September 3, 2020

Marcia E. Asquith
Office of the Corporate Secretary
Financial Industry Regulatory Authority
1735 K Street, NW
Washington, D.C. 20006-1506

Re: Response to Request for Comments on FINRA Report, “Artificial Intelligence (AI) in the Securities Industry”

Dear Ms. Asquith:

The Securities Industry and Financial Markets Association (“SIFMA”)1 welcomes the opportunity to present its views to the Financial Industry Regulatory Authority Inc. (“FINRA”) in response to FINRA’s request for public comment on its recent report discussing the deployment of artificial intelligence (“AI”) in the securities industry (the “AI White Paper”).2

SIFMA believes that the AI White Paper is a thoughtful, detailed, and productive step forward in an ongoing process of developing the industry’s understanding of the opportunities and challenges posed by AI technologies. The paper is especially valuable in describing and emphasizing the fast pace of ongoing innovation, the significant consumer benefits associated with AI deployment, and the extensive investment and attention that firms are already devoting to managing the risks associated with these new technologies and capabilities.

Part I of the comments that follow addresses the need for an appropriate approach to regulation of issues related to AI technologies and processes. It specifically addresses FINRA’s request for comment (p. 20) regarding “areas where guidance or modifications to FINRA rules may be desired to support adoption of AI applications while maintaining investor protection and market integrity.” In short, for the reasons set out in that section, issuing guidance or modifying FINRA rules at this juncture is not necessary. Firms operating in the securities industry are already subject to complex and often overlapping regulatory frameworks, and adding additional regulations would risk curtailing the innovation, consumer benefits, and compliance and risk management capabilities provided by AI—the very benefits that the AI White Paper itself identifies.