CFTC Launches FinTech Innovation Initiative

The CFTC launched “LabCFTC,” an initiative designed to “promot[e] responsible FinTech innovation to improve the quality, resiliency, and competitiveness of the markets the CFTC oversees.” The initiative, which will include the creation of a FinTech innovation office in New York City, is intended to address the regulatory challenges of increasingly automated trading, and to foster a regulatory environment more receptive to emerging FinTech companies. The initiative will consist of two major components:

  • GuidePoint will offer guidance to FinTech companies on how innovations may fit into the existing regulatory framework and help innovators navigate the regulatory process; and
  • CFTC 2.0 will implement emerging technologies in order to improve the CFTC’s effectiveness and efficiency.

CFTC Acting Chair J. Christopher Giancarlo emphasized that regulatory organizations must keep pace with technological innovation, and cooperate and engage in dialogue with FinTech companies, as the influence of technology on financial markets continues to expand:

“Good regulation should not inhibit technological innovation. Rather, innovation should foster better and smarter regulation. Regulators must engage in a constant and evolving dialogue with innovators precisely because we need to understand the impact they are having on the very marketplaces we are charged to supervise. We must partner with them, experiment with them, learn from them and innovate alongside them, if we are ever to keep pace with the digitization of modern markets and protect their 21st century participants.”

CFTC Commissioner Sharon Bowen lauded the initiative and suggested that the CFTC needs an expanded budget in order to keep up with the evolving marketplace.

Lofchie Comment: During his tenure as a Commissioner, the now-Acting Chair Giancarlo was constant in his attention to (i) making the CFTC more efficient through improved use of technology and (ii) exploring how technology can improve regulated markets without the regulators becoming a roadblock. (See generally news regarding Mr. Giancarlo and technology.) The latter focus area demonstrates an understanding that regulators too often lack. Change is inevitable. It takes special care and leadership to foster a regulatory environment that does not slow down or inhibit that change.

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