Panel II Of A Hearing Of The Subcommittee On Financial Services And General Government Of The Senate Committee On Appropriations - Review Of The President's FY 2010 Funding Request And Budget Justification For The Securities And Exchange Commission, And

Statement

Panel II Of A Hearing Of The Subcommittee On Financial Services And General Government Of The Senate Committee On Appropriations - Review Of The President's FY 2010 Funding Request And Budget Justification For The Securities And Exchange Commission, And The Commodity Futures Trading Commission

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SEN. DURBIN: I'd like to invite Chairman Gensler from the Commodity Futures Trading Commission to come forward.

This year, 2009, marks the 35th year since the establishment of this agency. At the time of its inception in 1974, CFTC's 500 employees were tasked with ensuring fair practices and honest dealings on the commodity exchanges of America's then $500 billion industry, 1974.

Today, it is a $22 trillion industry and it looks a lot different. The traditional agricultural products are still there, but the landscape has been diversified with novel and complex commodities from grains to gold, currencies to carbon credits. In the past decade, trading volume has increased more than tenfold, reaching over 3.4 billion trades in 2008. Actively traded contracts have quintupled from 286 in 1998 to 1,521 in 2008.

CFTC oversees $5 trillion of trades every single day. So we don't want you to stay at the table too long. We want you to get back and keep an eye on those trades. But we invite you, Chairman Gensler, to give your testimony at this point.

MR. GENSLER: Thank you, Chairman Durbin, Ranking Member Collins and members of the subcommittee, Senator Tester.

I'm pleased to be here today to discuss our budget and especially pleased to learn that Senator Durbin recently visited our Chicago office, which the staff was very encouraged and I thank you for.

I'm also grateful for each of your individual support on my recent confirmation and it's an honor to serve the country in this capacity.

I come before you having served as chairman just six calendar days but with full knowledge of the failures of our regulatory system, failures that affected all Americans, failures that we must ensure do not happen again. And as chairman, I will use every authority available to protect the American people from fraud, manipulation, excessive speculation. I will also work with Congress on new authorities to bring much needed transparency and regulation to the over-the-counter derivatives marketplace.

I am grateful, on behalf of the agency, for the $146 million recently appropriated for this commission. This boost has allowed us to get back to beginning to address the alarmingly low staffing levels that were at the agency.

Our size, however, is still roughly equivalent to the commission that was established 35 years ago. Today, the futures market, of course, is dramatically different, as the chairman just outlined, being some 45 times larger than it was 35 years ago and, also, the complexity is much greater as well.

Just 10 years ago, the CFTC was near its peak staffing levels, near to 580 full-time equivalents at the time. It shrunk over 20 percent since that time and the fiscal 2009 funding, with your help, will permit us just to get back to where we were in 1999.

Since 1999, however, volumes have gone up fivefold. The number of contracts have gone up sixfold. The complexity, of course, I don't need to tell you, has gone up dramatically. We've gone from open outcry pits to electronic trading, which, in some cases, are harder to monitor, and we've also lived through the worst financial crisis in 80 years and seen the results of an asset bubble in commodity prices.

In short, the commission remains an underfunded agency, and we're very grateful to the president's budget of $160.6 million in recognition of some of these needs.

If I could, just in six days, some of the things that have been highlighted to me and just share with you: I think we still need to ensure that our enforcement effort is larger. We need to ensure robust enforcement of our laws. We've got about 141 attorneys now in our enforcement arm by the end of this year, but I think it's still quite lower than what's required given the financial turmoil we've lived through.

We need to ensure greater transparency. I believe that commodity index funds did contribute to some of the asset bubble that we've just lived through. We need to bring greater transparency. This is going to need more economists. Its' going to change some of our weekly commitments and traders reports. We'll probably need to upgrade our systems to do it as well.

