[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Notices]
[Pages 18009-18013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08673]
[[Page 18009]]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Request for Input on LabCFTC Prize Competitions
AGENCY: Commodity Futures Trading Commission.
ACTION: Request for input.
-----------------------------------------------------------------------
SUMMARY: In May 2017, the Commodity Futures Trading Commission
(``Commission'' or ``CFTC'') launched a new initiative, LabCFTC, to
spearhead the CFTC's effort to facilitate the development and
implementation of market-enhancing financial technologies
(``FinTech''). As part of that effort, CFTC staff are exploring
opportunities to play a constructive role to stimulate innovation and
leverage FinTech solutions that can enhance our regulated markets and
help make the Commission more effective and efficient in satisfying its
mission. The Science Prize Competition Act (``SPCA'') authorizes the
CFTC to invest federal funds in science and early-stage technology
research and development as well as in science, technology,
engineering, and mathematics education. Under this authority, the CFTC
may implement a competition and award prizes to stimulate innovation
designed to advance the CFTC's mission. Accordingly, the Science Prize
Competition Act may offer a useful mechanism to further the goals of
LabCFTC and the CFTC's mission. This Request for Input solicits
feedback on focus areas for potential prize competitions, and how
competitions could best be structured and administered. The Commission
welcomes all public comments.
DATES: Comments must be received on or before July 24, 2018.
ADDRESSES: You may submit comments, identified by the title, ``LabCFTC
Prize RFI,'' by any of the following methods:
CFTC Website: https://comments.cftc.gov. Follow the
instructions to Submit Comments through the website.
Mail: Send to Christopher Kirkpatrick, Secretary of the
Commission, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 20581.
Hand Delivery/Courier: Same as Mail, above.
Please submit comments by only one of these methods.
All comments should be submitted in English or accompanied by an
English translation. Comments will be posted as received to
www.cftc.gov. You should submit only information that you wish to make
available publicly. If you wish the Commission to consider information
that may be exempt from disclosure under the Freedom of Information Act
(``FOIA''), a petition for confidential treatment of the exempt
information may be submitted according to the procedures established in
the Commission's regulations at 17 CFR 145.9.\1\ The Commission
reserves the right, but shall have no obligation, to review, prescreen,
filter, redact, refuse, or remove any or all of your submission from
www.cftc.gov that it may deem to be inappropriate for publication, such
as obscene language. All submissions that have been redacted or removed
that contain comments on the merits of the Request for Information will
be retained in the public comment file and will be considered as
required under the Administrative Procedure Act and other applicable
laws, and may be accessible under the FOIA.
---------------------------------------------------------------------------
\1\ 17 CFR 145.9. All Commission regulations cited herein are
set forth in chapter I of Title 17 of the Code of Federal
Regulations.
FOR FURTHER INFORMATION CONTACT: Daniel Gorfine, Director of LabCFTC
and Chief Innovation Officer, (202) 418-5625; Brian Trackman, Counsel
on FinTech and Innovation, Office of General Counsel, (202) 418-5163;
Jorge Herrada, Senior Technical Data Specialist, Office of Data and
---------------------------------------------------------------------------
Technology, (202) 418-5346; or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
A. LabCFTC
In May 2017, the CFTC launched the LabCFTC initiative to further
the CFTC's goal of evolving as a 21st century regulator and keeping
pace with technological innovation. LabCFTC is dedicated to
understanding and facilitating market-enhancing financial technology
(``FinTech'') innovation, promoting fair market competition, and
ensuring proactive regulatory excellence. LabCFTC is designed to make
the CFTC more accessible to FinTech and regulatory technology
(``RegTech'') innovators, and to inform the Commission's understanding
of emerging technologies and their regulatory implications.
Further to that effort, LabCFTC seeks to spur innovation and
innovative applications of FinTech through prize competitions as
described further below. By focusing attention on aspects of CFTC
operations or regulated markets that could benefit from FinTech and
actively encouraging development of innovative solutions, LabCFTC can
act as a catalyst to drive progress.
B. FinTech and RegTech Opportunity
Technology-driven innovation is rapidly transforming the markets
CFTC oversees, and the way market participants operate and interact.
