On September 12, during a Senate oversight hearing, Gary Gensler, Chair of the United States Securities and Exchange Commission (SEC), revealed that the SEC is already using artificial intelligence (AI) technologies to monitor the financial sector for potential fraud and manipulation.
Although Gensler had previously discussed the integration of AI into the SEC’s surveillance efforts in a July 17 speech at the National Press Club, this marked the first public acknowledgment of the agency’s actual use of the technology. Responding to a question from Sen. Catherine Cortez Masto about the SEC’s vision for AI use, Gensler explained that AI is currently employed in market surveillance and enforcement actions to identify market patterns.
He also noted that this was part of the rationale behind the SEC’s request for increased funding in 2024 to bolster its technology budget for emerging technologies.
While it may not be surprising that the SEC is using AI in its operations, the lack of a formal public announcement detailing this usage is somewhat unexpected. However, it’s important to note that, apart from the requirement to report cybersecurity incidents enacted by President Biden in March 2022, there seem to be no legal mandates for U.S. agencies to publicly disclose their internal use of new technologies.
Gensler did not provide specific details on the type of AI being used by the SEC, but given the agency’s numerous analysis reports on the use of AI and algorithmic trading within financial markets, it is plausible that the SEC is using machine learning algorithms to sift through vast amounts of data to identify anomalies.
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