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Gary Gensler, chair of the US Securities and Exchange Commission, cautions against the overuse of similar AI systems by brokers and money managers. He warns that this could lead to significant market turmoil, drawing a parallel to the heartbreak experienced by characters in the film 'Her.' Gensler emphasizes the importance of diversity in algorithms to prevent potential financial crises.
While acknowledging the innovative potential of AI in finance, Gensler stresses the need for regulatory measures to mitigate conflicts of interest. The SEC's proposal aims to ensure that AI tools do not prioritize brokers' interests over those of their clients. Additionally, Gensler highlights new rules that will allow for more precise trading increments, which could lower trading costs and enhance market competition.
• Gensler warns of AI risks leading to financial market turmoil.
• SEC proposes rules to mitigate AI-related conflicts of interest.
In the context of finance, AI systems are used for trading, risk assessment, and market analysis.
Gensler warns that reliance on the same algorithms by multiple market players could lead to systemic risks.
The SEC's proposal aims to address how AI tools might create such conflicts in financial advising.
The bank's operations may be influenced by regulatory changes regarding AI and trading practices.
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