SEC, Congress Want Regulations to Oversee AI Experiments

Despite the Trump administration’s war on artificial ingredients, there is a big push to help artificial in another context: AI.

Late last week, the Securities and Exchange Commission announced the formation of an artificial intelligence task force. That group, led by the former director of the SEC’s strategic hub for innovation and financial technology, Valerie Szczepanik, will “accelerate AI integration to bolster the SEC’s mission,” the regulator stated. The agency is examining ways to use AI in its own operations to make it more efficient and to encourage innovation, according to its announcement. (The outcome may prove that AI has government uses beyond generating fake videos that the president has not been shy about sharing.) 

Last month, the White House also published an action plan for AI use by regulators. Relatedly, the House Financial Services Committee last week submitted a bill that would promote AI use in financial services.“As AI continues to evolve, we must understand its full impact because it will touch every part of our lives,” Sen. French Hill, R-Arkansas said in an announcement of the legislative package.

Stay in Your Sandbox

The House bill, dubbed Unleashing AI Innovation in Financial Services Act, would create innovation labs and allow the industry to launch test projects in “regulatory sandboxes.” The bill, which has bipartisan support, is a reintroduced piece of legislation from last year under the same name. Some aspects of the bill include:

• Allowing regulated entities, including those under the SEC, to test AI “in a safe way,” according to bill sponsors.
• Similar tests could be allowed under the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, National Credit Union Administration and Federal Housing Finance Agency.

This Is a Test. “The financial services industry has been using AI for decades, but companies must have the opportunity to innovate as major advancements continue to develop,” Sen. Mike Rounds, R-SD, said in an announcement. The bill “is designed to foster innovation and economic growth by providing a controlled environment where new financial products and services that use AI can be tested.”