SEC, CFTC would have skeleton staffs in shutdown



By Ronald D. Orol
and Laura Mandaro
, MarketWatch

WASHINGTON (MarketWatch) — In the event of a government shutdown, top U.S. regulators overseeing trading in commodities and securities said Friday they would have to reduced staffing to bare-bones levels.

The Commodity Futures Trading Commission said it would retain 25 employees starting Monday in the event of a shutdown. The agency has 675 workers.

Details of the CFTC’s plan emerged as congressional leaders appeared at loggerheads in negotiations with President Barack Obama on providing continued funding for the federal government, which would run out of money for its operations effective at 12:01 a.m. on Saturday. A partial shutdown of nonessential personnel would begin without a spending deal.
Read about shutdown effects on economy

The 25 CFTC employees would be permitted to continue working because the agency has determined that without them there would be an “imminent risk to the protection of property.”

According to one CFTC employee, other agency staff would receive furlough notices either electronically and stay home on Monday or they can come in for a maximum of three hours to receive their notices in person.

The plan adds that the CFTC’s five commissioners are exempt from the furlough requirements.

CFTC officials made the determination to keep 25 employees working based on the understanding that a “complete absence of any oversight or surveillance by the CFTC would create an imminent risk to the protection of property,” the agency said.

The CFTC, an independent federal agency, regulates trading in futures and options. The agency regulates futures exchanges and exchange members, futures brokerage houses and commodity pool operators.

Meanwhile, the Securities and Exchange Commission would also have its staff reduced significantly in the event of a shutdown.

“Unlike almost every other financial regulator, we may be shut down,” SEC Chairwoman Mary Schapiro told reporters at a conference in Dallas on Friday.

The Federal Reserve and other bank regulators, because they are self funded, would continue to operate unscathed by a shutdown.

The SEC would continue certain market-surveillance efforts and keep some staff on hand to handle vital enforcement matters if the event of a shutdown, The Wall Street Journal reported, citing people familiar with the matter.

Most of the agency’s activities, including regular examinations of fund manager and broker-dealer books, would come to a halt, according to the report.

‘We can get the rules written, but we can’t operationalize them.’

Mary Schapiro, SEC

A shutdown would come at a particularly sensitive time for the two agencies, as they work through how to implement the Dodd-Frank Act, the sweeping reform law enacted in 2010.

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