Regulating Artificial Intelligence in Finance: Putting the Human in the Loop

40 Pages Posted: 22 Apr 2021 Last revised: 4 Jun 2021

See all articles by Ross P. Buckley

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC); European Banking Institute

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Brian Tang

The University of Hong Kong - Faculty of Law

Date Written: April 1, 2021

Abstract

This article develops a framework for understanding and addressing the increasing role of artificial intelligence (‘AI’) in finance. It focuses on human responsibility as central to addressing the AI ‘black box’ problem — that is, the risk of an AI producing undesirable results that are unrecognised or unanticipated due to people’s difficulties in understanding the internal workings of an AI or as a result of the AI’s independent operation outside human supervision or involvement. After mapping the various use cases of AI in finance and explaining its rapid development, we highlight the range of potential issues and regulatory challenges concerning financial services AI and the tools available to address them. We argue that the most effective regulatory approaches to addressing the role of AI in finance bring humans into the loop through personal responsibility regimes, thus eliminating the black box argument as a defence to responsibility and legal liability for AI operations and decisions.

Keywords: artificial intelligence; machine learning; financial regulation; black box

Suggested Citation

Buckley, Ross P. and Zetzsche, Dirk Andreas and Arner, Douglas W. and Tang, Brian, Regulating Artificial Intelligence in Finance: Putting the Human in the Loop (April 1, 2021). 43 Sydney Law Journal 43 (2021) , University of Hong Kong Faculty of Law Research Paper 2021/016, Available at SSRN: https://ssrn.com/abstract=3831758

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC) ( email )

Universitaetsstr. 1
D-40225 Düsseldorf
Germany
+49 211 81 15084 (Phone)
+49 211 81 11427 (Fax)

European Banking Institute ( email )

Frankfurt
Germany

Douglas W. Arner (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Brian Tang

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
224
Abstract Views
827
rank
169,747
PlumX Metrics