SEC Chair Gary Gensler Confirms Use of AI Technology for Financial Surveillance
Summary:
The United States Securities and Exchange Commission (SEC) Chair, Gary Gensler, revealed that the agency is utilizing artificial intelligence (AI) technology to monitor the financial sector for signs of fraud and manipulation. This use of AI was confirmed during a Senate hearing, where Gensler discussed the agency's need for increased funding to support their technology budget for emerging technologies. While the SEC's use of AI is not surprising, it is notable that they have not issued a public declaration highlighting this technology. The agency has previously published reports on AI and algorithmic trading, suggesting the use of machine learning algorithms.
The United States Securities and Exchange Commission (SEC) Chair, Gary Gensler, revealed in a Senate oversight hearing on September 12 that the agency has been utilizing artificial intelligence (AI) technology to monitor potential fraud and manipulation in the financial sector. While Gensler had previously outlined the benefits of integrating AI into the SEC's surveillance operations during a speech at the National Press Club on July 17, the agency had not publicly disclosed the explicit use of this technology until now. In response to a question posed by Senator Catherine Cortez Masto about the SEC's approach to AI, Gensler confirmed that the agency already employs it in market surveillance and enforcement actions to detect patterns in the market. This use of AI has led the SEC to request increased funding from Congress to enhance its technology budget for emerging technologies in 2024. Although it may be expected that the SEC utilizes AI tools as part of its operations, it is surprising that the agency has not issued a formal, public declaration regarding its use. However, it is important to note that except for the requirement to report cybersecurity incidents enacted into law by President Biden in March 2022, there are no apparent legal obligations for agencies to publicly disclose the internal use of new technologies in the United States. While Gensler did not provide specific details about the type of AI used by the SEC, the agency has published multiple reports analyzing the use of AI and algorithmic trading in financial markets. It is reasonable to assume that the SEC employs machine learning algorithms capable of analyzing large volumes of data to identify abnormal patterns or anomalies.
Published At
9/12/2023 8:00:00 PM
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