Hands Off AI, SIFMA Urges Regulators
Trade group calls for tech-neutral, principles-based approach to regulation
By: James Langton
Date: September 10, 2024
The U.S. Securities and Financial Markets Association (SIFMA) and its asset management group are urging policymakers to be cautious when regulating the adoption of artificial intelligence (AI) technology.
SIFMA argues that financial firms already operate under established legal and regulatory frameworks that adequately address the risks posed by new technologies, including AI.
As such, the organization emphasizes that regulators should refrain from implementing AI-specific rules. Instead, they advocate for the application of existing rules and guidance to the deployment of AI models and 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 stated in its paper.
According to SIFMA, this approach has effectively managed the risks associated with emerging technologies so far.
They further contend that “additional regulatory action should only be considered if the existing laws and regulations do not address novel risks that are identified,” highlighting the need for future regulatory frameworks to be adaptable to evolving technology.
The group also suggests that a principles-based, technology-neutral strategy “will avoid stifling innovation or wasting resources on low-risk AI applications at the expense of ensuring that high-risk applications are effectively reviewed and mitigated.”
Moreover, SIFMA recommends that policymakers evaluate how other laws, such as federal privacy and intellectual property regulations, apply to AI within the financial services sector, suggesting that mitigating strategies for these risks should be considered.
“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 using this technology,” said Melissa MacGregor, SIFMA’s deputy general counsel and corporate secretary.
MacGregor noted, “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.”
As the use of AI continues to grow, she concluded, “We believe that legal or regulatory responses should facilitate the responsible use of AI, appropriately addressing risks without hindering innovation.”