We have to ensure that everybody's consistently applying position limits across the board, and we're reviewing hedge exemptions and no- action processes in that regard. Our IT systems and particularly our mission-critical systems on positions and transactions have not been upgraded for quite some time, and I look forward to working with this committee on getting funds to try to upgrade these mission-critical systems.

And also, we need to ensure timely review of new products and rule change filings. This has lagged a great deal and just even last year, with the new farm bill, the review of significant price discovery contracts will be important moving forward. These are only a few of the funding priorities, but I wanted to give the committee a tangible sense of some of the things that we're grappling with and struggling with.

With that in context, the $14.6 million of additional funding, about half of that is to stay at current services, and half of that in the president's budget, fortunately, is for 38 new full-time equivalents to bring us back just above where we were 10 years ago, but to about 610 full-time equivalents. These positions are essential. The increase, however, probably still won't allow us to fully address these complex markets and what we need to do.

Before I close, I would like to just highlight that the additional funding needs will also accompany much needed regulatory reform. I, along with other regulators in the administration, feel we need broad reform to this over-the-counter derivatives marketplace, bring it all under the regulatory umbrella, and this, too, will probably highlight some things possibly toward the end of the year in working with this committee and Congress for funding those new authorities to make sure they're properly implemented.

And with that, I thank you very much and I look forward to answering your questions.

I hope -- and my written testimony to be entered into the record.

SEN. DURBIN: Of course, it will be.

Chairman Gensler, thank you for being here and we're glad that you're on the job. And it strikes me that if we look at your recent arrival and the recent arrival of a lot of money into your agency that you're really going to be tested quickly in terms of whether or not you can gather together the professional staff to do your job and the added responsibilities that you mentioned in the farm bill.

And I think the inspector general that just recently -- I don't know if you've had a chance to look at the inspector general's report on your agency, but that was, I think, one of the major points made by that report as to whether or not you would have human capital necessary to monitor the complex situations that you face.

Now, there's been some problems in the past in CFTC when it comes to federal pay parity, where the government basically said, let's start treating all the professionals in our agencies alike, and CFTC seemed to be lagging in the past in bringing the income levels up to meet the pay parity standard.

Now, you mentioned my visit to the office in Chicago, and I'm glad I did it. I don't know how many other congressmen or senators have been there, but it's an eye opener. It's a small staff, but it's an amazing staff, and I was very impressed. There are some people we have working for our government in that office who do such exceptional work.

One man they introduced me to, I've forgotten his name, unfortunately, and they told me what his responsibility was each day and they said, he is the go-to guy; he watches all of these transactions going and he's the one who monitors them, and if he weren't here, you know, I'm not sure how good a job we'd do. It would take a lot more people to try to do what he does every day.

I said, "Does this man take a vacation?"

They said, "Yes, he does and we try to hang on until he gets back."

It's that kind of person and that kind of responsibility which leads me to ask: Now that we've sent you a substantial amount of money in this year's fiscal year bill, in the omnibus bill, and now that we've told you, you need more professional people, and now that you're looking at this pay parity issue, how are you trying to fit these pieces together into some coherent way of expanding your agency in a manner that is consistent with rewarding the good performance of people there and bringing on board the kind of folks that you need to meet these new electronic markets?

MR. GENSLER: Senator, I think you're right and these are important challenges. Just being in the job for six days, what I've captured --

SEN. DURBIN: Incidentally, you're new to this, but it's always great start your answer with "Senator, you're right." (Laughter.) Please proceed.

MR. GENSLER: Senator, you're right. (Laughter.) But as I understand it, the agency has been able to get up just all of the job postings. There's about 95 job postings. There's competence at least within the staff as to what might be achieved by September 30th. We all know there's a summer and August and so forth, but all the postings are up. Some of the recruiting has already occurred and people have been coming in.

But I also agree with the chairman that this agency, which was so sorely underfunded and actually shrunk over 20 percent in the face of this complexity during the last eight years, has too many jobs that are being done by one person or not enough. And just as an example, when I ask, well, how large is the group that oversees the clearing, this really important function in futures, before we even get to over- the-counter derivatives, and that nine-person staff out in Chicago, which is part of that larger staff, I said, is that enough?

