1

 MINUTES OF THE TENTH MEETING OF THE 

U.S. COMMODITY FUTURES TRADING COMMISSION’S

TECHNOLOGY ADVISORY COMMITTEE 

October 5, 2018 

The Technology Advisory Committee (TAC) convened for a public meeting on Friday, 

October 5, 2018, at 10:02 a.m., at the U.S. Commodity Futures Trading Commission’s (CFTC or 

Commission) Headquarters Conference Center, located at Three Lafayette Centre, 1155 21st St. 

NW, Washington, DC. The meeting consisted of four panels. In Panel I, the Virtual Currencies 

Subcommittee presented on the evolving cryptocurrency landscape, including questions 

surrounding the appropriate regulatory framework for various crypto assets and trading 

platforms. In Panel II, the Automated and Modern Trading Markets Subcommittee discussed its 

planned work over the next year to assess the true risks of the modern trading environment. 

Panel III discussed the feasibility of regulators issuing machine-readable and executable 

regulatory rulebooks to facilitate market participants’ RegTech compliance solutions. In Panel 

IV, the Distributed Ledger Technology and Market Infrastructure Subcommittee discussed 

distributed ledger technologies potential for trade reporting. 

TAC Members in Attendance 

Erik Barry, Credit Suisse. Head of Client Platform for Prime Derivative Services 

Christopher Chattaway, Managing Director, Goldman Sachs 

Paul L. Chou, Chief Executive Officer and Co-Founder, LedgerX 

Gary DeWaal, Special Counsel, Katten Muchin Rosenman LLP 

Bryan Durkin, President, CME Group 

Richard Gorelick, Head of Market Structure, DRW Holdings LLC 

Christopher Hehmeyer, Managing Member, Hehmeyer Trading and Investments 

Bradford Levy, Managing Director and Chief Executive Officer, MarkitServ, Markit 

John Lothian, President and Chief Executive Officer, Jonathan J. Lothian Co. 

Benjamin Macdonald, Global Head of Product and President, Bloomberg SEF and Bloomberg 

 SDR, Bloomberg 

Timothy McHenry, Vice President, Information Systems, NFA 

Jennifer Peve, Managing Director Business Development and Co-Head, Office of FinTech 

 Strategy, DTCC 

Steven J. Randich, Executive Vice President and Chief Information Officer, FINRA 

Alexander Stein, Managing Director, Two Sigma 

Larry Tabb, Founder and Chief Executive Officer, TABB Group 

Supurna VedBrat, Global Head of Trading, BlackRock 

CFTC Commissioners and Staff in Attendance and Speakers 

J. Christopher Giancarlo, Chairman, CFTC 

Brian D. Quintenz, Commissioner and TAC Sponsor, CFTC 

Rostin Benham, Commissioner, CFTC 

Dan Berkovitz, Commissioner, CFTC 

Dawn D. Stump, Commissioner, CFTC 
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Daniel Gorfine, TAC Acting Chair/Designated Federal Officer (DFO) and Director, 

 LabCFTC 

Brian Trackman, Counsel on FinTech and Innovation, Office of General Counsel, CFTC

Invited Speakers in Attendance

Jo Ann Barefoot, Barefoot Innovation Group 

Pierre Lamy, REGnosys 

Andre McGregor, TLDR Capital

Brijesh Solanki, Credit Suisse

I. Opening Remarks 

Mr. Gorfine, the Designated Federal Officer for the TAC and Director of LabCFTC,

called the meeting to order. Commissioner Quintenz, the TAC’s sponsor, then gave his opening 

remarks, welcoming and thanking all committee members for attending. Additionally, he 

specifically thanked the members of the four subcommittees that were formed after the February 

TAC meeting. The four subcommittees are: Virtual Currencies; Distributed Ledger Technology 

(DLT) and Market Infrastructure; Cybersecurity; and Automated and Modern Trading Markets. 

He then discussed the agenda for the day, including three presentations from the subcommittees 

on their progress and future plans, and a panel regarding the use of RegTech to facilitate 

compliance. 

