Join Our Telegram channel to stay up to date on breaking news coverage
The U.S. Securities and Exchange Commission (SEC) is set to introduce new regulations for brokerages using artificial intelligence (AI) in client communication.
The aim is to address conflicts of interest associated with AI technology, with the rules expected to be implemented by October.
The proposed regulations will encompass predictive data analytics and machine learning.
SEC chair Gary Gensler has consistently expressed concerns about brokers’ recommendations and their alignment with clients’ best interests.
He has also highlighted the potential conflicts of interest arising from specific technologies used by financial professionals.
In a recent statement, Gensler emphasized the importance of the SEC adapting its work to the changing landscape of technology, markets, and business models.
He has previously examined conflicts of interest related to these technologies. Robo-advisers, brokerages, and wealth managers have been exploring personalized approaches to target consumers through tailored marketing, pricing, and prompts.
U.S. Government Examines AI Impact on Finance Industry
While significant media focus has been on AI tools, the U.S. government has yet to establish a comprehensive approach to these new technologies. Rohit Chopra, the nation’s leading consumer watchdog, warned that AI could lead to increased fraud and discrimination within the finance industry if not effectively controlled.
The @CFPB has proposed a rule on home appraisals computed by algorithms. This is one of many steps we are taking to ensure that automated systems and models, including those marketed as “artificial intelligence,” are not used as way to evade the law. https://t.co/uREpxWgfYO
— Rohit Chopra (@chopracfpb) June 1, 2023
The SEC’s semi-annual rule-writing agenda includes a proposal to restrict AI brokerage usage. The proposal aims to make more robo-advisers register as money managers, subjecting them to additional regulations. Additionally, the SEC is considering requiring large brokers to calculate their customer reserve deposit requirements daily instead of weekly.
Gensler Warns of Potential Financial Crisis Due to Widespread AI Use
SEC Chair Gensler recently raised concerns about the potential for the next financial crisis from firms’ widespread use of artificial intelligence. He has warned about the potential “systemic risk” posed by the increasingly widespread use of AI technology.
Gensler expressed his concerns about the financial system’s potential future “fragility” due to its reliance on data aggregators and AI platforms. He also emphasized the possibility of a crisis in 2027 that could be attributed to an over-dependence on a single foundational level known as “generative AI.” Generative A.I. systems, like the widely used ChatGPT tool, can produce advanced text, images, and sound outputs.
Many government officials, including Mr. Gensler, have maintained a skeptical stance toward the technology despite businesses embracing it for its potential to increase productivity. In the financial sector, artificial intelligence has been utilized by banks and other institutions to streamline tasks like compliance and customer due diligence. However, Mr. Gensler emphasized the importance of closely scrutinizing these AI systems, even with their potential efficiency benefits.
Safety Standards and Licensing for Advanced AI
The CEO of OpenAI, Sam Altman, has urged Congress to establish safety standards and licensing requirements for advanced AI. He stressed the importance of understanding how risk management is handled in AI systems and underscored the potential for biased decisions.
Furthermore, U.S. regulators have repeatedly warned about the possibility of AI unintentionally amplifying biases present in its designers or training data. Law enforcement agencies have recently committed to addressing AI discrimination and bias in lending, housing, and hiring areas. Smaller jurisdictions have also taken measures to regulate the use of AI technology.
Support for the Creation of A.I Advisory Board
In light of this, UN SEC-GEN Guterres has drummed up support for creating the AI advisory board to prepare for various initiatives effectively. Guterres emphasized the need to address AI concerns and misinformation on digital platforms. He proposed an international code of conduct to address these issues.
UN Secretary-General Antonio Guterres on Monday backed a proposal by some artificial intelligence (#AI) executives for the creation of an international AI watchdog body like the International Atomic Energy Agency. https://t.co/HsZPoZzPpI pic.twitter.com/ifFWpKUypN
— People’s Daily app (@PeoplesDailyapp) June 13, 2023
While acknowledging the alarming nature of artificial intelligence, the U.N. Secretary-General cautioned against diverting attention from the existing harm caused by digital technology. He emphasized the need to address and mitigate the damage already inflicted by digital technology on our world.
Related News
- Hinman Documents Unsealed! Ripple Price Surges Almost 10% With $1.8 Billion Increase In Market Value
- SEC Asks Coinbase for More Time to Clarify Crypto
- Music NFT Platform Sound.XYZ Integrates Ethereum Layer-2 Token Optimism
Most Searched Crypto Launch - Pepe Unchained
- Layer 2 Meme Coin Ecosystem
- Featured in Cointelegraph
- SolidProof & Coinsult Audited
- Staking Rewards - pepeunchained.com
- $10+ Million Raised at ICO - Ends Soon
Join Our Telegram channel to stay up to date on breaking news coverage