Qalid Mohamed

Artificial intelligence in financial markets: systemic risk and market abuse concerns

The prospect of widespread adoption of advanced artificial intelligence (AI) models in financial markets, particularly reinforcement learning and deep learning techniques, has raised significant concerns among regulators. Although there is no clear evidence that these AI techniques are currently prevalent in trading systems, regulators warn that their future integration could heighten systemic risks and introduce novel forms of market manipulation. This Spotlight article examines whether the characteristics of advanced AI systems create new forms of market instability and explores the challenges they present to existing market abuse detection and prevention frameworks.