Next, Chairman Giancarlo gave his opening remarks. He thanked all for their attendance 

of the TAC meeting and also noted that it was FinTech week at the Commission and thanked 

CFTC staff for facilitating and/or organizing the inaugural FinTech Forward Conference. The 

Chairman then welcomed new Commissioners Stump and Berkovitz and thanked them for taking 

on sponsorship of their respective committees, the Global Markets Advisory Committee 

(GMAC) and the Energy and Environmental Markets Committee (EEMAC). The Chairman also 

thanked Commissioner Behnam for his interim sponsorship of the Agricultural Advisory 

Committee (AAC) and his work on the Market Risk Advisory Committee (MRAC). He further 

noted that the Commission just approved the formation of a new MRAC subcommittee to 

address emerging issues related to the movement away from London Interbank Offered Rate 

(LIBOR) to Secured Overnight Financing Rate (SOFR), and that he would be serving as the 

AAC’s new Sponsor. The Chairman concluded by highlighting the importance of the TAC 

meetings and how the meetings help inform the Commission so that the Commission may refine 

its policy responses to the quickening pace of change in markets. 

Following the Chairman, Commissioner Benham gave his remarks. He thanked the 

Chairman for his remarks and welcomed Commissioners Stump and Berkovitz to the 

Commission. He also thanked Mr. Gorfine for all his work on the October TAC meeting and 

Commissioner Quintenz’s sponsorship of the meeting. 
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Following the Chairman’s remarks, Commissioner Stump gave her opening remarks. 

She emphasized her commitment to tackling the challenge of addressing emerging regulatory 

questions that result from today’s evolving technology applications. She thanked Commissioner 

Quintenz and Mr. Gorfine for their leadership of the TAC and all of her fellow Commissioners 

for welcoming her to the Commission. 

Finally, Commissioner Berkovitz gave his opening remarks. He thanked the Chairman 

and other Commissioners for welcoming him to the Commission. He emphasized the 

importance of the Commission being at the cutting edge of technology and regulators being 

responsive to address the role of these technologies. He concluded by thanking Commissioner 

Quintenz and Mr. Gorfine for their work on the meeting. 

II. TAC Discussion Regarding Committee Goals, Agenda, and Scope

Following the opening remarks, Mr. Gorfine discussed the scope, plans, and approach for 

the meeting. He stated that the following three subcommittees would present on panels: Virtual 

Currencies, Automated and Modern Trading Markets, and DLT and Market Infrastructure. At 

the end of each presentation, the current framing and approach to the subcommittee work would 

be evaluated to see if it could be improved in any way. Mr. Gorfine also stated there would be a 

panel on the topic of RegTech and facilitating machine-readable and machine executable 

rulebooks. 

III. Panel I: Virtual Currencies Subcommittee Presentation & Digital Assets Security 

Discussion 

Mr. Gorfine introduced the first panel. Mr. DeWaal opened the panel and stated that 

there are two main issues that the subcommittee had been asked to review. The first issue is how 

to look at the derivatives markets and leverage the characteristics, standards, and best practices 

from a largely institutional derivatives market to enhance the integrity and degree of trust in the 

underlying spot markets. The second issue is whether crypto assets are a security and/or 

derivative and under what parameters should the Commission determine that crypto assets are 

derivatives contracts. 

Mr. Gorelick gave a brief primer on the virtual currency spot markets and the benefits 

and potential issues associated with these markets. He discussed the decentralized exchanges, 

the centralized exchanges, and the over-the-counter market. He stated that there were some good 

things about the market structure that should carefully be preserved and not lost. For example, 

the innovation and creativity in the markets can at times solve difficult problems. Another 

benefit discussed was the demand to participate in these markets including a wider variety of 

participants. Further, he noted that the potential issues associated with these markets include: 

the lack of transparency, venue risk including the risk of hacking and theft, market manipulation 

including wash trades and spoofing, inadequate surveillance, conflicts of interest due to a lack of 

defined roles, and issues of supervision due to the global framework of these markets. 
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Mr. Gorelick then discussed potential solutions to the issues associated with virtual 

currency spot markets. First, he stated that smart regulation was part of the solution. However, 

difficult definitional and jurisdictional issues need to be addressed before figuring out the right 

regulatory model. The CFTC has authority for fraud and manipulation in the spot market for 

commodities in the U.S. However, the CFTC must consider how to best influence the regulatory 

landscape in the virtual currency spot market as there are many regulators that will be involved 

in regulating this market because of its global nature. Mr. Gorelick then stated that one of the 

potential solutions the Commission could consider to assist in the regulation of these markets is a 

number of self-regulatory organizations or similar organizations that could touch markets in 

multiple jurisdictions. 

