Rethinking regulation for the age of AI

The jump from "assistant" to "actor"

Rathi drew a sharp line between today's AI and what's shipping next. Generative AI summarizes, detects, automates — a faster research desk. Agentic AI "coordinates and transacts." For anyone following copy strategies, that distinction matters more than it sounds. A signal provider sending alerts and a system that auto-allocates capital across correlated strategies are not the same risk profile. I've watched traders delegate trade selection, then position sizing, then rebalancing logic — until they're effectively running a black box they can't explain to themselves. Rathi's own phrasing is the warning: "investors will be wary to delegate important decisions to systems they don't understand." That wariness isn't optional. It's how you survive drawdowns that the system never flagged.

What platforms should expect — and what you should check

The FCA isn't banning the technology. It's shifting posture. Rathi said traditional rule-making "simply won't work anymore" in some areas, with a growing share of the regulator's role becoming "stewardship, as well as supervision." He also revealed the FCA processes roughly a billion rows of market data daily and is piloting agentic AI as a "first responder" against market abuse. Translation for platform users: surveillance is about to get faster, and sloppy behaviour — revenge trading patterns, coordinated stop-runs, copy strategies piling into the same correlated basket — gets caught sooner. If your edge depends on staying invisible, the runway is short.

Three moves before your next allocation

One: demand the human-oversight layer. If a provider pitches "fully autonomous AI," ask what sits on top — and who carries accountability for outcomes. Rathi's framework makes clear regulators expect clarity here, not "the algorithm did it."

Two: stress-test for correlation. Studies Rathi cited suggest over 80% of financial firms are adopting AI, which means more strategies will be running similar models. Five momentum bots isn't diversification. That's one crowded trade wearing five costumes.

Three: watch the tokenisation thread. The FCA just approved the UK's first natively tokenised authorised fund — Baillie Gifford with BNY Mellon — and its Call for Input on tokenised wholesale markets closes this week. Any copy platform that integrates tokenised instruments will need new compliance rails. If your provider hasn't talked about how they handle that, ask now.

The takeaway isn't fear. It's homework. AI isn't going away from your trading stack, and regulation isn't going to freeze it either. The traders who keep their edge are the ones who know exactly what's running their money — and who answers when it breaks.