International: IOSCO issues AI and machine learning guidance
The International Organisation of Securities Commissions ('IOSCO') issued, on 25 June 2020, proposed guidance ('the Proposed Guidance') to help members regulate and supervise the use of artificial intelligence ('AI') and machine learning by market intermediaries and asset managers and is requesting comments on the same. In particular, IOSCO noted that regulators are increasingly focused on the use and control of AI and machine learning in the financial markets to ensure that potential risks are mitigated and consumer harm is prevented. Furthermore, the Proposed Guidance seeks to ensure that market intermediaries and asset managers have the following measures including appropriate governance, ensuring staff are equipped with adequate knowledge and skills, the development of robust testing processes, and appropriate transparency and disclosures. In addition, the Proposed Guidance outlines the potential risk areas for the use of AI and macine learning including cybersecurity risks in outsourcing, client identification and monitoring, third-party vendor management, and securing customer personal information.
Comments may be submitted until 26 October 2020.