Well, you know, everybody said, "Well, that's what we have and we've had to make tough choices."

So I think that's very important. I'm committed to make sure the taxpayer dollars are put work most appropriately and efficiently. But I do have confidence in what I've seen in six days that there's a plan of action for these hires.

SEN. DURBIN: What about the pay parity issue?

MR. GENSLER: On the pay parity, as I understand it, we've been able to bring up very close -- I believe, in a submission to the Office of Management and Budget, there was a figure of about 4 or 4.5 million dollars more to bring that up, I think, in this latest request, if I recall the figures that were shared with me in the last week.

SEN. DURBIN: I might say that there's --

MR. GENSLER: Let me just correct this. There is $1.4 million in the fiscal 2010 budget specifically with regard to that. So maybe that was what we were able to include.

SEN. DURBIN: One obscure little thing which I accomplished when Senator Collins was chairing the government administration committee -- is that when it started?

SEN. COLLINS: Governmental Affairs.

SEN. DURBIN: Governmental Affairs Committee, when it started, was the whole question of student loan repayment as an incentive to bring in professionals. And we instituted it initially right here on the Hill and started extending it to federal agencies. The SEC is one of the best agencies in government on this front; 385 of their staff, 181 of whom are attorneys, have used the student loan repayment. And I believe this brings into federal government, where their services are very valuable. Otherwise, they might not be able to consider it.

The CFTC has not instituted such a program. And I'm wondering -- probably for lack of money. I'm wondering if you expect to be able to provide that benefit as part of recruitment in the future.

MR. GENSLER: The answer is yes, sir. I think that we tried to do -- I think it was just a small de minimis in this year, but $200,000 in this fiscal year.

SEN. DURBIN: I see.

MR. GENSLER: In fiscal '09 actually.

SEN. DURBIN: Well, I think it could be a major part of attracting really talented college graduates who otherwise would be lured to something that may pay a little more, just to defray their --

MR. GENSLER: The agency shares that view.

SEN. DURBIN: Thank you.

Senator Collins?

SEN. SUSAN COLLINS (R-ME): Thank you, Mr. Chairman.

Mr. Gensler, Senator Lieberman and I, as the chairman and ranking member of the Homeland Security and Governmental Affairs Committee, held three hearings last year looking at speculation in the commodities markets. And I want to talk about some of our findings as a result of those hearings.

The first we've already discussed at some length. And that is that the CFTC has been woefully understaffed. We were told by the commission that there were more than 3 billion futures and options contracts that were traded last year. It would have been the year before last. And that was up from 37 million in 1976 when the commission was first created, so 37 million to 3 billion contracts. And yet the commission was operating with fewer employees than it had 30 years ago, just an untenable situation.

Now, the acting chairman of the commission in February wrote to the OMB director in protest of the budget that had been handed down by OMB of having a budget of $160.6 million. And he described it as perilously inadequate. He went on to say that it would not allow the commission to implement all of its responsibilities. That is the budget that we're talking about today. Do you disagree with the letter that was written by the acting chairman, or do you share his concerns?

MR. GENSLER: I share the concerns that this agency is both under-funded, as you and Senator Lieberman's panel determined last year. I think as the acting chairman, Mike Dunn, who really did an excellent job these past four months, has laid out this agency needs more.

We're very appreciative of the president's budget and the 38 additional employees. But I don't think it's really yet up to the task that the American people expect or how we're going to protect against fraud, manipulation and, as your hearings looked at, the burdens of excess speculation in these markets.

SEN. COLLINS: Let me turn to the speculation issue. As a result of the hearings that we held, Senator Lieberman and I introduced a bill that directed the CFTC to establish position limits that would apply to an investor's total interest in a commodity, regardless of whether they originate on a regulated exchange, the over-the-counter market or on foreign boards of trade that deal in U.S. commodities. Do you support establishing position limits, having the commission do it rather than the exchanges?