Examples include automated trading, which now constitutes up to 70
percent of trading on regulated futures markets,\2\ ``big data''
capability to enable more sophisticated data analysis and
interpretation,\3\ machine learning and artificial intelligence to
guide highly dynamic trade execution,\4\ ``smart'' contracts that value
themselves and calculate payments in real-time,\5\ behavioral
biometrics that can detect and combat online fraud,\6\ and blockchain
and distributed ledger technologies.\7\ Shared ledger systems,
[[Page 18010]]
which hold promise in increasing operational efficiencies (e.g.,
identity confirmation, KYC/AML compliance, and trade lifecycle
management), may also help facilitate real-time, standardized, and
lower-cost regulatory reporting, which benefits both market
stakeholders and CFTC. Application of self-executing machine logic,
often called ``smart contracts'' could result in the potential decrease
of execution risks, more efficient use of trade-related margin and
collateral, and the incorporation of automated regulatory compliance
provisions into the contract code.
---------------------------------------------------------------------------
\2\ J. Christopher Giancarlo, Chairman, Commodity Futures
Trading Commission ``Remarks at the Singapore FinTech Festival,''
November 15, 2017 (citing a March 2015 report of the CFTC's Office
of the Chief Economist ``Automated Trading in Futures Markets'' that
reviewed over 1.5 billion transactions across over 800 products on
the Chicago Mercantile Exchange over a two-year period, available at
http://www.cftc.gov/idc/groups/public/@economicanalysis/documents/file/oce_automatedtrading.pdf). See also McKinsey & Company and
Greenwich Associates study reprinted in Bank for International
Settlements, Markets Committee, Electronic Trading in Fixed Income
Markets, January 2016, http://www.bis.org/publ/mktc07.pdf.
\3\ Trevir Nath, ``How Big Data Has Changed Finance,''
Investopedia, April 9, 2015, http://www.investopedia.com/articles/active-trading/040915/how-big-data-has-changed-finance.asp; Central
Banking Focus Report, Big Data in Central Banks, Central Banking
Journal, November 13 2017, https://www.centralbanking.com/content-hub/big-data-in-central-banks-focus-report-2017-3315066; Ciara
O'Brien, Irish Firm Siren raises 3m in funding for data
investigation technology, The Irish Times, February 8 2018, https://www.irishtimes.com/business/technology/irish-firm-siren-raises-3m-in-funding-for-data-investigation-technology-1.3383335; Andrew
Zolli, ``After Big Data: The Coming Age of `Big Indicators''';
Stanford Social Innovation Review, January 22, 2018, https://ssir.org/articles/entry/after_big_data_the_coming_age_of_big_indicators.
\4\ Tom Upchurch, ``Technology: AI and the Spectre of
Automation,'' Euromoney, August 2016, http://www.euromoney.com/Article/3575461/Technology-AI-and-the-spectre-of-automation.html.
\5\ Nigel Farmer, ``Making Contracts Smarter,'' TabbForum, May
3, 2016, http://tabbforum.com/opinions/making-contracts-smarter?print_preview=true&single=true&ticket=ST-14742885819637-OxE2RQ6CSK3LXd6HsvaWwJ8v3ewjlyh208guDvuC; Jay Cassano, What Are
Smart Contracts? Cryptocurrency's Killer App, Fast Company,
September 17, 2014, https://www.fastcompany.com/3035723/app-economy/smart-contracts-could-be-cryptocurrencys-killer-app.
\6\ Anna Irrera, Experian enlists behavioral biometrics startup
to combat fraudsters, Reuters, April 7, 2017, http://www.reuters.com/article/us-experian-fraud-idUSKBN1792XT.
\7\ Oscar Williams-Grut, WEF: Blockchain Will Become the
`Beating Heart' of Finance, Business Insider, August 12, 2016,
http://www.businessinsider.com/world-economic-forum-potential-of-blockchain-in-financial-services-2016-8; see generally William
Mougayar, The Business Blockchain: Promise, Practice, and
Application of the Next internet Technology (Wiley 2016).
---------------------------------------------------------------------------
For market participants, new technologies can improve operational
efficiencies, create better workflows, increase transparency, and
strengthen compliance. Indeed, emerging financial technologies ranging
from blockchain to machine learning to predictive data analytics are
already changing the way financial markets operate. And, importantly,
for regulators too, including the CFTC, RegTech can help drive more
effective and efficient internal operations, as well as surveillance
and oversight of regulated markets.\8\
---------------------------------------------------------------------------
\8\ Remarks of J. Christopher Giancarlo at the Singapore FinTech
Festival, May 17, 2017, http://www.cftc.gov/PressRoom/SpeechesTestimony/opagiancarlo32.
