Head of British standards-setting body warns of rise in AI risk to financial markets
The global algorithmic trading market is expected to grow to US$18.16 billion by 2025 from US$8.79 billion in 2016 – but are the technology, artificial intelligence and electronic trading systems involved regulated strictly enough?
International capital markets have become much stronger and safer since the financial crisis a decade ago thanks to tighter regulation and the recapitalisation of banks around the world.
But the rise of technology, artificial intelligence (AI) and electronic trading is creating a whole set of new hazards, according to the head of the world’s leading standards watchdog for fixed income.
Although regulation in many countries has become more sophisticated, it has mainly focused on rebuilding the financial system by improving liquidity of banks and setting a framework for the size and scope of their business activities.
The changes were not designed, however, to address day-to-day market behaviour that “comes within the culture of a organisation”, said City of London veteran Mark Yallop, chairman of the FICC Markets Standards Board (FMSB), who was speaking in Hong Kong during the 9th annual Pan Asian Regulatory Summit.
The London-based FMSB has considerable clout. It was set up in 2015 by the Bank of England and UK Treasury in response to the Libor interest rate and foreign exchange rigging scandals and its work is aimed at improving global systems and controls in future.
