Summary

As the global industry association for exchanges and clearing houses (CCPs), we represent the providers of over 250 of market infrastructure that see more than $124tr in trading pass through them annually (at end-2023). Our members’ extensive experience with technology makes them well-placed to offer views on the development of Artificial Intelligence (AI). While the technological innovations and the associated concerns about managing generative AI are significant, it is important to remember that, as trusted third parties providing secure and regulated platforms for trading securities, our members are already carefully scrutinising tools and establishing controls to govern AI use.

In this paper we set out the industry’s views on AI. Namely:

  • AI has been around for a long time, but recent advances have opened new opportunities in individual productivity, operational efficiency and new product development.
  • AI use cases amongst our members are numerous and varied, among these AI can help exchanges and CCPs to:
    • detect fraud, undertake market surveillance,
    • facilitate trade execution,
    • manage risk,
    • optimise settlement,
    • provide customer support,
    • and enhance compliance.
  • The industry is cognizant of the importance of managing specific risks attached to AI. Existing risk management techniques are being applied, where applicable, to AI and our members welcome the development of new techniques.
  • Third party vendors will enable the development of AI in financial markets. The software and hardware tools used to train and serve AI models are diverse; however, there is potential for a smaller number of vendors emerging as leaders in the provision of cloud services, large language models and open-source projects.
  • Our members favour principle and risk-based approaches to regulation, where requirements are proportional to the level of risk associated with AI applications. At this point, we see no need to change regulation of exchanges and CCPs in response to the growth in AI.
  • Ultimately, government policy should encourage modernisation by promoting the use of cutting-edge technologies like AI, cloud computing, and machine learning in capital markets. This enhances market dynamics and provides better services to consumers.