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The Canadian Securities Administrators (CSA) has published its 2025 Systemic Risk Committee Annual Report on Capital Markets (Report) providing an analysis of recent financial market trends, emerging risk areas and potential vulnerabilities in the Canadian capital markets landscape.
Key findings
Despite increased economic uncertainty, the Canadian financial system generally demonstrated resilience through 2025. Current trade conflict resulted in slowed economic activity, particularly within the manufacturing sector, although economic growth exceeded earlier expectations. CSA Chair Stan Magidson noted that “the Report arrives at a significant moment for Canada in the global context, offering analysis of current and emerging risks to help market participants and investors navigate an uncertain environment.”
Artificial intelligence and concentration risk
The Report highlighted a significant increase in the use of artificial intelligence across the financial markets. The CSA identified concerns related to potential financial stability arising from the concentration of firms creating third-party dependencies within the financial system. The Report concluded that this reliance on a limited number of AI models could negatively impact liquidity conditions and therefore increase market volatility.
Stablecoins and cryptocurrency developments
The growing role of stablecoins within the crypto ecosystem was examined, alongside risks posed by high market concentration. In 2025, the United States adopted the GENIUS Act, while Canada introduced legislation to regulate the issuance of fiat-based stablecoins. Despite rapid growth in this sector, the CSA does not presently view stablecoins as presenting a systemic risk, though it emphasized that global regulatory coordination remains essential in managing potential risks.
Additional areas of analysis
The Report also addressed rising clearing activity for derivatives and repurchase agreements, the potential impact of trade tensions on non-financial corporate bonds, stable liquidity in Canadian fixed-income markets, over-the-counter derivatives developments and private asset fund liquidity challenges.
CSA Systemic Risk Committee
The CSA established its Systemic Risk Committee following the global financial crisis as the principal forum for analyzing and monitoring systemic and emerging risks. Since 2022, this committee has conducted an annual systemic risk survey to gather market participant views on financial risks. The CSA collaborates with federal and provincial agencies through the Heads of Regulatory Agencies Committee and its Systemic Risk Surveillance Committee to ensure appropriate risk monitoring and the development of mitigation strategies.
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