CFTC Commissioner Bowen Contends That “Transitions Present Opportunities”

In a speech titled “Transitions Present Opportunities,” CFTC Commissioner Sharon Y. Bowen outlined her views on Regulation Automated Trading (“AT”), cybersecurity, position limits and diversity.

Appearing before the Commodity Markets Council “Global State of the Industry” Meeting, Commissioner Bowen addressed:

  • Regulation AT. Commissioner Bowen stated that the supplemental proposal was revised to establish that firms using Direct Electronic Access to connect to commodities markets will not be required to register automatically, subject to certain conditions and that the second major revision of the supplemental proposal “would require that all electronic trading, algorithmic as well as non-algorithmic, . . . have two separate layers of pre-trade risk controls on it.”
  • Cybersecurity. Commissioner Bowen asserted that recent CFTC rulemakings are a “great first step” because they establish a comprehensive testing regime, require heightened risk management measures, focus on governance and are based on “well-regarded, accepted best practices for cybersecurity.”
  • Position Limits. Commissioner Bowen stated that “having position limits is essential,” and urged industry groups to help regulators “make one last push to get rules finalized that will help prevent the negative impacts of excessive speculation while allowing commercial end users to manage their risks.”
  • Diversity. Commissioner Bowen urged companies to “get buy-in from all relevant stakeholders for the diversity initiative and foster an environment that lends itself to inclusion.”


Lofchie Comment: One benefit of transitions is that they allow us to let go of the past. A preference for holding onto a failed theory is not unique to those in government. Indeed, one of the most famous works on the theory of knowledge and the course of scientific progress, Thomas Kuhn’s “The Structure of Scientific Revolution,” deals with precisely this issue (see Emory University Professor Frank Pajares’ Study Guide). If, after eight years of dedication to the proposition, proponents of position limits regulation could find no evidence that it served any purpose, then it is time to move on.

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