Up until 1974, there wasn’t a single dedicated regulator of the commodities brokerage business. The exchanges were in the enforcement business, for better or worse, then.

That changed with the birth of the Commodity Futures Trading Commission (CFTC) in 1974. Launched under “sunset” legislation, the CFTC took on oversight responsibilities much like the Securities and Exchange Commission (SEC) does for stock trading. With some notable exceptions, that is.

The biggest exception is permanence. The CFTC has none; the SEC does.

Every few years, the CFTC must go, hat in hand, to Congress for “reauthorization,” a process by which the agency must justify its continuing existence or face the setting of its sun (hence the “sunset” moniker). The SEC, on the other hand, is a permanent agency.

Not that the SEC doesn’t beg Congress for money. It does. It’s just that there’s less at stake when the SEC troops climb the Capitol steps compared to CFTC-ers’ hike.

In the upcoming fiscal year, the CFTC is in line for a 16% budget increase, which, if approved by Congress, would likely boost the agency's staffing and surveillance capabilities. In total, $130 million has been earmarked for the CFTC, with the most sizable allocations going to:

• Enforcement – $47 million (up 15%)
• Market oversight – $37 million (up 16%)
• Clearing and intermediary oversight – $26 million (up 18%)

According to the proposed budget, CFTC had 465 full-time employees in 2008 and is looking to boost personnel by 2%, or 10 slots, to counteract the steady staff leakage to the private sector in recent years and defections to the SEC.

The shoe’s on the other foot now. SEC’s budget request, though seven times as large as CFTC’s, will grow less than 1% in fiscal 2009. That, tellingly, includes the effect of 3% staff reduction at the securities regulator.

Hmmm … perhaps some of those defectors are going back to the CFTC.