Introduction

President Donald Trump was re-elected on the promise to “fix” the US federal government. He described his bold vision to the American people: “our golden age has just begun”. And the phrase resonated with an electorate eager for change.

In the first year of his second term, the President issued 229 executive orders, 57 presidential memoranda, and 116 proclamations. Early orders included Executive Order 14178, addressing digital financial technology to support “responsible growth and use of digital assets, blockchain technology, and related technologies”, and was followed by committee appointments, and demands to departments, agencies, and Congress to “make it so”.

Government departments and agencies proclaimed their agendas. Technology and crypto industry representatives joined working groups and committees sponsored by the two primary derivatives regulators – the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) – with rosters reading like a “Who’s Who”. Policies were adopted to increase public access to blockchain networks; promote dollar-backed stablecoins; provide regulatory clarity and certainty; and manage risks associated with central bank digital currencies.

In 2026, the US derivatives markets are having another dramatic year. Last year, I noted how President Trump’s crypto ambitions were changing the larger US derivatives market and reshaping this industry. While I was right about the broad direction of and impact on the derivative markets, President Trump has advanced his Golden Age agenda in ways that I did not anticipate.

I had not predicted his profound expansion of executive power, the tacit abdication of Congressional power, and the subjugation of independent regulatory agencies. I also did not predict fully partisan oversight at the derivatives regulators, the dominance of industry advisory groups, or the gutting of governmental watchdogs overseeing legal matters, ethics, and other critical activities. Importantly, I also did not anticipate the pace of extraordinary technological advancements and new product development fuelling growth in the derivatives markets.

Derivative Markets

At CYE 2025, the global derivatives markets had expanded to USD844.6 trillion notional outstanding, of which the United States’ share stood at about 24.64%, USD208.1 trillion. Traditional US derivatives reporting only reflects insured US commercial banks and savings associations, more than 85% from four large banks. While direct comparisons between banks and their quantitative trading firm cousins are not available, we can make some educated guesses. The specific operational structure of each quant determines the extent of its derivatives trading revenues; typically, anywhere from 50% to 95%. One attention-grabbing headline was that banks totalled USD64.9 billion in derivative trading revenues, while just one quant trading firm racked up a whopping USD39.6 billion during 2025.

Converging technological advancements drove market changes not seen in over a century. As new financial products are created and traded on blockchains, the basis of competition is changing, and old ways fall by the wayside. Next-gen computational capabilities enable derivatives trading and clearing with extraordinary speed and automation, make certain advanced artificial intelligence (AI) accessible, while all of us wrestle with broader risk management issues.

Derivatives risk managers now face cross-cutting multiplicative threats. Recent polls underscore concerns about AI, cyber-crime, financial crimes, fraud, service disruptions, data protection, digital governance, outsourcing, supply chains, geopolitical issues, and operational resilience.

Gold and Gilt

Today’s Golden Age parallels in many ways America’s Gilded Age of the late 1800s. Both periods are marked by transformational technological changes; extraordinary wealth creation and concentration; a close relationship between wealth and political influence; and policies favouring economic growth and reduced regulatory oversight.

The Gilded Age was the pinnacle of the US industrial revolution, with railroads, telegraphs, and telephones connecting the country and the world as important new sources of power facilitated innovation, automation, and productivity. Paralleling this growth, a few “captains of industry” ascended, destroying competitors and blocking new entrants to control critical resources, connectivity, and knowledge. Extreme wealth and power concentrated in America, which became a plutocracy in all but name.

In today’s Golden Age, the technological advances controlling the management of key resources, connectivity, and knowledge are primarily digital. Dominated by AI, the memory and processing power of electronics are being augmented by photonics and quantum computing, and the speed and agility of blockchain are starting to revolutionise the markets.

As the new plutocrats pump trillions of dollars into technological innovations and product development, extreme wealth and power are concentrating again today. While Gilded Age wealth was in the hands of captains of industry, it is now in the hands of captains of technology.

