AI developing faster than market regulator can make rules, FCA warns
Ever-faster artificial intelligence trading 'bots' may make it harder for regulators to monitor markets and prove when rules are being breached, the boss of the City regulator has warned.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA) since 2020, said the rising use of AI in the financial world meant that 'clean markets' could be more difficult to achieve in the future.
'What will clean markets mean in the future with more autonomous agents operating, trading at phenomenal speeds across the globe, and how can you prove abuse in that environment? I think that's something that's going to hit us in the next few years,' he said.
A 'clean market' is one in which prices are set by genuine supply and demand forces, not by cheating or manipulation. In a clean market every participant — whether that is big banks, hedge funds or retail investors — play by the same rules, have timely access to accurate information and cannot secretly distort prices through tricks such as insider trading, spoofing orders or spreading false rumours.
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