As AI evolves faster, the Financial Conduct Authority is re-thinking what it means to be an effective regulator, with greater emphasis on competition, collaboration and system-wide risk awareness, according to a speech by Nikhil Rathi, chief executive of the Financial Conduct Authority.
According to Rathi, only financial services can provide the investment, infrastructure, and trust that will accelerate AI adoption across the economy. Yet he also claimed that the pace of change brought about by AI was challenging many of the assumptions on which markets and regulation were built.
“The AI conversation has so far focused on what generative AI can help us summarise, detect, or automate,” says Rathi.
“The next phase will be quite different: systems that don’t just support financial decisions, but coordinate and transact. In wholesale markets, this mean agentic systems supporting liquidity management, trading workflows, and other market functions. Ultimately, this means a profound step change to the structure and operation of markets.”
He also insisted that accountability for regulated activities and outcomes must remain clear.
The FCA is currently exploring agentic AI as a ‘first responder’ to speed up how it monitors wholesale markets.
“In some areas, we will still need detailed rules. But in others, traditional rule-making simply won’t work anymore,” says Rathi.
He also noted that legislation can currently take far longer than developments in markers, citing that ‘Buy Now Pay Later’ legislation took about six years to come into force.
