The GDF board developed this response to the IOSCO Consultation Report on Artificial Intelligence in Capital Markets: Use of Cases, Risks, and Challenges as part of our ongoing commitment to supporting the work of IOSCO, as well as the GDF mission to support the development of best practices and governance standards across the digital finance industry.
The attached letter summarises GDF’s feedback to the consultation report and our key points of feedback are:
1. We support the development of compliant AI systems for use in financial services, and support proportionate oversight mechanisms to mitigate risks;
2. We support IOSCO’s emphasis on robust and transparent AI design, and recommend the incorporation of Explainable AI (XAI) principles to enhance accountability and mitigate the risks posed by black-box models;
3. We caution against biases in financial data, particularly those stemming from historical, demographic, and market stability trends; and
4. We encourage IOSCO to also consider the inclusion of small language models in future initiatives of the AI Working Group.