With regard to technology, Mr. Gorelick stated that the technology associated with crypto 

assets including block chain, identity tokens, and smart contracts will all help enforce rules and 

contracts. Additionally, technology used in traditional financial markets such as surveillance 

systems, order management and execution management systems, risk management systems, and 

compliance technologies could also be refined to be used in the virtual currency markets. 

Mr. DeWaal then discussed ideas on how to classify crypto assets. He stated that crypto 

assets can be put into three categories: crypto currencies, security tokens, and utility tokens. He 

explained that crypto currencies are typically mediums of exchange similar to fiat currency. 

Security tokens have the qualities of securities where people are collectively investing in an 

enterprise with the expectation of a profit. Utility tokens are consumption tokens where you may 

purchase use or access to goods and services, but there might be a secondary market for this 

token. He suggested three broad questions that must be considered to classify crypto assets: 1) 

how was the coin issued?, 2) how did the sponsors promote it and or retain control?, and 3) 

should subjective or quantitative measures be used to group assets? 

Mr. Stein followed with a brief discussion regarding the quick pace that the technology in 

the virtual currency industry is changing. He stated that there seemed to be a consensus in the 

Virtual Currencies Subcommittee that the Commission should take a principles based approach 

to regulation to allow itself maximum regulatory flexibility in a changing industry. 

Mr. McGregor then shared remarks regarding safeguarding digital assets. He discussed 

crypto hacks in the news and the causes of these hacks as being very simple things like 

employees failing to protect private keys, hackers sending malicious files to exchange 

employees, deposits being on a single wallet and allowing for extreme exposure, etc. He 

highlighted that 90% of attacks still happen over email. As a result, custody regulations are very 

important and could prevent exchanges from being hacked. He emphasized the need for 

institutions to have insured, qualified custodians. He also emphasized the need to have industry 

wide standards regarding custody. He stated that these standards could come from the 

government, a consortium, or an SRO. These standards should include a “know your customer”
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(KYC)/anti-money laundering (AML) and anti-bribery corruption process to ensure safety and 

education for all the relevant actors. 

The panel then turned to a question and answer session. Generally, the concerns and 

discussions raised in this session included: how it was easy to create a new crypto currency but 

getting others to adopt it was more difficult, the use of the tokens by fraudsters including money 

launderers, the need to explore all the devices and tools that have been useful in traditional 

finance and apply them to the virtual currency market, the impact and role of smart contracts and 

the underlying jurisdiction which they fall under and the arbitration provisions that underlie 

them, the misunderstanding that Bitcoin is anonymous and that in reality if there is an issue you 

can see every wallet and transaction, the problem of unregulated Bitcoin exchanges that do not 

employ AML/KYC, and the role of the Securities and Exchange Commission (SEC), CFTC and 

banking regulators in regulating crypto currency. 

IV. Panel II: Automated and Modern Trading Markets Subcommittee Presentation 

Mr. Gorfine opened the panel by asking Mr. Durkin to present. Mr. Durkin began by 

stating that electronic trading has emerged as the principal trade execution method for futures 

markets, resulting in important, well recognized public benefits of increasing liquidity, 

promoting price discovery, narrowing the bid ask spreads in markets, and lowering risk 

management costs. 

 Mr. Durkin stated that since its establishment, the TAC has examined these changes and

produced principles based guidance to inform the industry and Commission on risk management, 

pre and post-trade protocols, systems safeguards, access to co-location facilities, messaging 

policies, and proposed rules on automated trading (Regulation AT). 

 Mr. Durkin then discussed the volatility controls and principles that the International 

Organization of Securities Commissioners (IOSCO) advocated for in a report it recently 

produced called “Mechanism Used by Trading Venues to Manage Extreme Volatility and 

Preserve Orderly Trading.” He stated that the U.S. markets were largely ahead in complying 

with the principles based guidance of the IOSCO report due to the principles based guidance the 

Automated and Modern Trading Markets Subcommittee had issued earlier and U.S markets had 

already adopted. 

 Mr. Durkin stated that the TAC has had a great deal of influence in the industry more 

broadly. For example, as a result of the dialogue that this committee promoted, the Futures 

Industry Association (FIA) produced best practices and industry guidelines for risk protocols and 

controls in 2010. In addition, in 2010, 2015, and 2018, the FIA conducted a survey of global 

exchanges’ derivatives venues regarding the types and the position of controls that are offered. 

