The Risk Analysis And Regulation Path Of Robo-Advisor

In recent years,Robo-Advisor service based on large data and artificial intelligence technology has been gradually entered the Chinese market and achieved wide attention,due to the rapid development of internet technology and the growing of residents' wealth.Robo-Advisor contains large aspects of business such as securities investment consulting,securities commissioning,financial advisory and asset management.As a result of its characteristics of objectivity,accuracy,comprehensiveness and low service price,Robo-Advisor has been rapidly developed since its introduction.However,besides the rapid development,market chaos under no supervision occurs as well.Under this circumstance,in 2018,? Guidance on regulating the asset management business of financial institutions? published by The People's Bank Of China and other relevant commissions firstly mentioned the qualification required by Robo-Advisor service and made some preliminary restrictions on this.However,there is a lack of a more comprehensive and micro-regulatory path besides this.Hence,in author's opinion,some detailed suggestions on the supervision path of Robo-Advisor service could be put forward finally through composing this article.The article begins from the following three major chapters:The first chapter gives a comprehensive understanding of the definition of Robo-Advisor.The core of Robo-Advisor is portfolio management.The principle is to integrate data such as personal investment idea,risk tolerance and expected return of customers.And determine the optimal investment plan based on personality data of different customers calculated by algorithmic model.It is necessary to sort out the legal relationships existing between these entities before specifically analysing the legal risks they may face: Firstly,the following relationships between investor and operator may be involved according to the service process: basic contractual relationship;investment consulting legal relationship or discretionary relationship;securities entrusted transaction relationship;and securities investment analysis relationship,etc.Secondly,the securities regulatory relationship exists between regulator and operator.The second chapter starts from each entity based on the analysis on definition and legal relationship of Robo-Advisor from the first chapter,and gives a detailed analysis on legal risks facing now and might face in the future.Firstly,the operator may face two challenges:1.Compliance dilemma,2.Appropriate obligation which breaches the law in fact.Furthermore,investors need to sign service agreement with operators before purchasing Robo-Advisor service.Actually,investors always take disadvantages from electronic agreement than operators.The progress aggravates the inequality of rights and obligations between operators and investors.Last but not least,in the process of fulfilling the contract,the information asymmetry is further aggravated due to the inadequate disclosure of investors' information and none supervision.On the other hand,operators may risk two supervision problems:First is the regulatory dilemma caused by the financial division supervision corresponding to the compliance dilemma faced by operators.Next,Robo-Advisor is a new type of financial product based on big data and artificial intelligence technology.However,hardly no supervision methods for artificial intelligence has been introduced in China,supervision experience on this aspect still remains to develop.The third chapter will focus on the legal risks concluded in the first two chapters and give some macro and micro suggestions on the regulation path of Robo-Advisor in China,based on the success experience in America and Australia.Firstly,explicit the credit obligation of Robo-Advisor and protect the rights and interests of investors.Secondly,apply the regulation of product liability methods in ? Tort Liability Law ? to decide responsibility of damage from Robo-Advisor through comprehensive application of civil law and securities regulations.Thirdly,improving supervision laws and regulations: Including establishing an Robo-Advisor registration system,establishing independent registration and filing links for Robo-Advisor.For the aim of fully protecting the interests of investors and improving the market chaos in recent years,regulators should incorporate Robo-Advisor into the regulatory system in a timely manner,formulate complete regulatory rules,and provide clear guidance for both operators and investors.At the same time,it could provide reference suggestions for products or businesses involving artificial intelligence in other fields as well.The improvement of legal system not only benefits the supervision system,but it also encourages the innovation in financial science and technology,which could bring significant impact on financial innovation and scientific and technological progress.