This year, FMQ is all about the future of financial markets, innovation, and uncertainty — and our regulatory panel got right to the heart of that theme. Mark Uyeda, Commissioner, U.S. Securities and Exchange Commission kicked off by saying that the financial markets are made for having economic growth, job growth and innovation, and that while the SEC is there to protect investors, it’s not a merit regulator. “It’s not up to the government to decide what ideas are great, what ideas are bad,” Uyeda said. Instead, regulators should be looking at those who lie, cheat and steal, since those bad actors can tar the entire market and deter others from entering the market.
Artificial intelligence is at the forefront of many conversations regarding market innovation. Sandra Lee, Deputy Assistant Secretary, U.S. Department of the Treasury Financial Stability Oversight Council said that while AI is really exciting, the FSOC did identify increased use of AI in financial markets as something that should be monitored. It’s important to keep an eye on risks like cyber risk and compliance risk, as well as build market participants and regulators’ expertise around these tools.
Caroline D. Pham, Commissioner, U.S. Commodity Futures Trading Commission said it’s key for regulators to stay “technology-neutral.” There is no way for regulators to look in a crystal ball and see every technological innovation coming down the pike — nor should they, she added. As new products and new markets evolve, regulators should be able to accommodate that new innovation.