SEC Commissioner Uyeda Cites Benefits of AI for Financial Markets and Regulators

SEC Commissioner Mark T. Uyeda touted the benefits of new technologies for markets, investors and regulators. He argued that "[j]ust because something is new does not mean that regulators should fear it and preclude financial institutions from utilizing it."

In remarks before the 2023 North American Securities Administrators Association Annual Meeting, Mr. Uyeda highlighted advancements made in financial markets using new technologies. He said that artificial intelligence ("AI") technologies are being used by firms to (i) execute trades, manage portfolios and develop trading strategies; (ii) reduce operational costs; and (iii) increase compliance to detect fraud, monitor data and identify risk indicators. He underscored that advancements made by firms will also provide benefits to investors by offering personalized products and services to meet customer needs.

Further, Mr. Uyeda stated that AI can "reduce the burden" for state and federal regulators while it supports compliance. He suggested the use of AI technologies to organize required data reported by market participants, such as Exchange Act filings, FOCUS reports and Form ADV filings. He also said that AI can support the identification of "potential areas of risk and concern, . . . assist with policymaking decisions and prevent scenarios where evidence of a fraud slips through the cracks." Mr. Uyeda stated that "thoughtful regulators will consider methods for risks to be mitigated, rather than prohibited."