1. Background
2. Executive Summary
3. Benchmarks
4. Clearing
5. Corporate Bonds
6. Disruptive Innovation
7. Exchange-Traded Funds
8. Hedge Funds
9. Investment Dealers
10. Mutual Funds
11. Over-The-Counter Derivatives
12. Private Asset Funds
13. Securitization

Background

The Canadian Securities Administrators (CSA) is the umbrella organization of Canada’s provincial and territorial securities regulators. Its mission is to improve, coordinate and harmonize regulation of the Canadian capital markets. The CSA’s key objectives are: 1) the protection of investors; 2) fair, efficient and transparent markets; and 3) the reduction of systemic risk.

In 2009, the CSA created the Systemic Risk Committee (SRC) as the principal forum for CSA staff to analyze and monitor systemic and emerging risks. It is comprised of staff from the securities regulatory authorities of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec, and Saskatchewan.

Current SRC members are:

This annual report provides an analysis of recent financial market trends and key vulnerabilities in Canadian capital markets. The report also outlines the CSA’s efforts to mitigate those vulnerabilities and associated risks. Views expressed herein are those of SRC members and not necessarily the official views of CSA members.

Executive Summary

The world’s major economies proved resilient in 2024, despite continued headwinds from the tightening of central bank policy rates that began in 2022. As the year progressed, the economy experienced lower inflationary pressures, which allowed major central banks to begin normalising their policy rates with the aim of achieving a soft economic landing. Growth in the United States has been particularly robust while economic conditions in other advanced economies have been relatively more subdued. In Canada, GDP growth has been restrained, expected at around 1.3% in 2024, and job creation has not kept up with population growth, resulting in the unemployment rate edging higher to 6.6%. Canadian economic growth is expected to pick up somewhat in 2025 with lower interest rates stimulating a gradual strengthening in consumer spending and residential investment.

Stock market indices, particularly in the US, have posted significant gains in 2024. Once again, markets in the US outperformed their peers. The S&P 500 has risen 23% last year, driven by the outperformance of technology stocks. The S&P/TSX, which was up 18% last year, also performed well, reflecting the strong performance of finance and energy, the two most important sectors of the index. Overall, trading conditions in financial markets have largely been stable over the past year. There was, however, a relatively short-lived spike in volatility in August in stock markets, while bond market volatility has been elevated since interest rates began rising in 2022.

Lowering of central bank interest rates and the resilience of the global economy have resulted in lower financial stability risks in Canadian capital markets in our assessment. According to our 2024 Systemic Risk Survey conducted in November 2024, market participants are less concerned about financial stability risk than last year. Less than 60% of respondents reported they were “Somewhat Concerned” to “Very Concerned” about the stability of the Canadian financial system, a decrease of 6 percentage points from a year ago. Important macro risks remain, however, notably from a potential rebound in inflationary pressures, geopolitical uncertainties stemming from the wars in Ukraine and the Middle East, and potential tariffs on Canadian exports from the new US administration.

Our 2024 annual report also highlights the following trends and vulnerabilities:

• Benchmarks: The transition from the Canadian Dollar Offered Rate (CDOR) to the Canadian Overnight Repo Rate Average (CORRA) was achieved smoothly and successfully, as CDOR ceased to be published on June 28, 2024.
• Clearing: Clearing activity continued to increase and remained resilient. We continue to monitor the growing importance of certain exempted central counterparties, the implementation of the post-trade modernization project by CDS, the impact of the transition to a shorter settlement cycle, and the procyclical nature of margining requirements.
• Corporate bonds: Net issuance of corporate bonds by non-financial corporations increased in 2024. With the end of the high-interest rate cycle, pressure on the financial position of non-financial corporations and their credit ratings has eased.
• Disruptive innovation: After a robust market in 2023, crypto asset market capitalization continued its upward trajectory, with growing risks to financial stability. The increasing integration of AI in trading, asset management, and customer interactions presents both opportunities and challenges, underscoring the need for regulatory oversight.
• Exchange-traded funds: The Canadian exchange-traded fund (ETF) market has continued to grow, increasing its market share of the investment fund space. Overall, the ETF market has remained resilient despite spikes in volatility, both in stock and fixed-income markets.
• Hedge funds: Hedge fund total net assets advanced in 2023, supported by strong equity market returns. Market participants, including foreign hedge funds, have increased their cash-futures basis trading activity in Canada. Hedge funds employ more leverage than other funds, but their leverage remains low and stable.
• Investment dealers: Investment dealers continue to post strong gains in revenue and profitability underpinned by higher interest income. The failure of a large, interconnected dealer could have broad repercussions. Non-bank dealer leverage remains relatively low and appropriate measures are in place to prevent failures.
• Mutual funds: The Canadian mutual fund sector has seen its net assets grow at a healthy rate in 2024. Investment fund liquidity risk continues to be a subject of regulatory focus, notably for fixed-income funds. The credit risk profile of these funds has stayed relatively constant over the past year and has generally improved since the COVID-19 shock.
• OTC derivatives: The Canadian over-the-counter (OTC) derivatives market sustained growth in 2024. A significant event in Canadian derivatives markets this past year was the migration from CDOR to CORRA. Regulators will be monitoring the new benchmarks on an ongoing basis. We are also monitoring margin liquidity risk in the Canadian context.
• Private asset funds: Prospectus-exempt private asset funds – that invest in private equity, private debt, real estate or infrastructure – have surged over the past decade. Their holdings have reportedly become less liquid over time, but they appear to be adjusting their redemption profiles accordingly. Some private asset funds continue to report liquidity mismatches between the liquidity of their holdings and their redemption terms.
• Securitization: Total amount outstanding in the Canadian private securitization market has been relatively stable. The securitization market continues to be focused on credit cards, mortgages, and auto loans. In spite of a challenging economic environment, securitized assets have continued to perform relatively well in terms of credit performance.

