The International Organization of Securities Commissions (IOSCO) publishes a report on artificial intelligence in financial markets

An overview of the uses, challenges, and risks of AI in financial markets

Titled "Artificial Intelligence in Capital Markets: Use Cases, Risks, and Challenges", the report has been developed by IOSCO’s Fintech Task Force (FTF), and aims to provide members of the organization with a shared understanding of the issues, risks, and challenges related to the increasing use of AI in financial services and products. It aims to analyse the challenges to investor protection, market integrity, and financial stability. It also seeks to assist regulators and legislators in their reflections on the evolution of regulatory frameworks.

Drawing on feedback from IOSCO members and industry professionals, the report provides an in-depth analysis of current practices, and presents the risks and challenges associated with AI use.

Key conclusions

The report draws five key conclusions:

• Financial actors are increasingly using AI to support decision-making processes in applications such as automated investment advice (robo-advising), algorithmic trading, investment research, and sentiment analysis. AI is also being used to enhance surveillance and compliance functions, including anti-money laundering (AML) and counter-terrorism financing efforts.
• Market participants are leveraging recent advancements in AI to improve their operations and internal processes through task automation, optimized communication, and enhanced risk management functions.
• The primary risks associated with the use of AI systems in the financial sector include malicious uses of AI, concerns related to the integrity of models and data, concentration of models, outsourcing and third-party dependence, and risks arising from human-AI system interactions.
• Industry practices are evolving: A number of financial institutions are integrating AI into their existing risk management and governance structures, while others are establishing AI-specific governance frameworks.
• Regulatory responses to the use of AI in the financial sector are also evolving. Some regulators are applying existing regulatory frameworks to AI-related uses by market participants, while others are developing new frameworks to address the unique challenges posed by AI.

Active participation of the AMF in developing the report

Through its participation in the Fintech Task Force’s working group, the AMF played an active role in the development of this report, reaffirming its commitment to support innovation while ensuring investor protection and the stability of financial markets. This involvement is part of the AMF’s strategy regarding the anticipation of technological developments, and to encourage a responsible development of AI tools in the financial sector.

In this context, the AMF continues its work on AI and its engagement with international counterparts and financial market participants to ensure a suitable framework while preserving market fairness and transparency.

Public consultation and call for contributions

As part of this publication, IOSCO is launching a call for responses from stakeholders, including financial market participants, AI developers, academics, researchers, or anyone that shows interest in these topics.

Comments and proposals can be submitted to the following email address: AIWGConsultation [at] iosco.org (AIWGConsultation[at]iosco[dot]org), until April 11, 2025.

The AMF strongly encourages French financial sector participants to contribute their response to this consultation, in order to help further the discussion on the regulation and use of AI in capital markets.