International Organization of Securities Commissions
AI and machine learning - IOSCO consults on guidance for supervision - June 2020
The International Organization of Securities Commissions (IOSCO) has published a consultation requesting feedback on guidance on the use of artificial intelligence (AI) and machine learning by market intermediaries and asset managers. IOSCO observes that the use of these technologies may benefit firms and investors, such as by increasing execution speed and reducing the cost of investment services. However, it may also create or amplify risks, potentially undermining financial markets efficiency and causing harm to consumers and other market participants.
IOSCO identifies several areas of potential risk and harm posed by the use of AI and machine learning, including: (i) governance and oversight; (ii) algorithm development, testing and ongoing monitoring; (iii) data quality and bias; (iv) transparency and explainability; (v) outsourcing; and (vi) ethical concerns.
The proposed guidance seeks to ensure that market intermediaries and asset managers have the following features:
- appropriate governance, controls and oversight frameworks for the development, use and performance monitoring of AI and machine learning;
- ensuring staff have adequate knowledge, skills and experience to implement, oversee and challenge the outcomes of AI and machine learning;
- robust, consistent and clearly defined development and testing processes to enable firms to identify potential issues before they fully deploy AI and machine learning; and
- appropriate transparency and disclosure obligations to investors, regulators and other relevant stakeholders.
The consultation period closes on 26 October 2020.
IOSCO consultation on guidance on the use of AI and machine learning by market intermediaries and asset managers
Press release
Cost Transparency Initiative
Cost Transparency Initiative - additional tools and guidance published - 19 June 2020
The Cost Transparency Initiative (CTI) has published additional tools to encourage asset managers and pension schemes to adopt its framework on the standardised disclosure of costs and charges to institutional investors, which was published in May 2019. The CTI is an independent body supported by the Pensions and Lifetime Savings Association (PLSA), the Investment Association (IA) and the Local Government Pension Scheme Advisory Board (LGPS SAB).
Following a recent survey which indicated that approximately 75% of respondent pension schemes had adopted the use of the framework to request costs information, the CTI has published several new resources, including: (i) a fiduciary management template; (ii) additional reporting fields on the liability driven investments template; (iii) real estate investment guidance on completing the templates; (iv) CTI mapping guidance for private equity investments; and (v) additional FAQs and case studies.
Press release: CTI publishes additional tools on its framework on the standardised disclosure of costs and charges
Webpage