Benchmarks

The transition from the Canadian Dollar Offered Rate (CDOR) to the Canadian Overnight Repo Rate Average (CORRA) was completed smoothly and successfully, as CDOR ceased to be published on June 28, 2024. Nearly all CDOR exposure was transitioned prior to CDOR’s end date, with a small number of contracts being remediated later, but before the end of September (the date of the last effective CDOR setting). Outstanding notional of OTC derivatives referencing CORRA now stands at around $20-25 trillion.

Ontario Securities Commission (OSC) and Autorité des marchés financiers (AMF) have designated Term CORRA as a designated interest rate benchmark and CanDeal Benchmark Administration Services as its designated benchmark administrator. Term CORRA’s use is limited to trade finance and loans, and any derivatives associated with hedging those products. In 2025, the Bank of Canada will undertake its 5-year sunset review of the CORRA methodology to ensure it remains representative of the market it represents, and the data source and the data providers remain optimal for the calculation of the benchmark. The Bank of Canada has been CORRA’s administrator since June 15, 2020.

The cessation of CDOR has led to the disappearance of the banker’s acceptance (BA) market. This market, which represented about 20%, or approximately $90 billion, of the notional outstanding in the Canadian money market, was relatively significant, especially in the 1-month tenor. As there was no single substitute, BAs have been replaced by a mix of financial money market products, including Treasury bills, bearer deposit notes, and asset-backed commercial paper.

To ease the transition out of BAs, the Government of Canada introduced a 1-month Treasury bill on a temporary basis. Likewise, the Canadian Derivatives Clearing Corporation (CDCC) introduced secured general collateral notes, a form of sale and repurchase agreement (repo). Repos have also been identified as a possible investment alternative to BAs, especially for tenors of less than 1-month. To facilitate the use of repo as an investment product, TMX together with Clearstream have introduced a tri-party repo option in Canada. It should be noted that some investment funds, that made greater use of BAs, due to their shorter tenor, have been impacted by their disappearance more than others. The CSA is continuing to monitor how money market funds are adapting to the disappearance of the BA market.

Clearing

The Canadian clearing sector consists of derivatives, repos and cash securities cleared by Canadian participants through domestic and foreign central counterparties (CCPs). This report section focuses on activity and collateral pledged by Ontario-based participants through the 12 CCPs recognized or exempt from recognition as clearing agencies in Ontario, providing a reliable and representative view of overall Canadian clearing activity.

Overall, clearing activity continues to trend higher compared to previous years. The notional value of derivatives cleared during Q4 2024 reached nearly $36 trillion, higher than the peak volume observed during the pandemic (i.e., $27 trillion during Q1 2020). Also, the value of fixed-income repos cleared reached nearly $29 trillion (figure above), a marked increase from recent years. Collateral pledged is a more accurate measure of participant exposures to CCPs driven mainly by changes in clearing activity and market volatility. Total collateral requirements reached approximately $45 billion at the end of Q4 2024, consistent with historical averages (figure below).

Systemically important clearing agencies^[1] are more interconnected and have greater potential to adversely affect financial stability, if their services are disrupted. Three clearing agencies – CDS, CDCC, and LCH Limited (LCH) – are recognized by certain provincial securities regulators and are subject to their supervision.^[2] The clearing systems operated by these agencies are also designated as systemically important and subject to oversight by the Bank of Canada.^[3]

While the set of systemically important CCPs has remained unchanged over the last decade, certain exempted CCPs may be growing in importance in Canada. Provincial securities regulators that exempted these entities regularly monitor their activity and the risk they pose to Canada’s capital markets (considering factors such as the number of Canadian clearing members and clients, cleared volumes, collateral pledged, etc.). Exempted CCPs in Canada are typically designated as systemically important financial market infrastructures (FMIs) in other major jurisdictions, such as the US, the UK, Japan and certain EU countries, and are subject to heightened prudential and supervisory provisions.^[4]

Monitoring operational developments at systemically important CCPs is essential. The CDS is undergoing a major initiative known as the Post-Trade Modernization (PTM) initiative, which involves a complete modernization of its technology infrastructure. Originally planned for launch in the second half of 2023, the PTM implementation is now scheduled for launch during the first half of 2025.^[5] Additionally, several CCPs plan to further outsource and transition to cloud, concentrating risk on a small set of cloud service providers. The G7 revised a set of guidelines for third-party cyber risk management in 2022, providing authorities with a framework for informing public policy, and regulatory and supervisory efforts.^[6] Furthermore, the CPMI-IOSCO have established a new working group on operational resilience focusing on two workstreams: the cyber resilience workstream will address cyber risks to FMIs, while the third-party risk and operational resilience workstream will focus on risks to FMIs from outsourcing and the use of third-party services.