---------------------------------------------------------------------------
C. Science Prize Competition Act \9\
---------------------------------------------------------------------------
\9\ Section 401 of the American Innovation and Competitiveness
Act, Public Law 114-329 updated previous authority to sponsor prize
competitions under the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3719), subsequently known as the America Competes
Act, and renamed the law to be ``Science Prize Competition Act.''
---------------------------------------------------------------------------
The SPCA authorizes the Chairman of the CFTC to carry out a program
to award prizes competitively to stimulate innovation that has the
potential to advance the mission of the agency.\10\ Generally, the
subject of the prize competition, eligibility rules to participate,
registration process, conduct of the competition, prize, and winner
selection criteria must be published in advance.\11\ Notice must be
given on a publicly available Government website such as
challenge.gov.\12\ The head of an agency is required to advertise a
prize competition widely to encourage broad participation.\13\
---------------------------------------------------------------------------
\10\ See 15 U.S.C. 3719(b).
\11\ See 15 U.S.C. 3719(f).
\12\ See id.
\13\ See 15 U.S.C. 3719(e).
---------------------------------------------------------------------------
A competition may have a cash prize purse or a non-cash prize
award.\14\ To win a cash award, an individual or entity must comply
with the competition requirements and be U.S.-based.\15\ Individuals
must be U.S. citizens or a permanent resident of the U.S.\16\ Private
entities must be incorporated in and maintain a primary place of
business in the U.S.\17\ While eligibility to win cash awards is
limited to individuals and entities that are U.S. based, as described
above, there is no limitation on participation in a competition or
eligibility to win a non-cash prize award.
---------------------------------------------------------------------------
\14\ See 15 U.S.C. 3719(f)(4). To the extent a competition
includes a cash prize, the competition may not commence until the
funds to pay out the amount have been appropriated or committed in
writing. See 15 U.S.C. 3719(m)(3)(A). The amount of a cash prize
purse, if offered, is up to the sponsoring agency; there is no
specific amount required.
\15\ See 15 U.S.C. 3719(g).
\16\ See 15 U.S.C. 3719(g)(3).
\17\ See id. Awards may not be won by federal entities or
employees acting within the scope of their employment. See 15 U.S.C.
3719(g)(4).
---------------------------------------------------------------------------
The SPCA includes guidelines concerning liability and
insurance,\18\ intellectual property rights,\19\ prize competition
judges,\20\ administering the competition,\21\ and funding.\22\
Competitions under the SPCA are not intended to be a substitute for the
standard procurement process. Rather, they are aimed at developing
solutions to challenges where the solution is not yet well-defined or
developed.
---------------------------------------------------------------------------
\18\ See 15 U.S.C. 3719(i).
\19\ See 15 U.S.C. 3719(j).
\20\ See 15 U.S.C. 3719(k). Judges may come from within or
outside the federal government, including the private sector. 15
U.S.C. 3719(k)(1). A judge may not have personal or financial
interests in, or be an employee, officer, director, or agent of any
entity that is a registered participant in a competition, or have a
familial or financial relationship with an individual who is a
registered participant. 15 U.S.C. 3719(k)(2). Also, any committee,
board, commission, panel, task force, or similar entity, created
solely for the purpose of judging prize competitions is exempted
from the Federal Advisory Committee Act (5 U.S.C. App.) under 15
U.S.C. 3719(k)(4).
\21\ See 15 U.S.C. 3719(l).
\22\ See 15 U.S.C. 3719(m).
---------------------------------------------------------------------------
Beyond the basic requirements specified in the SPCA, the Commission
has a great deal of flexibility in defining and structuring a
competition.\23\ For example, the competition could be scheduled for a
day or two, or instead extend over several weeks. The competition may
have one single prize, or interim stages of selection. The competition
need not be run in the CFTC's IT environment. Participants could create
their submissions in their own environments. Participant submissions in
prize competitions could be designated fully public or kept
confidential, in whole or part. And the Commission is free to determine
the prize, whether to offer a cash prize purse or non-cash prize award.
