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65 Ala. L. Rev. 567 (2013-2014)
The New Financial Industry

handle is hein.journals/bamalr65 and id is 597 raw text is: THE NEW FINANCIAL INDUSTRY Tom C. W. Lin* Modern finance is undergoing a fundamental transformation. Artificial intelligence, mathematical models, and supercomputers have replaced human intelligence, human deliberation, and human execution. A financial industry once dominated by humans has evolved into one where humans and machines share power. Modern finance is becoming cyborg finance- an industry that is faster, larger, more complex, more global, more interconnected, and less human. This Article offers an early systemic examination of this ongoing financial transformation, and presents an original set of regulatory principles for governing the emerging, new financial industry. This Article provides a normative and descriptive cartography of this changing financial landscape. It identifies particular perils, systemic risks, and regulatory shortcomings emanating from this financial transformation. It then proposes new guiding principles for the future offinancial regulation in response to this sea-change. Drawing from a rich literature of past financial crises and transformations, this Article explores the next big movement in finance and financial regulation. And it offers fresh insights for better addressing the perils and promises emerging from the new financial industry. IN TRODU CTION .......................................................................................... 568 I. C YBORG FIN ANCE ................................................................................... 572 A. A Brief Retrospective ............................................................... 572 B. A M odest P review .................................................................... 576 II. CRASHES AND CRIM ES .......................................................................... 580 A . F lash C rashes .......................................................................... 581 B . Cy-F i C rim es ........................................................................... 582 III. EMERGING SYSTEM IC RISKS ................................................................ 585 * Associate Professor of Law, Temple University Beasley School of Law. Many thanks to Miriam Baer, Michael Cahill, Stuart Cohn, David Hoffman, Jerold Israel, Jennifer Laurin, Lawrence Lokken, Gregory Mandel, Eleanor Myers, Jason Nance, William Page, David Post, Christopher Slobogin, and workshop participants at American University Washington College of Law, the University of Florida Levin College of Law, and the University of Georgia School of Law for helpful comments and exchanges. Additionally, I am grateful to Amanda Harris and Sara Hoffman for their extraordinary research assistance.

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