The Managed Funds Association (MFA), an organization representing the global alternative asset management industry, recently sent a letter to the House Financial Services Committee, urging policymakers to account for differences among financial institutions and artificial intelligence (AI) use cases.
The global alternative asset management industry includes hedge funds, private credit funds and hybrid funds. Alternative asset managers operate differently from large banks, and the organization urges Congress to avoid one-size-fits-all requirements that ignore the differences as well as the varying risks of different AI applications.
“Alternative investment advisers are deploying AI to improve portfolio management, risk controls, and investment research on behalf of the pensions, foundations, and endowments they serve,” Bryan Corbett, MFA President and CEO, said. “It is critical to maintain the flexible, principles-based approach to regulation that has long fostered innovation as AI continues to unlock new opportunities throughout the asset management industry. Existing SEC (Securities and Exchange Commission) regulation and investment advisers’ fiduciary duties provide a comprehensive framework for governing the development and use of these important tools.”
Alternative asset managers are using AI for compliance, cybersecurity, investment and operational functions.
A separate regulatory regime for AI would be a departure from how securities laws have long accommodated technological change, MFA said.