic effects and benefits of new product development, new markets,

and new complex trading mechanisms.

Globalization

Maintain watchful surveillance activities to monitor

systemic risk of expanding markets, intermarket linkages, and cross-

border trading systems.

Foster and sustain strong relationships with foreign

authorities to ensure rapid communication and responsive actions in the

event of global financial uncertainty.

Participate in international efforts to standardize world-

wide market surveillance and information sharing practices.

Competitiveness

Consider refinements to the regulatory framework to take

into account the growing use of over-the-counter derivatives.

Respond to structural changes in the financial services

industry to ensure a level playing field as the commodities,

securities, and banking industries become more integrated.

Dynamic Economic Forces

Monitor general economic events and trends in order to

understand dynamics affecting commodity futures and option trading.

Respond to the changing needs of the U.S. agricultural

community resulting from the passage of the Federal Agricultural

Improvement Reform (FAIR) Act of 1996 and the changes it will spawn in

this sector of the U.S. economy.

Develop an automated market surveillance system capable of

collecting and assimilating data from option trading, as well as

commodity futures trading.

Respond rapidly and effectively to destabilizing events,

either in the United States markets or in the global marketplace, to

ensure the protection of U.S. interests and customers.

Monitor the increasing volume of the public's funds

invested either directly or indirectly through commodity pools.

Advancing Technology

Develop capability of overseeing rapidly evolving

technological changes and innovations influencing the markets--

electronic trading mechanisms, increasingly linked trading

relationships, real-time trading, electronic commerce, expansion of the

Internet and other advancements.

Ensure that the Commission has state-of-the art computing

power to collect and analyze the increasing volume of data generated by

the commodity futures and option markets.

Develop and Sustain Vital Partnerships--Strong working

relationships with other organizations and jurisdictions involved not

only in commodity futures and option trading, but domestic and

international finance and law enforcement, increase the Commission's

ability to build knowledge and insight, share information, and

participate in developing standard practices and policies.

Federal and State

A key relationship that ensures regulatory consistency

across the federal government is the Commission's participation in the

President's Working Group on Financial Markets. This critical forum for

coordination of regulation across financial markets brings together the

leaders of the federal financial regulatory agencies to consider issues

concerning risk assessment, capital requirements, internal controls,

disclosure, accounting, market practices relating to trading in

derivative instruments, bankruptcy law revisions, and contingency

planning for market emergencies.

Another key federal liaison is with the U.S. Department of

Agriculture. Consistent with the mandate of the Act, the FAIR, CFTC

will work with USDA staff in a risk management education effort to

reach agricultural producers seeking risk management services or advice

to deal with the changes resulting from its passage.

[[Page 48623]]

Commission staff works through various established

intergovernmental partnerships to share information and to consult on

issues of importance both to the Commission and to other financial

regulators. Some meetings are recurring, such as biweekly conference

calls and quarterly meetings held among the CFTC, the Securities and

Exchange Commission, the Department of the Treasury, the Board of

Governors of the Federal Reserve System, the New York Federal Reserve

Bank and the Federal Deposit Insurance Corporation. Others are

occasional as needed, but nonetheless valuable, such as those with the

Department of Energy, the Department of Agriculture, and the Department

of Labor's Bureau of Labor Statistics on other matters.

The working relationships with other federal law

enforcement entities are also fundamental to an effective law

enforcement effort. The Commission coordinates its enforcement efforts

with agencies such as the Department of Justice, the Federal Bureau of

Investigation, the Federal Trade Commission, the Securities and

Exchange Commission and the U.S. Postal Inspection Service.

The CFTC is also represented on several interagency task forces

designed to keep participants abreast of new developments in financial

crimes and to coordinate the government's response.

Enforcement efforts are coordinated with state authorities

as well, including state commissions responsible for the regulation of

corporations, securities, insurance, and banking.

Self-Regulatory

The National Futures Association (NFA) has been granted

registration by the Commission as a futures association with specific

self-regulatory responsibilities under the Commodity Exchange Act. The

NFA has existed since 1982 and works in partnership with the Commission

to assure high standards for industry professionals. The Commission

works closely with the NFA in a variety of areas to augment scarce

government resources--registration, ethics training for industry

professionals, the review of disclosure documents, and issues

concerning statutory disqualification of registrants.

