The SEC Chairman, Gary Gensler, has raised concerns about the potential risks associated with AI, suggesting that unchecked AI advancements might precipitate financial disruptions.
Speaking to the Financial Times, Gensler mentioned that the widespread reliance on AI models and data aggregators, primarily formulated by tech entities, could be a recipe for economic instability.
He remarked, "It's conceivable that we'll witness a financial upheaval in the future, and retrospection might pinpoint excessive reliance on a particular AI model or data source. This could originate from the mortgage sector or even a particular stock market segment."
Emphasizing the need for a regulatory framework, Gensler articulated the challenge in establishing oversight. He highlighted that traditionally, regulations target individual financial entities, whereas the issue with AI stretches across multiple institutions that might be utilizing the same foundational models or data sources.
With the debut of ChatGPT, major financial institutions have shown a keen interest in harnessing AI's capabilities. For instance, Morgan Stanley recently integrated an AI aide, built on OpenAI's GPT4 model, designed to provide its financial advisors with streamlined market insights.
On a similar note, JPMorgan is believed to be pioneering an AI solution, dubbed 'IndexGPT', aiming to assist traders in making informed security investment decisions.
Yet, it's evident that as much as they are exploring AI's potential, some banks are also treading cautiously. Firms like Goldman Sachs, Deutsche Bank, and Bank of America imposed restrictions on ChatGPT usage within their operations earlier this year.
At the time of the report, the SEC had yet to provide a comment on the matter.
