At the CFTC Technology Advisory Committee ("TAC") meeting, CFTC Commissioner and Committee Chair Brian Quintenz, CFTC Chair Heath P. Tarbert, Commissioner Dawn D. Stump and Commissioner Dan M. Berkovitz considered recommendations for improving regulatory compliance through better integration of technology.
Mr. Quintenz questioned whether:
treating stablecoin the same as other similar products would be effective due to its "nascency";
distributed ledger technology could be used to meet CFTC record retention obligations;
the risks associated with the "modern trading environment" might already be addressed due to current market incentives;
an industry survey would be helpful in determining the best practices concerning trading and risk management controls; and
the TAC should hold a vote at the next committee meeting on its support of the Financial Services Sector Coordination Council Cybersecurity Profile.
Mr. Tarbert encouraged the CFTC to continue using its "principles-based approach" in striking a balance between rules that protect market integrity and supporting innovation. He said that such an approach provides flexibility for CFTC registrants to try new technology while complying with fundamental regulatory mandates.
In agreement with Mr. Tarbert, Ms. Stump advocated for a "principles-based approach" that will minimize the risks associated with new technology while continuing to foster innovation.
Mr. Berkovitz urged the CFTC to work with FinTech firms and other market participants to create automated solutions that help to fulfill regulatory requirements. Citing the "numerous" swap reporting violation enforcement actions the CFTC announced this week (see previous coverage), Mr. Berkovitz stated that FinTech could lead to greater compliance.
The CFTC settled enforcement cases against six swap dealers for reporting violations.