International

In the past several years, the Commission has cooperated

with a large number of foreign regulatory authorities through formal

memoranda of understanding (MOUs) and other arrangements to combat

cross-border fraudulent and other prohibited practices that could harm

customers or threaten market integrity. Cross-border information

sharing among market regulators forms the linchpin of effective

surveillance of global markets linked by products, participants, and

information technology. The Commission currently has 18 formal

arrangements for the sharing of information on enforcement matters,

three arrangements related to financial information sharing, and nine

cooperative arrangements for the sharing of information on matters

related to foreign firms and exemptions from certain CFTC rules and one

letter relating to the use of foreign settlement banks.

A key partnership in our efforts to remain abreast of

global financial issues is our membership in the International

Organisation of Securities Commissions (IOSCO), an organization of more

than 120 members from over 75 countries. IOSCO's main purposes are to

provide machinery for exchanging information and expertise between

regulatory authorities for the supervision of world securities and

derivatives markets, to establish standards of best practice, to ensure

market integrity, and to promote effective supervision and enforcement.

IOSCO deals with issues affecting both developed and emerging markets.

Advisory

The Commission sponsors three advisory committees that facilitate a

dialogue between the CFTC and three key groups of interested persons--

the American agricultural community, the financial community, and the

states.

The Agricultural Advisory Committee (AAC) represents a

vital link between the Commission, which regulates agricultural futures

and option markets, and the agricultural community, which depends on

those markets for hedging and price discovery. The AAC's 25 member

organizations represent a major portion of the American agricultural

community. For the last 14 years, the AAC's twice yearly meetings have

fostered an ongoing dialogue between that community and the Commission.

The Financial Products Advisory Committee provides a means

of receiving invaluable information and obtaining advice and

recommendations on issues related to financial markets. In this regard,

the Committee has served as a channel for communicating to the

Commission diverse viewpoints within the financial community, including

the views of broker-dealers, pension fund sponsors, investment

companies, futures commission merchants, commodity pool operators, and

commodity trading advisors. The Committee has also served a conduit for

the views of federal financial market oversight agencies, futures

exchanges, and accounting firms.

The CFTC-State Cooperation Advisory Committee (CSCAC)

continues to play a highly productive role in facilitating the

cooperation between federal and state regulatory authorities. In the

context of diverse state laws and enforcement authorities, it provides

a forum for the Commission to solicit the advice and recommendations of

knowledgeable state officials in efforts to protect investors from

fraud and secure the integrity of futures markets. Similarly, it helps

the various state regulators learn about changes to federal laws and

regulations as well as federal enforcement activities. This facilitates

the exchange of information and the coordination of policies and

enforcement efforts among the CFTC, the SEC, and the Department of

Justice. Some of the issues addressed in recent years include:

--misleading advertising in the broadcast media;

--bank-financed precious metal investing;

--commodity pool operations; and,

--public availability of disciplinary actions in the futures industry.

CSCAC's membership includes representatives of federal and state

law enforcement agencies, futures industry associations, and private

futures brokerage firms.

Achieving the Goals: Internal Challenges--1997-2002

The Challenges

Many of the internal challenges identified may not be unique to the

CFTC, but nonetheless are possible barriers to success which must be

analyzed and met in order to succeed in its mission.

Diminishing Resources--with a declining pool of budgetary resources

slated for domestic discretionary programs, every federal entity faces

the same task of streamlining the way it operates. The Commission will

continue to review its requirements and program initiatives to ensure

that its fiscal perspective is sound. It must also continue to seek

ways of improving performance, delegating responsibilities, and

becoming more efficient.

Recruitment and Retention of Qualified Professionals--nearly 80% of

the staff of the CFTC falls into four categories of professional

employment: law, economics, financial audit, and futures trading. The

complexity of the work at the Commission demands highly skilled

workers, many with

[[Page 48624]]

advanced educational degrees. Competition for these individuals has

always been keen, and there is no indication that this challenge will

abate. Indeed, the Commission is the only federal financial regulator

which does not have the authority to pay professionals at premium pay

levels.

