AN INVESTIGATION INTO INSTITUTIONAL RESPONSES AND LEGAL CONCERNS AROUND AI REGULATION IN FINANCIAL MARKETS

Explosive adoption has transformed trading, risk management, and decision-making in the financial markets by introducing Artificial Intelligence (AI). Financial and regulatory problems are looming large as a result of this shift. To institutions and politicians, pressing concerns now revolve around market manipulation, the transparency of algorithms, the ethical use of AI, and compliance with current financial regulations. The dynamic legal landscape that regulates the use of AI in capital markets, including international regulatory regimes, training paradigms, and issues related to enforcement, is explored in this study. It further places a focus on the role of the financial regulatory authorities in investor protection, market stability, and fostering ethical uses of AI. A regulatory policy that effectively balances innovation and minimizes systemic risks is required, the report suggests.