<ul><li>The Bank of England has warned that the use of artificial intelligence (AI) in algorithmic trading could increase market volatility and amplify financial instability.</li><li>The widespread use of AI for trading and investing could lead to a 'herding' behavior, causing sudden market drops.</li><li>The report emphasizes that the use of advanced AI-based trading strategies could result in firms taking increasingly correlated positions and acting similarly during times of stress, thereby amplifying shocks.</li><li>However, if AI is used to tailor strategies specifically for each client, it could lead to more market stability by diversifying investments.</li></ul>

Bank of England Warns of Higher Market Volatility From AI-Driven Trading

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