Promoting Investor Success Industry Innovation and Efficiency
Dated: September 10, 2024
Executive Summary
The development and adoption of artificial intelligence (“AI”) in the financial services industry has garnered significant attention in recent years. As federal and state policymakers and regulators continue to assess the potential impact of AI in the financial services industry, the Securities Industry and Financial Markets Association and its Asset Management Group (collectively, “SIFMA”) have developed this white paper to highlight key points that it believes will be useful to consider as part of the ongoing discussions related to the use of AI in the industry.
Key Points
- Laws and regulations governing the financial services industry should remain focused on addressing activities and outcomes. This technology-neutral approach encourages innovation within the industry without sacrificing the safety of financial markets.
- Existing laws and regulations governing the financial services industry have proven effective in addressing the use of emerging technologies in the industry, including AI.
- There is no need to adopt a precise definition of AI at this time because AI is an evolving technology, and adopting a technology-neutral approach to the use of AI will likely render a definition unnecessary.
- Policymakers and regulators should collaborate with firms in the financial services industry to understand the uses of AI and its related benefits and risks. Additional regulatory action should only be considered if the existing laws and regulations do not address novel risks that are identified.
- Any regulatory action should be flexible enough to continuously adapt to evolving technology. Prescriptive rules can lead to inconsistent regulations across jurisdictions and will also deter innovation that could benefit all market participants, including investors.
- Existing laws and regulations recognize that management at financial services firms are best positioned to identify emerging risks and the impact they could pose to their businesses. Firms should continue to retain this flexibility when determining how to address the use of AI and other emerging technologies.
- Policymakers should assess how other existing areas of law and regulation apply to the use of AI in the financial services industry and consider strategies for mitigating potential risks, including in the areas of federal data privacy legislation and copyright ownership.
See Also
Press Release: SIFMA, SIFMA AMG Support Existing Risk-Based Rules to Govern AI (September 10, 2024)