By Douwe Miedema
WASHINGTON (Reuters) - The U.S. derivatives regulator said it could send staff home for several weeks next year because of budget cuts, just as it takes on crucial new responsibilities in overseeing the $630 trillion market.
The Commodity Futures Trading Commission, whose powers were vastly expanded after the 2007-2009 financial crisis, depends on Congressional appropriations for its budget, unlike U.S. bank regulators, which are self-funded.
Congress reopened the government and narrowly avoided a U.S. default in a temporary deal on government spending this month but the inability to agree on a longer-term budget means automatic spending cuts known as the sequester remain in place.
The CFTC will implement an administrative furlough of up to 14 days, including three days before January 15, Chairman Gary Gensler said in an email on Thursday to staff.
"This CFTC furlough results from continued funding challenges, sequestration and a required minimum level Congress set for the CFTC's outside technology spending," Gensler said in the email, which was seen by Reuters.
The CFTC is overseeing the shift towards electronic trading of the complex instruments at the heart of credit crunch, and has recently started overseeing a score of new exchanges where this regulated trading will take place.
The reforms put in place after the crisis have given the CFTC oversight of a market eight times as big as the futures market it traditionally oversaw, but its budget and staff levels have not materially gone up.
Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, said she was "deeply troubled" by the news of the furlough.
"This news is particularly devastating as it comes on the heels of a government shutdown that practically closed the CFTC for more than two weeks," she said in a statement.
The agency had to halt its operations almost completely the moment the U.S. government partially closed on October 1, delaying the publication of data and leaving the CFTC unable to assist the new swap trading platforms in their first days of operation.
The CFTC said it had exhausted other options to keep it going on a tight budget. It had shrunk staff by 5 percent, reduced travel and spending on contractors, and had used up carryover funds from last year.
(Reporting by Douwe Miedema; Editing by Tim Dobbyn)