What if AI Malfunctions While Trading? Supervising Artificial Intelligence Under the Commodity Exchange Act

In a Westlaw Today article, Sidley lawyers Ian McGinley, Peter Malyshev, and Rebecca Lewis Tierney examine the use of artificial intelligence (AI) in Commodity Futures Trading Commission (CFTC)-regulated markets and firms’ supervisory responsibilities under the Commodity Exchange Act (CEA). The authors discuss how existing regulatory requirements may apply as AI increasingly performs trading, investment advisory, clearing, and other regulated functions, and outline practical considerations for firms deploying AI, including reviewing AI use cases, stress-testing systems, auditing outputs, documenting prompts and system design, evaluating registration requirements, and maintaining appropriate regulatory oversight.