CCP margining requirements may amplify financial stress. Concerns over the procyclical nature of CCP margining requirements and their potential to amplify stress have re-emerged over the past few years. These concerns were prompted by the spike in market volatility during the pandemic, recent events in commodity and fixed-income markets following the Russian invasion of Ukraine, the failures of Silicon Valley Bank and Credit Suisse and conflict in the Middle East. Several initiatives are underway to address this vulnerability. Domestically, Canadian CCPs are required^[7] to regularly review and improve, as needed, their margining models to ensure they remain resilient during periods of extreme volatility.^[8] In North America, the shortening of the standard settlement cycle helped reduce counterparty risk in the system and, in turn, collateral requirements for cash market CCPs. CDS data showed approximately 27% decrease of the Continuous Net Settlement (CNS) Participant Fund, and 23% of the CNS Default Fund.^[9] Internationally, the BCBS, the CPMI, and IOSCO jointly published their final report on the review of CCP margining practices in September 2022^[10] followed by the publication in January 2025 of 2 final reports^[11] focusing on margin procyclicality, particularly regarding the transparency of CCP margining models and the design of anti-procyclicality measures.

Overall, vulnerabilities associated with central clearing are considered low. CCPs have demonstrated resilience during recent market stress events with the ability to handle major industry initiatives such as the successful transition to T+1.^[12] However, further investigation through international work is necessary to understand their potential to amplify stress through their margining practices. The CDS PTM initiative represents significant system and process changes that will require a smooth implementation to minimize disruption to securities markets.

Corporate Bonds

Net issuance of corporate bonds by Canadian non-financial corporations (NFCs) increased in 2024. In 2022, net issuance declined sharply in response to rapidly rising rates. In 2023, net issuance started to rebound, as interest rates and inflation stabilized. In 2024, net issuance was further supported as financial markets expected the Bank of Canada and other global central banks to cut interest rates. The interest rate cuts come as central banks determined that inflation has fallen back within the central banks’ target range and that the economic outlook may be softening. Reliance on foreign high-yield markets remains low after rising in the wake of the pandemic.

The proportion of recent net issuance by NFCs rated BBB- to BBB+ relative to A- to AAA is higher than pre-pandemic. Lower rated issuance is a trend that potentially indicates higher financial stress faced by corporations over the past few years and evidenced by rising insolvency rates and debt servicing ratios. However, leverage ratios among NFCs do not appear elevated relative to the 10-year average, suggesting that the economic environment, higher interest rates, and the end of the Canada Emergency Business Account program may be driving factors in higher business insolvencies.

Meanwhile net bond issuance has declined among financial corporations in 2024 back to pre-pandemic levels. This fall in net bond issuance may be correlated with a shrinking appetite for bank loans by businesses and households in a higher rate environment. Net bond issuance by financial corporations continues to be mostly rated A- to AAA given their diversified and strong balance sheets.

Net issuance in foreign markets has risen for financial corporations but remains relatively low among NFCs. Financial corporations are increasingly reliant on foreign markets. Among other potential factors, this may reflect cheaper funding and the ability to issue in greater scale outside of Canada. For NFCs, most raise funds in Canada although some rely on the U.S. high yield market.

In dollar amounts, more NFC bonds were downgraded in 2024 following sizeable rating downgrades in 2023. This may be consistent with a relative return to predictability in the economy despite a weakened outlook, particularly regarding inflation and monetary policy.

The rising financial burden on NFCs over the past two years was largely driven by higher rates as leverage levels have been stable. This suggests that lower credit ratings for NFC-issued bonds in recent years might not speak directly to fundamentals, since the underlying creditworthiness of NFCs has not worsened from a balance sheet perspective. Fortunately, since around two-thirds of bonds on NFCs balance sheets mature in 5 or more years,^[14] NFCs have been greatly insulated from rolling over bond debt at peak interest rates seen in 2023. However, in the long term, bond yields are expected to remain above pre-pandemic levels and thus NFCs may continue to face higher interest costs as they refinance their debt structure.

Overall, vulnerability within corporate bond markets is low. The rapid rise in interest rates in 2022 and higher-for-longer rates in 2023 placed significant financial pressure on NFCs and their credit ratings. However, 2024 marked the end of the rising-interest rate cycle, as inflation and the economic outlook declined. Should borrowing rates moderate, credit ratings could see uplift in the coming year, although other uncertainties such as the economic outlook and the impact of rolling over older bond debt at higher rates still exist. While financial corporations issue most of their bonds outside of Canada, they remain mostly rated A- to AAA, mitigating the effects of sentiment swings in foreign markets.

Disruptive Innovation

Crypto and DeFi Markets

After a robust 2023, crypto asset market capitalization continued its upward trajectory. At the end of January 2025, total market capitalization of crypto assets reached roughly US$3.5 trillion, reflecting a 120% increase year-to-date. This expansion was supported by the U.S. SEC decision to authorize 11 spot Bitcoin exchange-traded funds (ETFs) in early January. By mid-2024, these ETFs held about 865,000 BTC, valued at roughly US$52 billion. In Canada, 16 crypto ETFs, all invested in either Bitcoin, Ethereum, or both, are now listed on the TSX, with an approximate market capitalization of $7.2 billion as of December 2024. Crypto asset values continued to rise to new highs following the election of Donald Trump, reflecting expectations of more crypto-friendly regulation.

