Public Statements & Remarks

Opening Statement of Chairman Timothy Massad before the CFTC Technology Advisory Committee Meeting

    February 23, 2016

Thank you all very much for taking the time to be here today, particularly those of you who have flown in from across the country.

I want to welcome you all to this meeting of the CFTC’s Technology Advisory Committee. For more than 15 years, the Commission has relied on the TAC for guidance on a wide range of technology issues. Since taking office, I have made it a priority to focus on the technological changes taking place in our marketplace, and the TAC has provided an excellent forum to exchange ideas, discuss issues of importance, and engage with a wide array of market participants.

I believe today’s meeting is particularly important, as we will address a number of items that are at the top of the Commission’s agenda.

Before we begin, let me take a moment to thank the CFTC staff who worked tirelessly to plan this meeting and its robust agenda. And I’m pleased to be joined by my fellow Commissioners Bowen and Giancarlo. Their presence is important, and I applaud their commitment to these issues.

There are a number of important items we will consider today. First, we will discuss the Commission’s proposed rule to address the increased use of automated trading in our markets. As you know, automated trading has dramatically expanded in recent years and has brought many benefits to market participants – such as more efficient execution, lower spreads and greater transparency. But its extensive use also raises important policy and supervisory questions.

Our recently approved proposal builds upon the steps we and the exchanges have already taken on this front. It focuses on principles-based, industry best practices that mitigate operational risks and minimize the potential for disruptions or other problems. It includes requirements for pre-trade risk controls and other types of measures. But it does not prescribe the parameters or limits of such controls.

We worked very hard on this proposal and we’re looking forward to your feedback.

Second, we will discuss CFTC’s efforts to improve the quality of swap data reporting. As you know, reporting of swaps transaction data was a key goal of the G-20 reforms – and of the Dodd-Frank Act. We have come a long way since the fall of 2008, and today data has given regulators better information and market participants greater transparency.

But building this system is a significant project, and we are taking a number of actions to enhance the quality of the data. Today we will discuss one area of that action: our efforts to ensure that the data we receive is reported consistently. Currently there is considerable variation in how different participants report the same fields to swap data repositories (SDRs), and in how the SDRs themselves transmit information to the CFTC.

As you know, to address this problem, the CFTC staff has made a dedicated effort to identify a number of priority areas where standardization or clarification is needed. They have carefully considered what fields are critical to our use of the data as well as where there have been reporting challenges.

Recently, staff solicited public input on 80 enumerated questions addressing 120 data elements. From that feedback – and from the feedback we will receive from you today – we hope to develop proposals that specify the form, manner and allowable values that each data element can have.

This is just one of the many actions the CFTC is taking to ensure accurate and efficient data reporting.

Finally, today we will discuss blockchain technology and its potential application to the derivatives market. This is something many of you are considering, and we are quite interested in hearing your thoughts about it. I hope we can have a discussion today that gets into some specifics—and avoids the hype—about the potential for blockchain or distributed ledger technology in this industry. For example, what specific areas could there be applications that might bring benefits or improvements? What are the specific advantages and disadvantages in those areas? What are the limitations, and the unknowns?

So again, thank you all very much for coming and lending your voice – and experience—to this important conversation. I look forward to an informative and productive discussion.

Last Updated: February 23, 2016