In some instances, as with lawyers and economists, the Commission

has experienced the effects of a ``brain drain,'' when highly talented

and skilled employees are hired away from the CFTC by other federal

financial regulators who can offer premiums.

Potential for Significant Numbers of Retirements--the CFTC is in

its 23rd year of operation. Many of the employees who started with the

Commission in its early days are approaching retirement age. Over 12%

of CFTC's on-board staff will become eligible for retirement in the

next five years. This level of turnover will require significant levels

of recruitment and training, particularly to fill behind the loss of so

much ``institutional memory.''

Another challenge associated with a significant turnover in staff

is the question of reengineering. Allocation of staff resources in the

future needs to be considered in light of changes in the organization's

tasks and responsibilities.

Remaining Abreast of Current Technology--perhaps more so than many

other federal agencies, the Commission is dependent on a significant

level of advanced technology to manage the volume and complexity of

financial information we collect and analyze. Data are voluminous,

require timely handling, and must be thoroughly analyzed for anomalies

in trading patterns, relationships, and strategies.

Over the years, the Commission has developed and maintained an

impressive technological infrastructure and has employed automation

when feasible to enhance its work product and to enhance productivity

in light of a static level of staffing.

The sophisticated market surveillance and market analysis the

Commission performs are accomplished through the use of databases and

econometric modeling. Fact patterns for enforcement investigations are

supported by computer programs, and many other responsibilities could

not be accomplished without the significant level of information

technology at the CFTC. The need for this level of support will

increase over the coming five years as technology continues to evolve

and to offer new capabilities.

Commission staff must be knowledgeable as to current technologies

in order adequately to perform oversight of the exchanges as they

increase their use of technology. This technological trend has been

reflected in the increasing linkage of global markets and the

introduction of overnight trading capabilities by major U.S. exchanges

linked to foreign counterparts. Advances in technology will improve the

ability of the exchanges to handle their work electronically. The

Commission must be knowledgeable in these technologies to fulfill its

mission of fostering innovation and a flexible and responsive

regulatory environment.

Remaining Educated and Informed as Innovation Changes the

Industry--it has always been necessary for Commission staff to continue

to improve their knowledge of developing economic trends, new trading

instruments, trading strategies, and the interrelationship of markets,

domestically and internationally. Without such continued investment in

skill and information building, they may not be fully capable of

understanding the marketplace, the economic influences on it, and its

changing needs and uses. This level of skill and knowledge will need to

increase over the next five years as new markets emerge around the

world and market users seek new hedging strategies.

The Strategies

Strategies to Develop a Responsive Commission Culture--At the

center of the Commission's mission accomplishment are the core business

processes and responsibilities. Meeting these responsibilities and

performing them well provides an ongoing level of regulatory presence

and support to the industry and its users. These core business

processes are many and include: daily market surveillance, the

detection and prosecution of wrongdoing, contract market designation,

rule review, market research, and audits of industry firms.

To accomplish the day-to-day activities associated with these

processes, the Commission must maintain a positive culture within which

to work. Over the next five years, the following strategies will guide

us and help us meet the internal challenges we face.

Build a professional and highly trained staff--

Set standards for the recruitment of qualified staff.

Develop a recruitment and promotion strategy to build a

new professional base for filling behind the anticipated high level of

retirements in the next five years.

Provide technical and advanced training to ensure that

CFTC staff skills keep pace with advances in the commodities industry

and permit promotion to higher levels of responsibility.

Build a strong technological infrastructure--

Implement the Commission's Five-Year Automated Data

Processing (ADP) Plan. The plan establishes: the Commission's systems

development priorities; agency standards for various software

applications; policies and procedures related to support provided by

the Office of Information Resources Management (OIRM); and priorities

for acquisition and utilization of external databases and other

electronic information services.

Sustain the Commission's End-User Advisory Group (EAG) to

gain broad input into planning and prioritizing technological

developments. The EAG provides: assistance and guidance to OIRM in the

development of the Five-Year ADP Plan; annual review and prioritization

of OIRM's systems development workload; establishment of Commission-

wide standards for the use of software applications and support

provided by OIRM; and priorities for acquisition and utilization of

databases and information services.

