A paper from the Organisation for Economic Co-operation and Development (OECD) on generative artificial intelligence (GenAI) in the financial sector says regulators have a key role in ensuring its responsible development. The paper notes GenAI in financial markets has seen “slow-paced deployment” due to the highly regulated nature of the sector. However, it says regulators need to ensure GenAI’s deployment is “consistent with the policy objectives of securing financial stability”, protects consumers, and promotes market integrity. According to the paper, GenAI’s broader implementation could exacerbate existing risks and introduce new challenges to the financial markets. It noted policymakers play a “crucial role” in supporting innovation in the sector while ensuring that financial market participants are duly protected and that markets around such products and services remain fair, orderly and transparent. The paper said regulations are required for robust risk management, including the management of third-party risks, as well as stringent model governance, transparency and other obligations. The OECD also pointed out that financial service providers have the legal responsibility to act in the best interest of the clients. This also means protecting them from risks of deceptive outputs, misinformation or other risks to financial consumers related to GenAI tools.
Financial regulatory frameworks safeguard market integrity and ensure consumer protection against risks associated with #GenAI’s adoption, noted an @OECD paper.https://t.co/0HjuU9QqdY
— Regulation Asia (@RegulationAsia) December 27, 2023