Public Service or Self-Interest?

As it was in the Gilded Age, lines have blurred between public service and self-interest, with extraordinary political influence in the hands of monied interests. While many Americans struggle to survive, America minted 121 new billionaires, their collective wealth increasing by 22.45% (USD1.5 trillion) in just the last year.

Billionaires with business interests in the derivatives markets are part of this undeniable trend, a number of them with strong connections with the derivatives regulators. Claims of “insider” involvement in crypto, the predictions markets, and AI have led to stated public and Congressional concerns about potential conflicts of interests, ethical violations, market manipulation, and collusion.

This criticism extends to President Trump and his two elder sons. Their personal crypto and high-tech projects include 1789 Capital, ALT5 Sigma, American Bitcoin, Dominari Holdings, Kalshi, Unusual Machines, various Memecoin issuances, and World Liberty Financial. Public scrutiny intensified in June when the President’s 2025 financial disclosures showed USD2.24 billion in income, with USD1.4 billion attributed to crypto-related activities. A July 2026 New York Times article claims Presidential tokens, platforms, and licensing arrangements provide his supporters with ways to transfer value to him and his family. Potential conflicts exist because it is the President who also sets crypto policy, enforcement priorities, and market structure rules.

Independent Regulatory Agencies

In reflecting on the new Golden Age, it is useful to consider why Congress created independent regulatory agencies in the first place. During the Gilded Age, Congress sought to prevent inappropriate enrichment, manipulation, and fraud by insulating these agencies from politics.

The first such agency, the Interstate Commerce Commission (1887), was established in response to Gilded Age railroad abuses. The ICC model was created “to ensure impartiality in decision making, with five commissioners appointed by the President and confirmed by the Senate [with] no more than three commissioners… from the same political party”. Commissioners had fixed terms, bipartisan membership quotas, and protections against removal “without cause”. Other agencies followed, including the Federal Trade Commission (FTC) in 1914, and the SEC in 1934, each with distinct statutory mandates.

The SEC and the CFTC use similar models, with organic statutes defining their authority, governance, and funding, and their structural independence historically helping to ensure stability and continuity beyond presidential administrations, while guarding against political pressure.

Expanded Executive Power and Control

Power started to shift in 2025 when President Trump issued Executive Order 14215, “Ensuring Accountability for All Agencies”, as a direct challenge to the independent agency model that had stood for 138 years. Relying on “unitary executive theory”, agencies must now consult with the President on priorities and strategic plans, adopting performance standards that he sets. It further provides that the President and Attorney General “shall provide authoritative interpretations of law for the Executive Branch”, with their “opinions on questions of law... controlling on all employees... No Executive Branch employee… may advance an interpretation of the law that contravenes the President or the Attorney General’s opinion”.

Based on this broader reading of Article II of the US Constitution, unitary executive theory had already reshaped and politicised many federal agencies. In spite of Congressionally enacted statutory provisions preventing the President from removing certain Executive Branch officials without cause, the US Supreme Court also endorsed unitary executive theory in recent decisions, including Trump v Slaughter.

By way of background, in March 2025, President Trump dismissed two Democratic FTC commissioners. He did not allege statutory reasons for dismissal, and they were not removed “for cause”. Instead, the President claimed Article II allows him to remove “at will” key agency leaders. FTC Commissioner Rebecca Kelly Slaughter sued the President, arguing her dismissal was unlawful under both the Administrative Procedure Act (APA) and the Constitution.

In the Slaughter case, the Supreme Court adopted the unitary executive theory, overruling a 90-year-old Supreme Court case, Humphrey’s Estate, and held that the statutory provision requiring substantial “cause” for removal is unconstitutional. Chief Justice Roberts wrote the Majority Opinion, stating that “Subordinates who exercise the President's power are subject to removal by him. Then, and only then, can they remain accountable to the President, and the President to the people”. President Trump acknowledged the win as “the Greatest Increase in Presidential Power in the last 100 years”.

