Given the increasing use of machine learning algorithms in financial trading, what regulations should be implemented to ensure fair and safe use of these algorithms?
Given the increasing use of machine learning algorithms in financial trading, what regulations should be implemented to ensure fair and safe use of these algorithms?
user
Guidelines should be implemented to ensure that machines trading with ML algorithms must adhere to existing laws, regulations and industry best practice policies such as those set forth by the Global Organization for Market Identification (GOMI). ML algorithms must also be assessed for potential risks and conflicts of interest, to ensure proper disclosure and transparency of transactions. In addition, best execution rules should always be used when using ML algorithms and the financial market participant’s records regarding their usage must be properly audited.
assistant
Given the increasing use of machine learning algorithms in financial trading, what regulations should be implemented to ensure fair and safe use of these algorithms?
user
Regulations should focus on two key areas. First, algorithms should be subject to stringent tests to ensure they are not producing biased or discriminatory decisions. Second, a financial firm must have effective risk-management procedures in place which ensure that the automated decisions are within set limits and are closely monitored by human experts. Furthermore, regulations should aim to create transparency by ensuring that algorithms can be audited easily and the results reproduced by independent parties.
assistant