The U.S. Commodity Futures Trading Commission (CFTC) today announced that Commissioner Brian Quintenz will sponsor the CFTC’s Technology Advisory Committee (TAC).
The TAC advises the CFTC on technological innovations in the markets and the appropriate regulatory response to those advances. The CFTC also designated Daniel Gorfine, CFTC’s Director of LabCFTC and Chief Innovation Officer, as the Designated Federal Officer for the TAC.
Commissioner Quintenz commented: “The CFTC must stay abreast of market evolution and technological change to successfully meet the challenges of the modern economy. During my confirmation process, I pledged to advance regulation that encourages FinTech innovation and modernizes the agency’s approach to technology. To that end, I am very honored and extremely excited to sponsor the CFTC’s Technology Advisory Committee.
“The most recent TAC meeting occurred in February 2016, and before that, in June of 2014 – more than three years ago, or a lifetime in financial market innovation terms,” Quintenz added. “Crucial and fascinating questions need to be explored and answered in areas like automated trading, distributed ledger technology, data harmonization, and cybersecurity, and I hope that the TAC will provide leadership on these matters.”
Quintenz noted: “Financial risk moves at the speed of information flow. As information dissemination has become practically instantaneous, so has the need to hedge risk. Automated, algorithmic trading is the necessary market result of that increased information speed and has created many benefits to market participants while also posing some new challenges. Questions remain as to the circumstances under which automated trading poses risk to the market as well as to the best approaches to addressing that risk through regulation.
“Distributed ledger technology is on the verge of creating a sea change in contract design, reporting and settlement,” stated Quintenz. “Soon, so-called ‘smart contracts’ may be able to both value themselves and self-report their data fields to required repositories. How would these technological transformations fit within or fall outside of our existing rules? How can the agency participate constructively in shaping these innovations’ development to benefit markets and transparency?”
Quintenz further commented: “Swaps data integrity and harmonization are imperative and have frankly taken way too long. Chairman Giancarlo has provided the necessary leadership on this matter and issued a robust Data Roadmap laying out the challenges and a corresponding timetable to address them. What are the remaining obstacles to realizing the G20’s goal of transparency and how can we overcome them?”
Additionally, Quintenz remarked: “Cybersecurity is the single largest threat to our markets. How have advancements in connectivity and data storage created new vulnerabilities? What more should the CFTC and market participants do to protect the data that we hold?
“I am very pleased to be joined in this effort by Dan Gorfine, a FinTech specialist and the current leader of the CFTC’s LabCFTC initiative,” noted Quintenz. “LabCFTC is an important step toward making America a home for future technology innovation, and I hope to advance its work and impact through the TAC.”
Quintenz concluded: “I look forward to exploring these issues and many others with the members of this Advisory Committee. I hope that through our efforts, the TAC will play a leading role in identifying marketplace risk, promoting market transparency and modernizing the CFTC’s rulebook for the 21st century.”
Gorfine commented: “I am looking forward to working with Commissioner Quintenz and the Members of the Advisory Committee to facilitate market-enhancing technological innovation, while ensuring market integrity. Today’s announcement further underscores the Commission’s commitment to leveraging appropriate regulatory tools and resources, such as the TAC, in order to become a 21st century regulator in increasingly digital markets.”
The CFTC’s Advisory Committees were created to seek input and make recommendations to the CFTC on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. The committees facilitate communication among the CFTC and U.S. markets, trading firms, market participants, advocates and commercial end users. In addition to TAC, the CFTC has Agricultural, Energy and Environmental Markets, Global Markets, and Market Risk Advisory Committees.