The Canadian Securities Administrators (CSA) published its 2025 Systemic Risk Committee Annual Report on Capital Markets, setting out its assessment of recent market trends, emerging risk areas and potential vulnerabilities in Canadian capital markets, alongside selected mitigation work. The report concludes that the Canadian financial system remained resilient through 2025 despite heightened economic and financial uncertainty and a trade conflict that slowed the economy, particularly in manufacturing. Key themes include the rising use of artificial intelligence and the potential for financial stability impacts from third-party dependencies and concentration in a small number of AI models, including possible effects on liquidity conditions and volatility. The report also reviews the growing role of stablecoins and related concentration risks, noting that the CSA does not currently see stablecoins as presenting a systemic risk while pointing to the importance of global regulatory coordination, and referencing the United States’ GENIUS Act and Canadian legislation introduced to regulate issuance of fiat-based stablecoins. Other areas covered include increased clearing activity for derivatives and repurchase agreements, the potential impact of trade tensions on non-financial corporate bonds, liquidity conditions in Canadian fixed-income markets, over-the-counter derivatives developments and liquidity challenges in private asset funds. The CSA’s Systemic Risk Committee serves as its forum for monitoring systemic and emerging risks and, since 2022, has run an annual systemic risk survey of market participants, alongside coordination with other federal and provincial agencies through bodies including the Heads of Regulatory Agencies Committee and its Systemic Risk Surveillance Committee.

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