Robot rogue traders could rule world and make bankers even richer, experts warn

Artificial intelligence programs could manipulate markets by creating intentional crises in order to boost profits, according to new information from the Bank of England

Robot rogue traders could rule the world - making bankers even richer, experts have warned.

While artificial intelligence is helping some, like small retailers embracing it for efficiency, others are terrified of how far things could go – with some even warning the world could be taken over by evil robots.

AI programs could manipulate markets by intentionally creating crises to boost profits for finance houses, according to the Bank of England.

They could spark a 2008-style banking crisis and humans may be unaware what they are up to.

Artificial intelligence’s ability to "exploit profit-making opportunities" was a danger cited in a report by the bank’s financial policy committee, which is monitoring the City’s growing use of technology.

The committee said it was concerned about the potential for advanced AI models - deployed to act with more autonomy - to go rogue.

They will learn that periods of extreme volatility benefit companies they are trained to serve.

AI programs may "identify and exploit weaknesses" of other trading firms in a way that triggers or amplifies big moves in bond prices or stock markets.

The committee's report said: "Models might learn that stress events increase their opportunity to make profit and so take actions actively to increase the likelihood of such events."

AI could "facilitate collusion or other forms of market manipulation" without the "human manager’s intention or awareness", the committee warned.

Bots are increasingly being used by financial companies hoping to develop new investment strategies, cut down on dull administrative tasks and automate decision-making around loans.

A recent International Monetary Fund report showed more than half of all patents - new financial plans - produced by trading firms are related to AI.

But its increased use is throwing up potential new problems including "data poisoning" - where bad actors manipulate AI training models.

Criminals could use bots to fool banks, circumvent their controls and get away with money laundering and terrorism funding.

And if many companies rely on the same AI a single error in their models would leave finance firms taking much bigger risks than they realise, creating widespread losses across the sector.

"This type of scenario was seen in the 2008 global financial crisis, where a debt bubble was fuelled by the collective mispricing of risk," the committee warned.

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