Commissioner Kristin N. Johnson delivered opening remarks at the FIA L&C Panel on the future-proofing of financial markets through AI and derivatives markets on April 25, 2024. In her address, she emphasized the transformative potential of innovations like generative AI, stating, "Innovations such as generative AI have the power and the potential to alter many aspects of our markets and lives."
Johnson highlighted the importance of policing derivatives markets, a cornerstone of the CFTC's mission, and advocated for heightened penalties for the misuse of AI in activities such as fraud or market manipulation. She stressed the need for responsible adoption of AI, stating that "without appropriate guardrails that ensure responsible adoption of AI, the risks of integrating this technology may outweigh the benefits in some contexts."
The Commissioner proposed specific interventions to address the increasing prevalence of AI in financial markets, including the adoption of a principles-based regulatory framework and the establishment of an inter-agency task force for information sharing. Johnson also emphasized the need to combat AI-enabled manipulation and fraud, calling for greater visibility and transparency regarding the use of AI by registrants.
Reflecting on her role in supporting the development of comprehensive reports on AI, Johnson expressed her advocacy for creating a financial markets interagency task force to guide the regulation and use of AI in the financial services industry.
As discussions around the integration of AI in financial markets continue to evolve, Commissioner Kristin N. Johnson's proactive stance on responsible adoption and regulatory oversight serves as a guiding force in navigating the complexities of AI in the financial sector.
