SEC Creating Regulations to Address AI ‘Conflicts of Interest’
In a speech on Monday, the head of Wall Street’s leading regulatory body stated that they are in the process of creating regulations to oversee the utilization of artificial intelligence on trading platforms. This move is necessary as it presents a potential threat of conflicts of interest.
According to Chairman Gary Gensler, the US Securities and Exchange Commission also needs “new thinking” to address financial stability challenges posed by the use of technology such as predictive analytics and machine learning.
Gensler’s remarks are part of a broader effort by the U.S. government to promote what officials call “responsible” innovation while managing the threats emerging technology poses to public safety.
If a trading platform’s AI system considers the interests of both the platform and its clients, “this could lead to conflicts of interest,” Gensler said, according to a copy of prepared remarks, adding that he had tasked SEC staff with recommending new regulatory proposals. deal with this.
Artificial intelligence could also strengthen the interconnectedness of the world’s financial system, which current risk management models may not be ready for, Gensler said.
“Many of the financial stability challenges that AI may pose in the future…require new thinking about system-wide or macro-level stability policy interventions.”
Gensler’s remarks echoed statements he has made in recent months about managing the risks posed by the use of artificial intelligence in finance.
According to the SEC’s latest agenda for new regulatory development, officials are considering potential proposed rules that could be released later this year to manage potential conflicts of interest in the use of artificial intelligence and machine learning by investment advisers and broker-dealers. .
