The European Securities and Markets Authority (ESMA) has issued its inaugural statement on the use of artificial intelligence (AI) by banks and investment firms within the European Union (EU), emphasizing their boardroom responsibility and legal obligation to safeguard customers.
In its guidance released on Thursday, ESMA outlines how financial entities across the 27-country bloc can integrate AI into their daily operations while ensuring compliance with the EU's MiFID securities law.
ESMA acknowledges the potential benefits of AI in bolstering investment strategies and client services but underscores the inherent risks involved. The watchdog highlights the significant impact AI can have on retail investor protection and stresses the imperative for firms to uphold their commitment to act in clients' best interests.
The responsibility for decisions, ESMA asserts, ultimately rests with management bodies, regardless of whether those decisions are made by individuals or AI-based tools. It emphasizes the paramount importance of maintaining a client-centric approach and underscores that firms must ensure appropriate oversight of AI technologies.
The statement extends beyond instances where banks and investment firms develop or adopt AI tools internally, also encompassing the use of third-party AI technologies, such as ChatGPT and Google Bard. ESMA emphasizes that senior management should possess a comprehensive understanding of how AI is applied within their organizations and should exercise diligent oversight.
This guidance from ESMA specifically addresses compliance with MiFID and is distinct from the EU's forthcoming regulations on AI, set to take effect next month. These regulations are poised to establish a potential global standard for the ethical and safe deployment of AI across various sectors.
Moreover, global efforts, including those by the Group of Seven (G7) economies, are underway to establish frameworks ensuring the responsible development and utilization of AI technology in business and daily life.
