U.S. derivatives regulators are establishing a pair of new enforcement task forces: one targeting emerging technology issues, and another focusing on misconduct in the growing environmental markets.
The division of enforcement at the U.S. Commodity Futures Trading Commission (CFTC) announced the launch of the task forces, consisting of both investigators and lawyers, to prosecute cases and work with other divisions in a couple of high-profile areas.
The cybersecurity and technology task force will prosecute misconduct such as hacks, account intrusions, and tech-based misconduct that is used to enable market manipulation, insider trading and other violations.
It will also work to ensure that the industry has adequate cybersecurity controls, and to supervise firms’ use of new technologies such as AI and machine learning.
The environmental task force will tackle fraud and regulatory violations in both derivatives markets and spot markets (including voluntary carbon markets), such as abusive trading and various forms of greenwashing.
“The task force will examine, among other things, fraud with respect to the purported environmental benefits of purchased carbon credits, as well as registrants’ material misrepresentations regarding ESG products or strategies,” the CFTC said in a release.
“Recent events that directly impacted derivatives markets highlight the concerns that cybersecurity breaches raise in our markets,” Rostin Behnam, chair of the CFTC, said. “Meanwhile, as more firms tout their environmental credentials and as voluntary carbon markets grow, there exists the potential for fraud and manipulation. The creation of these two task forces demonstrates the vigorous and forward-looking approach the CFTC will take to address misconduct in these critical areas.”