Congress in recent years has habitually funded the government with so-called continuing resolutions for large parts of each fiscal year until it is able to iron out a new budget. Continuing resolutions restrict agencies to expending funds at rates not higher than those of the preceding fiscal year; they are essentially a fiscal holding pattern. This means that agencies must mark time on new initiatives, even those mandated by Congress, such as implementation of Dodd-Frank, until sufficient funds are eventually provided for a new fiscal year. Now, with the "fiscal cliff" threatening massive automatic budget cuts at the beginning of 2013, funding for government agencies is even more uncertain than usual.
Even were Congress to immediately fund the CFTC at the level of the President's budget request, the agency would be woefully underfunded compared to the breadth and complexity of its new statutory mandate. Funding the agency, even in part, through user fees imposed on transactions on designated contract markets would provide a more reliable and adequate source of income than the erratic appropriations process. What's more, the fee would be paid by those who benefit most from the services provided by the regulated marketplace. I would recommend imposing a small fee, perhaps a fraction of a penny or a fraction of the value of a transaction, on each transaction on designated contract markets. With the millions of transactions completed each day, this minimal burden would permit much more effective funding of the CFTC than in the past and would mirror the mechanisms used to fund other regulators.
Of course, even a nominal fee is a cost to those trading on the market. High frequency traders, in particular, may object to even a fraction of a cent fee, as that would consume the bulk of their profits. But it is regulation that makes the markets possible at all. It is only fair that those who benefit most from the existence of the markets bear some of the costs of maintaining them.
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