In July 2024, the SEC also approved the first spot Ethereum ETFs, following the launch of Ethereum futures ETFs in 2023. These new crypto ETFs represent a notable shift in how institutional investors can gain access to crypto assets, driving more substantial capital inflows into the market for market participants who are unwilling to invest directly in crypto assets. Retail investors increasingly use crypto ETFs due to their ease of access compared to directly holding crypto assets.

However, this rapid expansion may have increased potential risks to financial stability. As crypto assets become more entwined with conventional financial markets, vulnerabilities such as interconnectedness, funding liquidity and redemption risks, and operational risks will be important to monitor.

In terms of funding liquidity, value-referenced crypto assets (VRCAs or stablecoins) remain a key point of concern. While comprising only 6% of the overall market, VRCAs remain a worry due to their liquidity and reliance on traditional financial reserves. The event in March 2023, when the USD Coin briefly lost its peg after its issuer, Circle, disclosed its exposure to the failing Silicon Valley Bank, exemplifies how weaknesses in VRCA structures can cause market disruption.

Decentralized finance (DeFi) also experienced a resurgence in early 2024. With about US$120 billion in total value locked, it makes up about 3% of the global crypto market. Despite this growth, DeFi remains a minor segment and smaller than in 2021, when it reached US$174 billion in total value locked. The DeFi market suffers from ongoing concerns about security, investor safeguards, and the lack of regulatory accountability within its protocols. While DeFi is not yet large enough to pose a major threat to financial stability, continued surveillance is essential.

In 2024, both IOSCO and the CSA continued to refine their regulatory approach. They are both advancing their frameworks for regulating the crypto assets industry, aiming to enhance investor protection and address potential systemic risks posed by the rapid growth of digital assets. At the end of 2023, IOSCO published its policy recommendations for crypto and digital asset markets^[15] and DeFi.^[16] These recommendations provide a coherent and robust policy framework to tackle the core risks posed by crypto asset markets. In December 2023, IOSCO’s Board approved the Crypto-Asset Implementation Roadmap to promote the effective implementation of these recommendations across its members. Phase I, to be completed in 2024, involves a stock-take of current crypto regulation approaches to establish a clear regulatory and market landscape. This groundwork will lead to the development and piloting of an assessment methodology for the crypto and digital market asset recommendations in subsequent phases.^[17]

Artificial intelligence in Financial Markets

Artificial intelligence (AI) is transforming the financial sector. AI has the potential to offer significant benefits, such as improved operational efficiency, enhanced regulatory compliance, more personalized financial products, and enhanced data analysis capabilities. However, AI also presents challenges such as data security, third party dependencies, market correlations, cyber risks, and decision-making biases. Major financial firms have adopted generative AI (GenAI) to enhance internal operations and financial advising, though this comes with risks. A Mercer survey indicated that 91% of asset managers are utilizing or planning to implement AI in their investment processes.^[18]

AI adoption is growing in Canada. According to the Global AI Adoption Index 2023,^[19] conducted by Morning Consult on behalf of IBM, there has been an increase in AI deployment at large organizations in Canada from 34% in April to 37% in November 2023. An additional 48% of Canadian companies are still exploring the use of AI. The report on experimental research and use cases in AI from the OSC explored how AI impacts retail investors’ decision-making in an online investment simulation.^[20] Based on their literature review and environmental scan conducted in their first research stream, they identified three broad use cases of AI specific to retail investors: decision support, automation, and scams and fraud. The study found that there was no major difference in adherence between advice from a human or AI alone, suggesting that Canadian investors may be open to following AI-based investment recommendations.

The OSC also explored the use of AI systems in Canadian capital markets.^[21] According to its work, AI is primarily used to enhance existing products and services rather than to create new ones. Capital market participants are adopting AI systems for three overarching purposes: efficiency improvements, revenue generation, and risk mitigation. AI applications include asset allocation, price and liquidity forecasting, hedging, trade order execution and surveillance, high-frequency trading, futures market analysis, and sales and marketing.

AI has the potential to significantly impact economies and financial markets, but the extent and timing of these effects are uncertain. Early studies suggest positive productivity effects, but further analysis is needed. AI could boost productivity and create jobs in some sectors, but it could also displace workers, increase inequality in financial markets and potentially amplify certain financial sector vulnerabilities. Financial regulators need to monitor AI’s impact and adjust their requirements accordingly.^[22] The FSB calls on national financial authorities and international bodies to enhance their monitoring of AI developments, assess the adequacy of existing financial policy frameworks, and improve their regulatory and supervisory capabilities.^[23]

In Canada, the CSA published guidance on how the Canadian securities legislation applies to the use of AI systems by market participants.^[24] This guidance does not create new legal requirements and addresses key considerations for registrants, reporting issuers, marketplaces and other market participants that leverage AI systems. It highlights the importance of maintaining transparency, ensuring accountability and mitigating risks to foster a fair and efficient market environment.

GenAI may provide inaccurate or misleading information and exacerbate existing risks such as higher trading volatility. Notably, GenAI can raise concerns about herd behavior in financial markets if models’ outputs are highly correlated and exacerbate reliance on a few dominant technology firms. Further, AI algorithms, especially those used in high-frequency trading, respond instantly to market movements based on criteria that are not always transparent or fully understood. In rapidly changing environments, this can result in decisions that inadvertently increase market fluctuations.

