SEC Chief Economist and Director of the Division of Economic and Risk Analysis S.P. Kothari highlightedpolicy challenges of big data.

Speaking at the National Bureau of Economic Research (NBER) conference on big data and high-performance computing, Mr. Kothari stated that the SEC faces three main big-data policy challenges: security, technology and communications.

First, he said that the “volume, velocity, and variety of big data” create security risks. Mr. Kothari urged the SEC to be “mindful of the data it collects and its sensitive nature.” Second, he said that technology poses an “arms race” among firms, with the risk that those who have better technology will profit significantly at the expense of others. Third, he said that issues concerning big data are complex and “increasing require specialized training to understand.” He warned that the SEC focuses on retail investors, but there are numerous stakeholders including “pension funds, municipal bond issuers, brokerage firms, hedge funds, and Congress.” In communicating to each group, he said, “one size does NOT fit all.”

Mr. Kothari also described the potential of big data with respect to identifying and stopping bad actors. He pointed to the Consolidated Audit Trail, which, when completed by the self regulatory organizations, “will provide a single, comprehensive database enabling regulators to track more efficiently and thoroughly all trading activity in equities and options throughout the U.S. markets.”

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The administration of US President Donald Trump is exploring curbing exports of sensitive technologies including artificial intelligence for national security reasons, according to a proposal this week.

The proposal to control sales of certain technologies “essential to the national security of the United States” comes amid growing trade friction with Beijing — and fears that China may overtake the US in some areas such as artificial intelligence.

The Commerce Department said in the proposed rules, published Monday, that it would consider curbs on various AI technologies such as neural networks and deep learning, computer vision, natural language processing and audio and video manipulation.

The proposed rules also said export curbs would be examined for microprocessor technology, quantum computing, robotics and other sectors.

The US is examining controls for “specific emerging technologies” that would avoid “negatively impacting US leadership in the science, technology, engineering, and manufacturing sector,” said the federal register notice.

But banning AI exports could be counterproductive to US goals, said Daniel Castro, vice president of the Information Technology and Innovation Foundation, a Washington think tank.

“If the US government bans the export of AI technology, other countries will likely enact reciprocal policies,” Castro said.

“It will mean US companies are locked out of certain markets, allowing firms in other countries to compete unchallenged.”

Castro said a ban also would “prevent the type of international research collaboration needed in an emerging technology such as AI,” including with China.

Meanwhile, a report this month by the Center for Strategic and International Studies said there are difficult tradeoffs when considering AI and national security in light of cross-border investments.

“If an adversary succeeds in acquiring technology from a US firm or start-up through investment, that is a detriment to national security,” the CSIS report said.

“On the other hand, if the United States refuses to work with companies that have Chinese investment or funding because of the national security risk that this investment might pose, these companies could lose access to significant investment potential and the US government also loses a potential partner for new ideas and capabilities.”

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