Implement and refine the CFTC's automated Market

Surveillance System.

Maintain and enhance expertise capable of overseeing the

technological advancements in the domestic and international markets.

Review and replace hardware and software with current

technology to support Commission goals.

Reengineer business processes to streamline regulatory requirements

and to create internal efficiencies--

Identify areas which may benefit from reengineering, to

create efficiencies for the regulated industry or for the CFTC's

internal processes.

Recent examples include: the implementation of ``fast-track''

procedures for processing certain contract designation applications and

rules-cutting in half the average period such contracts and rules are

pending with the Commission; streamlining of the risk disclosure

process; and streamlining the administrative opinions process to reduce

the backlog of pending cases.

Restructure organizationally to improve performance and respond to

changing mandates and trends--

As warranted, reorganize the internal structure of the

Commission to strengthen program initiatives.

Recent examples include: the strengthening of the enforcement

[[Page 48625]]

program through a reorgani-zation, concentrated hiring and renewed

training efforts; and the establishment of an Office of International

Affairs to enhance the Commission's ability to meet the increasing

challenge of playing an active role in international initiatives.

Plan effectively to maximize the use of scarce budgetary

resources--

Continually review resource requirements for operations

and program initiatives to ensure sound fiscal management and the

optimal allocation of resources to mission requirements.

Enhance the capability of the financial management system

to aid in analyzing inputs and outputs in order to improve the

measurement of outcomes at the Commission.

Make increasing use of the data flowing from our payroll/

personnel system in order to determine how we are using our most

significant resource-staff-years.

Develop advanced planning skills to assure an emphasis on

results-oriented management.

Communicate accountability to CFTC managers and staff--

Institute a new Performance Management System to create a

more effective and responsive communication tool for managers and

staff.

Employ the Annual Performance Plan to improve the commu-

nication of specific goals and performance levels to staff to improve

performance.

Provide training at all levels of the Commission so that

employees have the skills and current information to enable them to

perform at a high level.

Achieving and Measuring Performance

Achieving Performance

The Commission may measure the success of its performance through

four broad indicators:

Markets free of disruption.

Registered and fit market professionals and financial

intermediaries.

Self-regulatory organizations with sound financial

practices and effective enforcement programs.

Swift and aggressive investigation and prosecution of

wrongdoing, with sanctions and fines levied for the maximum remedial

and deterrent effect.

Measuring Performance: The Annual Performance Plan

On an annual basis, work of the Commission is directed through the

Annual Performance Plan (APP). The APP establishes a full set of

performance indicators and targets to ensure that day-to-day activities

are appropriately defined and measured. Activities are outlined by

performance indicators and performance targets for five years, FY 1998

through FY 2002.

Relating General Goals and Objectives to Performance Goals and Program

Evaluation

Program evaluation, or determining how well the performance targets

CFTC has established are being achieved, is necessary to measure the

effectiveness and efficiency of our work. Many program priority and

resource allocation decisions hinge on the knowledge of what is going

well and what is not. For the first three years of this plan, the

Commission will use methods and processes already in place to evaluate

how we are progressing on the implementation of the Strategic Plan and

the Annual Performance Plan.

Quarterly Objectives Review Process

The Quarterly Objectives reporting process provides executive

management with a review of program accomplishments for the fiscal

quarter just completed and program priorities for the current fiscal

quarter. Also included is a summary of performance statistics, a series

of output measures provided by program. This reporting process will be

evaluated to determine how it may be used as the method for reporting

on program progress toward meeting the goals, outcome objectives, and

activities in the Strategic Plan as well as a method for setting

overall priorities and allocating resources consistent with those

priorities.

Management Accounting Structure Code System

Information concerning the distribution of labor at the Commission

is captured through the financial reporting system called MASC--

Management Accounting Structure Code System. This input data, provided

by every employee on a bi-weekly schedule, reflects the hours they

dedicate to various Commission activities and projects. The information

is intended for use by agency program managers in their resource

management activities, as well as to provide a database for

documentation and support of the CFTC fee structure for such fee-

generating activities as the designation of contract markets for

trading on exchanges and rule enforcement reviews of the exchanges.

