In a speech to the National Press Club, SEC Chair Gary Gensler said recent advances in generative AI increase the possibility of institutions relying on the same subset of information to make decisions.

Gensler said the significant demand for data and computing power could mean only a few tech platforms may dominate the field, narrowing the field of AI models companies can use.

He said: “AI may heighten financial fragility as it could promote herding with individual actors making similar decisions because they are getting the same signal from a base model or data aggregator,”

Gensler said. He added that the rise of generative AI and other deep-learning models “could exacerbate the inherent network interconnectedness of the global financial system.”