Today’s staff advisory on the use of artificial intelligence by CFTC registered entities and registrants is the product of months long action by the staff AI task force[1] that I created to engage with market participants, AI technology providers, domestic and international regulators, and other stakeholders to understand existing and potential AI uses cases and risks in the derivatives markets. The advisory is also informed by public comment on staff’s Request for Comment on the Use of Artificial Intelligence in CFTC-Regulated Markets.[2]
Given the dynamic nature of artificial intelligence and the growing integration of AI in derivatives markets, the advisory is a measured first step to engage with the marketplace and ensure ongoing compliance with the Commodity Exchange Act and the CFTC’s regulations. The advisory is emblematic of the CFTC’s technology-neutral approach, which balances market integrity with responsible innovation in the derivatives markets. As firms may thread AI into the fabric of nearly every aspect of their operations, staff intends to monitor for any risks from AI that may merit policy or regulatory consideration. Staff encourages a continued dialogue with all stakeholders about the risks and benefits of AI use cases in the derivatives markets.
The advisory complements the internal transformation underway at the agency to build a forward-looking AI culture. Since becoming Chairman, the CFTC hired its first Chief Artificial Intelligence Officer[3] to implement the agency’s first enterprise-wide analytics and AI strategy to upskill staff and leverage data to optimize the agency’s limited resources to better monitor risk, surveil for market integrity, examine for compliance, and enforce to deter unlawful trading behavior in our markets. This strategy aims to identify the highest return-on-investment projects for the agency to execute its mission. Our progress to date demonstrates a thorough and purposeful trajectory that is equally responsive and forward-looking in consideration of available technologies.
I greatly appreciate the work of staff in the Division of Data, Division of Clearing and Risk, Division of Market Oversight, the Market Participants Division, and the Office of the General Counsel on today’s staff advisory. I also greatly appreciate all of the effort underway in the Division of Data and input from the CFTC’s data end users across the agency to drive our internal enhanced data analytics and AI transformation.
[1] Rostin Behnam, Chairman, Keynote of Chairman Rostin Behnam at the 2023 U.S. Treasury Market Conference (Nov. 16, 2023), Keynote of Chairman Rostin Behnam at the 2023 U.S. Treasury Market Conference | CFTC.
[2] Press Release Number 8853-24, CFTC, CFTC Staff Releases Request for Comment on the Use of Artificial Intelligence in CFTC-Regulated Markets (Jan. 25, 2024) CFTC Staff Releases Request for Comment on the Use of Artificial Intelligence in CFTC-Regulated Markets | CFTC
[3] Press Release Number 8903-24, CFTC, Chairman Behnam Designates Ted Kaouk as the CFTC’s First Chief Artificial Intelligence Officer (May 1, 2024), Chairman Behnam Designates Ted Kaouk as the CFTC’s First Chief Artificial Intelligence Officer | CFTC.
