FIA and FIA EPTA Response to the European Commission’s Targeted Consultation on Artificial Intelligence in the Financial Sector.
Innovation has long been a catalyst for growth and opportunity in derivative markets. New technologies have fostered new business opportunities, new products and enhanced the accessibility and transparency of markets for existing and new participants. Furthermore, the evolution of technology has underpinned the global reach of our markets, breaking down geographic barriers and enabling global markets to compete and thrive while safeguarding customers and investors.
We recognise that many policymakers are examining current and future uses of AI technology in the financial sector. Regulatory coordination and a globally harmonised approach to regulation is essential to avoid regulatory divergence and overlap which will create unnecessary complexities for firms whilst also acting as a barrier to AI entry and adoption, thus stifling innovation in our markets. We commend the Joint Statement3 , signed on 23 July by EU, UK and US competition authorities where regulators committed to further cooperation when monitoring the AI landscape. We are confident that coordination and cooperation between regulators will limit regulatory divergence.
In the financial services sector, market participants’ use of technology, including AI, is already subject to comprehensive regulatory scrutiny. This regulatory framework is technology-neutral and should remain so. We caution against more vertical legislation for the financial sector which will cause regulatory overlap when considered alongside existing regulation. FIA and FIA EPTA members believe that existing rules and regulations, including MiFID II, GDPR and DORA already provide the controls and oversight needed to promote and protect the integrity and resilience of European markets.
Technological advancement is not new to the futures industry. Many of our members have been working with AI for many years and are managing any associated risks accordingly, including via well-established 3 Lines of Defence operating models. Furthermore, the banking sector is already subject to strong sectoral regulation and supervision, which promotes consumer and investor protection, risk management, financial stability and wellfunctioning markets. This regulatory framework ensures that companies have robust governance arrangements in place for the use of technology, including AI, and that risks are approrpraitely managed.
Today, AI is used in areas such as risk management, fraud detection and customer service with the potential to improve decision-making and increase efficiencies. It is with this in mind that we set out our response to the Commission’s targeted consultation.
