According to the Financial Industry Regulatory Authority (FINRA), financial institutions are allocating significant resources to developing applications that use artificial intelligence (AI) to offer innovative products, increase revenues, cut costs and improve customer service. For example, broker-dealers are currently evaluating and implementing AI-based applications to assist with customer-facing, investment and operational activities. As a result of these developments, FINRA’s Office of Financial Innovation has met with a number of market participants to learn more about the use of AI in the securities industry. Following these discussions, FINRA published a white paper addressing the following topics:

  • Defining the scope of AI;
  • Areas in which broker-dealers are evaluating or using AI (including communications with customers, investment processes and operational functions); and
  • Regulatory considerations for AI-based tools.

FINRA has requested comments in response to the white paper, as well as comments related to AI applications and their implications for FINRA rules.

The white paper is available here.