The role of artificial intelligence and big data in investment management

Kishore K Yalamanchili and Saurav Banerjee

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

Artificial intelligence (AI) and big data (also referred to as alternative data) are the topics du jour across a broad spectrum of industries. These technologies have been adopted by different sectors to various degrees, highlighted by developments such as self-driving cars and chess playing computers that hit the headlines. However, one area where there is relatively low visible activity and which has scope for substantial penetration is the investment management sector. This chapter will therefore discuss the potential role of AI and big data in different aspects of investment management. Applications in different asset classes, portfolio management, trading, risk management and compliance practice areas are explored. Furthermore, we evaluate the potential impact such technologies can have for the future of investment management, including the ramifications for related compliance and regulatory oversight. The regulators may have to develop new rules for regulating the use of AI- enabled processes after careful experimentation with the use of such processes in collaboration with the industry.

ARTIFICIAL INTELLIGENCE

Artificial intelligence can be defined as intelligence

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