In that regard, the Commission notes that it does not, at this time,
anticipate offering a cash purse prize.
---------------------------------------------------------------------------
\23\ The Commission notes that it does not currently anticipate
that a competition would involve the use or release of any
confidential regulatory or market oversight data. To the extent such
types of data might be relevant to a competition, the participants
would likely use either alternate, publicly available data sets,
fully anonymized, aggregated data, or substitute data.
---------------------------------------------------------------------------
II. Request for Input
The Commission believes that science prize competitions offer an
exciting opportunity to encourage and spotlight innovation that can
benefit the quality, transparency, and integrity of our markets, the
market participants who depend on them, the operations and activities
of the CFTC, and broader American public. The Commission has begun
considering potential competition topics and potential ways to
structure competitions under the auspices of its LabCFTC initiative.
The SPCA encourages broad consultation in and outside of government
when selecting topics.\24\ Accordingly, to develop its ideas further
and help ensure that competitions achieve their objective of
facilitating market-enhancing innovation, the Commission is issuing
this Request for Input to gather feedback on potential competition
topics as well as on the structure and administration of its prize
competitions, i.e., what approach would be most effective. The
Commission welcomes any comments, including potential competition
topics not discussed here or any other element that a commenter
believes should be considered.
---------------------------------------------------------------------------
\24\ See 15 U.S.C. 3719(d) (``In selecting topics for prize
competitions, the head of an agency shall consult widely both within
and outside the Federal Government, and may empanel advisory
committees.'').
---------------------------------------------------------------------------
A. Potential Prize Competition Topics
FinTech is rapidly evolving, and there are many areas where
innovation and technology have the potential for significant impact.
Accordingly, because the scope of FinTech is so broad, the range of
potential FinTech prize competitions is expansive. The Commission would
like to identify specific challenges and use cases where a prize
competition is especially suited to spur the creation and demonstration
of innovative solutions. Ideally, a prize competition would both
highlight how new technology can benefit the CFTC as well as the
derivatives markets we oversee, and also lead to actionable next
[[Page 18011]]
steps, which could include further use case development, additional
research or investment, proofs of concept, and implementation.
The Commission has given some preliminary consideration to several
topics, described below, that may satisfy its stated objectives. These
examples are just that: examples. There are many other potential areas
where a prize competition or series of competitions under the SPCA
might advance the development of beneficial solutions, which could
improve market participants' ability to serve the needs of clients,
enable the CFTC to better fulfill its mission, or enhance the overall
quality and integrity of our markets. Therefore, in addition to
feedback on any of the potential competition topics described below,
the Commission would appreciate suggestions for additional competition
topics.
The Commission emphasizes that, as noted, this Request for Input is
meant to stimulate thinking about potential prize competitions. The
Commission is not endorsing any particular topic, nor is the Commission
committing to pursue a prize competition or engage in follow-on
procurement to implement specific solutions.
(1) Transaction, Position, and Margin Data and Analysis
Several potential topics relate to challenges around market data:
transaction reporting by market participants, data dissemination by the
CFTC, data management and analysis, and data cleansing and
harmonization. In each case, innovation driven by new technology has
the potential greatly to improve current processes and ``output,''
enabling both market participants and regulators to engage with data
more effectively.
For example, standardization of forms and processes, simplified
reporting mechanisms, shared, comprehensive data ontologies, and new
modes of reporting all offer the potential to greatly enhance the
accessibility, quality, and utility of market data that is reported to,
and disseminated by, the CFTC. Disseminating data reports in machine
readable format, new techniques in data visualization or new ways of
combining data streams could help make sense of market activity,
educate the public on the role of derivatives markets in the broader
economy, identify opportunity and risks, and improve the overall
quality of our markets. Likewise with respect to data management,\25\
cleansing,\26\ and analysis, new technology could help the agency and
stakeholders make good use of available market data to gain insight
about market interactions, risk flows, and aggregate exposures. A prize
competition in any of these areas could thus be useful.
---------------------------------------------------------------------------
\25\ Data management is a broad discipline that defines and
governs how an organization makes use of data. It includes such
areas as data governance, data architecture, data security
management, data quality, reference and master data, meta data, and
data transformation.