Deep learning models, often employed in AI trading, function as “black boxes,” where their inner workings are not easily understood. This opacity makes it challenging for market participants and regulators to understand trade decisions, hindering risk management and error correction in AI-driven systems. Further, as with all models, the effectiveness of AI trading models is dependent on the quality of the data they are trained on. If the historical data used contains biases, the model may perpetuate these distortions in its trading strategies.

The increasing integration of AI in trading, asset management, and customer interactions presents both opportunities and challenges, underscoring the need for regulatory oversight to manage emerging risks. The overall landscape of AI in finance is evolving rapidly, but this growth necessitates appropriate regulatory frameworks to mitigate associated risks. Notably, the financial sector must address the potential for correlated failures, particularly in high-frequency, automated trading environments.

Exchange-Traded Funds

The Canadian ETF market has continued to grow with positive returns and net inflows. As of November 2024, Canadian ETF total net assets stood at $515 billion, compared to $382 billion at the end of 2023. In the first eleven months of 2024, net ETF inflows amounted to $65 billion, led by equity and bond ETFs, surpassing mutual fund net flows considerably. With positive returns and relatively large inflows, the share of the ETF market has continued to grow. From approximately 12% in 2020, the ETF market now represents approximately 17% of mutual fund net assets.^[25]

Over the past year, the Canadian ETF market has remained resilient. Among the main risks that we monitor in this market is the risk that it could experience impaired primary and secondary market liquidity in the event of a large financial shock, for instance, wide bid-ask spreads and low transaction levels. However, previous episodes of financial stress, such as the COVID-19 financial shock, have shown that the Canadian ETF market, while it can experience lower liquidity and higher trading costs, remains relatively resilient even during such episodes.

While financial markets have largely been stable over the past year, they did experience some spikes in volatility. Notably, stock markets experienced a spike in volatility in August, and volatility has increased considerably in fixed-income markets since interest rates began rising in 2022. ETF trading activity remained robust, in particular when volatility was at its peak (figure below).

Among other trends, we note the growth in active ETFs in Canada and elsewhere. Following rule changes by the SEC in 2019, which facilitated their approval, active ETFs have grown markedly in the US. In Canada, active ETFs, which are ETFs managed by portfolio managers working under a discretionary mandate, represent approximately 24% of all Canadian ETFs and 11% in terms of net assets.^[26] A majority of these active ETFs have a fixed-income orientation and tend to invest in government and investment grade corporate bonds in North America.

As we highlighted in our last annual report, some active ETF managers do not fully disclose their ETF portfolio holdings. Although most ETF managers disclose their holdings to authorized participants daily, some do not disclose their holdings to the public at that frequency. According to the OSC Investment Fund Survey, about 50% of active ETFs do not disclose their holdings to the public on a daily basis, in total net asset terms. When the content of an ETF portfolio is disclosed frequently and publicly, liquidity providers – other than authorized participants – can potentially increase competition and play a role reducing price deviations from NAV and narrowing bid-ask spreads.

Overall, active ETFs, including those that do not publicly disclose their holdings, are resilient. The vast majority of active ETFs have at least four authorized participants available to make trades to help support ETF resilience. According to our analysis, active ETFs have demonstrated resilience during recent episodes of stress, although they typically exhibit wider bid-ask spreads and attract less trading volume than other ETFs.

Hedge Funds

Hedge fund total net assets advanced in 2023, supported by strong equity market returns. Subscriptions and redemptions remained roughly balanced, resulting in small net inflows. In contrast, prospectus-qualified alternative mutual funds and alternative ETFs, which adopt similar strategies, are receiving substantially higher net inflows from investors and are growing more quickly. These alternative mutual funds and alternative ETFs, however, pose less risk than hedge funds because they are prospectus qualified and subject to leverage limits and other regulatory requirements (National Instrument 81-102).

Hedge fund total net assets reached nearly $82 billion, accounting for a modest 2% of Canadian-domiciled investment fund total net assets as of December 2023 (figure below). This figure likely overestimates the size of the hedge fund sector in Canada compared to third-party data sources, because all prospectus-exempt funds with gross balance-leverage^[27] exceeding 200% must be categorized as hedge funds or private asset funds in the OSC Investment Fund Survey.^[28] Therefore, leveraged “pooled” funds would be considered hedge funds in the survey. In total, Canadian hedge funds represent only 3% the size of U.S. hedge funds whose total net assets approached US$2 trillion as of December 2023.^[29]

Despite their modest size, hedge funds have an outsized impact on financial markets because of their borrowing activity. Because hedge funds employ leverage, total assets amount to $164 billion, nearly double the size of their net assets. Many hedge funds also have substantial derivatives exposure in contrast with other investment funds. Most hedge fund leverage is concentrated among stand-alone hedge funds that directly hold securities, rather than fund of funds that invest in other funds. Stand-alone hedge fund leverage has remained relatively low and stable since 2020 (figure below).

Hedge funds also employ sizable amounts of synthetic leverage acquired through derivatives markets. In contrast with other investment funds that mostly invest in currency and interest rate derivatives, some hedge funds also take sizable positions in equity, credit, and commodity derivatives.

