The use of artificial intelligence on trading platforms is being addressed by Wall Street’s top regulator through the development of new rules. Chair Gary Gensler of the US Securities and Exchange Commission stated in a speech on Monday that these technologies, such as predictive analytics and machine learning, also present challenges to financial stability, requiring “new thinking” to be implemented.
This emphasis on responsible innovation aims to manage the potential threats that these emerging technologies pose to public safety. Gensler highlighted that conflicts of interest can arise when AI systems on trading platforms consider both the platform’s interests and those of its customers. To tackle this, he has directed SEC staff to propose new regulatory measures.
Gensler also noted that AI has the potential to amplify the interconnectedness of the world financial system, which may be beyond the capabilities of current risk management models. As a result, system-wide or macro-prudential policy interventions will need to be reconsidered to address these future challenges to financial stability.
These remarks by Gensler echo his previous statements on managing risks associated with the use of AI in finance. The SEC is currently contemplating potential rule proposals for governing the use of AI and machine learning by investment advisers and broker-dealers, aiming to mitigate conflicts of interest. These proposals may be unveiled later this year, according to the SEC’s agenda for developing new regulations.
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Deepak Sen is a tech enthusiast who covers the latest technological innovations, from AI to consumer gadgets. His articles provide readers with a glimpse into the ever-evolving world of technology.