\26\ Data cleansing is vital to making use of data resources. It
refers to the process of preparing data for analysis. The CFTC
handles numerous data sets that range in complexity. In many cases,
the utility of the dataset is reduced because the quality of the
data is imperfect. Entries in fields may not be consistent in form
or format. Data requirements may be interpreted differently by
different respondents (or even within different divisions of the
same firm), resulting in different types of entries. Data elements
may be entered improperly or inadvertently omitted. Manual data
cleansing, however, cannot scale.
---------------------------------------------------------------------------
(2) Enhancing Market Transparency and Oversight
FinTech innovation may enhance market transparency and oversight in
a number of ways. Already, the Internet of Things (IoT) is making new
kinds of information available that may be relevant to pricing
derivatives and assessing market risks. A prize competition could
address, for example, how FinTech can be deployed in the derivatives
markets to detect behavior or information that may assist the
Commission in detecting fraud or abuse.
A more ambitious competition topic could address leveraging FinTech
innovation to enhance the availability of accurate, timely
transactional data, including trade prices. Commentators have noted
that new technologies have the potential to improve market transparency
and oversight at a lower cost.\27\
---------------------------------------------------------------------------
\27\ See, e.g., Dong He et al. IMF Staff Discussion Note,
Fintech and Financial Services: Initial Considerations (June 2017),
http://www.imf.org/~/media/files/publications/sdn/2017/sdn1705.ashx;
``Capital Markets: innovation and the FinTech landscape,'' Report of
Innovate Finance and EY (2016), http://www.ey.com/Publication/
vwLUAssets/EY-capital-markets-innovation-and-the-finTech-landscape/
$FILE/EY-capital-markets-innovation-and-the-fintech-landscape.pdf;
Jo Ann Barefoot, ``Reglabs: Time for a major regulatory
experiment?'' July 13, 2017, http://www.bankingexchange.com/blogs-3/unconventional-wisdom/item/6940-reglabs-time-for-a-major-regulatory-experiment (``Today's technology is creating a possibility that has
never before existed--the opportunity to improve the public policy
results of financial regulation, and reduce the costs of achieving
them, at the same time.'').
---------------------------------------------------------------------------
(3) Systemic Risk Analysis
The Commission believes it is critical to its core function to
successfully monitor and prevent the build-up of systematic risk.\28\
New technologies can help the Commission discharge this vital
responsibility by providing new ways to track and assess risk. Using
distributed ledgers, Cloud-based storage, machine learning, and other
new technologies could enable new methods for conducting stress tests,
for example, and gauging the impact(s) of unforeseen events on the
financial system as a whole.
---------------------------------------------------------------------------
\28\ Excessive systemic risk is understood to have been a
significant contributing factor to the financial crisis. See, e.g.,
Ian Goldin and Chris Kutarna, ``Risk and Complexity,'' Finance and
Development September 2017, http://www.imf.org/external/pubs/ft/fandd/2017/09/pdf/goldin.pdf; Chairman Ben S. Bernanke, ``Causes of
the Recent Financial and Economic Crisis,'' Testimony Before the
Financial Crisis Inquiry Commission, Washington DC, September 2,
2010, https://www.federalreserve.gov/newsevents/testimony/bernanke20100902a.htm.
---------------------------------------------------------------------------
(4) Improving the Accessibility of CFTC Regulations
A longstanding critique of regulatory frameworks is their
complexity. Over time, as regulations continue to evolve, rulesets tend
to become more intricate. Updates may be difficult to track and
engender unintended consequences. For regulated entities this presents
a tremendous compliance challenge. Each entity must know which rules
apply to it, understand what those rules require, structure an
appropriate compliance program, and keep the program up to date. These
challenges may be even more significant for relatively young or lean
entities looking to scale their activities in an increasingly fast-
moving market. For other market participants, regulators, and the
public more broadly, complex regulations can obscure straightforward
regulatory goals and impede meaningful review of the overall regulatory
framework.
The Commission believes that technology may offer meaningful
opportunities to make the regulatory framework more accessible, reduce
burdens and enhance overall compliance.\29\ There are a variety of
potential approaches, including:
---------------------------------------------------------------------------
\29\ Other regulatory authorities are already exploring these
possibilities. For example, the UK Financial Conduct Authority
hosted an event where participants demonstrated technology to link
regulatory obligations to internal policies in a cost effective,
automated and auditable fashion. See Yaa Asare, ``JWG and
ClauseMatch Launch Next Generation Regulatory Policy Management
Solution,'' https://regtechfs.com/jwg-and-clausematch-launch-next-generation-regulatory-policy-management-solution/.
