The Canadian Securities Administrators (CSA) has released its 2025 Systemic Risk Committee Annual Report on Capital Markets, outlining recent financial market trends, emerging risks and potential vulnerabilities affecting Canada’s capital markets.
The report provides an overview of developments across the financial system and describes regulatory efforts to monitor and address systemic risks.
According to Stan Magidson, Chair of the CSA and Chair and CEO of the Alberta Securities Commission, the report comes at a time of heightened global uncertainty.
“At a time when markets are looking for stability, the CSA is setting out its analysis of current and emerging risks to help market participants and investors navigate these complex conditions,” Magidson said.
Despite economic and geopolitical pressures, the report finds that Canada’s financial system remained resilient in 2025. Trade tensions slowed economic activity, particularly in the manufacturing sector, and uncertainty remained elevated. However, overall economic growth proved stronger than initially expected.
One emerging area of focus is the growing use of artificial intelligence in financial markets. The CSA notes that increased reliance on a small number of AI providers could create third-party dependencies within the financial system. Concentration among a limited number of AI models may also affect market liquidity and volatility.
The report also examines the expanding role of stablecoins within the cryptocurrency ecosystem. While stablecoins have grown rapidly, the CSA does not currently consider them a systemic risk. However, regulators note that high market concentration and global interconnectedness mean continued monitoring and regulatory coordination will be important.
Other trends highlighted in the report include rising clearing activity for derivatives and repurchase agreements, potential impacts of trade tensions on non-financial corporate bonds, stable liquidity in Canadian fixed-income markets, developments in over-the-counter derivatives, and liquidity challenges affecting private asset funds.
The CSA established its Systemic Risk Committee following the global financial crisis to monitor emerging risks across Canadian capital markets and coordinate regulatory responses where necessary.
