Global Correspondence
GFMA Letter on Key Considerations for AI in Capital Markets
GFMA submitted a letter to the leadership of the Financial Stability Board (“FSB”), Basel Committee on Banking Supervision (“BCBS”), International Organization of Securities Commissions (“IOSCO”), Committee on Payments and Markets Infrastructures (“CPMI”), and Organisation for Economic Co-operation and Development (“OECD”) regarding key considerations for artificial intelligence (“AI”) in capital markets.
The letter includes a set of industry views concerning key considerations regarding the use of, and the regulatory approach to, AI in capital markets. Key messages include that:
- Firms have utilized “traditional” forms of AI for many years, and consequently have developed governance processes to oversee, manage and monitor application of AI, in accordance with existing regulatory obligations.
- AI has the potential to further transform financial services to make them safer, more efficient, accessible, and tailored to consumer needs. This will bring important benefits to consumers and the wider global economy.
- New AI-specific regulation has the potential to stifle innovation in the financial sector. A fragmented regulatory approach, with overlapping regimes mandating different requirements, could end up being a major risk for financial entities when using AI, and could prevent stakeholders from realizing its genuine benefits.
- As AI evolves and new use cases develop, a technology-neutral, principles-based, and outcomes focused approach must be prioritized. Global authorities can apply and adapt proven existing standards and frameworks where applicable, rather than create new AI-specific standards.
- AI is neither a narrow nor static technology. If the authorities utilize a principles-based and outcomes-focused approach by referring to AI characteristics, it will be less necessary to develop a single consensus definition of AI.
- Should gaps in existing standards be identified as new AI use cases gain prominence, from a financial stability perspective, standard setters should explore whether it would be sufficient to update existing governance frameworks or if new guidance may be necessary.
The letter also includes two appendices to support the global standard setters in their analysis on this topic:
- Appendix I includes a table highlighting existing technology-neutral functional policy areas applicable to AI.
- Appendix II includes a table highlighting jurisdictions with AI-specific regulations, legislation, and frameworks.
– 28 May 2024 –
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