Remarks as Prepared for Delivery

I welcome all who are joining us to AI Day, with a special welcome to guests who are speaking today as well as the TAC members who I thank for their public service in serving on TAC.  Special recognition and thanks go out to TAC Chair Carole House and Vice Chair Ari Redbord. I also want to recognize and thank TAC designated federal officer Tony Biagioli, assistant designated federal officers Ben Rankin and Drew Rogers, as well as Scott Lee, Yevgeny Shrago, and Zach Coplan in my office, and all the CFTC staff who worked on AI Day and TAC. I have also invited to be with us today Ted Kaouk who yesterday was named as the CFTC’s first Chief AI Risk Officer. Welcome.

While it is well known that AI has been involved in financial markets for many years, AI Day is about gaining a better understanding from AI experts of the impact and implications of the evolution of AI, including generative AI.  AI Day is also about how to ensure the safety, security and trustworthiness of AI systems in this evolution.  Earlier presentations in TAC on AI have focused on this evolution of AI.

Much has been said about the great opportunities that the evolution in AI could bring to solve many of the world’s toughest problems—the promises of AI.  On the other side of the coin are concerns that have been raised about the negative potential implications of this evolution of AI—the perils of AI.

To manage those perils, the TAC has been examining the concept of Responsible AI. Responsible AI includes principles of fairness, transparency, explainability of the AI’s output, safety, and security.  The concept of Responsible AI at its core, embraces values by which governments and organizations can align their AI planning, design and deployment.  A critical component of ensuring Responsible AI is governance, which is increasingly becoming foundational to organizations and the U.S. government.  The TAC has already had presentations from the White House on the Executive Order on AI, the White House Office of Science and Technology Policy on the Blueprint for an AI Bill of Rights, and the Department of Commerce.

Today we are honored to hear from Elham Tabassi, Associate Director for Emerging Technologies, Information Technology Laboratory and Chief AI Advisor at the National Institute of Standards and Technology (NIST), in the Department of Commerce.  She will present on NIST’s AI Risk Management Framework released in early 2023.  As we learned when NIST previously presented to the TAC on its Cyber Framework, NIST is the standard setter in the federal government for technology. After all, it’s in their name.

Just this week, NIST released supplemental material for its AI framework.  In the announcement, U.S. Secretary of Commerce Gina Raimondo described how the Commerce Department has been working hard to research and develop guidance needed to safely harness the potential of AI, while minimizing the risks associated with it.  She talked about the tremendous progress the Department had made in a short amount of time and said “we are continuing to support responsible innovation in AI and America’s technological leadership.

As the TAC helps the CFTC understand the impact and implications of the evolution of AI in financial markets, a whole of government approach will enable the CFTC to leverage existing practices, principles, expertise and resources of other federal agencies, and harmonize our approach where possible.  Along with Associate Director Tabassi from NIST, we are honored to hear today from Sunayna Tuteja, Chief Innovation Officer, of the Federal Reserve Board. She will speak on the Fed’s Approach to Responsible AI.  I have had the privilege of working with her on several occasions.

We are also honored to hear from Todd Conklin, who serves as Treasury’s Chief AI Officer and Deputy Asst Secretary Cyber.  TAC members are very familiar with Todd as he serves as a member of the TAC.  As many of you know, Treasury just released a report on AI and cybersecurity, a report that came after Treasury’s consultation with 42 financial institutions.  As Todd will discuss, one of the results of those consultations was that financial institutions are leveraging NIST’s AI Risk Management Framework.

We will hear a presentation from the CEO of Modern Markets Initiative Kirsten Wegner. Kirsten recently testified before Congress on the potential impact of AI in financial markets. I knew that the TAC would benefit from hearing from her.

As the TAC examines the impact and implications of AI evolution on financial markets, it must be at the forefont of that examination that U.S. financial markets are the safest, most trusted and deepest markets in the world.  Investor and customer confidence and trust in U.S. financial markets is paramount to the ability of markets to continue leading the world.

As a market regulator, the CFTC has a mission to promote the integrity, resiliency and vibrancy of markets.  This mission is necessary to maintain the leadership of U.S. financial markets.  The CFTC has an important responsibility to safeguard U.S. financial markets and the trust placed in them.

As part of this core responsibility, in past meetings, the TAC has examined the potential for AI to harm markets and to undermine confidence and trust in markets. Today, the TAC discusses what the CFTC and organizations can do to prevent that.  That examination and other AI subjects are contained in a draft report by TAC’s Subcommittee on Emerging and Evolving Technologies.

I am excited to hear from the Subcommittee chairs who will be presenting to the TAC their draft report on Responsible AI in Financial Markets for the TAC’s consideration.  The TAC has made tremendous progress in a short amount of time, and is continuing to support responsible innovation in AI and America’s technological leadership.

The Subcommittee has worked a long time on this report, and I want to give them special recognition today. Chairs of the Subcommittee are Dr. Nichol Turner Lee, Senior Fellow and Director of Brookings Center for Technology Innovation, and Todd Smith, Director of Information Systems at the National Futures Association. These two Co-Chairs have made substantial contributions to lead the Subcommittee in drafting a report that expertly and addresses the impact and implications of the evolution of AI in financial markets.

There are thoughtful, iterative, and foundational recommendations geared towards more responsible AI systems with greater transparency and oversight to safeguard financial markets.  Given the AI expertise as well as market expertise of the Subcommittee, the findings and recommendations in the report should be taken seriously by financial services firms and regulators.

I am very grateful for the work that went into this report.  Please allow me to recognize by name the Subcommittee members that drafted the report, with the co-chairs Dr. Turner Lee and Todd Smith. They are:

TAC Chair Carole House,

Cornell Law School Professor Dan Awry,

Better Markets Director of Derivatives Policy Cantrell Dumas,

Brale Founder and CEO Dan Guido,

IBM AI Ethics Global Leader Dr. Francesca Rossi,

Themis Trading Co-founder and Co-head of Equity Trading Joe Saluzzi,

Institute for Agriculture and Trade Policy Sr Policy Analyst Steve Suppan,

Circle Vice President and Deputy General Counsel Global Policy Corey Then,

U of Michigan Prof Computer Science & Engineering Dr. Michael Wellman,

U.S Department of Treasury Chief AI Officer and Deputy Assistant Secretary of Cyber Todd Conklin.

It is an impressive report for the TAC’s consideration, and I thank all the Subcommittee members for their contributions.  I look forward to the discussion.