The U.S.'s top swaps watchdog appears to be losing its bark and its bite.
The Commodity Futures Trading Commission sought $413 million of penalties from Wall Street banks and other firms in the 12 months ended in September, down 68% from $1.3 billion in 2016, the regulator said in a statement last Wednesday. The drop is even more stark when compared with the record $3.2 billion of sanctions the agency imposed on firms in 2015.
The number of CFTC enforcement cases has also been falling in recent years. In 2017, there were 49 cases, compared with 68 a year earlier and 69 in 2015.
Recommended For You
The CFTC has a big responsibility as the main U.S. regulator of the $483 trillion global derivatives market, but with an annual budget of $250 million it is perennially cash strapped.
Under the Trump administration, the agency has been trying to find more cost-effective ways to police markets, such as enforcement chief James McDonald's September announcement that the regulator would reduce penalties for firms that self-report violations. And in a June case that involved three Citigroup traders, the CFTC entered into is first-ever non-prosecution agreement. The accord allowed the traders to avoid claims of wrongdoing as long as they fulfilled certain obligations.
After its creation in 1974, the CFTC was largely considered a regulatory backwater. That changed after the 2010 Dodd-Frank Act gave it much more oversight of derivatives, which were largely blamed for contributing to the global financial crisis. The agency even began to develop a reputation for aggressive enforcement, as it was involved in investigations into banks' manipulation of Libor and other benchmarks that led to billions of dollars in penalties in 2015.
To be sure, last year's decline may be part of the natural ebb and flow in regulators' development of investigations. Many probes take years to finish and agency leadership often strives to wrap up high-profile cases as presidential administrations draw to a close.
Still, the CFTC's drop in sanctions mirrors what's happened at another key financial regulator in President Donald Trump's first year in office. Last week, the Securities and Exchange Commission reported that its penalties fell to the lowest level in three years during fiscal 2017.
From: Bloomberg News
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
