Financial regulation is forever running to catch up with evolving technology. There are many examples of this: the Second Markets in Financial Instruments Directive (MiFID II) sought to make up ground on the increased electronification of markets since the introduction of MiFID I; policymakers in both the EU and the UK are at this very moment defining the regulatory perimeter around cryptoassets, more than a decade after the initial launch of bitcoin; and regulators first took action against runaway algorithms long before restrictions on algorithmic trading made it into regulatory rulebooks.
Continuing this trend, on 11 October 2022, the Bank of England (BoE) and the UK Financial Conduct Authority (FCA) launched a joint discussion paper on how the UK regulators should approach the “safe and responsible” adoption of AI in financial services (FCA DP22/4 and BoE DP5/22) (the AI Discussion Paper), which is now open for responses. This follows the UK Government’s Command Paper published in July 2022, announcing a “pro-innovation” approach to regulating AI (CP 728) across different sectors.
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