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ARTICLE · 19 DECEMBER 2024

Key Considerations When Adopting Artificial Intelligence As A CFTC-Regulated Firm

Lowenstein Sandler LLP
Lowenstein Sandler LLP
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Lowenstein Sandler LLP

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On December 5, 2024, the U.S. Commodities Futures Trading Commission staff issued a staff advisory on the use of artificial intelligence by market participants in CFTC-regulated markets.

United StatesFinance and Banking
Ryne Miller
Ryne Miller
Trevor Levine
Trevor Levine
Leo B. Choi
Leo B. Choi

On December 5, 2024, the U.S. Commodities Futures Trading Commission (CFTC) staff (Staff) issued a staff advisory (Advisory) on the use of artificial intelligence (AI) by market participants in CFTC-regulated markets.1 Staff reminds registered entities and registrants that, as with any rapidly evolving technology, whether they choose to utilize AI directly or indirectly, they must maintain compliance with applicable requirements. The Advisory provides guidance and considerations depending on the type of registered entity and/or registrant as follows.

Designated Contract Markets (DCMs), Swap Execution Facilitations (SEFs), and Swap Data Repositories (SDRs): Staff highlights three areas where it anticipates AI may be used by DCMs, SEFs, and SDRs: (i) order processing and trade matching; (ii) market surveillance; and (iii) system safeguards. For example, DCMs may use AI-based products and services (AI Software) to facilitate more-efficient order processing and trade

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