PHOENIX - President Donald Trump's fiscal year 2019 budget requests $2.96 million for the Securities and Exchange Commission's Office of Municipal Securities, a slight increase over the office's $2.82 million received under the fiscal 2018 continuing resolution.

The budget request, made public on Monday, seeks to maintain the OMS staffing level with slight increases in salaries and expenses.

The administration also is requesting more substantial increases for its Division of Enforcement and for its Office of Compliance Inspections and Examinations. It wants Congress to increase funding to $531.7 million from $505.8 for enforcement. It wants to increase funding to $365.8 million from $346.3 million for OCIE.

In total, the budget request for the SEC overall would be $1.66 billion, a 3.5% increase from the $1.6 billion for fiscal 2018. This would support 4,628 positions at SEC.

"This year's budget request reflects our top priorities of protecting investors and making sure we continue to have the most vibrant and well-functioning capital markets in the world," said SEC chairman Jay Clayton.
"This year's budget request reflects our top priorities of protecting investors and making sure we continue to have the most vibrant and well-functioning capital markets in the world," said SEC chairman Jay Clayton. Bloomberg News

“This year’s budget request reflects our top priorities of protecting investors and making sure we continue to have the most vibrant and well-functioning capital markets in the world," said SEC chairman Jay Clayton. “With the exceptional work and commitment of dedicated staff, the SEC will continue striving to maintain and expand an environment conducive to capital formation while ensuring investor protection.”

Under the budget request, OMS would maintain funding for 10 full-time equivalent (FTEs), the same as in the CR. A full-time equivalent estimate is the number of full-time employees it would take to work the number of hours for which the SEC is budgeting. Salaries and benefits for the muni office would total $2.3 million, with non-personnel expenses totaling an estimated $634,000.

The budget request would support 1,348 FTEs in enforcement, down from 1,373 in the CR despite the overall cost increase in the request. Some of the increased spending would be used to battle cybercrime, according the budget request, but the SEC also announced the creation of the Retail Strategy Task Force, charged with creating “effective strategies and methods to identify potential harm to retail investors.”

“In particular, the task force will focus on harnessing the commission’s ability to use technology and data analytics to identify large-scale wrongdoing,” according to the budget documents.

OCIE’s request would support 1,032 FTEs, also down slightly from 1,047 in the CR even though the overall cost is expected to increase. Some increased spending will help with oversight of the Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board, the SEC said.

“Oversight of FINRA is vitally important, as it is the primary regulator for broker-dealers,” the SEC said in the budget documents. “Examinations in FY-2019 will continue to focus on FINRA’s operations and regulatory programs and the quality of FINRA’s examinations of broker-dealers. Additionally, given the responsibility of MSRB to regulate municipal securities firms, staff will continue to examine the MSRB to evaluate the effectiveness of select operational and internal policies, procedures, and controls.”

The budget request seems to reflect the chairman’s public statements, as Clayton has said on several occasions that he has concerns about the fixed income markets and about the well-being of retail investors generally. Clayton will appear before lawmakers to discuss the budget request in coming weeks.

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Kyle Glazier

Kyle Glazier

Kyle Glazier is a reporter covering market trends, infrastructure, and the Far West region for The Bond Buyer.