MR. GENSLER: I think, Senator, that it's important that we bring a broader view of this even than was being discussed then, that we have the over-the-counter derivatives marketplace under regulation but, in addition, that the position limits that are set -- for instance, if it was for crude oil, that it would look across markets and aggregate not only internationally, as you were discussing, but also within the over-the-counter derivatives marketplace there may be contracts that are really quite similar, as you addressed in the farm bill, but more broadly as we work with Congress later this year and try to get aggregate position limit authority for federal regulators to look across markets and across futures and swaps.

SEN. COLLINS: What our hearings demonstrated was that speculation in the commodities markets by noncommercial investors -- not individuals or entities that are actually taking possession of the commodity at some point but entities like pension funds, university endowments and other institutional investors -- has grown enormously from 2003 to 2008. In just that five-year period, the total value of their futures contract and commodity index funds investments soared from ($)13 billion to $260 billion. So you have this influx of money from speculators.

It's always been speculation in the commodities futures markets. I understand that. And I understand that speculation is useful for hedging risk. But we're talking now about speculation from individuals who are not the traditional buyers and sellers of the commodity.

And I understand that those investors' intention is to provide good returns as a hedge against inflation, asset diversification. But the effect of that activity cumulatively appears to drive up the price for some of the traditional users of the commodity markets. And just a week ago Maine's fuel dealers were in my office saying that they believe excessive speculation by noncommercial players is once again driving up the cost of oil. That's a tremendous issue in a state where 80 percent of the families use home heating oils to stay warm.

So two questions: First, what is your general opinion on whether the influx of funds from nontraditional players is putting artificial price inflation or causing prices to go up beyond what they otherwise would? And second, what, if anything, should we do about it?

MR. GENSLER: Two excellent questions. I do think that, looking back, looking back in that period that you named and when oil prices peaked in last summer that a contributing factor, not the only factor because there were many, many factors, but a contributing factor to the commodity asset bubble was index investors and other financial investors.

We have also lived through other asset bubbles in housing, unfortunately, in the stock market in the late '90s and then again, maybe, last year. So in a similar way, I think financial actors contributed to this but were not the only cause.

I do think that the Commodity Futures Trading Commission at its core, and has been for 70-plus years -- one of its missions is to make sure that markets' integrity is sound, that there's not manipulation and fraud, but also that the burdens of excessive speculation be guarded against through position limit authority. So in terms of what -- the Commodity Futures Trading Commission is not a price-setting agency. But it is an agency that has to guard to make sure that the markets are operating free of manipulation, free of fraud and that through the position limit authority that Congress first granted back in the 1930s that there's some limit to the actors within the marketplace.

SEN. COLLINS: Thank you.

SEN. DURBIN: Senator Tester?

SEN. JON TESTER (D-MT): Thank you, Mr. Chairman.

And thank you for those questions, Senator Collins.

I've just got a follow-up that goes right on to her question. And that is, do you think the marketplace right now is being impacted by -- I'm talking about the oil marketplace -- is being impacted by trading of nontraditional traders?

MR. GENSLER: Senator Tester, again I've only just been in the job for six days and mostly been preparing for this appropriations hearing and a hearing for Thursday on other matters. So I haven't formed a view.

I do think that just as the asset bubble broke last year with this financial crisis that part of what we're seeing is with some confidence coming back in the stock market and in other investment markets. Just as Senator Collins mentioned, some investments of firms and others are having more confidence in the value in the commodities marketplace. But, again, I've only been there six days and haven't, you know, been able to meet with economists and sort through the specifics of this market.

It is likely that as economy -- if we're able to get out of this recession and get away from the financial crisis, the commodity prices will move. And I'm not saying where, but a lot will change in the economy as well.

