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US SEC Developing Some Rules to Govern Use of AI on Trading Platforms. The Securities and Exchange Commission (SEC), Wall Street’s regulator, is developing some rules to govern the use of artificial intelligence (AI) on trading platforms. The agency chief, Gary Gensler, said in a speech on Monday that AI poses a risk of conflicts of interest and that the SEC needs to “think differently” about how to regulate this new technology.

The use of technologies like predictive analytics and machine learning, according to Chair Gary Gensler, will also necessitate “new thinking” from the US Securities and Exchange Commission to address threats to financial stability.

Gensler’s comments are part of a larger US government initiative to support “responsible” innovation and manage the risks to public safety that they claim new technologies present.

According to a copy of his prepared remarks, Gensler stated that if a trading platform’s AI system takes into account the interests of both the platform and its consumers, “this can lead to conflicts of interest,” and he added that he had tasked SEC staff with developing new regulatory ideas to address this.

According to Gensler, AI may increase the interconnection of the global financial system, for which present risk management approaches might not be ready.

Many of the potential future threats that AI may pose to financial stability may necessitate new approaches to system-wide or macro-prudential policy interventions.

Gensler’s comments reaffirmed remarks he has made in recent months on minimising hazards brought on by the application of AI in finance.

The SEC is exploring potential rule proposals that may be released later this year to control the possibility of conflicts of interest in the use of AI and machine learning by investment advisers and broker-dealers, according to the SEC’s most current agenda for establishing new regulations.


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