IOSCO publishes supervisory toolkit for AI regulation
Global securities regulator the International Organization of Securities Commissions (IOSCO) has published a new supervisory toolkit to support regulators overseeing the use of Artificial Intelligence (AI) in capital markets. The report highlights growing supervisory concerns around transparency, governance, disclosure, third-party dependencies, and the increasing opacity of black-box AI models.
With the use of AI models in capital markets rapidly expanding—from machine learning systems, to generative AI and emerging agentic AI—application could bring significant benefits, alongside amplified risks. The toolkit aims to address these risks, providing supervisory considerations, practical tools for oversight, and a range of indicators and data sources to support monitoring of AI use.
The report includes some noteworthy recommended supervisory measures. On disclosure, it recommends that regulators consider requiring firms to provide meaningful information to clients about AI use that affects their outcomes, and to ensure regulators themselves have sufficient visibility to exercise proper oversight: AI application is a growing area where company-level data can be interesting for regulators and investors.
The toolkit also addresses recordkeeping and audit trails, calling for AI inventories, logs of AI-generated outcomes, and explainability of AI logic; as well as operational resilience, requiring business continuity planning that explicitly accounts for AI system failures and outages.
On data quality, the report suggests that firms should be expected to demonstrate that the data underpinning AI performance is of sufficient quality and breadth to prevent bias: a recommendation with resonance here at XBRL International. Regulators are increasingly recognising that the outputs of AI systems are only as trustworthy as the data they consume, with structured, machine-readable data the gold standard for reliable AI oversight.
Following publication, IOSCO will survey emerging industry practices on governance, disclosure and recordkeeping, with responses open until 26 June.
Read the report here.
