IOSCO publishes final report on AI supervisory toolkit

The International Organization of Securities Commissions (IOSCO) has published its final report on a Supervisory Toolkit for AI Use in Capital Markets. The report is based on IOSCO's previous work, and provides supervisors with a practical, multi-phased approach to monitoring ongoing advancements in AI, the concentration and dependency on AI service providers, and AI's expanding range of applications and risks in capital markets. The report is designed to complement, not replace, national frameworks, and to offer a common foundation for supervisory dialogue between authorities and firms.

The report sets out three complementary layers to support supervisory oversight:

• Areas of supervisory consideration: the first layer outlines areas of supervisory consideration, building on the work conducted for previous IOSCO reports on AI.
• Tools for supervisory oversight of key areas: the second layer provide supervisors with more detailed tools to support evaluation across four areas of focus: (i) governance and risk management; (ii) third-party and outsourcing risk management; (iii) disclosure; and (iv) recordkeeping and reporting. It also includes practical examples of questions that supervisory authorities may find helpful when planning examinations of supervised firms' AI use.
• Indicators and data sources: the third layer provides supervisors with suggested indicators for monitoring AI adoption and use, alongside a range of engagement methods to gather relevant information.

The report is complemented by a standalone extract of the toolkit designed for direct use in supervisory activities, including on-site examinations and inspections. IOSCO has also published a survey to gather feedback on the toolkit which is open until 26 June. In their next phase, IOSCO will review emerging industry practices across governance, disclosure, and recordkeeping and reporting of AI systems in capital markets. IOSCO will also continue coordinating with other relevant international organisations, including the Financial Stability Board.

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