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LabCFTC Overview

  • LabCFTC is the focal point for the CFTC's efforts to promote responsible FinTech innovation and fair competition for the benefit of the American public. LabCFTC is designed to make the CFTC more accessible to FinTech innovators, and serves as a platform to inform the Commission's understanding of new technologies. Further, LabCFTC is an information source for the Commission and the CFTC staff on responsible innovation that may influence policy development.

    The need for LabCFTC is immediate. Consumers, farmers, ranchers as well as investors have benefited from the technological innovation of the markets overseen by the CFTC. The pace of change in just the past few years has only increased.

    FinTech Innovation

    Today, FinTech is driving innovation in financial markets across the globe. New technologies are wide-ranging in scope, from cloud computing and algorithmic trading to distributed ledgers to artificial intelligence and machine learning to network cartography, and many others. These technologies have the potential for significant or even transformational impact on CFTC regulated markets and the agency itself.

    FinTech refers to a broad range of new technologies that have the promise to fundamentally reshape our markets, including the CFTC's supervision and oversight. RegTech is an important part of FinTech focused on solutions that can enhance the regulatory compliance function to be more effective and efficient. LabCFTC will be a dedicated CFTC function to engage with these technologies.

    Goals

    LabCFTC will enable the CFTC to be proactive and forward-thinking as FinTech applications continue to develop. LabCFTC's mission is twofold:

    • To promote responsible FinTech innovation to improve the quality, resiliency, and competitiveness of our markets; and
    • To accelerate CFTC engagement with FinTech and RegTech solutions that may enable the CFTC to carry out its mission responsibilities more effectively and efficiently.

    Core LabCFTC Components

    • GuidePoint: A dedicated point of contact for FinTech innovators to engage with the CFTC, learn about the CFTC’s regulatory framework, and obtain feedback and information on the implementation of innovative technology ideas for the market. Such feedback may include information that, particularly at an early stage, could help innovators/entities save time and money by helping them understand relevant regulations and the CFTC’s approach to oversight.
    • CFTC 2.0: A program to foster and help initiate the adoption of new technology within the CFTC’s own mission activities through collaboration with FinTech industry and CFTC market participants.

    To accomplish its goals, LabCFTC will facilitate:

    • Proactive engagement with the innovator community. Through such engagement, the Commission can better understand how new innovations interact with the regulatory and supervisory framework, and identify areas where the framework could better support responsible innovation.
    • Collaboration among the FinTech industry and CFTC market participants that facilitate responsible innovation in our markets and promote the use of technology within our agency. This collaboration can benefit the many businesses and members of the public that rely on the derivatives markets that the CFTC oversees.
    • CFTC participation in studies and research that facilitate responsible innovation in our markets and promote the use of technology within our agency.
    • Cooperation with financial regulators at home and overseas.
    • Monitoring of trends and developments to ensure that our regulatory framework supports – and does not unduly impede – responsible technological innovation.
    • Information sharing about applications of FinTech, including potential use cases, benefits, risks, and solutions.
    • Engagement with academia, students and professionals on applications of FinTech relevant in the CFTC space.

    A Transformative Opportunity

    FinTech innovation offers the potential for great progress, not only to make processes more efficient in the markets the CFTC oversees, but also fundamentally to transform those processes so that the markets are better able to serve the needs of their participants. Accordingly, there is much optimism and attention around current development efforts.

    At the same time, this new wave of innovation is yet in its early stages. And, while innovation holds great promise, new applications of technology can present challenges both to individual participants and the market as a whole. It is important to ensure that applications of new technology are subject to appropriate controls and safeguards, satisfy resiliency and other relevant standards, and meet industry needs. To that end, it is vital that those tasked with overseeing the market and the regulatory framework itself keep pace.

    Recognizing both the potential and challenges presented by FinTech innovation, LabCFTC is committed to understanding the changing landscape of the market and what impact that will have on policy and ultimately the Commission’s regulations. To achieve their potential, new technologies must be developed in a way that builds public confidence. LabCFTC is tasked with understanding these new technologies that are vital to helping the Commission learn how the agency’s regulatory framework may impact application of FinTech.