CFTC, SEC To Seek IT Upgrades
April 30, 2010
| 10:25 AM
Faced with the possibility of greater regulatory responsibilities, the Commodities Future Trading Commission and the Securities and Exchange Commission must upgrade their information technology systems, CFTC and SEC heads told Senate appropriators this week, Nextgov.com reported.
"While market participants have the technology to automate their trading, we do not yet have the resources to employ modern technology to automate our surveillance," CFTC Chairman Gary Gensler testified before the Senate Appropriations Subcommittee on Financial Services and General Government. "Significant changes in the markets demand new systems capable of efficiently receiving and managing massive amounts of raw data and converting it to useful information for analysis by skilled market experts, economists and technologists."
President Obama's fiscal 2011 budget recommends spending $18 million on IT to cover current and potential new authorities for CFTC, an agency that has long been underfunded, according to financial executives and agency officials. CFTC requested $23.3 million for IT in fiscal 2010 but was only allocated $9.3 million. Senators on Wednesday held a hearing to learn more about the budget requests for both commissions.
The full Senate is in the midst of a debate over legislation to reform financial regulation, partly by empowering the government to police over-the-counter, or privately exchanged, derivatives, which are complex financial contracts between two parties that hedge against what could happen in the future to other assets. Some proposals would move all derivatives onto trading systems that CFTC and SEC would be able to examine with the appropriate technology.
According to its 2011 proposal, new program requirements mean CFTC needs to expand its entire infrastructure, including communications circuits, overall circuit capacity, cabling and connections, switches, routers, servers, data storage and backup. Gensler noted on Wednesday that, at present, surveillance systems process more than 1 billion transactions annually.
During the past year CFTC's systems have had trouble accepting data from market participants, according to financial industry officials who did not attend the hearing and spoke on condition of anonymity. To read more, click here.
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