---------------------------------------------------------------------------
Coding rules to make them machine readable,
Creating common ontologies to make rules more
understandable and
[[Page 18012]]
highlight where rules may be inconsistent or diverge,
Creating visual, interactive representations of the
regulatory framework, that enable linking of related rules and mapping
of regulatory requirements to specific function, teams and individuals
within a regulated entity, and
Developing machines that ``digest'' rules to determine
data and other requirements, as well as ideal compliance approaches for
specific entities.
(5) Strengthening CFTC's Administrative Process
Technology-based solutions geared to address regulation, regulatory
process, and the day-to-day operations of market regulators present the
CFTC a meaningful opportunity to leverage innovative FinTech directly.
For example, as a market regulator the CFTC's rulemaking process is of
vital importance. A key element of that process is the opportunity for
public comment. But when the CFTC puts out a rule proposal, the agency
may receive hundreds, sometime thousands, of comment letters. While the
Commission currently uses some technology solutions, the review process
remains labor intensive and could benefit from automation. How can
innovative technology make the notice-and-comment process ``smarter,''
more dynamic, and more effective?
B. Administration of Prize Competitions
In addition to comment on potential competition topics, the
Commission also seeks public input on the administration of any prize
competition. The SPCA provides significant flexibility to agencies in
how a prize competition is conducted. The Commission wishes to
structure prize competitions to attract broad interest, to be fair to
all participants, and to encourage market-enhancing innovation.
Broadly, the Commission is interested in how these goals can best be
accomplished through a prize competition. We are particularly
interested in the following areas:
(1) Eligibility
The SPCA requires that prize competition winners be, in the case of
entities, U.S. based or, in the case of individuals, U.S. citizens. The
Commission seeks input on what additional requirements, if any, should
govern participation in a CFTC-sponsored FinTech prize competition.
(2) Format
Prize competitions may take many forms. Hackathons, for example,
may take place over a short period: one or perhaps a few days.\30\
During that time, competitors come together to create and submit a
solution that meets the challenge presented. By contrast, a FinTech
prize competition could be structured to permit competitors to work at
their own pace over a longer period, and then submit their solution by
a stated deadline. In the case of a CFTC-sponsored FinTech prize
competition, the Commission seeks public input on what format may be
most suitable.
---------------------------------------------------------------------------
\30\ Generally, a hackathon is an event typically of short
duration at which participants engage in collaborative computer
programming, often to address a coding challenge or to develop a
solution to an identified problem. Federal agencies such as the
Department of Health and Human Services have sponsored successful
hackathons, for example, the HHS Opioid Code-a-Thon in December
2017, https://www.challenge.gov/challenge/hhs-opioid-code-a-thon/.
---------------------------------------------------------------------------
(3) Conditions of Participation
The Commission is considering what, if any, conditions of
participation it should impose around a potential prize competition.
(4) Advertising
The Commission is interested in reaching the widest range of
potential participants that it can in regard to CFTC-sponsored FinTech
prize competitions.
(5) Evaluation Standards
Once entries are submitted as part of a competition, they must be
reviewed and evaluated to determine a prize winner. The Commission
seeks public input on the evaluation process and appropriate standards
of evaluation (e.g., how easily might a proposed solution be scaled,
how robust is a proposed solution, how resilient, how adaptable to
market changes or changes to the regulatory framework, etc.).
(6) Judges
As part of a prize competition, judges must be selected to evaluate
entries and select the winner(s). The Commission seeks input on the
judge selection process and the appropriate mix of judges from among
various stakeholder groups: financial market participants, commercial
end-users, researchers and academics, FinTech innovators, specialists
and experts (e.g., data scientists, technologists, etc.), financial and
technology press, government officials, CFTC staff, and members of the
general public.
(7) Prize
The Commission seeks feedback on the selection of a suitable prize.
For example, the Commission could offer a ``CFTC Market Innovator of
the Year'' award to recognize select competition participants.
