WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the release of Better Markets’ new Fact Sheet on AI and the financial markets.

“The field of artificial intelligence (‘AI’) is exploding. As the headlines proclaim, the race is on in the private sector to be the most successful AI company, with huge amounts of money driving the rush to be the leader in the field.  The push to incorporate AI into banking and other financial markets is equally intense. Without strong, forward-looking regulation in place, the dangers and abuses associated with AI are likely to outweigh the gains it can provide.

“As AI technologies are refined and new ones are developed, AI advocates highlight the potential benefits, including greater efficiency in financial services, lower costs, and better financial outcomes for clients.  While some of these are real, AI applications in finance also present serious risks to markets and financial stability by exacerbating existing channels of instability and creating new ones.  They are also powerful tools for investor exploitation, fraud, and other illegal conduct.

“In our fact sheet, we review the potential benefits and dangers of AI across the financial markets and provide an overview of early regulatory steps to address AI.  Our key takeaways include a call for affirmative regulatory standards beyond mere disclosure, as well as enhanced enforcement. Above all, regulators will need substantially more resources and expertise to keep pace with the efforts of a well-funded and highly motivated private sector to develop ever more advanced AI systems.  AI demands a new approach to financial regulation, one that effectively incorporates agile and forward-looking regulatory frameworks and a focus on consumer protection, ethics, transparency, accountability, and financial stability.”

You can find the fact sheet here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.