CFTC Commissioner Dan M. Berkovitz urged the agency to enhance regulatory oversight by incorporating emerging technology in its supervisory plans.
In a keynote address before ISDA's 2019 Annual North America Conference, Mr. Berkovitz called on the CFTC to work on fostering financial technology ("FinTech") solutions that "digitize and automate derivative[s] and other swap related activities." According to Mr. Berkovitz, FinTech solutions can help the agency mitigate some of the inefficiencies and costliness caused by regulation (e.g., Dodd-Frank and its implementing regulations) and market participants (e.g., human error).
Mr. Berkovitz argued that digitizing documentation and automating derivatives transaction and other swap-related activities could greatly improve compliance and regulatory efforts, in particular when it comes to: (i) swap data reporting, (ii) transaction level and risk management regulatory requirements as to OTC swaps, and (iii) swap event management systems.
For the agency to effectively incorporate FinTech innovations, Mr. Berkovitz said that it would be incumbent upon the CFTC to:
- speak with market participants, through LabCFTC and other divisions, on whether emerging technologies are aligned with CFTC compliance requirements; and
- learn about technology used to comply with CFTC requirements, and how that technology may be improved.
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