The European Securities and Markets Authority (ESMA), the EU's financial market regulator and watchdog, has issued a statement offering initial guidance to companies using artificial intelligence (AI) to provide investment services to retail customers.。

While the adoption of AI is still in its infancy and uneven across companies and member states, its potential impact on corporate behaviour and retail investor protection could be significant.。Importantly, whether decisions are made by people or AI-based tools, the responsibility for a company's decisions remains with the governing body.。In order to ensure compliance with the obligations of the Markets in Financial Instruments Directive II (MiFID II) and to protect the interests of investors, ESMA has decided to issue a statement providing some initial guidance for investment firms using AI, stressing that the best interests of their clients must always be prioritised.。

When using AI, ESMA expects companies to comply with relevant MiFID II requirements, particularly in terms of organizational aspects, business conduct and their regulatory obligations in the best interests of their customers.。

While AI technologies offer potential benefits to companies and customers, they also carry inherent risks, such as:

• algorithm bias and data quality issues;
• the opacity of the company's employee decisions;
• over-reliance of companies and customers on AI decisions;
• Privacy and security issues related to the collection, storage, and processing of the large amounts of data required by AI systems。

Under MiFID II requirements, investment firms may use AI for customer support, fraud detection, risk management, compliance, and investment advice and portfolio management support for companies。

ESMA and national authorities (NCAs) said they will continue to monitor the use of AI in investment services and the relevant EU legal framework to determine if further action is needed in this area.。