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The US Securities and Exchange Commission sets rules governing the use of artificial intelligence in trading platforms


The head of the Wall Street regulator said in a letter Monday that Wall Street’s largest regulator is developing rules to govern the use of artificial intelligence on trading platforms, which presents a conflict of interest risk.

The SEC will also need “fresh thinking” to address the challenges to financial stability presented by the use of technologies such as predictive analytics and machine learning, according to Chairman Gary Gensler.

Gensler’s comments are part of a broader US government effort to promote what officials call “responsible” innovation while managing what they say are threats to public safety posed by emerging technology.

If a trading platform’s AI system takes into account the interest of both the platform and its customers, “this could create a conflict of interest,” Gensler said, according to a copy of the prepared notes, adding that he has tasked SEC staff with recommending new regulatory proposals. to address this.

Gensler said AI could also amplify the interconnectedness of the global financial system, something current risk management models may not be prepared for.

“Many of the challenges to financial stability that AI may pose in the future…will require new thinking about system-wide prudential policy interventions.”

Gensler’s remarks echoed statements he’s made in recent months about managing risk from the use of AI in finance.

Under the SEC’s latest agenda to develop new regulations, officials are studying potential rule proposals, which could be unveiled later this year, to control potential conflicts of interest in the use of artificial intelligence and machine learning by investment advisors and brokers. .

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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.