By Elena Eyber, J.D.
The Market Risk Advisory Committee’s (MRAC) Future of Finance subcommittee held a meeting on March 15, 2024, at the CFTC’s Washington, D.C. headquarters. The CFTC Commissioner Kristin N. Johnson's issued an opening statement, highlighting the significant potential and associated risks of artificial intelligence (AI) in various sectors, including finance. Johnson emphasized AI's positive impact on fields such as medicine and agriculture, as well as its efficiency in financial markets for trade execution, pricing prediction, and risk management.
However, Johnson warned about the potential perils of AI integration, citing a real-world example of a scam involving deep fake technology. Johnson stressed the need for proper oversight and regulation to address concerns such as governance, bias, transparency, and ethical considerations.
Further, Johnson discussed the White House's Blueprint for an AI Bill of Rights, outlining principles to guide safe AI deployment, and the establishment of an AI Safety Institute within the Commerce Department to develop guidelines and standards for AI risk management. Additionally, Johnson mentioned international efforts and standards regarding AI governance.
Commissioner Johnson advocated for a principles-based regulatory framework, greater transparency in AI adoption by financial institutions, and heightened penalties for AI-related fraud. Johnson proposed creating an inter-agency task force to facilitate information sharing and support the AI Safety Institute.
The meeting included panels on AI in financial markets, implications of AI on current market regulations, AI-related risks, and future trends in AI adoption and regulation. Various experts from both public and private sectors participated in these discussions, addressing key aspects of AI's role in finance and regulatory responses.