The MASC system will be reviewed with the goal of reengineering the

present system to conform to the activity structure defined by this

Strategic Plan. This evaluation will assess the current system's

utility as the primary method for capturing the distribution of labor

costs.

Status of Funds Reporting Process

The Status of Funds, a financial management reporting process,

executed from the Commission's automated financial management system

and presented to executive management, is the basis for periodic

reports of the agency's financial condition and usage of its chief

resource--staff-years. This process will be evaluated to determine how

it may best facilitate the reporting of resource usage under the new

framework of the Strategic Plan.

Stakeholders

The Commission's stakeholders-the public, the Congress, the

Administration, other federal departments and agencies, market users,

registrants, the exchanges, the National Futures Association, and

foreign authorities-are valuable resources which must be tapped to

provide critical feedback on Commission goals and priorities.

Understanding their perspectives will assist the Commission in

clarifying its mission and directing its resources. We will evaluate

how best to use these partnerships effectively.

Leadership

The outcome envisioned by the Government Performance and Results

Act is improved efficiency and effectiveness of federal programs

through the establishment of a system to set goals for program

performance and to measure the results.

As this planning and reporting process evolves, the Commission will

evaluate how best to provide the leadership and direction to integrate

program, cost, and budget information into a reporting framework that

allows for fuller consideration of resource allocations, operational

costs, and performance results.

Monitoring External and Internal Factors

The Commission will evaluate the most effective method to

continually review key factors, external and internal to the agency,

which may affect how it achieves its mission. This evaluation process

will ensure that the Commission anticipates future challenges and makes

adjustments to its goals, outcome objectives, and activities before

potential issues and problems escalate.

As part of this evaluation the Commission will continue its

refinement of vital systems such as the Market Surveillance System

which

[[Page 48626]]

provides invaluable front-line information on commodity futures and

option trading on a daily basis, and will look to defining other

systems that may provide assistance in anticipating issues and

directing resources.

Appendix

Understanding the Fundamentals of Commodity Futures and Options

What is a Futures Contract?

What is an Option Contract?

What is Price Discovery?

What is Daily Cash Settlement?

What is Leverage?

What is Margin?

Addresses of the Commodity Exchanges

Addresses of CFTC Offices

CFTC Team

Organizational Structure

Staffing

Occupations

Commission Concurrence

Publications and Information

Understanding the Fundamentals of Commodity Futures and Options

What Is a Futures Contract?

A futures contract is an agreement between two parties to buy and

sell in the future a specific quantify of a commodity at a specific

price. The buyer and seller of a futures contract agree now on a price

for a product to be delivered and/or paid for at a set time in the

future, know as the ``settlement date.'' Although actual delivery of

the commodity can take place in fulfillment of the contract, most

futures contracts are actually closed out or ``offset'' prior to

delivery.

What Is an Option Contract?

An option on a commodity futures contract is an agreement between

two parties which gives the buyer, who pays a market determined price

known as a ``premium,'' the right (but not the obligation), within a

specific time period, to exercise his option. Exercise of the option

will result in the person being deemed to have entered into a futures

contract at a specified price known as the ``strike price.'' In some

cases, an option may confer the right to buy or sell the underlying

asset directly, and these options are known as options on the physical

asset.

What Is Delivery vs. Cash Settlement?

There are two types of futures contracts, those that provide for

physical delivery of a commodity or other item and those which call for

cash settlement. The month during which delivery or settlement is to

occur is specified in the contract. Thus, a July futures contract is

one providing for delivery or settlement in July.

It should be noted that even in the case of deliverable futures

contracts, very few actually result in delivery. Not many speculators

have the desire to take or make delivery of, for example, 5,000 bushels

of wheat, or 112,000 pounds of sugar, or even one million dollars worth

of U.S. Treasury bills. Rather, the vast majority of speculators in

futures markets choose to realize their monetary gains or losses by

buying or selling offsetting futures contracts prior to the delivery

date.