Mr. Durkin noted that in 2018, the FIA survey found that, of the seventeen major derivatives 

exchanges that responded globally, eleven implemented dynamic price bands and thirteen 

implemented trading halts during extreme volatility. He stated that every exchange in the 
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Americas that responded had implemented both price banding and trading halts without being 

required to do so. 

 Mr. Durkin then discussed the eight recommendations of the 2018 best practices and 

industry guidelines report. The recommendations included: 1) trading venues should have 

appropriate volatility control mechanisms, 2) trading venues should have appropriately calibrated 

volatility control mechanisms, 3) trading venues should regularly monitor volatility control 

mechanisms, 4) regulatory authorities should determine what information they require to 

effectively monitor volatility control mechanism frameworks, 5) trading venues should provide 

regulatory authorities information regarding the triggering of volatility control mechanisms, 6) 

trading venues should communicate information to market participants and to the public about 

volatility control mechanisms, 7) trading venues should make available to market participants 

and the public information regarding the triggering of a volatility control mechanism, and 8) 

where the same or related instruments are traded on multiple trading venues, the relevant trading 

venues should communicate regarding these instruments. 

The panel then turned to a question and answer session. Generally, the concerns and discussions 

raised in this session included: how the IOSCO report was aligned with the work that the TAC 

and Commission have led particularly regarding the principles based approach and volatility 

control mechanisms, the potential for further improvement to risk controls with the introduction 

of inline credit controls, how qualitative calibrations can go wrong, future trends including 

quantum computing, next steps for the committee including making adjustments to its guidance 

based on the TAC meeting, the need for more details on how industry has implemented the 

subcommittee’s principles, and the need for an analysis on how the subcommittee’s principles 

differ from the aforementioned IOSCO principles. 

(Lunch Break) 

V. Panel III: RegTech and Robo-Rulebooks 

Following the lunch break, Mr. Gorfine called the meeting back to order. He previewed 

the panel stating that the panel would discuss RegTech and how it is opening up the possibility 

of machine-readable and machine-executable rulebooks. He then introduced the panelists. 

Ms. Barefoot framed the panel with quote from Chairman Giancarlo – “The biggest 

challenge facing virtually every regulator is: How do we take a 20th century analog rulebook and 

apply it in a 21st century digital world?” She discussed the experiments the Financial Conduct 

Authority (FCA) has been running in London to see if it was possible to issue a regulation in the 

form of code rather than words (model-driven machine-executable regulation) and the 

subsequent hackathon or TechSprint for these code regulations. She stated that by attempting to 

digitize regulations the FCA and other regulators attempting to do the same are making 

regulation faster and more cost-effective. 
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Ms. Barefoot stated the leading use case that regulators and companies are working on is 

converting the rulebook to being machine readable. She explained that the idea is to put an 

electronic tag on the sections of regulations and rules and enable a machine to be able to 

understand who and what is covered by it, and then to implement the changes. She also stated 

that there is a great deal of work underway on market monitoring through RegTech using 

artificial intelligence to detect patterns of conduct that could indicate misbehavior or 

noncompliance or regulatory risk. She also cited digital identity as another area where RegTech 

can be used. 

Ms. Barefoot walked through the key concepts that should be kept in mind regarding 

RegTech: 1) the goal of actual transformation of the regulatory space, 2) the technology to make 

the regulatory changes exists but the institutional readiness and capacity is the problem, 3) the 

regulatory need to learn to move faster, 4) the need for more collaboration, 5) the need for 

`regulators to have the capacity for experimentation, 6) the need to be working to 

interoperability, 7) the need to move toward open source design in regulation, and 8) the need to 

introduce some of the RegTech changes on the side rather than trying to reform the whole entire 

system at once. 

Mr. Lamy provided a background on REGnosys a Fintech company which was created 

with a vision to radically transform the financial industry’s approach to regulatory compliance by 

providing a digital repository of data (Rosetta), workflow, market practices, and regulatory 

provisions that are accessible to all market participants. He stated that REGnosys participated in 

a TechSprint with the FCA and a key takeaway for them was that source documents need to be 

expressed in unambiguous terms and syntax so that they can be converted into a sequence of 

subject-object predicates that can be executed by machines. Mr. Lamy also explained that the 

core of Rosetta is the syntax that provides the ability to express data presentation, data 

validation, data mapping, and workflow logic in an intuitive and legible manner than can be 

automatically translated into executable code. Rosetta is currently used by ISDA and market 

participants to develop the Common Domain Model, a digital representation of derivatives 

products and workflows. 

