CFTC's Gunewardena Flags Gaps in Cross-Border Derivatives Oversight

CFTC Director of International Affairs Mel Gunewardena warned that international regulatory architecture has not kept pace with markets that are becoming continuous, programmable, composable, and autonomous. He gave his remarks at a joint Regulation Week conference hosted by the George Washington University Regulatory Studies Center and the Fundação Getulio Vargas Center for Law and Regulation.

Speaking for himself and not for CFTC Chair Michael Selig or the Commission, Mr. Gunewardena argued that tokenization, stablecoins, smart contracts, and AI are converging to reshape how prices and risk move across jurisdictions. He noted that global derivatives markets now exceed $1.2 quadrillion, with the CFTC overseeing roughly $600 trillion of that total.

Mr. Gunewardena identified four gaps across international standard-setting work and bilateral work among regulators. He said supervisory cooperation agreements were designed for information sharing after problems occur rather than for real-time coordination during fast-moving cross-border stress. He also argued that financial-stability oversight remains weighted toward central banks and cash-securities regulators, leaving derivatives expertise underrepresented even as derivatives increasingly drive price discovery.

On global standard-setting bodies, Mr. Gunewardena said they too often let geography and institutional convention, rather than market scale and expertise, determine leadership and priorities, producing lowest-common-denominator regulation. On market safeguards, he said price limits and circuit breakers were built for computer-age risks such as fat-finger trades and erroneous orders. The next disruption, he said, could come from autonomous systems working exactly as designed, setting prices in a thinly traded unsupervised market overnight or over a weekend that then transmit into regulated markets when they reopen.

Mr. Gunewardena said Mr. Selig is adapting the agency's framework to this new market architecture. Mr. Gunewardena cited the Commission's approval of the first "true" onchain perpetual futures contract, its expectations for 24/7 trading, clearing, and settlement (see prior coverage), and its initial rules for prediction markets (see prior coverage).

He added that the agency is reviewing the architecture through which foreign markets and institutions access the United States so that supervisory frameworks address financial stability, economic, and national security risks.