US SEC Develops Rules Governing Use of AI in Trading Platforms

Wall Street’s chief executive is creating regulations to regulate spending artificial intelligence on trading platforms, which poses the risk of conflicts of interest, the director of the organization said in a speech on Monday.

The US Securities and Exchange Commission will also need a “new approach” to deal with the challenges of 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 the US government’s efforts to promote what officials call “good” and monitor what they say are emerging technological threats to public safety.

If the AI ​​system of the trading platform takes into account the interests of the platform and its customers, “this could lead to conflicts of interest,” Gensler said, according to the prepared statement, adding that he had given the SEC staff to propose new regulatory proposals. deal with this.

AI can also increase the connectivity of the global financial system, which cannot be planned, Gensler said.

“Many of the problems related to economic stability that AI will bring in the future … will require new thinking in terms of social or intellectual policies.”

Gensler’s comments are consistent with what he has said in recent months about managing the risks associated with using AI in finance.

According to the SEC’s most recent draft of new rules, officials are considering possible policies, which may be revealed at the end of this year, to control the possibility of conflicts related to the use of AI and machine learning by financial advisors and traders. .

© Thomson Reuters 2023

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