The top U.S. derivatives regulator said his agency lacks resources to conduct even routine inspections of the exchanges and other companies it polices.

"We simply can't get into these entities on a regular basis," Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad told lawmakers in Washington on Tuesday, speaking two weeks after the arrest of a trader accused of manipulating a futures market over five years. "We don't even get to many of the clearinghouses and exchanges once a year. That is a big problem," Massad said, as he asked for more money.

The CFTC is under scrutiny amid last month's allegations that Navinder Singh Sarao cheated on CME Group Inc.'s exchange from 2009 to 2014, including on the day of the 2010 "flash crash" that briefly erased almost $1 trillion from U.S. stock prices. Massad has responded to questions about Sarao by highlighting funding woes at the CFTC, pointing out that it's tasked with regulating the $700 trillion swaps market on a $250 million annual budget.

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Tuesday marked the first time Massad and Securities and Exchange Commission (SEC) Chairman Mary Jo White have faced members of Congress since U.K. police raided the home near Heathrow Airport that Sarao shares with his parents.

Not one lawmaker on the subcommittee of the Senate Appropriations panel asked about the 36-year-old trader and the time it took to bring charges. Massad himself referred to Sarao in his prepared remarks as an example of successful enforcement, saying the agency recently brought a case against "an individual who we believe" manipulated futures contracts tied to the Standard & Poor's 500 Index.

While Massad didn't mention Sarao by name, he reiterated the CFTC and U.S. Justice Department view that the trader "contributed to the order imbalance" that helped spur the flash crash on May 6, 2010.

President Barack Obama has asked Congress to increase the CFTC's budget by 29 percent, to $322 million, a boost that Massad said the agency will use to improve its technology and hire more staff to inspect companies and investigate wrongdoing.

Still, paltry funding may not be the only reason the CFTC didn't catch Sarao sooner or tie his trading to the flash crash in a 2010 review the agency did with the SEC. In examining the sudden market plunge, CFTC economists say they never considered whether it was caused by individuals manipulating the market with fake orders.

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