Generally, the Commission seeks input on what type of prize may best
encourage meaningful participation that results in real-world solutions
relevant to the competition topic. As noted, the Commission does not at
this time anticipate providing a cash purse, but notes that under the
SPCA, an agency may partner with outside entities which may sponsor
cash awards.\31\
---------------------------------------------------------------------------
\31\ See 15 U.S.C. 3719(m).
---------------------------------------------------------------------------
Specific Questions for Input
As noted, the Commission seeks feedback on candidate prize
competition topics and on the administration of a prize competition.
The Commission's broad goal is to stimulate thinking and highlight
efforts to apply new technology in ways that may enhance our markets.
In addition to any general input, the Commission is interested in
responses to the following:
Regarding prize competition topic selection:
1. Are there subject matter areas or specific topics that the
Commission should particularly consider or focus on for a potential
prize competition?
[ssquf] In each case, what is the relevant challenge to be
addressed?
[ssquf] In what ways can FinTech innovation potentially address
this challenge?
[ssquf] How would a prize competition spur development, interest,
or broader adoption? Please be specific as possible or provide examples
where appropriate.
2. What criteria should the Commission use to select prize
competition topics?
3. Are there subject matter areas or specific topics that are not
suitable for a prize competition? Please be specific as possible or
provide examples where appropriate.
4. What competition topics may help illuminate areas where new
technology can reduce costs or improve services for market participants
and end-users who depend on these markets to manage risk?
5. What competition topics may highlight areas where the regulatory
framework could work better or needs significant revision to
accommodate market-enhancing FinTech?
6. Which existing regulatory compliance or regulatory reporting
processes do you feel would most
[[Page 18013]]
benefit from RegTech? Please be specific as possible or provide
examples where appropriate.
Regarding administration of a prize competition:
7. What ground rules should govern participation in a CFTC-
sponsored FinTech prize competition?
[ssquf] For example, are there particular eligibility requirements
that the agency should adopt?
[ssquf] Should competition entries be designated ``open source,''
or should each participant retain full control of its entry and any
decision about its availability?
[ssquf] Should any different rules apply to winning entries?
8. How should prize competition judges be selected?
[ssquf] Should the Commission select a single judge or panel to
evaluate prize competition submissions?
[ssquf] If a panel, how large?
[ssquf] And what is the appropriate mix of stakeholders?
[ssquf] What additional requirements, if any, should apply to
judges?
9. What general evaluation standards or criteria may be appropriate
in the context of a CFTC-sponsored FinTech prize competition? Regarding
the evaluation process, are there models or protocols that the
Commission might adapt with regard to prize competitions it sponsors?
10. What type of prize is likely to encourage the greatest
participation from a broad range of innovators? What factors should the
Commission consider? If the prize is other than a cash purse, what type
of prize may be suitable?
11. Generally, are there any rules, policies, or practices that the
Commission should adopt to facilitate a prize competition or encourage
participation? For example, what modes of advertising and publicity may
be most effective? And, likewise, are there any rules, policies, or
practices that could impede participation in a prize completion?
In providing your responses, please be as specific as possible, and
offer examples where appropriate. The Commission encourages all
relevant comments; commenters need not address every item.
III. Conclusion
The Commission appreciates your time and effort responding to this
Request for Input on potential CFTC-sponsored FinTech prize
competitions. The information provided by stakeholders will help us
refine our understanding and future approach, and identify how the
Commission can best structure prize competitions to maximize their
positive impact.
More broadly, the input from this request will further aid the
Commission in identifying FinTech trends and areas where emerging
technologies and innovation may offer significant potential benefit.
In that respect, we look forward to continuing to engage
proactively with the innovator community and market participants to
promote market-enhancing FinTech, to identify opportunities to update
our regulatory framework, and to implement new technology-based
approaches to fulfill the CFTC's mission on behalf of the American
people.
Issued in Washington, DC, on April 20, 2018, by the Commission.
Christopher Kirkpatrick,
Secretary of the Commission.
Appendix To Request for Input on LabCFTC Prize Competitions--Commission
Voting Summary
On this matter, Chairman Giancarlo and Commissioners Quintenz
and Behnam voted in the affirmative. No Commissioner voted in the
negative.
[FR Doc. 2018-08673 Filed 4-24-18; 8:45 am]
BILLING CODE 6351-01-P