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The Future of AI in Capital Markets

Author

Listed:
  • Adrian, Tobias
  • Mosk, Benjamin
  • Wu, Jason

Abstract

Generative Artificial Intelligence is starting to more significantly impact capital market trading activities, on the heels of the broad deployment of machine learning that has already revolutionized trading over the past two decades. The impact of Gen AI is characterized by its ability to process vast amounts of data, allowing market participants to translate new information quickly into price signals. While many current changes appear more evolutionary, more revolutionary shifts may emerge, potentially catching policy makers off guard. Gen AI can amplify existing risks but can also introduce entirely new risks. Rapid adoption could challenge whether existing surveillance and regulatory frameworks are sufficient. However, AI could also help regulators keep pace with growing market complexity, though skill gaps may hinder SupTech adoption.

Suggested Citation

  • Adrian, Tobias & Mosk, Benjamin & Wu, Jason, 2025. "The Future of AI in Capital Markets," CEPR Discussion Papers 20748, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20748
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    File URL: https://cepr.org/publications/DP20748
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    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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