The SEC recently proposed new rules that would change the way broker-dealers and investment advisers manage conflicts of interest associated with their use of predictive analytics, including artificial intelligence (AI).
The proposed rules prescriptively describe the process these financial firms must take for evaluating, testing, and documenting a technology covered by the rules, as defined in the proposal. Many technologies would be included, from AI used to forecast models to spreadsheets.
If adopted, these rules have the potential to dissuade the industry from employing new investing technology that promises significant benefits to both investors and firms.