Large Language Model in Financial Regulatory Interpretation

Understand

This study explores the innovative use of Large Language Models (LLMs) as analytical tools for interpreting complex financial regulations.

• The primary objective is to design effective prompts that guide LLMs in distilling verbose and intricate regulatory texts, such as the Basel III capital requirement regulations, into a concise mathematical framework that can be subsequently translated into actionable code.
• This novel approach aims to streamline the implementation of regulatory mandates within the financial reporting and risk management systems of global banking institutions.
• A case study was conducted to assess the performance of various LLMs, demonstrating that GPT-4 outperforms other models in processing and collecting necessary information, as well as executing mathematical calculations.