U.S. Commodity Futures Trading Commission (CFTC) Commissioner Brian Quintenz will oversee the CFTC’s Technology Advisory Committee (TAC), which advises the commission on technological innovations in the markets.
“The CFTC must stay abreast of market evolution and technological change to successfully meet the challenges of the modern economy,” Quintenz said. “During my confirmation process, I pledged to advance regulation that encourages FinTech (financial technology) 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.”
Quintenz noted that technology moves quickly and a lot has changed since the TAC last met in February 2016.
“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,” he added.
As information dissemination has become practically instantaneous, so has the need to hedge risk, Quintenz stated.
“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,” he said.
He also commented that distributed ledger technology is on the verge of creating a sea change in contract design, reporting, and settlement.
“Soon, so-called ‘smart contracts’ may be able to both value themselves and self-report their data fields to required repositories,” Quientenz said. “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?”
Further, cybersecurity is the largest threat to U.S. markets and needs to be addressed, he added.
“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?” he asked.
Daniel Gorfine, CFTC’s chief innovation officer, was named the federal officer for the TAC.
“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,” Gorfine said. “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.”