Regulatory Considerations Regarding Accelerated Use of AI in Securities Markets

This paper examines the uptake of AI in securities markets and recent approaches to its regulation and supervision, complementing work by IMF and standard setters’ initiatives. It highlights the adoption of AI across financial services, the growing use of GenAI, and the associated risks, including data, performance, new cybersecurity threats, and broader financial stability risks. While AI offers benefits, its adoption warrants caution given the potential for material risks that could undermine financial sector’s reputation and soundness. The paper highlights how authorities are responding, providing a stocktake of regulatory and supervisory developments. While the paper compares advanced economies (AEs) and emerging markets and developing economies (EMDEs), it highlights the significant heterogeneity within EMDEs, in terms of technology adoption and capacity. Finally, the paper summarizes key take-aways and identifies practices that authorities could consider adopting as part of their supervisory frameworks.