In her Dissent, Justice Sotomayor condemned the Slaughter decision, stating: “For most of this Nation’s history, Congress and the President together have decided that… some decisions should depend not only on who is in office… but also on judgment, expertise, and the public good”. Clear independence from the President no longer exists for independent regulatory agencies.

Interestingly, in another case decided that same day, Trump v Cook, the Supreme Court held “the President’s power to remove Federal Reserve (Fed) Governors is subject to judicial review and that ‘cause’ for removal must be substantial and related to the Governor’s official duties, reflecting the Federal Reserve’s need for independence”, and that sitting Governors must receive notice and opportunity to respond to any removal demands. What made the Fed different from the FTC? The Supreme Court gave the Fed special constitutional status. The removal of Governor Cook was supposedly “for cause” but required procedures had not been followed. In August, the President sent Governor Cook a letter giving her 21 days to respond to her “dismissal for cause”.

Derivatives Agencies

A 2024 Supreme Court decision, Loper Bright v Raimondo, had already weakened SEC and CFTC independence and powers. Loper Bright provides that independent regulatory agency interpretations of ambiguous statutory provisions no longer receive judicial deference as they had done for 42 years.

Independent agencies are being squeezed by both the Executive Branch and the Judicial Branch: Slaughter exerts Presidential control, and Loper Bright overrides their interpretations. On top of these squeezes, SEC and CFTC had headcount reductions in excess of 20% coming into 2026, and both agencies are being run at their statutory governance minimums.

Both agencies have been negatively affected by these changes. Critical policies are now released by policy statements, not through formal APA rulemaking processes. Interested parties cannot express their views, and policies are changed without adequate public commentary and debate. This runs counter to this administration’s election promises of greater governmental transparency.

Enforcement efforts have scaled back significantly, too. Both agencies have withdrawn major regulatory initiatives, rescinded advisory letters, and settled compliance-related enforcement actions. In Fiscal 2025, the CFTC under the Trump administration leadership filed 13 enforcement actions and recovered less than USD10 million, compared to 58 enforcement actions with a Fiscal 2024 recovery of USD17.1 billion. These rollbacks are widely praised by industry; but critics caution against “enforcement holidays” for certain technologies, platforms, markets, and products.

Along with these broader challenges, the CFTC was dogged by political leadership and operational intrigue, including some extended drama over its chairmanship. Finally, late December 2025, Michael Selig was sworn in as chairman. No other commissioners have been appointed as yet, but this has not stopped Chairman Selig from pushing forward rapidly. By February, he had sponsored an Innovation Advisory Committee (IAC) to help the CFTC “keep pace with how breakthrough innovations… are transforming markets”. IAC members include several crypto industry leaders and organisations with direct personal and business relationships with the President and his family members.

The CFTC has broad emergency powers to oversee, review, direct, and address:

• disorderly markets;
• extreme price movements;
• threats of market manipulation, corners, and squeezes;
• delivery disruptions; and
• liquidity breakdowns.

With the dramatically reduced number of leaders and staff, some observers question whether the CFTC is capable of pivoting from everyday duties to front-line emergency responses in the 24/7/365 markets it oversees. With the primary derivatives regulator operating with one commissioner, “when is a commission no longer a commission?”

Comprehensive Digital Asset Frameworks

In heralding the Golden Age in digital finance, the President called for “regulatory clarity and certainty built on technology-neutral regulations, frameworks that account for emerging technologies, transparent decision making, and well-defined jurisdictional regulatory boundaries”. The subsequent record of accomplishing these objectives has been spotty at best.

The GENIUS Act, “Guidance and Establishing National Innovation for US Stablecoins” enacted in July 2025, is currently tied up in Treasury and banking rulemaking projects. Executive Order 14233, “Strategic Bitcoin Reserve and Digital Asset Stockpile”, faces uncertainty as the Treasury and the Commerce Departments are arguing over cryptocurrency custody, while the Department of Justice (DOJ) is reviewing legalities at a time when regulatory frameworks are discussed but remain undecided.

