AI, ML, and competition dynamics in financial markets

Abstract There is a common assumption that the adoption of AI and ML in financial markets will make more competitive reduce consumer prices. This paper argues, however, this far from obvious identifies when increases competition are unlikely to arise. several key messages. It argued that, contrast experience bigtech markets, widespread use at sector-wide level lead any significant short-term changes concentration markets. In longer term, question whether there be depend on balance two opposing forces. On one hand, rapid acceleration nascent merging boundaries between could increase concentration; but other, action around tightening bespoke regulations, notably regulatory mandated data sharing, push opposite direction. At micro-market level, it also impact adopting very sensitive specifics market (e.g. consequent reduction asymmetry information highly underlying asymmetry).