Financial Markets Standards Board (“FMSB”) has today published a Spotlight Review – AI in trading: A practitioners’ view of the current landscape, offering a practitioner‑focused examination of the rapidly evolving use of artificial intelligence in electronic trading systems. The review highlights emerging use cases, tangible risks, and the governance considerations required as AI adoption accelerates across global wholesale markets.
While the financial industry has long pioneered the use of technology, the deployment of more advanced AI in wholesale markets is at a relatively early stage. However, greater computational power and broader access to more sophisticated AI tools are driving industry interest and experimentation. The Spotlight Review, developed by a Working Group made up of practitioners from across FMSB Member firms, provides insight into how firms are integrating AI within trading systems, the implications for model and trading risk, and whether existing control frameworks remain fit for purpose.
The Review emphasises that despite growing sophistication, market‑facing AI does not currently operate autonomously. Instead, AI is embedded within existing trading infrastructure and remains subject to direct and indirect human supervision, supported by established algorithmic trading and model risk controls.
Existing control frameworks already manage many AI-related risks well, but they may need to be kept up to date as the scale and complexity of the application of AI in markets further develops. Clear human accountability remains essential for decisions made by AI in trading, just as with traditional systems. While autonomous AI in trading could emerge in the future and pose systemic risks, such fully autonomous trading systems are not yet present in financial markets, the Review says.
David Shelton, Global Head of the FICC Electronic Trading and FX Quantitative Strategies Group at Bank of America and Chair of FMSB’s AI Working Group said:
“This Spotlight Review establishes a practitioner, cross-industry perspective on current market-facing uses of AI, focusing on real use cases and the tangible risks we face as an industry. FMSB is a valuable forum for harnessing expertise from across global wholesale markets and I would like to thank all those Members of the Working Group who contributed to this publication.
We hope it will give firms a useful practitioner perspective to help harness and deploy AI in market-facing applications in a controlled way, using existing risk management frameworks while recognising their limits. As a Working Group we intend to continue our work in this area, with a view to establishing specific good practice guidance around model risk management and trading controls for AI models.”
Myles McGuinness, CEO of Financial Markets Standards Board Limited said:
“AI has the potential to transform the functioning of wholesale markets, but its benefits can only be realised if firms pair innovation with robust governance and accountability. This Spotlight Review provides a timely insight into how AI is currently being used in wholesale markets and the opportunities and risks at a time when market participants are actively exploring how to deploy it safely and effectively. Ensuring human oversight, strong controls and clear responsibility and accountability will be essential to sustaining fair and effective markets as the application of these technologies evolves.”
About FMSB:
- Financial Markets Standards Board (FMSB) is an industry-led, member-funded global standards body for the wholesale financial markets.
- Created out of the Fair and Effective Markets Review (FEMR) in 2015, FMSB brings together its Members from banks, investment institutions, infrastructure and information providers, corporates, pension funds, non-bank liquidity providers and interdealer brokers, to develop Standards, Statements of Good Practice and Spotlight Reviews that raise standards of behaviour, competence and awareness – to promote the fairness and effectiveness of global wholesale financial markets.
- As well as standard setting, subject matter experts from member firms debate issues in working groups and are able to benchmark their approaches against industry peers, thus helping to lift standards of conduct.
- FMSB’s full membership list is here
For more information:
Laura Conaghan
+44 (0)203 961 6150