The other big vision bills – the Digital Asset Market Clarity Act of 2025 (CLARITY Act) and the Anti-Central Bank Digital Currency Surveillance State (CBDC) Act – passed the House of Representatives and were sent to the Senate in 2025. The Senate has not voted on either bill, except for one piece of the CBDC Act (which was tucked into the Housing Act in July 2026) prohibiting the Fed from issuing or creating a CBDC or similar digital assets until 1 January 2030.

The CLARITY Act, the comprehensive digital asset market framework, has stalled in the Senate over several sticking points about ethics, money laundering, and prohibitions on the President’s family from holding crypto interests. Perhaps the pressure for full passage is off because interim guidance was provided in September 2025 when the SEC and CFTC issued a Joint Release allocating their relative jurisdictional authorities.

New Products

The SEC and CFTC have issued a Joint Request for Comment to establish clear regulatory lines between SEC and CFTC jurisdiction for innovative derivatives, prediction contracts and perpetual contracts.

As I did in my last article, I address prediction contracts and perpetual futures in what follows.

Prediction contracts

Prediction contracts (or “event contracts”) are binary (yes/no; win/lose) options that pay out based on the outcome of an event, such as a sporting, political, military, or entertainment event. The CFTC has jurisdiction and the Commodity Exchange Act (CEA) allows the CFTC to “stay” any contract listing “that involves, relates to, or references terrorism, assassination, war, gaming, or any activity that is unlawful under any state or federal law”, or that the CFTC determines is not in the public interest.

Historically, the CFTC denied self-certification of prediction contracts, but that position was already loosening, as I discussed last year. During the early second Trump Administration, the floodgates opened. One of the first CFTC-registered DCMs, KalshiEX, reported about USD12 billion of total trading volume in 2025, and that company’s performance is broadly representative of predictions market growth last year. Kalshi’s year-to-date growth already appears to have increased exponentially.

In 2026, however, the CFTC has begun tightening oversight of prediction market self-certifications, specifically targeting “blanket” filings for multiple contract listings. A June 2026 proposed rule introduced a 90-day listing period review to address public interest and “gaming” concerns. In July and August 2026, staff advisories require distinct, non-generic filings for event contracts and associated incentive programmes to ensure proper evaluation of manipulation.  

Last year, I pointed out litigations challenging the legality of prediction contracts. Several states and Indian tribes have sued Kalshi and other designated contract markets (DCMs). Legality turns on whether federal pre-emption precludes state and Tribal actions against prediction markets. As we go to press, New York State just sued Kalshi, saying Kalshi is “running an illegal gambling operation”. New York alleges that prediction markets “meet the legal definition of gambling because the outcome of events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance”. On the other hand, the CFTC has asserted federal pre-emption, defending its “exclusive jurisdiction”. The CFTC takes the position that “prediction markets facilitate commodities investing rather than gambling”.

An interesting twist involves prediction contracts on election results. A Pew Research Center analysis found that 23 states “prohibit election betting entirely… Another nine states vary in how they regulate election betting and the exact circumstances under which it’s illegal”. Politico noted many state bans were originally “driven by concerns that such wagers would lead to electoral fraud and a corruption of democracy”. Given the CFTC’s federal preemption position, however, the ability of the states to enforce these bans is unclear. Perhaps by this time next year, some of these jurisdictional issues will be resolved.

Discussing prediction contracts would not be complete without mentioning Trump Media & Technology Group’s (TMTG) new paid data service, providing institutional customers – primarily, HFTs at the time of this writing – with preferential “fractionally faster” access to President Trump’s Truth Social posts for a hefty price.

This service raises a slew of conflict-of-interest concerns and legal issues, including CFTC Rule 180.1 (anti-fraud and anti-manipulation) and SEC Rule 10b-5 (anti-fraud). Users might face misappropriation allegations if they receive non-public information; market manipulation allegations if the information they receive favours parties that participate in this service; or possible claims that government information has been selectively disseminated for private profit.

