CSA's 2025 Systemic Risk Report: AI Model Concentration, Stablecoins, and What Finance Teams Should Do Next
The Canadian Securities Administrators released its 2025 Systemic Risk Committee annual report, and the signal is clear: concentration risk in a small set of third-party AI models could distort liquidity and amplify volatility across Canada's capital markets.
The report scans emerging risks, market structure shifts, and where vulnerabilities could surface. "At a time of uncertainty, the CSA is setting out its analysis of current and emerging risks to help market participants and investors through these times," said Stan Magidson, CSA chair and chief executive officer and chair of the Alberta Securities Commission, in the news release.
Why AI model concentration matters
More firms are leaning on a narrow set of third-party AI providers. That creates correlation in signals, model decisions, and execution patterns. In stress, that can drain liquidity at the same time across strategies and venues.
- Single points of failure: vendor outages, model drifts, or policy changes can cascade through desks and counterparties.
- Procyclicality: similar models chasing the same signals can widen spreads and speed price moves.
- Operational dependencies: data feeds, model hosting, and orchestration often sit with the same few providers.
Practical steps for CFOs, CROs, and heads of trading:
- Inventory your AI stack: models, vendors, data pipelines, and critical dependencies. Map where decisions touch execution.
- Diversify providers and methods: ensemble across vendors and techniques; maintain a credible in-house fallback.
- Build circuit breakers: throttles, position limits, and human-in-the-loop triggers for abnormal output regimes.
- Stress test "AI outage" and "correlated signal" scenarios across liquidity, PnL, and collateral.
- Elevate vendor risk reviews: SLAs, model change-control, audit rights, incident reporting, and exit plans.
Stablecoins: growing fast, not yet systemic-watch the concentration
The CSA notes stablecoins have scaled quickly with high issuer and infrastructure concentration. Today, they do not appear to be a systemic risk, but the agency stresses the need for global regulatory coordination.
Policy moves are picking up: in 2025, the US adopted the GENIUS Act, and Canada introduced legislation for fiat-backed stablecoin issuance. For finance teams, the message is exposure discipline, transparency on reserves, and operational controls around custody and settlement.
- Set limits on stablecoin usage, counterparties, and wallets; review issuer disclosure and attestation cadence.
- Assess settlement and intraday liquidity impacts if a major stablecoin breaks peg or faces sanctions.
- Run playbooks for rapid substitution to alternative rails.
Further reading: Canadian Securities Administrators | Bank for International Settlements
Other market signals the CSA highlights
- Increased clearing activity in derivatives and repos, changing margin, liquidity, and CCP exposure profiles.
- Trade pressures weighing on non-financial corporate bonds; monitor downgrade and refinancing channels.
- Stable liquidity in Canada's fixed-income markets-conditions bear watching if volatility lifts.
- Developments in OTC derivatives structure and reporting.
- Private asset fund liquidity issues, especially around redemption terms and valuation lags.
Macro context: uncertainty with resilience
The CSA acknowledges elevated economic and financial uncertainty. Trade issues slowed growth in manufacturing, yet the financial system showed resilience in 2025, with overall expansion stronger than expected.
Action checklist for finance leaders
- Define risk appetite for AI-driven execution and third-party dependencies at the board level.
- Establish a model governance framework: documentation, data lineage, bias testing, and outcome monitoring.
- Implement liquidity stress tests that combine AI correlation shocks with widening spreads and CCP margin spikes.
- Revisit collateral and funding buffers to cover clearing concentration and intraday needs.
- Align private fund liquidity terms with asset cash-flow profiles; add gates/notice periods where needed.
- Enhance counterparty and vendor due diligence around stablecoin exposure, custodians, and settlement processes.
- Run table-top exercises for market structure incidents: model outage, CCP default management, and peg breaks.
How the CSA is approaching systemic risk
The Systemic Risk Committee-formed after the global financial crisis-serves as the CSA's forum to assess and monitor systemic and emerging risks. Since 2022, it has run an annual survey to gather input from market participants.
The CSA also engages with federal and provincial partners, including the Heads of Regulatory Agencies Committee and its Systemic Risk Surveillance Committee, to track risks and craft mitigation strategies. Expect continued emphasis on AI concentration, market plumbing, and liquidity mismatches.
Resources for teams building AI discipline
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