The Commodity Futures Trading Commission (CFTC) of the United States is interested in finding out more about the potential applications of artificial intelligence (AI) for regulated entities’ compliance efforts.
In an effort to better inform employees about the risks and potential uses of artificial intelligence in the derivatives markets, the government has released a request for comments. Future CFTC guidelines, interpretations, policy statements, or rules may be impacted by the feedback we receive.
On applications of AI in trading, risk management, compliance, cybersecurity, recordkeeping, data processing, analytics, and consumer interactions, the CFTC is looking for feedback. The agency emphasized AI’s possible impact on regulatory reporting, anti-money laundering (AML), and surveillance in order to comply.
The request for comments (RFC) will “further support the CFTC as we strategically identify the highest priorities and return-on-investment projects with AI use cases internally to optimize our data-driven approach to policy, surveillance, and enforcement,” according to CFTC Chair Rostin Behnam, who backed this. The RFC, according to the CFTC, is a supplement to the guidelines the Biden Administration set forth to ensure the reliable, secure, and safe development of artificial intelligence. Comments must be received by April 24, 2024. Commissioner Kristin N. Johnson commented on the CFTC’s request for comments, stating that it represents a continuing dialogue amongst several divisions, including Market Participant, Clearing and Risk, Market Oversight, and Data.
Johnson underlined how crucial it is that the CFTC comprehends how market participants use artificial intelligence in the derivatives markets. Importantly, the RFC requests opinions on how best to define artificial intelligence (AI), including how wide or restricted the definition should be and where to draw the boundary between AI and other automated trading techniques that are now in use. To protect American investors, CFTC Commissioner Christy Goldsmith Romero recommended in September 2023 updating protection measures with technological improvements. She emphasized the potential negative repercussions if these measures are not adopted.
Romero selected technical professionals in fintech, responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity to the CFTC’s technical Advisory Committee (TAC), leading the agency’s efforts to strengthen investor protections and safeguards.
The CFTC has discouraged investors seeking to benefit greatly from cryptocurrencies by advising them not to rely on trading bots with artificial intelligence. The organization flags as scammers those offering enormous returns through the use of trading signal algorithms, bots, crypto-asset arbitrage algorithms, and other AI-assisted technologies.