In addition, the President and White House staff have been sued on First Amendment grounds by the Freedom of the Press Foundation and The Intercept over TMTG’s paid “Truth API” data service. On TMTG’s 10 August 2026 earnings call, the company’s interim CEO disclosed they were actively “exploring licensing [their] data for prediction markets”.

Perpetual futures

Perpetual futures (perps) trade much like traditional futures contracts except, as their name suggests, they do not have maturity dates. They trade 24/7, are leveraged, and buyers and sellers get in and out of their positions at any time by posting margin and meeting funding rate “true up” payments. Prior to April 2025, perp trading was closed to US participants as the CFTC viewed them as swaps. Things changed quickly in 2025 as perp-style contracts (with long-dated expiration dates) started trading on US DCMs.

Actual perps (without expiration dates) began trading in 2026. As the CFTC explained, perps are “unlike traditional futures contracts, in which the price benchmarking between the derivative and the underlying cash commodity market is done at or around the expir[y] of the contract. Open exposures on perps may settle many times during the day or continuously with the payment based on funding rates”. Perps “use funding rates to maintain price parity with spot markets”. In May 2026, the CFTC approved Kalshi’s Bitcoin perps as futures because they provide for continuing executory payment obligations. The CFTC also issued a policy statement establishing a broader framework for exchange-listed perps.

A jurisdictional issue is whether a perp without an expiration date is actually a contract for the “future delivery of a commodity” (that is, a futures contract) subject to the exclusive jurisdiction of the CFTC, or a swap subject to the specific CFTC regulatory regime established under the Dodd-Frank Act.

In June, the CME sued Chairman Selig and the CFTC, seeking to vacate approval of Kalshi’s Bitcoin perp and to invalidate the agency’s perp policy statement. The CME argues that Dodd-Frank imposes specific requirements for swap contracts, and the CFTC cannot avoid them by simply reclassifying a “swap” as a “futures contract”.

The CME makes a wide range of legal arguments, spanning statutory interpretation, including the question of what constitutes a futures contract; the CFTC’s inability to unilaterally depart from its previous position that perps are swaps; the CFTC’s failure to provide a reasoned explanation for its definitional change required under the APA; and the allegation that the CFTC violated the APA’s prohibition against arbitrary and capricious agency actions. Public comments were not invited because the policy changed with a policy statement, not formal rulemaking.

Some of these new product offerings require expansion of blockchain-based infrastructure, and may also involve registrations of new exchanges as DCMs on which to trade them. Many new digital asset products demand “near-continuous” and round-the-clock trading, settle instantly through “atomic settlement” using smart contracts, and feature automated leverage alongside programmatic liquidations. In readiness to offer such products, the number of CFTC-registered DCMs has grown to 30, with 12 added since 2025. While many of these new products offer significant new financial opportunities, they also give rise to a range of profound risks that remain largely unknown and poorly understood.

Technologies

This year’s article would be incomplete without considering the huge advancements in information and communication technologies driving and shaping the markets. Major new technologies are being developed and rolled out across product design, clearing, and compliance. They carry the possibility of extraordinary opportunities with unknown risks for both industry and government. How we choose to manage these technologies will be definitional for “The Golden Age”.

In an industry that counts success in microseconds and nanoseconds, execution time is critically important. Execution is constrained in many ways, and especially by “latency”. Latency is the delay in turnaround time between initiating an action or sending a request and receiving the response – and it is a stubborn and persistent challenge in the derivatives industry.

Modern trading firms require advanced technologies, and always seek faster and faster turnarounds. Leading-edge technologies are starting to address the constraints of traditional electronics and are accelerating the processes that could enable massive-scale AI. 2026 has seen many advances, including some that root in the field of physics. I will briefly highlight application of photonics to high-frequency trading, those not-so-blue-sky quantum computing advances, and the “elephant-bot in the room”: agentic AI.