SEN. TESTER: Being a farmer, I don't mind having commodity prices go up. I can tell you that the price of gasoline at the pump in Montana over the last six weeks probably went up a buck a gallon. I don't see that kind of increase at the barrel level. I can still hear about ships floating around out in the ocean full of oil. I can't make any sense of what's going on. And what further frustrates me is that last year during the last Congress we had people in -- and you're right, it was a multifaceted thing. But very, very few people would step up to the plate last year and say part of this, a good part of this, is caused by speculation in the marketplace.

MR. GENSLER: Well, I --

SEN. TESTER: It was all supply and demand, supply and demand, supply and demand. And that was part of it. But I think a good part of it was just flat speculation and greed.

MR. GENSLER: Well, Senator Tester, as I've just said, I believe that index investors, hedge funds, other pension and financial investors were a contributing factor in this asset bubble of last year. I just haven't been able to tease out what's happened in the last six days.

SEN. TESTER: I look forward to a further communication, either in committee or outside the committee, on that issue because I think it's really important.

I think it's really important that we make sure that we have honest markets here.

MR. GENSLER: I fully agree with that.

SEN. TESTER: Okay. I asked a question to Secretary Schapiro about the discussions of future roles of your agency and the SEC as we conduct a regulatory modernization effort. If they were combined, if CFTC were combined with SEC, can you just tell me some of the challenges, opportunities, possible consequences?

MR. GENSLER: You said if.

SEN. TESTER: That's right.

MR. GENSLER: I see. Well, thank you for your question, Senator. I think whether it's in government or in commerce, it's important to consider that a merger just for merger's sake is probably not much reason to do that, whether it's in government or in commerce.

SEN. TESTER: Yes.

MR. GENSLER: I think some of the challenges is that each of these agencies, these great agencies that really date back to the 1930s have a mission to protect against fraud and manipulation, but they're a little bit different missions. So at the CFTC its core was around farmers and ranchers initially, which you know a great deal about, but to protect that. Somebody can hedge a risk, you know, buy the seed and plant and hedge the risk, and that those markets' pricing mechanism was, as you say, were honest markets. That's at the core of the CFTC. And if for any reason Congress and the president working together wanted to merge these agencies, which, again, I'm saying merger for merger's sake probably isn't it, we'd have to really protect that root mission that we're protecting the pricing mechanism for farmers, ranchers, commercial users, all the users of the futures and derivatives marketplaces that the CFTC oversees.

SEN. TESTER: Okay. If the president's working group recommend combining the two agencies -- if, again -- and you believe that they should be separated, would you support the working group's regulatory modernization proposal?

MR. GENSLER: As chair of an independent regulatory agency, my responsibility, I think, to the American public would be to tell you what I believed at that time. So I think I would speak out openly and share with this committee and the rest of the Congress what I thought.

SEN. TESTER: Okay. All right. Good.

Derivatives -- you've been involved in a conversation on regulating or deregulating derivatives for over a decade in past positions that you've held. Could you give me, could you give me a quick synopsis, because I'm already out of time, on how your opinion of derivatives and their regulation has evolved over the last five, 10 years?

MR. GENSLER: It has evolved, Senator. I think now that we need to bring under regulation the over-the-counter derivatives marketplace in two complementary regimes. One is the dealers or institutions that actually deal in these swaps, if I might call them. And that's nearly 100 percent of the market, probably in 20 or 25 big institutions. We know their names, and you're familiar with them.

We should police for fraud, manipulation. We should get 100 percent of their record, both for standardized and customized swaps and set capital standards at a federal level and margin requirements through the dealer side. But in addition, in an additive way, also regulate the markets and that we can lower risk, we can lower risk if we have standard product all through central clearing and we can promote transparency. And this is critical, that we promote transparency through having regulated exchanges as well.

SEN. TESTER: Okay, thank you very much.

SEN. DURBIN: Chairman Gensler, as you look at the volume of work that you're faced with, the new responsibilities, what do you think is the -- well, let me state it this way: What would you recommend as the optimal number of people that you need in your agency to do that job effectively?

