Abstract: In capital markets, digitisation and cloud technology have catalysed opportunities for AI by enabling firms to collect, store and analyse larger datasets from a variety of internal sources than ever before. The past year brought greater regulatory activity around AI in the UK, EU and US than in any prior year, although regulatory regimes remain disparate. When considering legal issues that arise from use of AI, facets of multiple legal fields are relevant, albeit differing between jurisdictions, such as intellectual property rights frameworks and contractual areas such as data ownership, data rights, risk and liability allocation and compliance responsibilities. In this paper, the key legal considerations and recent regulatory developments are categorised into four actionable, international themes: (i) due diligence of data as an asset; (ii) effective organisational ongoing controls; (iii) intellectual property management; and (iv) third party contract and risk management. With so much in flux, we find that the best approach for now is to consider such themes and ensure robust governance, transparency and explainability of each of the AI systems, human oversight of the AI and contractual arrangements with third party providers. Perhaps ironically, ‘getting AI right’ is currently, to a large extent, more an art of human judgement than any formulaic compliance with rules.
Keywords: artificial intelligence; machine learning; digitisation; financial regulation; legislation; intellectual property
Saija Korkala has worked in the banking industry since 2000 in several business areas including markets, client coverage and investor services. She headed SEB’s office in Delhi, India from 2017 to 2020. Saija is currently Head of Investor Services Institutions at SEB, in charge of a business unit consisting of SEB’s post-trade offering to institutional clients, encompassing products such as global custody, derivatives clearing and portfolio solution services. She is interested in digital disruption and innovation in the financial industry and its impact on the business broadly.
Björn Welander heads the Business Services Unit providing SEB’s securities products to all client segments served by the bank. Products and offerings range from global and sub custody, through fund execution to fund and portfolio administration. Björn has extensive experience of the financial industry from over 25 years of leading teams in change. He takes a particular interest in the efficiency transformation of the industry and the impact it has on people and their required competences.