Photonics

“Electronic computers” rely on electrical currents that are based on electrons moving through copper wires and semiconductor channels, but their movements also generate high resistance and waste heat. The emerging field of photonics, however, uses the fundamental constituents of light – that is, photons instead of electrons. Due to the lack of mass and charge in photons, photonic computing can bypass the thermal and physical constraints that occur during transmission in traditional electronics.

Photonics offers solutions to data processing and transmission bottlenecks. Photonic computing can achieve massive bandwidth and significantly reduced latency. In addition, “wavelength-division multiplexing” (WDM) allows for simultaneous routing of massive data streams on different light wavelengths. This can enhance parallel processing capabilities that have been estimated at up to a thousandfold.

Photonics is not yet available as a general replacement for conventional electronics, but it is being explored for financial market analytics, trading systems, and risk management, potentially bridging electronic computing with emerging quantum approaches.

Quantum computing

Quantum computing is advancing rapidly, with the potential to reshape digital infrastructure by leveraging quantum mechanics to manipulate “qubits”, the basic unit of information in a quantum computer. While fault-tolerant quantum computers do not yet exist, early-stage quantum technologies are beginning to show potential in narrowly defined computational tasks.

US derivatives markets are among those at the forefront preparing for quantum computing capabilities to help power next-gen AI, implement post-quantum cryptographic defences, and protect the long-term integrity of clearing and market infrastructures. This is done through quantum-assisted optimisation and simulation. Quantum computing also has specific implications for blockchain vulnerability and security.

Agentic AI

According to ISDA polling, 30% of derivatives industry participants already use agentic AI and 56% want to use it for applications like volatility forecasts, model payoffs, hedging strategies, and credit risk, back-office processing, and fraud detection. Market participants and trading firms are incorporating “agentic AI” to autonomously co-ordinate, plan and execute tasks, and correct errors. Agentic AI can determine what actions to take to get to the assigned task. Models can pull from disparate source of structured and unstructured data. “Agents” can reason, check, and respond blisteringly fast to support complex derivatives trading workflows; observe markets; identify opportunities; choose products, and execute transactions.

High bandwidth memory advances and AI accelerators make real-time, complex multi-asset pricing execution possible, with huge reductions in response times. AI inference costs – that is, the costs incurred in quickly receiving good answers to questions – dropped by 95% to 98% from 2024 to 2026. Reduced costs make it possible to use AI in workflows, continuous operations, and large dataset processing.

Redefining Risk Management

Taken together, advances in computing and AI have re-energised discussions about the adequacy of our risk management. The derivatives business has always been a risky business, but now with “always-on” 24/7 business models, increasing contract volumes, shorter time to complete trades or make decisions, and integration of blockchain, we need to completely redefine our understanding of derivatives risk. Who or what controls the controllers? How, where, and when can systemic exposures be effectively managed?

Exchange shutdowns

Exchange shutdowns pose serious risks for the derivatives markets, and two have occurred since my last article. Exchange outages from hardware overheating, software glitches, or algorithmic cascades expose severe operational risks to centralised derivatives-matching engines during critical liquidity events.

The SEC and the CFTC are rolling out updates to address exchange systemic resilience, compliance delays, and market infrastructure. Before 2010, electronic network crashes caused operational headaches but not market shutdowns. Trading desks could route orders to floor traders in open-outcry trading pits. But, now, trading pits have been decommissioned, and the markets are entirely electronic. There is no fallback position with traders available to execute transactions if computers shut down.

In response, the SEC issued Regulation SCI (Systems Compliance and Integrity), imposing stiff financial penalties on non-compliant “SCI entities”. An “SCI Entity” now includes security-based swap data repositories (SBSDRs) and high-volume proprietary broker-dealers that execute options or Treasury transactions. SCI entities are subject to the strict IT backup standards traditionally reserved for securities exchanges. Despite these safeguards, physical infrastructure vulnerability remains a severe systemic threat.

