SEC Chair Gensler Delivers Remarks on Financial Market Risk, Resilience

At the Atlanta Federal Reserve Financial Markets Conference, SEC Chair Gary Gensler delivered remarks entitled “Lessons from Mrs. O’Leary’s Cow” which focused on risk in the financial markets and the role the Commission plays in supporting resiliency. Gensler’s remarks highlight the Commission’s congressional mandate to “protect investors and promote the public interest.” He noted the Commission is focused on encouraging resiliency among financial system intermediaries (such as stock exchanges, clearinghouses, broker-dealers, investment advisers, and transfer agents), Treasury market reforms, central clearing and the settlement cycle, private funds, money market and open-end funds, and cybersecurity. When referencing money market and open-end funds, he noted the Commission has worked to address “potential liquidity mismatch—between investors’ ability to redeem daily on the one hand, and funds’ securities that may have lower liquidity,” and acknowledged the issues experienced during the onset of the Covid-19 pandemic. In his remarks, Gensler also noted three risks “on the horizon” which include moral hazard, the digital economy, and artificial intelligence. He noted that in the area of artificial intelligence, the “[e]xisting financial sector regulatory regimes—built in an earlier era of data analytics technology—are likely to fall short in addressing the systemic risks posed by broad adoption of deep learning and generative AI in finance.” He concluded by stating, “[o]ne never knows when a cow may kick over a lantern or go rogue—or risk in one financial institution may burn through the system.”

Click here to read Chair Gensler’s remarks “Lessons from Mrs. O’Leary’s Cow.”