The head of the US Securities and Exchange Commission (SEC), Gary Gensler, announced that the agency is working on regulations to govern the use of artificial intelligence (AI) on trading platforms. Gensler acknowledged that AI poses a risk of conflicts of interest and highlighted the need for innovative approaches to address the challenges it presents to financial stability.
Gensler’s remarks reflect the US government’s commitment to promoting responsible innovation while also managing potential threats to public safety associated with emerging technologies. He expressed concerns about conflicts of interest when AI systems on trading platforms prioritize the platform’s interests over those of its customers. To tackle this issue, Gensler has assigned SEC staff the task of recommending new regulatory proposals.
Furthermore, Gensler pointed out that AI has the potential to magnify the interconnectedness of the global financial system. He emphasized that the current risk management models may not be equipped to handle the complexities posed by AI. Therefore, he called for a fresh perspective on system-wide or macro-prudential policy interventions.
The SEC is actively considering rule proposals to govern the use of AI and machine learning by investment advisers and broker-dealers, with a focus on addressing conflicts of interest. These proposals could be announced later this year, according to the SEC’s agenda for developing new regulations.
By taking these steps, the SEC aims to strike a balance between fostering innovation and ensuring the integrity of the financial markets. Gensler’s statements align with his previous remarks on managing the risks associated with AI in finance.
Overall, the SEC’s focus on regulating AI in trading platforms reflects the growing importance of responsible and ethical AI implementation in the financial sector.
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