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The
European Securities and Markets Authority (ESMA) on Thursday set
out how financial firms regulated in the 27-country bloc can use
AI in day-to-day operations without falling foul of the EU's
MiFID securities law.
While AI holds promise in enhancing investment strategies and
client services, it also presents inherent risks, and the
potential impact on retail investor protection is likely to be
significant, ESMA said.
"Importantly, firms' decisions remain the responsibility of
management bodies, irrespective of whether those decisions are
taken by people or AI based tools," ESMA said.
"Central to the use of AI in investment services is the
unwavering commitment to act in clients' best interest, an
overarching requirement which applies irrespective of the tools
that the firm decides to adopt in the provision of services."
The statement covers not just instances where AI tools are
developed or adopted by a bank or investment firm itself, but
also the use of third-party AI technologies, such as ChatGPT and
Google Bard, with or without the direct knowledge and approval
of senior management, ESMA said.
"The firm's management body should have an appropriate
understanding of how AI technologies are applied and used within
their firm and should ensure appropriate oversight of these
technologies," ESMA said.
The statement focuses on compliance with MiFID, and is separate
from the EU's landmark rules on AI that come into force next
month, setting a potential global benchmark for a technology
used in business and everyday life.
Efforts are also underway at the global level by the Group of
Seven economies (G7) to put in place guardrails to develop the
rapidly evolving technology safely.
(Reporting by Huw Jones; Editing by Sharon Singleton)
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