Chapter 3: Advances in Artificial Intelligence: Impact on Capital Market Activities
Chapter 3 uses new analytical work and results from global outreach to market participants and regulators to explore recent developments in AI and generative AI and their impact on capital markets. Evaluate. Evidence from labor markets and patent filings shows that the adoption of AI in capital markets is likely to increase significantly in the near future, and that AI will continue to improve the market through algorithmic trading and stronger and more powerful use of new trading and investment strategies. This suggests that major structural changes may occur. . AI has the potential to reduce some of the financial stability risks by enabling better risk management, deepening market liquidity, and improving market oversight by both participants and regulators. At the same time, new risks are emerging, including increased market speed and volatility under stress, increased opacity and oversight challenges for non-bank financial institutions, and increased operational risk due to reliance on a small number of major third-party AI service providers. may occur. , increasing cyber and market manipulation risks. Although many of these risks are addressed by the existing regulatory framework, important new and unanticipated developments may arise. Additional policy responses should be considered to ensure that relevant authorities are responsive to these potentially transformative changes.