MR. GENSLER: Under the current authorities -- because of course we'll work together with Congress and with the rest of the administration on new authorities -- thank you Senator Tester.

Under the current authorities, the agency put forward, as Senator Collins said, an appeal letter in February that was speaking to I think it was about 650 full-time people under that ($)177 million. I don't know yet -- again, through just six days -- whether that's going to allow us to fully cover. But I agree with Acting Chairman Dunn that it's more towards that number of people, and it may be as high as -- or some figures I've seen inside that are a little higher than that, closer to the 700-person figure.

SEN. DURBIN: When Chairman Schapiro was here, I noted that the fees collected by her agency, within the marketplace, generated about 40 percent more than the annual appropriation for her agency.

Similarly, in your situation, the penalties that have been assessed for wrongdoing and the amounts collected -- I've seen varying estimates of this amount -- but appear to be over the last eight years somewhere between ($)1.5 billion and $2 billion -- your annual appropriation for last year, ($)146 million, in comparison there.

So could you say to me, I mean -- or could we say to those who are observing this hearing that when your agency does its job and ends up with a trustworthy marketplace it also is engaged in enforcement actions which bring in more revenue than the actual budget of the agency?

MR. GENSLER: I think, Mr. Chairman, that the agency -- we could say to those looking that this is a sound investment of $160 million for the next year of taxpayer money, because in helping police these markets, enforcing these markets, bringing integrity to the markets, making sure that they're fairly priced in the marketplace -- is the crucial thing.

But in addition, you're right, there are enforcement actions that have penalties -- that penalties are at least greater than the budget. The collections tend to be a little less than that, as you know.

SEN. DURBIN: How well is the CFTC able to measure the deterrent impact of these enforcement actions?

MR. GENSLER: It's a challenge to measure the results, but we believe that the stronger we are in enforcement -- and just as Chairman Schapiro said -- in finding some of those cases that you can really bring the wrongdoers to bear is critical to make sure that the markets operate better.

SEN. DURBIN: What is your recovery rate?

MR. GENSLER: As I understand it, the collections on the large manipulation cases are very high. The collection on the Ponzi schemes and fraud cases, unfortunately, is very low, because so often those individuals behind those cases don't have any money.

But I believe it's somewhere in the 30 to 40 percent when you average out high recoveries on complex manipulations and low recoveries on these Ponzi schemes.

SEN. DURBIN: I'd like your thoughts -- and maybe you can share them with me in separate communication -- about whether the current penalty structure is in fact at a level consistent with creating a deterrent and what additional remedies or instruments you may need for that recovery rate to improve. And I understand that, as you said, in some recovery is going to be extremely difficult.

But if you would take a step back and look at those two aspects, the deterrence and recovery, and give us your thoughts on them, I would appreciate that very much.

MR. GENSLER: We will follow up with you, Mr. Chairman.

SEN. DURBIN: Thank you.

Senator Collins.

SEN. COLLINS: Thank you, Mr. Chairman. Just two final questions from me.

Senator Levin and I have introduced a bill that would repeal the language that prohibits the Commodity Futures Trading Commission from regulating derivatives. And I understand that the administration's new proposal would give both the SEC and the CFTC new authority to regulate derivatives.

What are your thoughts on this plan and the role of the CFTC in the regulation of derivatives?

MR. GENSLER: I wish to applaud you and Senator Levin on that bill.

I believe that we have to have, working with Congress, significant amendments to the Commodities and Exchange Act and -- seeking the same goal, to bring all the over-the-counter derivatives marketplace under regulation.

I think the Commodity Futures Trading Commission has the lead expertise on derivatives. Futures are a form of derivative, and these things -- they're now called over-the-counter swaps -- are another form of derivatives. Working with Chair Schapiro, I'm hopeful that we can present a unified front. And as she said, you know, there's -- the boundary issues are important.

