Regulators need to get ahead of those who are disrupting the financial markets, according to the head of the industry watchdog.
Nikhil Rathi, chief executive of the Financial Conduct Authority, has warned that artificial intelligence has raised the level of risk, with changes in technology sometimes happening “within weeks”.
Speaking at a City of London dinner, Mr Rathi urged the authorities to work in partnership to tackle the growing threats, such as this week’s attack on Google Cloud that took down numerous websites, including Daily Business. Banks and delivery firms were among others hit by the attack.
“The threats to market integrity are as serious as I have seen them,” he said. “Unprecedented volatility, concentration risks, new forms of market abuse and rampant cross-border financial crime: fast-emerging technologies are putting these on steroids.”
Rathi was responding to warnings from global regulators over the threat that rapid advancements in frontier AI were posing to key infrastructure such as payments and trading. It comes amid concerns that AI laboratories are sacrificing safeguards in their race to develop more complex technology.
Bank of England governor Andrew Bailey has called on watchdogs to take firmer control of the rise of these technologies which are putting the entire system at risk.
Speaking after last night’s dinner, Mr Rathi acknowledged that the technology was providing opportunities and transforming lives, making access to products easier, but there needed to be a swift response to dealing with the “bad actors” destabilising the market.
“We have a whole range of tools and legislation and we have to make sure we are using those as effectively as possible,” he said.
“The scale of what we are dealing with requires a level of partnership and mobilisation that we have never seen before.
“Every time there is an incident it needs to be reported and lessons learned but we also need investment in recovery.
“It is important that everybody thinks about what they need to do in those circumstances so they can recover as quickly as possible.
“Speed is an issue. Technology is moving within weeks, sometimes faster than that. Our systems, making rules take longer and we need to think about how we get ahead of them and disrupt them.”
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