Reported by Editorial Staff of Traders Magazine

When top financial market regulators on both sides of the Atlantic deliver speeches about the same technology within six days of each other, that’s a strong sign that technology is an important topic. 

This is the case with generative artificial intelligence, which Financial Conduct Authority Chief Executive Nikhil Rathi addressed on July 12 and U.S. Securities and Exchange Commission Chair Gary Gensler spoke about on July 17. 

Rathi cited several potential benefits of AI for financial services, such as improved financial models, more and better information for retail investors, and “the ability to tackle fraud and money laundering more quickly and accurately and at scale.”

Gensler called AI “the most transformative technology of our time,” and noted it’s already being used in the financial industry in compliance, trading algorithms, sentiment analysis, and other functions.

Tony Sio, Head of Regulatory Strategy and Innovation with Nasdaq Anti-Financial Crime, assessed the regulatory perspective on AI, and what it may mean for market surveillance, in a July 26 TradeTalks interview.

Sio noted that the SEC’s Gensler cited fraud and insider trading as potential positive use cases for AI. One con might be explainability, for example in that brokers who are obligated to act in the best interest of their clients will have to prove AI models do that. 

Read full report: https://www.tradersmagazine.com/tech-tuesday/tech-tuesday-ai-gains-traction-as-a-surveillance-tool/