The European Securities and Markets Authority (ESMA) emphasized the necessity for banks and investment firms to prioritize clients' best interests when incorporating artificial intelligence (AI) technologies. ESMA released a public statement on May 30, detailing the guidelines for financial service entities operating in the European Union (EU) to utilize AI within their practices. The statement specifically underlines the application of AI in accordance with the EU’s Markets in Financial Instruments Directive (MiFID) securities law, holding these institutions legally accountable for safeguarding consumers.

ESMA acknowledged the potential of AI to revolutionize retail investment services by enhancing efficiency and fostering innovation. However, the authority cautioned about the substantial impact of AI on the conduct of financial institutions and the protection of retail investors. It stressed that management bodies of firms bear the ultimate responsibility for decisions made, regardless of whether those decisions are human-driven or AI-driven.

As financial institutions embrace AI in their services, ESMA highlighted the critical requirement for a steadfast commitment to prioritize clients' interests, irrespective of the AI tools in operation. This commitment extends to both internally developed AI tools and those procured from third-party providers, including sophisticated AI chatbots like OpenAI’s ChatGPT and Google’s Gemini.

While the EU had recently enacted comprehensive AI regulations, this statement by ESMA is distinct from the EU AI Act and focuses solely on compliance with the MiFID directive. Beyond regulating AI, the EU has taken proactive steps on various AI-related matters, such as endorsing the use of supercomputers to foster the region’s AI ecosystem and supporting startups.

Furthermore, the European Blockchain Observatory and Forum (EUBOF) unveiled a report emphasizing the potential synergies between blockchain and AI integration to drive local innovation, particularly in fields like healthcare and finance where data security is paramount.