In a recently released statement, the European Securities and Markets Authority (ESMA) and the Portuguese Securities Market Commission (CMVM) expressed concerns regarding the usage of artificial intelligence tools in investment decision-making. “Despite their innovative potential, these tools can produce inaccurate or misleading advice, leading to inadequate investment decisions and significant financial losses,” the statement read.
While acknowledging that AI tools “can offer significant support in various areas,” ESMA and CMVM highlight that “they also carry a set of risks.” To address these concerns, they have put forth several recommendations for investors, including seeking multiple perspectives, avoiding get-rich-quick schemes, considering regulatory aspects, understanding potential risks, and safeguarding personal privacy.
The agencies urge for a “cautious approach” when utilizing these tools, emphasizing their ability to provide highly persuasive advice. They note that public AI tools accessible online “are neither authorized nor supervised,” “have not been explicitly designed to offer investment advice,” “often operate in ways not fully understood even by their developers,” and “are not subject to the same stringent standards and rules as authorized entities.”
Regarding trading signals, the statement highlights that trading in financial instruments is “inherently risky” and predicting price movements is “extremely difficult, if not impossible.” The use of AI-generated forecasts carries significant inaccuracy, potentially leading to substantial financial losses if relied upon exclusively. Therefore, investors are urged to conduct “thorough research” at all times.
