SEC Chair Warns AI "Herding" Could Drive Markets "Off an Inadvertent Cliff"

Hive Mind Last month, chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler warned that it’s “nearly unavoidable” that AI will lead to financial economic crisis. Now, at an event with The Messenger, Gensler has reiterated those fears, saying AI’s growing role in the financial sector could create a “herding effect” that could drive entire markets “off an inadvertent cliff.” He reasons that because AI is costly to develop, most firms are likely to depend on a handful of existing models, fostering a “monoculture.” Whatever decisions those models make could end up informing huge parts of the financial world — potentially leading the entire economy down the same doomed path. “A smaller asset manager can’t build the big models. You got to rely on someone else’s models,” Gensler said at The Messenger’s AI Summit on Tuesday, as quoted by Business Insider. “There are natural economics that will lead to monocultures, that there’ll be base data sets or base models, and large parts of the financial sector will be relying on it… trading on it, underwriting on it,” he added. Large Lemming Models AI tools are useful for traders and investors because they can process huge amounts of data in real time, picking up on trends and patterns that may go overlooked by the human eye. In fact, Gensler said that even the SEC uses AI in its “examination and enforcement and economic work.” To banks, the technology is especially handy at fraud detection, and has already been used…SEC Chair Warns AI "Herding" Could Drive Markets "Off an Inadvertent Cliff"

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