SEC Chief Cautions AI Finance Tools Could Create Costly conformity
-
SEC Chair Gensler warns that AI tools in finance could lead to "herding effects" that drive markets "off an inadvertent cliff"
-
He argues that because AI is expensive, firms will depend on a few major models, creating an AI "monoculture"
-
This monoculture could lead large parts of the financial sector to make the same mistakes if the models are flawed
-
Gensler acknowledges AI's benefits but says even small firms will have to depend on others' models due to development costs
-
The SEC has proposed requiring disclosure of conflicts of interest in financial firms' use of predictive analytics, but no major new AI policies yet