Remarks at Frontier Forums

Thank you, Michael.

Good afternoon, everyone. Welcome to our inaugural Frontier Forum.

I want to thank our distinguished panelists and moderators for joining us today, as well as the Innovation Task Force for organizing this forum. Before I provide my opening remarks, I must note that the views I share today are my own as Chairman and don't necessarily reflect those of the Commission.

Intelligent Regulation

We're gathered here today to discuss a technology that's rapidly transforming the financial markets. President Trump calls it "super intelligence," or SI, - because "it's not artificial."[1] It's as real as the printing press, the steam engine, and the internet.

Like the generational technologies that preceded it, super intelligence promises to reshape our financial markets by continuing a decades-long evolution toward increasingly autonomous trading systems. Fortunately, automated trading is nothing new to the Commission. Some of the earliest algorithmic strategies deployed in our derivatives markets date back to the launch of S&P 500 index futures on designated contract markets in the eighties. Of course, the rise of automated trading was not without controversy. About a decade ago, following the May 2010 Flash Crash, Knight Capital's runaway algorithm in August 2012, and a sharp disruption in Treasury futures in October 2014, the Commission considered special risk control rules for algorithmic trading firms in a proposal known as Regulation Automated Trading.[2] The Commission expressed concern that "[m]alfunctioning or incorrectly deployed algorithms deploying erroneous messages to trading venues can significantly impact markets and market participants."[3] We hear many of these same concerns today.

Yet a lot has changed since the Commission proposed the rule, which it never finalized and would be ill-suited for today's landscape. SI is no longer a tool available only to sophisticated firms and individuals. It's become nearly as commonplace on our computers and personal devices as a web browser or word processor.

Many of the most popular SI applications, such as Claude, ChatGPT, and Gemini, can interoperate with third-party applications to analyze market data, identify trends, and help users become more informed. Brokerages are also beginning to incorporate SI tools into their customer offerings, putting capabilities once reserved for Wall Street's largest institutions into the hands of everyday Americans. Meanwhile, individuals are increasingly giving the credentials to their brokerage and bank accounts to their SI agent and trusting the agent to manage their finances. And blockchains are providing rails for autonomous agents to custody and trade crypto assets without relying on banks, brokerages, or other traditional intermediaries.

It's no longer science fiction to imagine your refrigerator autonomously purchasing your groceries with funds that it earned from staking ether or launching a meme coin.

We have to think long and hard about how to regulate intelligently in this age of super intelligence. Like the printing press, the steam engine, and the internet before it, SI will transform the global economy. But America cannot afford to sit idly by as this transformation takes place all around us. It must lead with rational rules that promote technological innovation while also ensuring that our markets remain the deepest and most liquid in the world. We cannot accept the false choice of winning the SI race or maintaining global financial market supremacy. We must do both. And under President Trump's leadership, we're doing exactly that.

SI and the Future of Derivatives Markets

At their core, derivatives markets serve an essential economic purpose. They help businesses manage risk, discover prices, and make investment decisions with greater confidence. A farmer can hedge the future price of a crop before harvest. An airline can manage its exposure to variable fuel expenses. A manufacturer can protect itself against fluctuations in the cost of raw materials.

SI has the potential to make risk management more efficient. Consider what it takes to assess risk in modern financial markets. A market participant may need to evaluate thousands of instruments, monitor changing market conditions, and understand how a shock in one market could affect positions across several others.

That is an enormous amount of information to process, and the consequences of missing something could be detrimental. SI can help process the vast amount of information significantly faster than human brain power and with greater accuracy. For large, institutional firms, that could mean better-informed decisions and more effective risk management. For smaller market participants, it could mean access to capabilities that previously required the resources of a much larger institution.

That last point is particularly important. Innovation should create opportunities for more Americans and American businesses to participate in our markets.

By lowering the cost of sophisticated analysis and making powerful tools more widely available, SI could help level the playing field and expand access to risk-management capabilities. It could also improve price discovery by helping market participants better understand the information driving prices and the relationships between different markets.

These are meaningful opportunities. More effective risk management, better information, and broader access to financial tools will help our derivatives markets serve businesses across the economy even more effectively.

And as these technologies advance, we should be thinking not just about how SI can improve the markets we have today, but also about the new financial activity it could create.

