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NFA's Board of Directors approves Fiscal Year 2002 budget

NFA is continually striving to contain costs, and over the last ten fiscal years, NFA's administrative spending has increased on average less than two percent each year. The key to this cost containment has been a steady reduction in staff size: In 1991 NFA averaged 326 full-time equivalent employees; FY 2001 is projected to average 265 staff; and in FY 2002 NFA expects an average headcount of 254.

As a service organization, NFA's primary cost is people and people-related expenses. Employee wages and benefits have traditionally represented around 65 percent of NFA's overall administrative expenses. This focus on cost containment, as evinced in the 2002 Fiscal Year budget-which was approved by NFA's Board of Directors in May-continues to be a major factor this year.

Overall, the FY 2002 budget projects revenues at $31.7 million - about $2.6 million less than FY 2001 budget projections. The reason for the decrease in projected revenues is due to a reduction in NFA's assessment fee rate effective July 1, 2001; in addition, NFA will intentionally be operating at a deficit in order to gradually reduce its operating reserves.

Overall expenditures are budgeted to increase 4.2 percent, to $35.7 million. There are three areas responsible for most of this increase. First, the Trade Practice and Market Surveillance (TP/MS) program is expected to increase in size to accommodate the projected increase in business in this area. 100 percent of the costs associated with the TP/MS program are expected to be recouped through revenue generated by the program. Second, the lease for NFA's New York office, which will expire at the end of this year, has been renegotiated for a ten year extension. The cost of space has increased significantly since the previous lease was signed. Third, NFA will be making capital purchases related to space modifications and furniture, as the offices have not undergone any significant renovations in nearly ten years, and the furniture system has never been changed.

"We've worked diligently to prepare a budget for Fiscal 2002 which fulfills NFA's mission as a model for regulatory organizations," says David Hawrysz, NFA's Treasurer. "We want to ensure that, for years to come, NFA will continue providing the most efficient and effective regulatory environment possible."

NFA is the premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets.
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