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In this insight briefing, we analyse the draft EU directive on non-contractual liability relating to AI and compare it with non-contractual liability in the UCITS V directive and the AIFMD to decipher how AI’s non-contractual liability can impact EU-licensed investment funds.
AI & Funds #2 – non-contractual liability Investment Services & Funds

AI & Funds #2 – non-contractual liability

In addition to the draft EU regulation on Artificial Intelligence (“AI”) titled ‘Proposal for a Regulation laying down harmonised rules on artificial intelligence’ (the “draft EU AI Act”), the EU Commission is also proposing a separate draft directive on non-contractual liability relating to AI titled ‘Proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence’ (the “draft AI Liability Directive”). Whilst the draft EU AI Act aims to define AI and mitigate risks by safeguarding fundamental rights in the use of AI within the EU, the draft AI Liability Directive sets forth provisions allowing persons to bring…
Mario Mizzi
16th February 2023
we share our insights on when the investment discretion shifts from humans to AI by analysing whether a legal definition of artificial intelligence has been determined.
AI & Funds #1 – investment discretion Investment Services & Funds

AI & Funds #1 – investment discretion

When one instructs a painter to draw a portrait (no matter how detailed the instructions may be) the painter will always have discretion in executing the final product. Likewise, in investment funds, the investment manager is instructed to invest according to various rules and timeframes which are detailed in the investment strategy as approved by the competent financial regulator, but there will still remain investment discretion on how the investment strategy is executed. This discretion is normally based on a number of statistically orientated formulas which analyses quantitative and qualitative data. Artificial Intelligence (“AI”) is being increasingly used in these…
Mario Mizzi
8th February 2023
In this series of weekly briefings, insights will be shared on the impact that artificial intelligence is making on the asset management industry and investment services in general.
AI & Funds – insight briefings Investment Services & Funds

AI & Funds – insight briefings

The impact that Artificial Intelligence (“AI”) is making on investment services has been the subject of a recent publication, dated 1st February 2023, which was issued by the European Securities and Markets Authority (“ESMA”). The publication, entitled “Artificial intelligence in EU securities markets”, provides data on the methods that stakeholders are implementing to incorporate powerful digital tools in their regulated financial products. ESMA’s publication makes reference to the inherent notion that AI is an “umbrella” term which incorporates machine-learning as well as other forms of Big Data solutions. In fact, ESMA notes that in the funds industry certain managers use…
Mario Mizzi
3rd February 2023
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AI’s Responsibility Gap Telecoms, Media & Technology

AI’s Responsibility Gap

An autonomous vehicle is heading into another vehicle with five people inside. It cannot brake in time. The two options are: to do nothing and allow itself to crash into the vehicle or to divert its trajectory and crash into a wall, almost certainly killing the autonomous vehicle's sole occupant. This is the Artificial Intelligence version of the 'Trolley Problem' - at its core a philosophical/ethical problem tackled from a number of perspectives, not least by a utilitarian approach.This moral question, which was previously a problem which 'merely' troubled the mind, now troubles us in an actual, physical and even…
Michael Camilleri
2nd October 2019
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Towards Trustworthy AI: Malta’s Ethical AI Framework Open for Public Consultation Telecoms, Media & Technology

Towards Trustworthy AI: Malta’s Ethical AI Framework Open for Public Consultation

In a bid to establish Malta as the "Ultimate AI Launchpad," the Malta.AI Taskforce has released a public consultation document on its intended ethical framework for Artificial Intelligence technology.The title of the document is self-explanatory: "Towards Trustworthy AI". This reflects the Maltese government's intentions of establishing a stable ground for the future development of disruptive technologies.Building on its National AI Strategy  the government intends to base the future of Malta's AI development on four objectives:A human-centric approachRespect for applicable laws, regulations, human rights and democratic valuesMaximising the benefits of AI systems while reducing risksAligning with international standards and norms. Following…
Michael Camilleri
13th August 2019
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Malta: The Ultimate AI Launchpad Telecoms, Media & Technology

Malta: The Ultimate AI Launchpad

The Malta.AI Taskforce and the Maltese Parliamentary Secretary for Financial Services, Digital Economy and Innovation has invited members of the public, industry and academia to provide feedback on its High-level policy document for public consultation 'Malta: towards an AI Strategy' (the 'Policy Document').The purpose of the Policy Document is to establish Malta as "amongst the top 10 nations with the highest impact national AI programme." The government argues that Malta has the natural and infrastructural qualities to make it "the Ultimate AI launchpad" - Its small population, climate, use of the English language and legislative and regulatory set-up ensure that…
Michael Camilleri
29th March 2019