More detailed data on Canadian-domiciled funds, including hedge funds, is available on the OSC’s Investment Fund Survey dashboard. This dashboard provides aggregated insight into the number of funds, their size, holdings by asset class, notional derivatives exposures, and liquidity profiles. Dashboard users can drill-down by fund type (hedge fund) and strategy (equity, fixed income).^[31]

As seen in other jurisdictions, cash-futures basis trading activity has grown sharply in Canada. Market participants, including foreign hedge funds,^[32] are targeting price differences between the spot and futures markets for government bonds. Because the price differences between the spot and futures market are small, participants in cash-futures basis trading use leverage to increase the trade’s expected return. Market participants acquire this leverage by borrowing cash through repos using government bonds as collateral. The cash-futures basis trade is complex and involves transactions in distinct markets, including buying bonds over the counter and selling bond futures through the Montréal Exchange.^[33] Efforts are ongoing to gain a clearer picture of the overall size and risks associated with the cash-futures basis trade in Canada.

Leveraged hedge funds can potentially pose risks to financial counterparties in contrast with other unleveraged investment funds. Therefore, it is important to monitor their size and leverage. Redemption risks are generally well managed, because most hedge funds – reported in the OSC Investment Fund Survey – hold public securities and require investors to provide advance notice prior to redemption. Overall, the Canadian hedge fund sector remains modestly sized, characterized by returns-based growth with low and stable leverage.

Investment Dealers

Investment dealers continue to post strong gains in revenue and profitability underpinned by higher interest income. Over the first nine months of 2024, dealer revenue growth was relatively strong, up 15%. The revenue gains were broad-based with strong contributions from most segments, including interest income, fees, and principal trading business. Overall, the number of firms and employees remained near the same level as last year. However, growing equity valuations in 2024 have propelled investment dealer client net equity to new heights (figure below).

The primary vulnerability from investment dealers is the potential impact from the failure of a large dealer. The high degree of interconnectedness between large, highly leveraged dealers, which are typically bank-owned, and their counterparties could have broad repercussions.

Measures to prevent the failures of dealers are in place. Notable measures include the in-depth oversight of the investment dealers by CIRO, monitoring of the consolidated financial position of the parent banks by the Office of the Superintendent of Financial Institutions (OSFI), and oversight of provincially regulated financial institutions by provincial prudential regulators.

The Canadian Investor Protection Fund (CIPF) protects investors. The CIPF provides protection within prescribed limits to the clients of CIRO dealer members who have suffered or may suffer financial losses resulting from a CIRO member insolvency. Lastly, dealer client assets are segregated and portable, so they can be readily transferred from one dealer to another.

Greater dealer leverage could increase vulnerabilities and potential repercussions to counterparties in the event of a failure. The largest Canadian dealers are bank-owned and the banks are overseen by OSFI, which provides prudential oversight of the consolidated balance sheets of those banks. Banks’ consolidated balance sheet leverage remained stable since 2010,^[34] although the leverage of bank-owned dealer subsidiaries has risen since 2015, peaking in early 2021. In contrast, non-bank dealer leverage remains low (figure below).

Other vulnerabilities to investment dealers include cyber threats, which remain a constant issue for dealers. Investment dealers must invest heavily in cyber security to keep up with technological advancements. Securities law requires investment dealers to have disaster recovery and business continuity plans to mitigate the impact of disruption risks from cyber events and other operational issues.

Mutual Funds

The Canadian mutual fund sector has seen its assets under management grow at a healthy rate in 2024. As of November 2024, mutual fund total net assets stood at $2.3 trillion, representing a 17% increase compared to December 2023, supported by strong gains in stock markets. The mutual fund sector also attracted net inflows of $12.6 billion year-to-date, in contrast to net outflows of approximately $51 billion over the same period last year, reflecting an improved economic outlook (figure below). Bond mutual funds saw the largest net inflows while balanced mutual funds experienced relatively large outflows.

Among the risks we monitor is the risk that mutual fund managers may face liquidity mismatches when they invest in less liquid assets. When faced with large outflows, mutual fund managers may be unable to repay exiting investors in an orderly fashion if underlying assets are less liquid, notably for some fixed-income instruments. For this reason, we focus our monitoring on fixed-income mutual funds.The liquidity risks associated with fixed-income mutual funds have stayed relatively stable over the past year.

The credit risk profile of fixed-income mutual funds has stayed relatively constant over the past year. In the wake of the COVID-19 shock, these funds had increased their exposure to bonds with higher credit risk and longer duration, including corporate bonds. This trend reversed over the past few years and, more recently, their credit risk and duration profile has been relatively stable.

Fixed-income mutual funds continue to hold a large proportion of their assets in relatively liquid instruments. Approximately 43% of their portfolios are in receivables, cash or government bonds (figure below). Further, according to fund managers, approximately 64% of their assets can be liquidated in a day under normal trading conditions. When taking into account the historical stability of fixed-income mutual fund flows, our view is that the liquidity risks facing these funds remain low.

At the international level, investment fund liquidity risk continues to be a subject of focus. Notably, IOSCO published at the end of 2023 a final report providing guidance on the design and use of anti-dilution liquidity-management tools by open-ended fund managers.^[35] The guidance aims to support the greater use of such tools by managers to mitigate investor dilution and potential first-mover advantage arising from structural liquidity mismatch. The CSA is continuing its work to ensure its regulatory framework regarding liquidity risk management is appropriate and consistent with international standards.

