CFTC Year-End AI Guidance: Akin Gump Insights
The U.S. Commodity Futures Trading Commission (CFTC) recently issued a joint “Staff Advisory” discussing the use of artificial intelligence in CFTC-regulated markets and activities. This marks a significant step in AI-related guidance since a previous request for comment on the topic earlier in the year.
The key takeaway from the Staff Advisory is the recognition that AI is likely to impact many aspects of the derivatives trading lifecycle. While the document does not delve into every issue comprehensively, it emphasizes the need for regulated entities to assess risks associated with using AI and update their policies and procedures accordingly.
For fund managers, the Staff Advisory highlights two primary areas of focus: compliance and recordkeeping, as well as customer protection. It reminds managers of their responsibilities in ensuring information and disclosures comply with regulatory requirements, particularly when generated by AI tools.
While the Staff Advisory may not provide as much detailed guidance as some had hoped for, it underscores the importance of regulators keeping pace with technological advancements in financial markets. With ongoing developments like the Loper Bright case, the CFTC aims to maintain flexibility in future rulemaking and enforcement.
Overall, the Staff Advisory serves as a valuable reminder for market professionals to stay informed and adapt to the changing landscape of AI in CFTC-regulated environments.
