CFTC Seeks Public Insight on AI Use in Derivatives Market and Warns Investors About AI Bots
Summary:
The U.S. Commodity Futures Trading Commission (CFTC) is surveying on the utilization and implications of AI in the derivatives market. The feedback obtained could influence future policies and regulations. The areas of interest include trading, risk management, cybersecurity, compliance and customer service. Furthermore, it's important for the CFTC to understand how AI is used in the derivatives market. The commenting process closes on April 24, 2024. Additionally, the CFTC has warned investors against relying on AI trading bots for significant cryptocurrency profits.
The U.S. Commodity Futures Trading Commission (CFTC) is seeking to understand further the applications and implications of artificial intelligence (AI) used by its regulated entities. The Commission has disseminated a survey to collect comments and information to bolster their understanding of AI technologies and their use and possible risks in the derivatives markets. The respondents' feedback could potentially alter future regulations, policies, or interpretations by the CFTC.
The Commission is looking for insights into AI applications in several areas; these include trading, risk management, compliance, cybersecurity, data analysis, recordkeeping, and customer service. Particularly, the CFTC has pointed out AI's potential transformative role in surveillance tasks, Anti-Money Laundering (AML), and regulatory reporting operations.
Backing this move, CFTC's Chairman, Rostin Behnam, voiced that the commenting process will support the agency's strategic identification of high-priority areas and AI projects, thereby enhancing its data-oriented approach toward policy formation and enforcement.
This request for comments (RFC) by the CFTC aligns with the principles outlined by the Biden administration for the development of secure, trustworthy, and safe AI. The commenting process is open until April 24, 2024.
Speaking about the RFC, Commissioner Kristin N. Johnson opined that the request for comments is a sign of an ongoing conversation in different regulatory sectors such as Market Oversight, Market Participant, Clearing, and Risk, and Data. She stressed that it's crucial for the CFTC to understand the adoption of AI by market actors in the derivatives sector. The RFC also requests respondents to provide their viewpoints on the ideal definition of AI and differentiate it from the existing automated trading strategies.
Last September, CFTC Commissioner Christy Goldsmith Romero proposed the need for enhanced protective measures in tune with technological innovations to shield American investors, warning about the potentially adverse effects if this is not undertaken.
Being at the forefront of CFTC's initiative to strengthen investor defenses, Commissioner Romero has enlisted tech experts in various domains like fintech, responsible AI, cryptocurrency, blockchain, and cybersecurity to be part of CFTC's Technology Advisory Committee.
The CFTC has also warned investors seeking significant cryptocurrency profits against depending on AI trading bots. The Commission has flagged those guaranteeing exceptional returns using trade signal algorithms, robots, crypto-asset arbitrage algorithms, and other AI-enhanced technologies as potential fraudsters.
Published At
1/28/2024 3:41:22 PM
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