Mr. Solanki stated that Credit-Suisse started looking at machine-executable and machinereadable regulations sometime last year in order to understand the potential of technologies to 

transform this space. They approach their thinking on these topics with three conceptual 

buckets: 1) inputs, 2) the processing part of how to read and understand, and 3) outputs. For 

inputs, he stressed the need to have a common language which does not currently exist. For 

processing, he stressed the challenge is around understanding how to structure the process steps 

involved as well as how to organize the execution of rules and the data quality expectations. For 

outputs, he stressed looking at what is actually produced and what is actually submitted to the 

regulators and how this can be aided with technology. Mr. Solanki also stressed the need to have 

consistency in terms of expectations across regulators globally. 
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Mr. Trackman presented next stating the main objective of LabCFTC was engagement 

with the industry to spur innovative thinking and activity around applications of new technology. 

He stated that in the spring LabCFTC initiated a request for input on potential prize competitions 

that the CFTC would sponsor requesting both substantive topic areas and input on administration 

of such competitions. The substantive areas proposed were machine-readable and machineexecutable regulation, automated regulatory reporting, and leveraging new sources of market 

data for things such as better market development. Key takeaways from the input received 

included global interest in the robo-rulebook concept and interest in automated regulatory 

reporting. Commenters suggested that any competition the CFTC undertakes should focus on 

practical steps and focus on standards. Mr. Trackman concluded by discussing the next steps 

including the goal of moving forward with the competition next year. 

The panel then turned to a question and answer session. Generally, the concerns and 

discussions raised in this session included: how to get various regulators to work together, 

establishing a common language and common data among regulators, how to phase in machinereadable forms and regulations, and the use of artificial intelligence to address end runs around 

machine-executable regulatory reporting. 

VI. Panel IV: Distributed Ledger Technology and Market Infrastructure Subcommittee 

Presentation 

Mr. Gorfine introduced the panel. Mr. Levy led the panel discussion with some questions 

for consideration including whether DLT frees the industry and regulators for the challenges of 

an open, but secure, digital world. He emphasized the importance of cryptography, which is 

about data protection and information security, and the potential for more automation around the 

concept of smart contracts. 

Mr. Levy discussed three major initiatives. First, he discussed “Stax Payments for 

Loans,” which is a highly sensitive private market which is low to settle and in which cash is a 

relatively painful process. In this private market, a replica of true money can be used to 

reconcile portfolios and the accuracy of this process could be tested. The second initiative he 

discussed was a project called “Ubin.” The central bank of Singapore created and exact replica 

of the paper fiat in their systems. The central bank of Canada did the same in a project called 

“Jasper.” He stated that central banks should see whether they can move fiat money amongst 

each other with DLT. This has the potential to modernize the central banking system. The third 

initiative he discussed was an initiative in Australia to fully replatform the entire front, middle,

and back end from an exchange and clearing perspective. 

Mr. Barry presented next and stated that he is hopeful that many of the concerns that the 

FCMs have tried to solve independently can be addressed through DLT. For example, identifiers 

don’t currently carry through from execution through clearing in a normal manner across the 

industry. DLT could solve this problem by providing for consistent identifiers. In another 
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example, he explained that messaging could be centralized through DLT and the risk of failed 

messages could go down. Mr. Barry urged all to move towards a common language and 

common framework to bring efficiency and better communication to the industry on a central 

ledger. He concluded by highlighting the next steps, including refining the DLT and Market 

Infrastructure Subcommittee’s focus on the functional areas and drilling down on the instruments 

involved, looking at how new technologies may be adopted, and looking at specific industry 

efforts to adopt new technology to inform its work. 

 The panel then turned to a question and answer session. Generally, the concerns and 

discussions raised in this session included: industry initiatives to move DLT along, further 

refining the scope of the DLT and Market Infrastructure Subcommittee’s focus to include taking 

a look at what it really takes to bring some newer technologies to market, and how to drive 

standardization of data reporting given the numerous vendors providing the data. 

VII. Closing Remarks 

 In closing, the Chairman and Commissioners all expressed enthusiasm for the excellent 

discussion and stated they were looking forward to future discussions.

Mr. Gorfine adjourned the meeting at 3:22 p.m. 

 

______________________________ 

 

 ___

Daniel Gorfine Date 

TAC Acting Chair/Designated Federal Officer and Director LabCFTC 

 

___May 29, 2019_