Executive reveals FMA's strategic approach to AI in financial markets
At a recent forum in Da Nang, Vietnam, Daniel Trinder (pictured), the FMA’s executive director of strategy and design, articulated the agency’s proactive stance on AI integration within financial services.
Trinder’s speech at the 9th Annual EU-Asia Pacific Forum on Financial Regulation highlighted the importance of robust governance to manage the complex risks AI presents to market integrity and consumer protection.
Insights on AI’s impact and risks
The potential of AI to significantly alter the financial landscape is enormous, but so are the risks, Trinder said. He delineated the major concerns into categories such as market manipulation, systemic risks, and consumer protection.
FMA’s recent research, led by chief economist Stuart Johnson, echoed these sentiments, pointing out that AI’s rapid evolution necessitates a balanced approach to maximise benefits while mitigating risks.
Regulatory challenges and solutions
Advanced AI technologies pose new types of market manipulations and systemic risks, such as increased market volatility and cybersecurity threats. These issues, according to Trinder, require an evolved regulatory framework to ensure that financial markets remain stable and secure.
Governance as a key to responsible AI adoption
Trinder stressed the importance of governance in AI applications, a sentiment also reflected in FMA’s research findings.
Johnson highlighted the need for strict AI governance and ethical usage to safeguard against potential misuse and ensure data quality.
Both leaders advocated for clear roles and responsibilities within financial institutions to oversee AI throughout its lifecycle.
Future directions and policy recommendations
Looking forward, FMA, which recently announced its 2025 strategy, is committed to clarifying regulatory expectations to foster AI's safe adoption.
This involves not only enhancing the governance frameworks but also supporting financial institutions in implementing effective risk management practices.
The aim is to achieve a harmonious balance where technological advancements do not outpace ethical considerations and regulatory capabilities.
By addressing these challenges head-on, FMA aims to facilitate a financial sector that is both innovative and secure, benefiting from AI while protecting the interests of all stakeholders involved.