Among other trends, we note the growth of alternative mutual funds in recent years, albeit from a relatively small base. Mutual funds that adopt alternative strategies – which include short-selling, borrowing, and use of derivatives – now have total net assets that stand at about $26 billion. Alternative mutual funds offer these investment strategies that are typically associated with hedge funds, but in prospectus-qualified mutual funds, following regulatory changes implemented by the CSA in 2019.^[36] Alternative mutual funds present somewhat higher risks than traditional mutual funds, but they remain a very small part of the overall market and are subject to leverage limits, in contrast with prospectus-exempt hedge funds. Finally, we are monitoring the impact of the disappearance of the BA market on money market funds, which have grown since 2022 as a result of higher interest rates.

Over-The-Counter Derivatives

The Canadian OTC derivatives market sustained growth in 2024. As of December 31, 2024, the total notional outstanding for all OTC derivative products, excluding commodities,^[37] involving a Canadian counterparty reached $107 trillion, reflecting a 21.5% year-over-year increase.^[38] Interest rate derivatives primarily fueled this growth, with a 21% increase, though all asset classes demonstrated year-over-year growth (figure below). Interest rate derivatives account for most positions measured by outstanding notional, but FX derivatives make up the majority of trading volume.

Canada’s share of the global OTC derivatives market has steadily increased over the past few years. In terms of global notional outstanding, Canada’s share has risen from approximately 5.3% in 2018 to 9% in 2024.^[39],[40] All Canadian derivatives asset classes have increased their share of the global market over that 5-year period (figure below).

A significant event in Canadian derivatives markets this past year was the migration from CDOR to CORRA. The impact on derivatives markets was substantial. CDOR and CORRA are interest rate benchmarks used in almost all CAD-denominated derivatives from fixed-to-float and overnight index swaps to the funding leg of equity and commodity derivatives, among others. The migration represented a potentially significant operational risk as a poorly executed transition could have resulted in open contracts without a fallback benchmark and counterparties unsure of their cash flows or exposure.

The benchmark migration to CORRA was completed smoothly and successfully. Monitoring the transition using trade repository data revealed a relatively smooth changeover and demonstrated the data’s utility for tracking trends and assessing potential risks as the migration deadline approached (see Benchmarks section above for more details).

The new Term CORRA addresses the so-called inverted pyramid problem. The main concern with certain previous interest rate benchmarks was that the size of the market used to create the benchmark was much smaller than the market upon which the benchmark was used, increasing the potential for manipulation (the inverted pyramid problem). USD London Interbank Offered Rate (LIBOR), CDOR and many other Interbank Offered Rates all exhibited this feature. Term CORRA was created from a need for a forward-looking Canadian interest rate benchmark and was designed to be calculated from the prices of 1-month and 3-month CORRA futures contracts.

Regulators will be monitoring the new benchmarks on an ongoing basis. To ensure the inverted pyramid problem doesn’t resurface with Term CORRA, restrictions have been put in place by the Canadian Alternative Reference Rate Working Group (CARR) on how Term CORRA can be used. These restrictions limit its use to loans and trade finance and any associated derivatives used to hedge those products. Using trade repository data combined with CORRA futures data from the Montréal Exchange, regulators can effectively monitor market activity to identify inverted pyramids and will be able to act if necessary.

Margin liquidity risk

Large changes in interest rates and important market prices and the ensuing effects on markets are a source of potential systemic risk. Large price swings could indeed have a substantial impact on derivatives markets through margin calls. For example, in 2022 when interest rates in the UK rose sharply, pension funds – employing liability-driven investment (LDI) strategies – with portfolios of interest rate swaps experienced large mark-to-market losses, which required posting additional margin to cover them. Finding large amounts of margin quickly (typically in the form of cash in the UK) required the selling of bonds, which in turn caused the price of UK bonds to fall and interest rates to rise further in a negative feedback loop.

Regulators have been monitoring margin liquidity risk in the Canadian context. The CSA and other Canadian financial authorities have started to assess the potential impact a large interest rate shock could have on the value of swap portfolios to better understand the amount of margin that could be required. While largely contained within the UK, this risk also exists in the Canadian financial system with our large pension funds and insurance companies and their large holdings of interest rate swaps (See the Clearing section on initiatives related to central counterparty margining requirements).

Canadian regulatory developments

Regulatory developments in Canada have helped improve transparency and mitigate systemic risk. The regulatory framework in Canada continues to develop alongside the evolving derivatives markets. Two examples are amendments made to OTC derivatives trade reporting^[41] and mandatory clearing rules.^[42]

Trade reporting rules were amended to introduce international data standards for OTC derivatives reporting.^[43] These changes harmonized and clarified what data elements are required to be reported, as well as established data quality controls that improved the reliability of derivatives data reported to regulators.

Further proposed amendments were made to update the list of mandatory clearable derivatives.^[44] These proposed amendments reflect the migration in interest rate benchmarks and the increased systemic importance of such benchmarks. The amendments also require the most popular CDS Index products to be cleared in Canada for the first time. It is widely agreed that increasing the scope of products that must be cleared through a CCP helps contribute to financial stability.

