Circular to licensed corporations: Use of generative AI language model

The Securities and Futures Commission (SFC) has issued guidance on the responsible use of generative AI language models (AI LMs) by licensed corporations (LCs) in the financial sector. While AI LMs can enhance efficiency in client interactions and operations, they also introduce risks, including inaccuracies, biases, over-reliance on outputs, cybersecurity threats, and potential breaches of personal data or intellectual property laws. The SFC emphasizes the need for LCs to implement robust risk mitigation measures, particularly for high-risk use cases such as investment advice. LCs must ensure proper governance, model risk management, cybersecurity, and data privacy controls. Additionally, third-party providers of AI LMs must be carefully vetted, and LCs are required to notify the SFC of any significant changes related to AI LM use in high-risk scenarios. The circular is effective immediately, with LCs encouraged to review their policies to ensure compliance.

Resources: https://apps.sfc.hk/edistributionWeb/api/circular/openFile?lang=EN&refNo=24EC55