Omphalos Fund Response to ESMA’s AI Statement

Luxembourg, June 2024 – Omphalos Fund welcomes ESMA’s recent guidelines on the use of AI in investment services. However, we believe that these guidelines should not be limited to retail business, but should also cover services for institutional clients.

A clear and practical framework is essential for the development of the investment industry in Europe. In order to compete globally, European asset management companies must develop and implement state-of-the-art AI-driven solutions – otherwise they will lose significant market share to the competition. An important building block for successful implementation is acceptance and trust in AI solutions across all customer groups.

Omphalos Fund has always emphasised transparency, robustness and client-centric approaches in its AI-driven investment strategies:

1. Commitment to Transparency and Client Advocacy

We ensure that our AI systems are fully transparent and that our clients understand how these systems are used to make investment decisions. Our commitment is in line with ESMA’s requirement for clear and fair information. Our AI is not a black box; it executes clear investment strategies and selects the optimal strategy based on probabilities of success.

2. Rigorous Governance and Oversight

Omphalos Fund has implemented rigorous governance structures and continuous oversight to ensure that our AI technologies are aligned with our strategic objectives, risk management framework and regulatory compliance. This reflects ESMA’s emphasis on the responsibility of the governing body in AI integration.

3. Data Quality and Avoidance of Bias

We only use publicly available market data and do not process personal data. We train our AI systems with high quality, representative data to minimise algorithmic bias and ensure reliable results in line with ESMA guidelines on data quality and bias.

4. Risk Management and Ethical Standards

Our AI implementation includes rigorous risk management processes, comprehensive testing and monitoring systems. We ensure that our AI tools operate within a framework that respects privacy, promotes fairness and avoids discrimination, reflecting ESMA’s concerns about AI-related risks.

5. Continuous Training and Competence

We invest in the continuous training of our employees so that they can apply, interpret and work effectively with AI technologies. This commitment ensures that our team is well equipped to handle the complexity of AI in investment services, as recommended by ESMA.

At Omphalos Fund, we have been pioneering the integration of AI into investment and trading solutions since 2018. Our continuous innovation and compliance with regulatory guidelines enable us to offer superior, transparent and ethical investment solutions.

For further details, please refer to ESMA’s full statement.