Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...
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:
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.
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.”
To contact the reporter on this story: Richard Hill in Washington at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)