I think it's critical that we not have any gaps in regulation. But we believe at the CFTC -- and I believe -- interest rate swaps, currency swaps, commodity swaps, equity swaps, credit default swaps and any swaps invented in the future -- (laughter) -- that are a just a blip on the radar need to come under this regulatory regime.

There may be areas where a swap is more security-like -- like it's a single-issuer credit default. But of course, we need multiagency work -- insider trading and SEC you would want very much involved in things like that.

SEN. COLLINS: Actually, I would argue that the credit default swaps were more like an insurance product, and yet, they were not regulated by state insurance agencies either.

MR. GENSLER: They had many insurance attributes. There's many lessons, unfortunately, out of this crisis.

You were earlier asking Chair Schapiro, but I think one of the great lessons of AIG was that there was unregulated institutions. That's why I am for regulating all derivative dealers, whether they're affiliated with banks or not.

But then, these products, as you say, credit default swaps have attributes of insurance -- like monoline insurance. They have attributes of securities.

SEN. COLLINS: Exactly.

MR. GENSLER: They have attributes of derivatives that the CFTC is the expert on.

SEN. COLLINS: Which is why we need this council of regulators approach, because the problem now is the marketplace is always going to be innovating -- and we want it to be innovative -- and producing new kinds of products. And we need a system where -- just because a product is new does not mean that it falls into a regulatory black hole and no regulator ends up having responsibility and no regulator or regulators is looking at the impact across the financial system.

When you think of the credit default swap situation, here we have a new product that grows into the trillions of dollars, jeopardizes the entire financial market, and yet it doesn't fall under securities, it doesn't fall under insurance, it doesn't fall under the Consumer Product Safety -- I mean the Commodity Futures Trading Commission. So clearly, we need to resolve that.

Let me just turn to another loophole that our hearings took a look at and that's the so-called swaps loophole that allows financial institutions to evade position limits on commodity contracts that regulators are using to prevent unwarranted price swings or attempts at manipulation.

What should be done to close that loophole?

MR. GENSLER: I think that explicit authority should be given to the federal regulators, with the CFTC taking the lead on position limits.

But explicit authority to bring the over-the-counter-derivatives marketplace under a regulatory regime -- and if we regulate all of the dealers to make sure that they are not manipulating -- we're policing fraud, policing position limits -- aggregate position limits, as I referred to earlier -- that gives us an enormous opportunity -- and to see 100 percent of the transactions so that amongst the regulators.

SEN. COLLINS: Finally, do you have sufficient funds to pursue your international responsibilities?

What I'm thinking of is there is a problem with foreign exchanges and what rules they're going to play by, particularly if they're dealing with U.S. commodities, which they are, and particularly when they have a presence in the United States.

I don't know whether that's an issue you've looked at yet, but the SEC seems to be far more active in that area than the CFTC is.

MR. GENSLER: Well, Senator, you're right that we've had to make as an agency tough trade-offs, an agency that shrunk 20 percent in the last years. But thankfully, with this year we'll start to move back. There's a small office of international effort, but it's very small -- I think four or five people at the CFTC.

We do share your concern and share the view that we have to make sure that foreign boards of trades, that are influencing these markets and are in our markets, have consistent regulation come under the position limits and other authorities here. Thought the CFTC has moved forward in this regard, I do -- we do think that it's important to work with Congress to embed in statute some additional authorities with regard to foreign board of trade.

SEN. COLLINS: Thank you.

Thank you, Mr. Chairman.

SEN. DURBIN: Thank you, Senator Collins.

Chairman Gensler, thanks for your testimony.

We're going to keep the hearing record open until next Wednesday, June 10th at 12 noon for subcommittee members to submit statements and/or questions. And we ask that the information we have requested of you, you do your best to comply with at a convenient time.

Thank you very much for coming and joining --

MR. GENSLER: Chairman Durbin, Ranking Member Collins, thank you so much.

SEN. DURBIN: Thank you very much. (Sounds gavel.) Subcommittee hearing is hereby adjourned.

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