SEC Chair Gensler Urges Regulators to Tame AI Risks for Financial Stability

The chair of the US Securities and Exchange Commission (SEC), Gary Gensler, has warned that the adoption of artificial intelligence (AI) on Wall Street could lead to a financial crash within the next decade. Gensler called for regulation to address the use of AI models by banks, highlighting the potential economic chaos that could arise from reliance on models developed by tech companies. He emphasized the need for cross-regulatory measures to address the widespread use of the same underlying AI models or data aggregators by multiple institutions. While banks have embraced AI, with Morgan Stanley launching a chatbot advisor based on OpenAI's GPT4, some have also restricted its use.