{"id":5271,"date":"2023-11-01T02:48:42","date_gmt":"2023-11-01T02:48:42","guid":{"rendered":"https:\/\/connectwithfund.com\/economy\/ai-could-spark-the-next-financial-crisis-sec-chair-gary-gensler-says\/"},"modified":"2023-11-01T02:48:43","modified_gmt":"2023-11-01T02:48:43","slug":"ai-could-spark-the-next-financial-crisis-sec-chair-gary-gensler-says","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=5271","title":{"rendered":"AI could spark the next financial crisis, SEC Chair Gary Gensler says"},"content":{"rendered":"
\n

Securities and Exchange Commission Chair Gary Gensler has plenty to worry about as he seeks to bring order and fairness to America\u2019s $100 trillion capital markets, and there are few issues that cause him more concern than the spread of artificial-intelligence technology.\u00a0<\/p>\n

In an exclusive interview with MarketWatch, the regulator argued that generative AI technologies in the vein of ChatGPT have the potential to revolutionize the way we invest by leveraging large data sets to \u201cpredict things that were unimaginable even 10 years ago,\u201d but that these new powers will come with great risks.\u00a0<\/p>\n

\n

\u201cA growing issue is that [AI] could lead to a risk in the whole system,\u201d Gensler said. \u201cAs many financial actors rely on one or just two or three models in the middle \u2026 you create a monoculture, you create herding.\u201d\u00a0<\/p>\n

<\/p>\n

<\/p>\n

\n Gary Gensler: AI could pose \u2018a risk in the whole system.\u2019
\n <\/figcaption><\/figure>\n<\/p><\/div>\n

This herding effect can be dangerous if there is a flaw in the model that might reverberate through markets during a time of stress, causing abrupt and unpredictable price changes in markets. Gensler pointed to the examples of cloud computing and search engines as markets for tech products that have quickly become dominated by one or two major players, and he said he worries about similar concentration in the market for AI technology.<\/p>\n

The regulator said this issue is especially difficult because of the fragmented nature of the U.S. regulatory apparatus, which relies on the SEC to oversee securities markets while other agencies have responsibility for banks or commodity markets.\u00a0<\/p>\n

\u201cThis is more of a cross-entity issue,\u201d Gensler said. \u201cThat\u2019s the challenge for these new technologies.\u201d<\/p>\n

As SEC chair, Gensler has escalated his regulatory agency\u2019s crackdown on the cryptocurrency industry in 2023 by launching lawsuits against Binance and Coinbase, the two largest digital asset exchanges in the world by trading volume. The SEC alleges the two companies are operating unregistered securities exchanges in the U.S., but the companies say they are not running afoul of securities laws. <\/p>\n

Gensler is simultaneously pushing forward the most fundamental market-structure reform measures in a generation. Gensler lands on The MarketWatch 50 list of the most influential people in markets.\u00a0<\/p>\n

But AI is another issue that Gensler is starting to ring alarm bells over. There\u2019s a little bit of irony because the promise of AI has largely been responsible for the S&P 500\u2019s
\n SPX
\n gains in 2023. The SEC chair said that his agency is already contemplating new rules to regulate artificial intelligence. For example, the SEC proposed a rule this summer to address conflicts of interest associated with stock brokers and investment advisors that leverage algorithms to predict and guide investor decisions through their smartphone applications or web interfaces.<\/p>\n

The industry is pushing back on the proposal, arguing that existing rules are sufficient to prevent harm to investors and that a new rule would prevent brokers from using technology to create a better experience for clients.\u00a0<\/p>\n

Gensler said that the SEC benefits from such feedback, but still believes that regulators must be vigilant about the impact of these so-called predictive analytical tools. \u201cIf they do that to suggest a certain movie on a streaming app, okay,\u201d he said. \u201cBut if they\u2019re doing that about your financial help \u2026 we should address those conflicts.\u201d<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Securities and Exchange Commission Chair Gary Gensler has plenty to worry about as he seeks to bring order and fairness to America\u2019s $100 trillion capital markets, and there are few issues that cause him more concern than the spread of artificial-intelligence technology.\u00a0 In an exclusive interview with MarketWatch, the regulator argued that generative AI technologies in the vein of ChatGPT have the potential to revolutionize the way we invest by leveraging large data sets to \u201cpredict things that were unimaginable even 10 years ago,\u201d but that these new powers will come with great risks.\u00a0 \u201cA growing issue is that [AI]<\/p>\n","protected":false},"author":1,"featured_media":5272,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38],"tags":[],"class_list":["post-5271","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy"],"yoast_head":"\nAI could spark the next financial crisis, SEC Chair Gary Gensler says | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Securities and Exchange Commission Chair Gary Gensler has plenty to worry about as he seeks to bring order and fairness to America\u2019s $100 trillion capital\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/connectwithfund.com\/?p=5271\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"AI 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