ASIC is considering its role in the rising tide of AI use. 

The Australian Securities and Investments Commission (ASIC) has called for greater clarity and regulation in the field of generative artificial intelligence (AI).

While acknowledging the significant potential of AI in driving efficiency and risk management in the financial sector, ASIC Chair Joe Longo has expressed concerns about the lack of consensus on how to regulate AI.

Speaking at a recent financial conference, Longo said ‘explainability’ is needed in AI systems, stating that if a particular system cannot be effectively explained, its use cannot be justified. 

He also highlighted the risks associated with the rapid advancements in generative AI, which require new considerations and controls.

ASIC says it is monitoring global initiatives on AI regulation, including the European Commission's proposed laws and efforts in the UK, China, and Canada. 

Longo has urged local industry participants to contribute their views to the ongoing Safe and Responsible AI in Australia discussion paper.

While ASIC claims to recognise the importance of embracing technological advancements, Longo cautioned against rushing into innovations without proper controls and governance. 

He stressed the role of businesses in setting the pace and the need for robust governance, operational resilience, and information security measures.

Longo also announced ASIC's plans to expand automated order processing rules for futures markets to reflect AI developments, along with updating electronic trading guidance. 

He says ASIC will continue to closely monitor the application of AI, including crypto tech, digitization of assets, carbon markets, FX, and lending.