Madrid, 7 September 2021
The Board of the International Organization of Securities Commissions (IOSCO) today published guidance to help its members regulate and supervise the use of Artificial Intelligence (AI) and Machine Learning (ML) by market intermediaries and asset managers, following its consultation report published in June.
The use of AI and ML may benefit market intermediaries, asset managers and investors by increasing the efficiency of existing processes, reducing the cost of investment services and freeing up resources for other activities. However, it may also create or amplify risks, potentially undermining financial market efficiency and harming consumers and other market participants.
Moreover, market intermediaries and asset managers’ use of AI and ML is growing, as their understanding of the technology evolves. The IOSCO report describes how market intermediaries and asset managers currently use AI and ML to reduce costs and increase efficiency. It notes that the rise in the use of electronic trading platforms and the increasing availability of data have led firms to progressively use AI and ML in their trading and advisory activities, and risk management and compliance functions.
Consequently, regulators are focusing on the use and control of AI and ML in financial markets to mitigate the potential risks and prevent consumer harm. In 2019, the IOSCO Board identified AI and ML as a priority.