Canada’s capital markets stand at a critical juncture. While proposals like the Canadian Asset Management Entrepreneurs Alliance (CAMEA) rightly emphasize the need to attract and retain investment, their focus on tax incentives and regulatory rollbacks risks repeating past mistakes.
Rather than addressing systemic inefficiencies, such measures offer temporary relief while sidelining the transformative potential of technology-driven oversight. The path forward lies not in racing to the bottom, but in building a world-class financial ecosystem rooted in efficiency, fairness and transparency through digital innovation.
The CAMEA proposal, like many similar initiatives, mistakes symptom management for meaningful reform. By prioritizing reduced oversight and subsidies, it overlooks deeper structural challenges.
For instance, Canada’s fragmented provincial regulatory systems force firms to navigate redundant compliance processes, inflating costs without improving accountability. The country’s voluntary anti-money laundering (AML) framework — which requires manual renewal of privacy codes every five years — exemplifies this disconnect. Rather than streamlining through automation, it perpetuates administrative bottlenecks.
Similarly, while CAMEA acknowledges issues like fee compression and talent shortages, its reliance on tax breaks ignores scalable solutions. Compliance staffing costs, which consume 30 – 50% of operational budgets for asset managers, could be slashed through AI-driven automation. Yet the proposal opts for short-term fixes over systemic modernization.
Globally, jurisdictions are proving that smart regulation — enabled by regtech and AI — can reduce costs while strengthening market integrity. Singapore’s Financial Sector Technology Scheme, which funded AI adoption in risk management, cut compliance expenses by 40% while improving the detection of illicit activities.
The European Union’s AI Act mandates ethical AI use in finance, requiring bias audits and human oversight to prevent algorithmic discrimination, thus balancing innovation with accountability. Switzerland’s FINMA regulator leverages blockchain for tamper-proof transaction tracking, enabling real-time audits that build investor confidence.
Even within Canada, Ontario’s use of AI for trade surveillance is catching violations and reducing false positives —significant reductions are being reported in industry case studies, demonstrating homegrown potential.
These examples underscore that technology does not dilute oversight — it enhances it.
AI-powered solutions
Canada’s history of financial stability, epitomized by its resilient banking sector during the financial crisis, was built on prudent regulation. Today, that same prudence requires embracing tools like AI-audited disclosures and interoperable compliance platforms.
For example, replacing voluntary AML reporting with automated systems could flag anomalies in real time, freeing regulators to focus on high-risk cases. Expanding programs like Quebec’s Emerging Manager Program — which more than doubled assets under management by pairing grants with AI governance tools — would empower startups without fostering dependency on subsidies.
The CAMEA proposal’s emphasis on tax breaks and deregulation reflects a narrow vision. By contrast, a digital-first approach would position Canada as a global leader in trustworthy capital markets.
Imagine a system where AI streamlines compliance, blockchain ensures transparent audits and cloud-based platforms unify fragmented regulations. Such a system would attract investors seeking efficiency and integrity, not just low costs. It would prove that innovation and accountability are not opposing forces but complementary pillars of progress.
The choice is clear. Cling to outdated models of deregulation and subsidies or invest in a future where technology elevates Canada’s markets as beacons of fairness and reliability. The latter path honours our legacy of stability while embracing the tools of tomorrow.
Let’s build a financial ecosystem that doesn’t just compete globally, but leads by example — one algorithm, one blockchain and one reform at a time.
Harvey Naglie is a consumer advocate and policy analyst focused on financial regulation.