The SEC’s Wrongheaded AI Crackdown

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"... But under the guise of minimizing conflicts of interest, the SEC now proposes requiring advisers and broker-dealers to write new internal procedures and to log all uses of technologies relating to predictive data analytics for agency review. If left unchallenged, the new rules would hamper the American financial industry’s world-beating innovation. ...

Those costs are almost certain to be substantial, given the proposal’s capacious definition of a covered technology—“an analytical, technological, or computational function, algorithm, model, correlation matrix, or similar method or process that optimizes for, predicts, guides, forecasts, or directs investment-related behaviors or outcomes in an investor interaction.” If computing power is involved, the proposal’s text suggests, the SEC would like to know about it. These overbearing rules will leave all but the most established, robustly resourced, and well-staffed advisers and broker-dealers at a clear disadvantage in competing for customers’ business, further entrenching the largest players and raising barriers to entry. ..."

The SEC’s Wrongheaded AI Crackdown | City Journal Federal regulators announce a plan that would hamper financial innovation.