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EU Watchdog Warns Financial Institutions to Take Full Responsibly When Using AI EU Watchdog Warns Financial Institutions to Take Full Responsibly When Using AI
The European Securities and Markets Authority has issued its first statement on AI. In it, the statement emphasizes that banks and... EU Watchdog Warns Financial Institutions to Take Full Responsibly When Using AI

The European Securities and Markets Authority has issued its first statement on AI. In it, the statement emphasizes that banks and investment firms in the EU cannot evade their boardroom responsibilities and legal obligations to protect customers when utilizing AI according to Reuters.

This directive outlines how financial firms within the 27-country bloc can incorporate AI into their daily operations while complying with the EU’s MiFID securities law. The point of this statement from the ESMA is to ensure client projection as greater and greater AI integration takes place.

ESMA has highlighted the potential impact on retail investor protection, underscoring the importance of maintaining rigorous oversight. “Importantly, firms’ decisions remain the responsibility of management bodies, irrespective of whether those decisions are taken by people or AI-based tools,” ESMA stated.

The agency emphasized that a firm’s commitment to act in clients’ best interests remains paramount, regardless of the technologies adopted. One thing to keep in mind though, is that the ESMA’s statement extends beyond AI tools developed internally by banks or investment firms.

It also includes third-party AI technologies, such as ChatGPT and Google Bard, whether or not their use is directly known or approved by senior management. “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 advised.

This directive aims to ensure that firms remain compliant with MiFID regulations while leveraging AI. The focus is on upholding high standards of investor protection and maintaining trust in the financial markets.

One thing to keep in mind is that the ESMA statement on AI usage in financial services is distinct from the EU’s broader AI regulations set to take effect next month. These new rules aim to establish a global benchmark for AI technology across various sectors, reflecting the EU’s proactive approach to managing the integration of AI into business and daily life.

Either way, it is clear that the EU is aiming to lock down its AI regulation frameworks in the coming years before the technology scales even more while balancing innovation to keep the bloc competitive on a global market.

ODSC Team

ODSC Team

ODSC gathers the attendees, presenters, and companies that are shaping the present and future of data science and AI. ODSC hosts one of the largest gatherings of professional data scientists with major conferences in USA, Europe, and Asia.

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