SUPPLEMENTARY INFORMATION:

In accordance with section 9(a)(2) of the Federal Advisory Committee Act (FACA), 5 U.S.C. 1008, and 41 CFR 102-3.65, the CFTC is announcing the IAC's renewal and providing the below Commission-approved public interest determination. The IAC's objectives and scope of activities are to assist the Commission by providing advice on the impact and implications of technological innovation in the financial services markets. The IAC will also provide advice on the application and utilization of new technologies in the financial services markets, as well as by market professionals and market users. The IAC may further provide advice to the Commission on the appropriate level of investment in technology at the Commission to meet its surveillance and enforcement responsibilities, and inform the Commission's consideration of technology-related issues to support the Commission's mission of ensuring the integrity of the markets and achievement of other public interest objectives. The IAC will operate for two years from the date of renewal unless the Commission directs that the IAC terminate on an earlier date. A copy of the renewal charter will be posted on the CFTC's website at www.cftc.gov.

Public Interest Determination

Pursuant to 41 CFR 102-3.60(a), to establish, renew, reestablish, or merge a discretionary (agency discretion) advisory committee, an agency must first consult with the General Services Administration's Committee Management Secretariat (the Secretariat) and, as part of the consultation, provide a written public interest determination approved by the head of the agency to the Secretariat with a copy to the Office of Management and Budget. In addition, pursuant to 41 CFR 102-3.35, an agency shall follow the same consultation process and document in writing the same determination of need before creating a subcommittee under a discretionary committee that is not made up entirely of members of a parent advisory committee.

Information on the following factors for the committee is provided to the Secretariat to demonstrate that renewing the committee is in the public interest:

1. Annual budget: The estimated annual operating cost for supporting the IAC is $83,581.88 and includes:

a. Federal personnel on a full-time equivalent (FTE) basis:.50.

b. Other Federal internal costs: $6,636.27.

c. Proposed payments to members: The CFTC does not compensate IAC members for their services. However, there are government costs (salary and benefits) for Federal members which are estimated at $2,071.00.

d. Proposed number of members: Approximately 40-45.

e. Reimbursable Costs: $811.11.

2. If applicable, the total dollar value of grants expected to be recommended during the fiscal year: N/A.

3. Criteria for selecting members to ensure the committee has the necessary expertise and fairly balanced membership: IAC members are selected to represent a balance of viewpoints that reflect the groups and entities potentially affected by or interested in the IAC's recommendations, and are necessary to effectively address the issues to be considered by the IAC. The IAC will consist of members who reflect a wide array of background and have the technical expertise and qualifications to share their experiences and views on the opportunities and risks that may be associated with technological innovation, including in the derivatives and commodities markets, and ways that the Commission can utilize innovative technologies in carrying out its mission.

4. List of all other Federal advisory committees of the agency:

In addition to the IAC, the CFTC has one statutory committee that Congress has exempted from the FACA and one discretionary FACA committee:

(a) Agricultural Advisory Committee (discretionary)

(b) Energy and Environmental Markets Advisory Committee (statutory)

5. Justification that the information or advice provided by the Federal advisory committee or subcommittee is not available from another Federal advisory committee, another Federal Government source, or any other more cost-effective and less burdensome source: The IAC is the most efficient and thorough means of obtaining advice on issues related to: the impact and implications of technological innovation in the financial services markets; the application and utilization of new technologies in the financial services markets, as well as by market professionals and market users; and the appropriate level of investment in technology at the Commission to meet its surveillance and enforcement responsibilities, and inform the Commission's consideration of technology-related issues to support the Commission's mission of ensuring the integrity of the markets and achievement of other public interest objectives—issues that are not addressed by the CFTC's other advisory committees. Innovations that may significantly impact our markets include those involving blockchain technologies, artificial intelligence, machine learning, prediction markets, and cybersecurity innovations and evolution in approaches to cyber threats. Technological innovation and change in the derivatives and commodities markets is continuous and can only be addressed by a permanent committee comprised of a broad cross-section of representatives of the public, including, for example, market participants, CFTC registrants, financial technology providers, market infrastructure firms, self-regulatory organizations, public interest groups, and academics—they cannot be properly addressed by the CFTC, or by ad hoc roundtables, public hearings, or other means of public engagement, all of which are better suited to responding to specific, time-limited events and idiosyncratic concerns rather than ongoing, long-term issue. The IAC is the most cost-effective way to access input and information, particularly since the ( printed page 52048) Commission does not compensate members and does not provide for members' travel expenses and accommodations for meetings.

6. If the consultation is a committee renewal, a summary of the previous accomplishments of the committee and the reasons it needs to continue: Historically, the IAC has served as a forum in which representatives from segments of the financial industry, regulatory bodies, financial technology providers, public interest groups, academia, and market infrastructure firms have provided the CFTC with their varying perspectives and advice on technology-related issues within the agency's jurisdiction and where issues of mutual interest to the Commission and representatives can be aired. For example, in FY 2024, the Committee approved five recommendations relating to artificial intelligence, and six recommendations on Decentralized Finance (DeFi). In FY 2021, the Committee approved a recommendation that the Commission provide guidance on how it reviews highly sensitive cybersecurity artifacts and sensitive intellectual property.

The Commission has determined that it is necessary to obtain advice on issues directly impacting those affected by the regulation of the financial markets. The IAC provides a forum to facilitate interaction with and communications between the Commission and the diverse representation on the IAC.

7. Explanation of why the committee/subcommittee is essential to the conduct of agency business: The CFTC has critical regulatory responsibilities over the swaps and futures markets in an era where technology is a vital component of these markets. These derivatives markets are becoming increasingly digitized and fast-paced, especially with the increasing use of blockchain-based infrastructure, which introduces complexities and potential risks.

The CFTC has statutory anti-fraud and anti-manipulation authority over commodities, which includes certain crypto assets and environmental-based products. These markets are experiencing accelerating technological change and pose a number of complex or novel public interest issues, opportunities, and risks. The rapid innovation in technology will continue to drive market structure changes in the coming years. Further, market structure changes are also likely to occur as U.S. and non-U.S. regulatory frameworks continue to evolve. These technological changes in market structure and development of innovative asset classes will have significant implications for the CFTC's mission of ensuring the integrity of the derivatives markets, including its surveillance and enforcement responsibilities.

In order for the CFTC to carry out its mission, it must understand the impact and implications of technological innovation in the derivatives and commodities markets and on market participants. Accordingly, the IAC will continue to assist the CFTC by providing advice to the Commission on the impact and implications of technological innovation in the financial services markets. The IAC will also continue to provide advice on the application and utilization of innovative technologies in the financial services markets, as well as by market professionals and market users. Through its advice and recommendations, the IAC will continue to assist the CFTC in being able to adapt to the technology-driven evolution in the derivatives and commodities markets.

In conclusion, this public interest determination documents that renewing the committee is in the public interest, essential to the conduct of agency business, and that the information to be obtained is not already available through another advisory committee or source within the Federal Government.

91 FR 52047