U.S. securities industry lobbyists are calling on policymakers to tread lightly when regulating the adoption of artificial intelligence (AI) technology.
The U.S. Securities Industry and Financial Markets Association (SIFMA) and its asset management group issued a paper arguing that financial firms already have legal and regulatory frameworks to address the risks posed by new technologies, including AI.
As a result, SIFMA said regulators and policymakers should avoid adopting AI-specific rules. Instead, they should apply existing rules and guidance to the deployment of AI models and any other new technologies.
“Laws and regulations governing the financial services industry should remain focused on addressing activities and outcomes. This technology-agnostic approach encourages innovation within the industry without sacrificing the safety of financial markets,” the group said in its paper.
So far, this approach has proven effective in dealing with the risks posed by emerging technologies.
“Additional regulatory action should only be considered if the existing laws and regulations do not address novel risks that are identified,” SIFMA argued, adding that future regulatory action should also be “flexible enough to continuously adapt to evolving technology.”
The paper also suggested that a principles-based, technology-neutral approach to tech regulation “will also avoid stifling innovation or wasting resources on low-risk AI applications at the expense of work that needs to be done to ensure that high-risk applications are meaningfully reviewed and effectively mitigated.”
At the same time, policymakers should assess how other laws and regulations — such as federal privacy legislation and intellectual property rules — apply to AI in the financial services sector, the paper suggested, adding that policymakers should consider strategies for mitigating the risks posed by these requirements.
“The use of AI in the financial services industry is not new, but advancements in AI, particularly in generative AI, have heightened interest and concerns about the use of this technology,” said Melissa MacGregor, deputy general counsel and corporate secretary with SIFMA, in a release.
“Existing legal and regulatory frameworks are designed to be risk-based, technology agnostic and flexible enough to address the use of AI and other emerging technologies, which we believe is the right approach,” she said.
While the use of AI is expected to increase, “we believe the legal or regulatory responses to it should be aimed at facilitating the responsible use of AI, appropriately addressing risks without stifling innovation,” MacGregor said.