Artificial Intelligence (AI)
Artificial intelligence (AI) is transforming the landscape of capital markets, reshaping how firms trade, manage risk, detect fraud, comply with regulations, and serve clients. Its rapid evolution presents extraordinary opportunities for efficiency and insight, while introducing new challenges for governance, accountability, and trust.
SIFMA recognizes AI’s potential to enhance financial market operations and investor outcomes. We also emphasize the importance of responsible, transparent, and risk-based adoption that safeguards market integrity and maintains public confidence.
Key Focus Areas
Promoting Responsible AI Innovation
AI holds promise to make financial markets more efficient and inclusive, improving areas such as trading analytics, compliance monitoring, customer service, and cybersecurity defense.SIFMA supports innovation that enhances productivity, reduces risk, and strengthens investor protection, while ensuring firms maintain appropriate oversight and governance.
Advocating for a Risk-Based Regulatory Approach
AI adoption is accelerating globally, prompting policymakers and regulators to examine how best to manage potential risks. SIFMA advocates for a principle-based, risk-focused regulatory framework that:
- Prioritizes accountability for high-risk AI applications (such as decision-making in trading or credit);
- Avoids technology-specific or overly prescriptive rules that could quickly become outdated; and
- Preserves flexibility for innovation and beneficial use cases across the financial industry.
This approach aligns with existing regulatory structures that already govern data use, model risk management, and consumer protection.
Strengthening Governance and Transparency
Responsible AI use depends on strong internal controls, ethical data practices, and transparent decision-making. SIFMA supports guidance and standards that ensure:
- Effective model validation and testing;
- Clear explainability and auditability of AI-driven outcomes; and
- Robust data governance to prevent bias, misuse, or security risks.
- Accountability for AI systems under their control .
Supporting Global Coordination and Industry Dialogue
AI development is inherently cross-border. Fragmented regulatory regimes could create uncertainty, increase compliance costs, and hinder innovation. SIFMA encourages regulatory coordination and dialogue among international policymakers to ensure consistency, interoperability, and shared best practices across markets. Further, the regulation of artificial intelligence by states will further impede growth and disadvantage consumers and investors by discouraging the development of AI for efficiency and cost reduction.
The Bottom Line
AI has the potential to transform capital markets and empower investors. SIFMA supports a balanced, risk-based approach to AI oversight that fosters innovation, safeguards market integrity, and maintains the public’s trust in a rapidly evolving financial ecosystem.
