Ontario Securities Regulator Exploring Artificial Intelligence Use In Capital Markets

Ontario’s securities regulator says it is evaluating the potential role it can play in overseeing and guiding responsible adoption of artificial intelligence to protect investors and the integrity of capital markets.

The Ontario Securities Commission’s report released Tuesday says use of AI in capital markets is primarily focused on improving the efficiency and accuracy of operations, trade surveillance and detection of market manipulation, and supporting advisory and customer service.

It says AI can improve the ability to gather information and detect patterns, or anomalies from large volumes of data by automating processes normally handled manually — leading to better market forecasting and hedging.

Large firms are also currently using AI to provide automated customer support and help for client-facing advisers, but the report says its use for trading, asset allocation and risk management are so far limited.

The regular warns of major challenges for AI adoption in the sector because of data constraints and the ability to attract and retain AI talent due to competition from tech firms.

It also cites obstacles related to corporate culture, saying market participants may have trouble adapting operating models and culture to benefit from AI, and that issues related to privacy, bias and fairness can play a role.