FINRA recently published a paper on the development of Artificial Intelligence (AI) in the financial services industry.  The paper follows a July 2018 request for comments from the industry on the potential challenges associated with using and supervising AI applications at broker-dealers.  Based on comments, FINRA conducted a review of the use of AI in the securities industry to better understand the applications of the technology, the associated challenges, and the measures taken by broker-dealers to address those challenges.

The paper: (i) briefly defines AI and its scope in the securities industry; (ii) provides an overview of broker-dealers’ use of AI with respect to communications with customers, investment processes, and operational functions; and (iii) discusses key factors including potential regulatory considerations, securities market participants may want to consider as they develop and adopt AI-based tools.

FINRA has requested comments on all areas covered by the paper.