Commentary on big data and artificial intelligence risk has tended to focus on the risks associated with treating data subjects and customers unfairly or unlawfully, principally under GDPR. There has been less focus on new wholesale market misconduct risks. That is surprising given the exponential growth in the use of alternative data and AI in the financial markets and given the regulatory focus on market misconduct since the financial crisis.
On 13 February 2019 Julia Hoggett, Director of Market Oversight at the FCA, gave a speech to AFME in which she remarked on the evolving market misconduct risks associated with big data and AI. Firms and senior managers need to understand these new risks which can give rise to serious criminal and civil liability.
In this briefing we consider two specific risks: insider dealing risk associated with big data and the manipulation risks associated with AI.