CFTC Review of Fintech Potential Said Nearing Completion

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By Richard Hill

The CFTC is close to completing a review to determine how it can leverage and promote innovation in financial technology, acting Chairman J. Christopher Giancarlo said March 15.

Embracing fintech is one way the Commodity Futures Trading Commission can stimulate U.S. economic growth, he said in remarks prepared for delivery at the Futures Industry Association’s annual conference in Boca Raton, Fla., shortly after his nomination to chair the agency on a permanent basis.

Giancarlo’s stated goal throughout his tenure on the commission has been to shape the CFTC into a “21st century regulator,” and promoting fintech would be a major step in that direction. The agency is “an analog regulator in an increasingly digital marketplace,” he said in Florida.

The CFTC must “cultivate a regulatory culture of forward thinking” and “open wider our agency doors and regulatory minds to benefit from fintech innovation,” he said.

The fintech review is focused on three issues, Giancarlo said:

  •  how the commission can leverage the technology to make it more effective;
  •  what the CFTC’s role should be in promoting fintech innovation; and
  •  how fintech can help identify rules that need updating.

Data reporting could benefit from better use of fintech, derivatives industry observers told Bloomberg BNA.


Giancarlo may seek ways to streamline the amount and improve the quality of data the agency receives about derivatives trades, said John Servidio, a partner with McGuireWoods LLP, New York, who focuses on capital markets with an emphasis on derivatives and structured products. The agency then could use artificial intelligence—fintech in the form of algorithmic logic—to interpret the data, he said.

Speculative position limits also could benefit from fintech by giving the agency a more automated and transparent means of checking on commodity holdings, said Paul Architzel, co-head of the futures and derivatives group at Wilmer Cutler Pickering Hale and Dorr LLP, Washington.

The CFTC also could benefit if clearinghouses start using technology such as distributed ledger technology for settlement and recordkeeping purposes. That would give the regulator “greater visibility into positions and exposures,” Architzel said.

Both Architzel and Servidio pointed to a CFTC recordkeeping rule proposed in January that would allow firms to store their records with any technology they see fit—a so-called technology-neutral model—as the first regulatory move undertaken with fintech in mind.

Not Too Fast

While Giancarlo is probably the most ambitious of the financial regulators in his hopes to foster and leverage fintech, the generally more conservative approach of the banking regulators may force him to hold back somewhat, Servidio said. “If you become too free or make changes that are too accommodating and other regulators don’t follow, then you get patchwork regulation,” he said. That means financial firms with multiple regulators—which are most—would have to comply with vastly different fintech regulations.

“It’s good that he’s open to regulatory change, but prudential regulators are much more conservative because they have to be,” Servidio said. “He shouldn’t get too far ahead of the banking agencies. They may serve as an anchor on his regulatory reform.”

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To contact the editors responsible for this story: Phyllis Diamond at; Seth Stern at

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