On 3 September 2026, Mr Mel Gunewardena delivered remarks at George Washington University.1 Gunewardena is the CFTC's Director of International Affairs and Senior Markets Advisor to Chairman Selig. He spoke at the fourth Regulation Week, organised with the Fundação Getulio Vargas in Rio de Janeiro. The remarks address digital markets and international regulation. He describes markets becoming continuous, programmable, composable and autonomous. Global derivatives markets now exceed US$1.2 quadrillion in notional value. The CFTC oversees roughly US$600 trillion of that market. Gunewardena identifies four gaps in the international regulatory architecture. These cover supervisory cooperation, financial stability oversight, standard setting governance and market safeguards. US CFTC is reviewing how foreign markets and institutions access the United States.
The Market The Speech Describes
Gunewardena traces market structure from the manual markets of his early career at Goldman Sachs in 1994 through electronic and algorithmic trading to the present stage: markets "not merely electronic or algorithmic, but increasingly continuous, programmable, composable and autonomous". He observes that the relationship between cash and derivatives has reversed, with Treasury futures leading interest rate price discovery, Brent and WTI derivatives establishing physical oil reference prices, and equity index futures determining where cash equities reopen.
The convergence he describes is cumulative: "A tokenized asset can trade continuously, settle through a stablecoin, rely on smart contracts and oracle networks, reference a traditional derivatives benchmark, move across interoperable protocols and ultimately be traded by an autonomous AI system."1 He warns that collateral revalued, pledged and rehypothecated in real time through smart contracts may improve capital efficiency but "can also accelerate procyclicality, trigger cascading liquidations and transmit risk across markets before either regulators or market participants can intervene".
The examples in the above are chosen with jurisdictional intent. A Brent linked contract on a Singapore platform transmitting into London and then WTI, and Korean equity volatility amplified through an onchain derivatives platform in the British Virgin Islands, describe precisely the offshore perpetuals ecosystem. His conclusion states the regulatory problem in one sentence: regulators should understand "the economic market behind the interface, not simply the entity inside their legal perimeter".
The Four Gaps
The first gap is supervisory cooperation. Gunewardena argues that memoranda of understanding designed for technical information sharing "were not built for markets capable of transmitting risk across jurisdictions in seconds", and that many lack clear requirements for market disruption, cyber incidents, liquidity stress, defaults and timely notification. "Information sharing after something has gone wrong is not crisis management."
The second is financial stability oversight. He contends the international financial stability architecture "remains heavily weighted toward central banks and cash-securities regulators", leaving derivatives regulators underrepresented in the bodies analysing the markets where price discovery and risk transfer increasingly occur.1 The result, he argues, is "product analysis rather than systemic analysis", with years "spent pursuing hypothetical risks that have not materialized" in non-bank credit while AI, tokenisation and new products are examined as isolated workstreams. His summary is severe: without derivatives expertise and market level data, "the system is structured to understand the next crisis only after it arrives. That is not forward-looking financial stability oversight. It is institutionalized crisis management."
The third is standard setting governance. Gunewardena argues that leadership in global standard setters "can reflect geography, institutional convention and established relationships rather than market scale, expertise, data and responsibility for the risks being supervised", producing "lowest-common-denominator regulation, comfortable, broadly acceptable and behind the risk before a standard is published". His prescription: "A global market standard setter cannot operate like a diplomatic institution."
The fourth is market safeguards. Price limits and circuit breakers were designed for fat finger errors and algorithmic glitches, he notes, whereas "the next disruption could come from autonomous systems functioning exactly as designed", beginning in an unsupervised market trading through a weekend when traditional markets are closed. "The market may be closed. Price discovery is not."
The third gap in the above is the diplomatic event of the speech. Without naming the Financial Stability Board or IOSCO, a US official whose remit includes IOSCO engagement, and who served until recently as senior advisor to the chief executive of the UK Financial Conduct Authority, is telling the standard setting bodies that their governance allocates influence by convention rather than by market responsibility.2 Delivered at a US Brazil regulatory conference, the message is aimed at the membership as much as the secretariats.
The Cross Border Access Review Confirmed
Gunewardena stated that under Chairman Selig "the agency is reviewing the architecture through which foreign markets and institutions access the United States and the cross-border arrangements supporting that access", with participation in the world's deepest markets to be "supported by modern supervisory arrangements that protect customers and market integrity while addressing financial stability, economic and national security risks".1
The confirmation in the above converts the Chairman's Economist formulation, that access is a privilege, into an active workstream with named criteria. The addition of economic and national security risks to the review's scope is new and consequential: Foreign Board of Trade registrations, exempt DCO status and substituted compliance determinations have historically turned on comparability of regulation, not on national security assessment. Non-US exchanges and clearing houses serving US participants, particularly those in jurisdictions with significant offshore crypto derivatives activity, should treat their US access arrangements as under review against a broadened test.
Footnotes
- Mel Gunewardena, Director of International Affairs and Senior Markets Advisor to Chairman Selig, "Remarks at George Washington University: Digital Markets & International Regulation", 3 September 2026, available at www.cftc.gov/PressRoom/SpeechesTestimony.
- US Commodity Futures Trading Commission, "CFTC Chairman Selig Announces Mel Gunewardena as Director of the Office of International Affairs and Senior Markets Advisor to the Chairman", press release 9189-26, March 2026.
