ASIFMA publishes new papers on AI regulation and tokenized markets

The Asia Securities Industry & Financial Markets Association (ASIFMA) released two new papers, one  of which is a report by its AI (artificial intelligence) taskforce, which consists of banks, asset managers, technology firms, market infrastructure providers, and professional services firms.

The paper proposes a set of regulatory principles for AI which ASIFMA believes will form the basis for an efficient regulatory environment while also supporting customer and investor protection, market integrity and financial and systemic stability.

Laurence Van der Loo, executive director of Technology and Operations at ASIFMA, said in a statement. “We recommend that regulators take a principles- and risk-based approach to AI, giving financial institutions flexibility in how best to operationalize the principles in relation to their AI adoption, depending on the financial institution’s setup, framework, and the materiality of the AI use case. We encourage regulators to support the global development of AI within capital markets and avoid fragmentation and overregulation, which could slow down its adoption and development.”

Read the full report

In addition, ASIFMA published a paper on tokenized securities in APAC, which provides updates on developments in the space and what market participants think about the state of the market and ecosystem. It focuses on three core aspects:

1. What market participants think about the current and future state of the tokenized securities market and ecosystem
2. The challenges remaining in the adoption of tokenized securities
3. Success stories and case studies

“Financial firms and issuers have been creating pools of expertise via practical experimentation. This has led to a better understanding of the risks, costs, and benefits of the key performance metrics as well as a better understanding of the interaction between DLT networks and adjacent business process and infrastructure,” said Van der Loo in a statement.

Several challenges remain in the regulatory space, including the lack of inter-jurisdictional harmonisation and taxonomy, as well as historical paper-based requirements and processes. ASIFMA’s Tokenized Securities Taskforce recommends that regulators and authorities continue to collaborate with the industry to supply coordinated guidance on the classification of tokens and continue to work to modernize archaic paper-based requirements which undermine the adoption of tokenized securities.

From an ecosystem perspective, further education, collaboration and experimentation is needed to address the talent and liquidity gaps and reduce friction in a fragmented ecosystem and facilitate the adoption of tokenized securities.

Read the full report

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