On September 15, the Congressional Research Service released a report outlining the impact of AI tools in capital markets, highlighting several AI use issues pertinent to capital markets that Congress may want to consider when legislating.
The report detailed common uses of AI in capital markets, including investment management and execution, client support through robo-advisers and chatbots, regulatory compliance such as anti-money laundering and counterterrorism financing reporting, and back-office functions like productivity support and risk management. While AI could offer benefits, the report highlighted policy concerns for Congress, such as the need for auditable and explainable capabilities in financial models, questions of accountability when AI systems fail, risks related to market concentration, and maintaining data availability, reliability and security.
The report further noted how AI could unknowingly promote fraud, market manipulation, and cyberattacks. It emphasized costs associated with AI adoption, including investments and ongoing operating expenses. The report also noted the SEC’s recently launched AI task force, which aims to enhance innovation in the agency’s operations and regulatory oversight.
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