Doing Business With: Commodity Futures Trading Commission

About the commission<@VM>Profile of CIO Hilary Schultz

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st St. NW

Washington, DC 20581

(202) 418-5000

http://www.cftc.gov


Founded 1974


Chairman: James Newsome


Commissioners:

Barbara Pederson Holum,

Walter Lukken

Sharon Brown-Hruska

Employees: 526

What it does

CFTC is an independent agency that regulates commodity futures (an agreement to buy or sell in the future a specific quantity of a commodity at a specific price) and options markets in the United States. It protects market participants against manipulation, abusive trade practices and fraud. Through oversight and regulation, the CFTC provides a means for price discovery and a means of offsetting price risk. The regulated commodities include food, grains and metals.

Major subagencies
There are six major operating units: the divisions of Clearing and Intermediary Oversight, of Market Oversight, and of Enforcement; and the offices of the Chief Economist, the General Counsel, and the Executive Director. In addition to the Washington headquarters, there are offices in Chicago, Kansas City, Mo., Minneapolis and New York, where there are also futures exchanges. There is also an office in Los Angeles for enforcement purposes.

Number crunching
2004 budget request: $88.4 million
2003 budget: $79.9 million

In the fiscal 2004 request plan, a segment called "executive direction and support" accounts for all IT in support of all agency programs. This segment accounts for 28 percent, or approximately $24.4 million, of the budget request. The 2003 budget for this segment was $23.2 million. About 71 percent of the agency's budget covers employee salaries and

Things to note
In looking for information on doing business with the CFTC, I first found "Procurement Opportunities" listed on the site map of the Web page at http://www.cftc.gov/cftc/cftcmap.htm . Here was a category called "Current Business Opportunities" at http://www.cftc.gov/ofm/procurement/ofmcurrentops.htm that features an online request form. Submitting one will put you on a vendor list for recurring needs of goods and services, such as IT equipment, software and services and communications equipment. Other information on contracting is available here as well.

In December 2000, Congress passed the Commodity Futures Modernization Act, with the goal of helping to keep U.S. financial markets a leader in the global market. Among many things, it repealed an 18-year ban on single-stock and narrow-based stock index futures and set up joint regulation over these by the CFTC and the Securities and Exchange Commission. It also reauthorized the CFTC through the end of fiscal 2005.

Five commissioners are in charge of CFTC. They are appointed by the president and approved by the Senate to serve five-year terms. Currently, there is an open commissioner's position. The president chooses one commissioner to serve as chairman. The chairman also serves with the secretary of the Treasury and the chairmen of the Federal Reserve Board and the Securities and Exchange Commission as the President's Working Group on Financial Markets.

Hilary Schultz, CIO of the Commodity Futures Trading Commission

David S. Spence

Title: Chief information officer

Took the job: May 2002

Hometown: Born in London, raised in New York

Home now: Virginia

Hobbies: "My new granddaughter, bird watching, stained glass when I have time. I also want to learn more about sea kayaking."

Last book read: "Fish! A Remarkable Way to Boost Morale and Improve Results," by Stephen Lundin, Harry Paul and John Christensen

Currently reading: "The Present" by Spencer Johnson

Alma mater: Master of science in information resource management specializing in federal government from Syracuse University; graduate of the Department of Defense's National Defense University CIO Certificate Program

WT: How does your agency use IT? Do you have specific needs that may be considered unique?

Schultz: It's really interesting. There are two answers.

First, we are a Microsoft-centric organization using the standard suite of Microsoft Office tools to support day-to-day operations. We also have custom-built, mission-critical applications that support our regulatory functions related to the futures and options markets.

These applications support ongoing market surveillance to detect and prevent price distortion and manipulation. They also support clearing and intermediary oversight, which includes monitoring the financial and operational integrity of the clearinghouses and intermediaries, ensuring that customer funds are protected, and that safeguards are in place to prevent the financial problems of a single entity from spreading throughout the system.

Second, the commission receives a great deal of financial and transactional data from the futures and options market community. Finding the best ways to employ technology to enhance the commission's ability to analyze this volume of information in creating a stronger knowledge management environment that is unique for us.

WT: How has technology changed what your agency does or how it does it?

Schultz: From the mission-critical applications perspective, using technology, we have developed systems that make it possible for us to see a vast amount of information and analyze it quickly and thoroughly to fulfill our regulatory mission.

For example, through technology we have daily electronic interfaces with futures commission merchants, so that we have a view of the marketplace, in particular from the large trader perspective. We can use these systems to look at how professionals are trading in the markets, and identify patterns that may indicate circumstances that require action on our part.

Generally speaking, information is more readily available to those who need it, when they need it to support the commission's regulatory mission.

From the business operations perspective, applying technology has made it easier to share information within the commission. Critical information is not just in the bottom of one person's desk drawer; it's in a common location on our well-defined network file structure, making key information available to many.

Having an established standard suite of commercial products, such as [Microsoft] Office and Project and SAS, across the commission allows critical staff resources to focus on accomplishing the mission rather than being concerned about how they should efficiently communicate business materials internally.

WT: How did the Commodity Futures Modernization Act affect the IT end of the agency?

Schultz: There are a couple of things. It's changed some of the things that we have oversight to. Now we share the responsibility of single-stock futures, we have more electronic exchanges. It's really a case of moving from a regulatory perspective to an oversight perspective, and changing some of the things we focus on from a business perspective. That means modifying systems to incorporate new needs for data and new analysis purposes. It's provided us some interesting ways of approaching the business.

WT: What technology, if any, has made the agency's mission easier?

Schultz: This is pretty exciting. We are testing a technology called AudioCite, which allows an investigator to do a keyword search through hundreds of hours of indexed audiotapes, rather than having to listen to each tape trying to find the relevant parts. This technology is showing great promise, saving both the investigator's valuable time and identifying key information for an investigation file.

WT: What do you look for in companies with which you are thinking of doing business?

Schultz: Besides the obvious ? a company that would provide the best value for the taxpayers dollars ? we look at three things: a company's past performance in the work we are contracting for; the depth of their "bench" to support our effort, which reduces the risk to our project if a company loses a key staff member on the effort; and an understanding of our business.

WT: What are you looking for techwise for the agency's future?

Schultz: We are planning for an integrated information environment that is Web-based to improve the delivery, availability and reliability of the commission's critical information. We expect storage areas networks, enhanced broadband capability and Web services to play key roles in our future environment.

WT: A year from now, where do you see the agency's technology capabilities?

Schultz: It will be a busy year, but it will be exciting. We will have a technology solution that delivers an automated law office in support of the commission's investigative, trial and appellate work. We will have a more robust, commissionwide SANs solution to support our mission-critical applications and the volumes of data in those applications. And we will begin to redefine how we use one of our mission-critical systems to stay abreast of the changing trading world, which is moving from the open outcry style of trading to electronic trading systems. This new system will facilitate the commission's mission objective to monitor trade practices.

WT: How have you transformed your paperwork into electronic files? How is it going?

Schultz: That's an easy one. We are doing very well with moving from a paper-based environment to the electronic world. We've met the administration's October Government Paperwork Elimination Act goals. As we reported to [the Office of Management and Budget] in our 2001, 2002 and 2003 GPEA reports, the commission receives and disseminates the bulk of it information in electronic form.

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