AI-powered trading platforms are revolutionizing financial markets, executing billions of deals with speed surpassing human investors. While these systems significantly enhance efficiency and returns for institutions, they exacerbate the gap between institutional players and retail investors. The ultra-fast execution of trades often leaves retail investors at a disadvantage, raising concerns about market fairness. The opacity of AI models complicates trust, as even their creators struggle to explain decision-making processes. Regulatory bodies are emphasizing the need for transparency and human oversight to ensure accountability. Although AI can improve detection of anomalies and risk adjustments during volatility, the potential for algorithmic collusion and flash crashes remains a critical risk. To restore confidence, integrating transparent, explainable models is essential. As democratizing access to AI tools becomes a focus, the aim is to harmonize human judgment with AI efficiency, fostering a fairer financial ecosystem. Moving forward, transparency and ethics must guide AI advancements in trading.
Source link