Selling a contract that was previously purchased liquidates a

futures position. Similarly, a futures contract that was initially sold

can be liquidated by an offsetting purchase. In either case, gain or

loss is the difference between the buying price and the selling price.

Even hedgers generally do not make or take delivery. Most find it

more convenient to liquidate their futures positions and (if they

realize a gain) use the money to offset whatever adverse price change

has occurred in the cash market.

What Is Price Discovery?

Futures prices increase and decrease largely because of the myriad

factors that influence buyers' and sellers' judgments about what a

particular commodity will be worth at a given time in the future

(anywhere from less than a month to more than two years).

As new supply and demand developments occur, and as new and more

current information becomes available, these judgments are reassessed,

and the price of a particular futures contract may be bid upward or

downward. The process of reassessment-price discovery-is continuous.

Thus, in January, the price of a July futures contract would

reflect the consensus of buyers and sellers at that time as to what the

value of a commodity or item will be when the contract expires in July.

On any given day, with the arrival of new or more accurate information,

the price of the July futures contract might increase or decrease in

response to changing conditions and expectations.

Competitive price discovery is a major economic function and

benefit of futures trading. The trading floor of a futures exchange is

where available information about the future value of a commodity or

item is translated into price. In summary, futures prices are an ever-

changing barometer of supply and demand and in a dynamic market, the

only certainty is that prices will change.

What Is Daily Cash Settlement?

Once a closing bell signals the end of a day's trading, the

exchange's clearing organization matches each purchase made that day

with the corresponding sale and tallies each member firm's gains or

losses based on that day's price changes--a massive undertaking

considering that well over one million futures contracts are bought and

sold on an average day. Each firm, in turn, calculates the gains and

losses for each of its customers having futures contracts.

Gains and losses on futures contracts are not only calculated on a

daily basis, but they are also credited and debited on a daily basis.

This process is known as a daily cash settlement and is an important

feature of futures trading. It is also the reason a customer who incurs

a loss on a futures position may be called to deposit additional funds

into his account--a margin call.

What Is Leverage?

To say that gains and losses in futures trading are the result of

price changes is an accurate explanation, but by no means a complete

explanation. Perhaps more so than in any other form of speculation or

investment, gains and losses in futures trading are highly leveraged.

An understanding of leverage is crucial to an understanding of futures

trading.

The leverage of futures trading stems from the fact that only a

relatively small amount of money (known as initial margin) is required

to buy or sell a futures contract. On a particular day, a margin

deposit of only $1,000 might enable you to buy or sell a futures

contract covering $25,000 worth of soybeans. Or for $20,000 you might

be able to purchase a futures contract covering an index of common

stocks valued at $200,000. The smaller the margin in relation to the

underlying value of the futures contract, the greater the leverage.

If you speculate in futures contracts and the price moves in the

direction you anticipated, high leverage can produce large profits in

relation to your initial margin. Conversely, if prices move in the

opposite direction, high leverage can produce large losses in relation

to your initial margin.

What Is Margin?

The margin required to buy or sell a futures contract is a deposit

of good faith money that can be drawn on by your brokerage firm to

cover losses that you may incur in the course of futures trading. It is

similar to money held in an escrow account.

[[Page 48627]]

Minimum margin requirements for a particular time are set by the

exchange on which the contract is traded. They are typically about 5%

of the current value of the commodity or asset underlying the futures

contract. Exchanges continuously monitor market conditions and risks

and, as necessary, raise or reduce their margin requirements.

Individual brokerage firms may require higher margin amounts from

customers than the exchange-set minimums.

