The U.S. Commodity Futures Trading Commission (CFTC) is seeking insights into the utilization of artificial intelligence (AI) by regulated entities, particularly in compliance efforts and other applications. Through a request for comment (RFC), the agency aims to enhance its understanding of the current and potential applications of AI in derivatives markets and the associated risks. Input from market participants may influence future CFTC guidance, interpretations, policy statements, or regulations. The RFC focuses on AI applications in trading, risk management, compliance, cybersecurity, recordkeeping, data processing, analytics, and customer interaction, with a specific emphasis on surveillance, anti-money laundering (AML), and regulatory reporting functions.
CFTC Chairman Rostin Behnam expressed support for the RFC, stating that it would aid the CFTC in strategically identifying high-priority projects with AI use cases to optimize its data-driven approach. The RFC aligns with the Biden Administration's directives for the development of safe, secure, and trustworthy artificial intelligence. The deadline for submitting comments is April 24, 2024. Commissioner Kristin Johnson emphasized the importance of understanding how market participants are adopting AI in derivatives markets. The RFC also seeks input on defining AI – whether it should be broad or narrow – and how to distinguish between AI and other existing automated trading strategies.
In September 2023, CFTC Commissioner Christy Goldsmith Romero advocated for updating safeguards to leverage technological advances and enhance investor protections. Romero has been leading efforts to strengthen investor protections, appointing technology experts in fintech, AI, cryptocurrency, blockchain, and cybersecurity to the CFTC's Technical Advisory Committee. Additionally, the CFTC has taken measures to curb the use of AI trading bots by investors seeking substantial cryptocurrency profits, citing potential risks of fraud and emphasizing the need for safeguards to protect U.S. investors.