Electronics

This risk was realised in November 2025 when the Globex system of the Chicago Mercantile Exchange (CME) shut down. The cooling units at the data centre housing the core electronic matching engines failed. Expensive silicon chips were fried, and Globex was closed for ten hours. In the transition to 24/7 trading regimes, traditional electronic systems face operational capability limits that photonic technologies may help to address.

Cryptographic security

The impending technological advancement of quantum computing is a double-edged sword for blockchain networks. Understanding quantum computing is critical. In March, a Google AI-led research collaboration warned that advanced quantum systems could break the elliptic curve cryptography that protects digital assets much earlier than had been previously estimated – accelerating an already urgent “cryptographic arms race”.

Two June 2026 Executive Orders underscore related US government goals. First, to seek a dominant global position for US Quantum Information Science and Technology (QIST), and second to effectively defend against future quantum cryptographic threats. Although quantum computers cannot currently execute cryptographic attacks, the likely arrival – even of a few machines – has monumentally disruptive implications for the security of blockchain networks, crypto derivatives, and 24/7 clearing and settlement.

Agentic AI

Agentic AI offers opportunities but also poses very real concerns around models, accountability, regulation, and market stability. What starts out as a small error can result in large losses before anybody realises the error needs correcting.

Many human-run industries remain wary about AI, the derivatives industry being one of the few exceptions to this generality. “Loss-of-control” situations occur when AI agents will bend rules and ignore constraints, renewing industry and government calls for AI-related cyber-security investments to prevent and contain agents “going rogue”. According to Dawn Song from UC Berkeley, if organisations adopt autonomous agents, they increase the potential “attack surface” for hackers.

Executive Order 14365, “Ensuring a National Policy Framework for Artificial Intelligence”, issued in December 2025, sets out demands for technological governance. In response, the CFTC launched an Innovation Task Force (March 2026) to develop a clear regulatory framework – or “rules of the road” –  under the CEA to balance AI efficiencies and autonomous trading systems against systemic cyber and financial stability threats.

Agentic AI cannot (yet) run amok, inventing novel pork belly recipes in quant kitchens – but at a bare minimum, somebody needs to make sure we do not burn the bacon. In all sincerity, questions are raised when technological risks overlap with human-centred risks across industry and government. 

Conclusion

The founders of the Constitution created three separate branches of government to operate independently and to provide checks and balances on abuses of governmental power. During the Gilded Age, this separation was tested by the captains of industry and their undue political influences. Many important checks and balances – including independent regulatory agencies – were first developed during the Gilded Age and became important models going forward.

As I discussed above, two recent Supreme Court decisions – Loper Bright and Slaughter have dramatically hampered the functioning and autonomy of both the SEC and the CFTC.

Loper Bright shifts power from the agencies to the courts, while Slaughter shifts power from the agencies to the President. The SEC and CFTC – along with other agencies and the legislative branch – are being squeezed from both sides by the judicial and the executive branches. New limits have been placed on Congress’s ability to create independent agencies and give them regulatory authority. As a result of Loper Bright, the derivatives regulators do not have the judicial deference they once had as to how they interpret ambiguous statutory language.

As a result of Slaughter, control of agency leadership and policy has been transferred to the President. In 2026, the SEC and the CFTC are now less independent, with fewer institutional safeguards to protect them against presidential power, and the result is regulatory instability in policies and leadership. There will be less continuity from one US administration to another. Judges also have greater control over an agency’s statutory authority, and interpretation of its regulatory powers.

While the Supreme Court views Loper Bright and Slaughter as restoring the appropriate constitutional separation of the three branches of government, critics see these case decisions as attacks on safeguards against unchecked presidential power and as inappropriate checks on Congressional authority. These cases weaken institutional safeguards, and diminish the independence of the US regulators.

The battle lines are being drawn, and they run right through the derivatives markets.