Addresses of the Commodity Exchanges & Designated Self-Regulatory

Organizations

Chicago

Chicago Board of Trade, 141 West Jackson Boulevard, Chicago, IL 60606

Chicago Mercantile Exchange, 30 South Wacker Drive, Chicago, IL 60606

MidAmerica Commodity Exchange, 141 West Jackson Boulevard, Chicago, IL

60604

Kansas City

Kansas City Board of Trade, 4800 Main Street, Kansas City, MO 64112

Minneapolis

Minneapolis Grain Exchange, 400 South Fourth Street, Minneapolis, MN

55415

Philadelphia

Philadelphia Board of Trade, 1900 Market Street, Philadelphia, PA 19103

New York

AMEX Commodities Corporation, 86 Trinity Place, New York, NY 10006

Coffee, Sugar & Cocoa Exchange, Inc., Four World Trade Center, New

York, NY 10048

New York Cotton Exchange, Four World Trade Center, New York, NY 10048

New York Futures Exchange, Four World Trade Center, New York, NY 10048

New York Mercantile Exchange, One Northend Avenue, World Financial

Center, New York, NY 10282

COMEX Division

NYMEX Division

Registered Futures Association

National Futures Association, 200 West Madison Street, Suite 1600,

Chicago, IL 60606

CFTC Offices

Headquarters, Three Lafayette Centre, 1155 21st Street, N.W.,

Washington, D.C. 20581, Telephone: 202-418-5000

Eastern Regional Office, One World Trade Center, Suite 3747, New York,

NY 10048, Telephone: 212-466-2061

Central Regional Office, 300 South Riverside Plaza, Suite 1600 North,

Chicago, IL 60606, Telephone: 312-353-5990

Southwestern Regional Office, 4900 Main Street, Suite 721, Kansas City,

MO 64112, Telephone: 816-931-7600

Sub-Office, 510 Grain Exchange Building, Minneapolis, MN 55415,

Telephone: 612-370-3255

Western Regional Office, Murdock Plaza, 10900 Wilshire Boulevard, Suite

400, Los Angeles, CA 90024, Telephone: 310-235-6783

CFTC Team

Organizational Structure

Based in Washington, D.C. the Commodity Futures Trading Commission

maintains regional offices in Chicago and New York, and has smaller

offices in Kansas City, Los Angeles, and Minneapolis. The CFTC consists

of five Commissioners, appointed by the President to serve staggered

five-year terms. One of the Commissioners is designated by the

President, with the consent of the Senate, to serve as Chairperson. No

more than three Commissioners at any one time may be from the same

political party.

The Chairperson oversees the management of the agency and its five

major organizational units:

Division of Economic Analysis

Division of Enforcement

Division of Trading and Markets

Office of the General Counsel

Office of the Executive Director

Staffing

The Commission is requesting 621 full-time equivalent staff-years,

or FTEs, in FY 1999. A regional staffing distribution is shown below:

Washington, D.C. (DC)............................................ 370

Chicago, IL (CH)................................................. 131

New York, NY (NY)................................................ 90

Los Angeles, CA (LA)............................................. 21

Kansas City, MO (KC)............................................. 7

Minneapolis, MN (MN)............................................. 2

------

Total Staff Years.............................................. 621

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[GRAPHIC] [TIFF OMITTED] TN16SE97.004

BILLING CODE 6351-01-C

[[Page 48628]]

Occupations

The principal professional occupations at the Commission are

attorney, economist, futures trading specialist and investigator,

auditor and computer specialist. These professionals are assisted in

their work by a wide range of administrative and support personnel.\1\

\1\ Executives include Chairperson, Commissioners, and managers

in the Senior Executive Service. Other Professionals include

computer analysts, budget and finance professionals, human resource

specialists, and contracting officials.

[GRAPHIC] [TIFF OMITTED] TN16SE97.005

Commission Concurrence

----------------------------------------------------------------------

Brooksley Born, Chairperson

----------------------------------------------------------------------

Joseph B. Dial, Commissioner

----------------------------------------------------------------------

John E. Tull, Jr., Commissioner

----------------------------------------------------------------------

Barbara Pedersen Holum, Commissioner

----------------------------------------------------------------------

David D. Spears, Commissioner

Publications and Information

For a list of other CFTC publications or for more information on

the CFTC, please visit the CFTC's home page on the World Wide Web. Our

address is http://www.cftc.gov.

Or contact the Office of Public Affairs, Commodity Futures Trading

Commission at: Three Lafayette Centre, 1155 21st Street, N.W.,

Washington, D.C. 20581, (202) 418-5080.

[FR Doc. 97-24388 Filed 9-15-97; 8:45 am]

BILLING CODE 6351-01-P