Agentic Finance

The CFTC's regulatory framework was developed around identifiable market participants, intermediaries, and institutions performing specific financial functions.

But what happens when those functions are increasingly performed or facilitated by autonomous software? Consider an SI agent that identifies trading opportunities and executes transactions on behalf of a user. Does the developer of that agent become subject to registration? Who is liable if the agent goes rogue? How can regulators know who the agent, or suite of agents, is trading on behalf of? Do we need a new flavor of know-your-customer, maybe KYA or know-your-agent?

These are precisely the types of questions that we face as agentic finance continues to develop in our markets.

While they are challenging, the CFTC benefits from already having confronted similar issues in crypto asset markets. For years, software developers and entrepreneurs faced uncertainty about whether publishing code or developing user interfaces could trigger regulatory requirements designed for traditional financial intermediaries. Under my leadership, we have strived to provide greater clarity around these questions.

But as agents become more capable, these distinctions will become increasingly important. Our approach must remain grounded in the functions performed, the control exercised, and the economic realities of the transaction.

We must also understand the risks that increasingly autonomous systems may introduce. SI agents may respond to market conditions in unexpected ways. Systems relying on similar models may generate correlated trading behavior. And the speed of autonomous transactions may create new challenges for market surveillance and risk management.

But these technologies also offer opportunities to strengthen market integrity.

SI systems can help exchanges identify suspicious activity, enable clearinghouses to monitor exposures more effectively, and improve regulators' ability to detect misconduct. The CFTC is leaning in. Our staff here at the Commission are already using SI to police the markets more effectively than ever before.

Compute Will Power the SI Revolution

There is another dimension of this transformation that falls squarely within the CFTC's expertise. Every technological revolution depends on the resources necessary to power it.

The industrial revolution depended on coal, iron, and steam power. The twentieth century saw the rise of oil, electricity, and modern industrial infrastructure. The SI revolution depends on computational power, or "compute." Advanced SI systems require enormous amounts of compute, specialized processors, electricity, and data center infrastructure. As demand for these resources grows, businesses will increasingly need tools to manage exposure to changing prices and availability.

This is the role America's derivatives markets have played for generations. Farmers hedge agricultural production. Airlines hedge fuel costs. Manufacturers manage exposure to industrial commodities. In the SI economy, developers, infrastructure providers, cyber security firms, and frontier investors may need similar tools to manage SI-related risks.

Earlier this year, the CFTC sought public comment on the development of compute derivatives markets. We want to understand how these markets are evolving and how our regulatory framework can support their responsible development. The response has been substantial, with more than 100 commenters weighing in on the risks and opportunities these markets present. The CFTC has an opportunity to help establish the financial infrastructure of the SI economy, and we intend to take that opportunity seriously.

* * *

Nearly seventy years ago, an IBM computer scientist named Arthur L. Samuel taught a computer to play checkers, helping establish the principle that machines could do more than just follow instructions.[4] I suspect he could have scarcely imagined a world in which intelligent systems might one day manage financial portfolios, hedge commodity exposures, and transact directly with one another.

But that's the Rubicon we've crossed. And it's why conversations like today's are so important. The convergence of super intelligence, crypto, and modern financial infrastructure could transform how our markets have long operated.

It could expand access to sophisticated financial tools, enable businesses to manage risk with greater precision, and create entirely new forms of economic activity. But realizing that potential will require thoughtful engagement between the innovators building these technologies and the policymakers responsible for overseeing our markets.

And that is precisely what we hope to accomplish today. Our first panel will explore the implications of SI in the derivatives markets, including how increasingly capable systems may transform trading, price discovery, and risk management. Our second panel will examine the emergence of agentic trading and the questions raised by autonomous systems capable of conducting financial transactions.

As many of you have already done, I encourage our panelists to challenge conventional thinking, engage candidly about the opportunities and risks, and help us better understand what the next generation of markets may look like.

At the CFTC, we are committed to ensuring that America's derivatives markets remain the most innovative, competitive, and resilient in the world.

We will not sacrifice our global competitive edge in financial markets for the sake of technological supremacy. We will remain the financial capital of the world by embracing this technology and modernizing our approach to regulation for the new frontier of finance.

Thank you, and I look forward to today's discussions.