(Bloomberg) — Hong Kong’s government is preparing to issue its first policy statement on the use of artificial intelligence in finance, according to people familiar with the matter, a move that could catalyze the technology’s use in areas ranging from trading to investment banking and cryptocurrencies.
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The city’s Bureau of Financial Services and Treasury plans to release a framework of guidelines to address the ethical use of AI and general principles for applying the technology in the financial world, the people said, asking not to be identified discussing private information. Officials are still drafting the document while gathering feedback from the industry, they said. Details are still subject to change in the coming weeks, they said.
While the details remain unclear, the document is broadly intended to signal Hong Kong’s support for AI as governments around the world grapple with the technology’s potential. Local regulators are also trying to clear up some of the confusion around AI in Hong Kong, a city caught in the tech conflict between the U.S. and China. Many consumers and businesses can’t easily access some of the hottest services, like OpenAI’s ChatGPT or Google’s Gemini, because U.S. tech leaders likely fear running afoul of the Chinese territory’s rules, analysts say.
Officials plan to unveil their statement in late October at Fintech Week, one of the industry’s largest annual gatherings.
“The government and financial regulators are closely monitoring market developments and global experiences to promote the responsible use of AI in the financial sector,” a spokesperson for the Office of Financial Services and the Treasury said in a statement. “The government will publish a policy statement later this year, setting out its policy position and approach on the application of AI in the financial market.”
Hong Kong is looking to reposition the thriving city as a financial hub as foreign investors fret over Beijing’s growing grip and eye other locations like Singapore. The Southeast Asian nation has been ahead of the curve in developing guidelines on everything from crypto to fintech to AI.
Meanwhile, Wall Street is exploring ways AI could reshape the operations of financial firms. Banks around the world have been advertising for AI talent and are using the emerging technologies for tasks such as reviewing customer portfolios and tracking down potential defaulters.
A policy statement would provide general guidance and would not be immediately applicable. Yet such statements have become a popular way for the Hong Kong administration to declare its commitment to competitive new policy areas such as Web3 and family offices. The expected statement suggests that regulators will take a favorable stance toward AI applications and issue more concrete rules later, the people said.
The policy statement also aims to consolidate various detailed guidelines from individual banking and securities regulators, the people said. It will be a separate effort from the government’s technology office, which is focused on developing its own AI tools, they added.
Some Hong Kong financiers have recently grown concerned about the difficulty of accessing such services, as well as regulatory uncertainties over their use by companies, according to people familiar with the matter.
This global financial capital is a no man’s land for AI: Tech Daily
U.S. companies such as OpenAI, Anthropic and Alphabet Inc.’s Google don’t make their chatbots available here, while those from Chinese tech giants such as Baidu Inc. and ByteDance Ltd. can be difficult or impossible to use.
There are workarounds, though. One major U.S. vendor, Microsoft Corp, is making its tools accessible in the city. And other means such as VPNs, or virtual private networks, can be used to mask users’ locations in order to access chatbots.
Last year, the city’s Securities and Futures Commission updated guidelines on the use of external data storage providers to cover public and private cloud services, virtual and conventional data centers.
In August, the Hong Kong Monetary Authority and government-backed tech hub Cyberport launched a regulatory sandbox to allow banks to test new use cases for next-generation AI. It is not yet clear when the regulations will allow such applications to be used in real-world cases. The new AI guidelines are expected to provide unified rules and clarify such uses.
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