Overall, the Canadian OTC derivatives market continues to function effectively. OTC derivatives continue to be used by Canadian market participants as an important risk mitigation tool and an efficient means to gain exposure to various markets. Nonetheless, continuous monitoring is warranted due to the market’s significant size and interconnectedness within the financial system, focusing on dynamics and trends in products traded, active counterparties, and the level of associated risks. The CSA continues to monitor risks and concentration in the market using trade repository data, as well as implementing requirements to regulate the conduct of key participants in the OTC derivatives market.^[45]

Private Asset Funds

Prospectus-exempt private asset funds^[46] have surged over the past decade, underpinned by demand from institutional investors. Canadian-domiciled private asset funds have grown from $83 billion in 2020 to $134 billion in 2023 (figure below). However, these figures likely underestimate the total size of private asset funds in Canada, since financial regulatory data does not capture fund-like entities structured as private corporations that are outside the scope of the OSC Investment Fund Survey. Capital raising data typically exists for these fund-like entities from reports of exempt distribution, but not comprehensive structured financial data.^[47] Nevertheless, all indications are that private asset funds and fund-like entities are a growth area both in Canada and abroad.^[48]

Private asset fund holdings have reportedly become less-liquid over time. Since 2020, the share of stand-alone private asset fund net assets that could reportedly be sold in less than a year fell from 48% in 2020 to 31% in 2023 (figure below). Given their illiquid portfolios and the fact that some of these funds are non-redeemable, private asset funds should not be considered appropriate for investors who may need ready access to cash.

Private asset funds appear to be adjusting their redemptions profile to the illiquidity of their holdings. Based on data from the OSC Investment Fund Survey, the share of total stand-alone private asset fund net assets that can be redeemed within a year fell from 74% in 2020 to 64% in 2023. Despite these adjustments, overall, private asset funds still report liquidity mismatches where portfolio holdings cannot be sold as quickly as investors can redeem their units.

Sudden surges in redemption requests may trigger private asset funds and fund-like-entities to suspend redemptions to ensure that investors are repaid in orderly fashion. The suspension of redemptions is generally used as a last resort. Efforts to better align redemption profiles with estimated liquidity of underlying portfolios would increase the ability of private asset funds to meet surging investor outflows through the normal redemption process.

Since private asset funds invest in private equity, private debt, real estate and infrastructure, it is difficult to value them with any regularity. Moreover, because their holdings are illiquid, redeeming unitholders may be required to wait to be repaid. Notwithstanding these liquidity considerations, private asset funds generally use little leverage, limiting potential counterparty exposure.

Securitization

Total amount outstanding in the Canadian private securitization market has been relatively stable since the beginning of the year. We observe somewhat diverging trends between the two main components of this market, namely term asset-backed securities (term-ABS) and asset-backed commercial paper (ABCP). For the term-ABS market, we observe a slight decline in amounts outstanding year-to-date. On the other hand, the ABCP market has continued to grow and now stands slightly above $50 billion in amounts outstanding as of December 2024, compared to a low of approximately $35 billion in 2022.

The renewed use of the ABCP market coincides with the planned disappearance of the Canadian BA market. While many factors underpin this growth, it is worth noting that the ABCP market has been identified by market participants and authorities as one of the replacements to the BA market (see Benchmarks section above for more details).^[49]

The securitization market continues to be focused on credit cards, mortgages, and auto loans. The composition of term-ABS underlying assets is dominated by credit cards, representing approximately 78% of total assets, followed by auto loans and leases. For ABCP, the two main types of underlying assets are residential mortgages and auto loans, and their shares of total assets have been stable over the past year.

Despite a challenging economic environment, term-ABS and ABCP underlying assets have continued to perform relatively well in terms of credit performance.^[50] Across the Canadian economy, rates of loans in arrears on consumer credit have increased somewhat since 2022, including on credit cards and auto loans, but they remain at relatively low levels. As interest rates continue to moderate, default rates should stabilize. For residential mortgages and HELOCs, arrears have remained low.^[51]

The private securitization market provides important benefits, notably by enhancing credit availability to households. Risks in this market, which have been highlighted during the 2007-2008 financial crisis, are notably associated with complexity and lack of transparency. Overall, such risks are low and stable in Canada and the overall size of the market is comparatively small to other Canadian funding markets. Since 2008, CSA amendments have contributed to enhancing the transparency and level of disclosure in the ABCP market. These amendments also prohibit the inclusion of non-traditional assets, like credit derivatives, and establish minimum credit rating thresholds to qualify for the short-term securitized product prospectus exemption.^[52]

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[1] Refer to National Instrument 24-102 Clearing Agency Requirements, Part 2, Section 2.2 for the CSA’s guiding factors in determining whether a clearing agency is systemically important to a jurisdiction’s capital markets.

[2] The CDS and CDCC are recognized by the AMF, British Columbia Securities Commission (BCSC) and OSC. The LCH is recognized by the AMF and OSC. The primary regulator for LCH is the Bank of England. At the clearing-member level, certain foreign clearing members that provide Canadian participants with access to foreign CCPs may also be critical.

[3] Clearing agencies in this context refer to central counterparties and securities settlement systems. The Bank of Canada has also designated other types of financial market infrastructures.

[4] The OSC currently exempts a number of CCPs from recognition by order with terms and conditions and has a memorandum of understanding with each of the home regulators that facilitates information sharing. The OSC meets with the home regulators on a regular or as-needed basis.

[5] PTM has been postponed until after the transition of Canada’s standard securities settlement cycle from T+2 to T+1 that occurred on May 27, 2024.

[6] ECB, G7 Fundamental Elements for Third Party Cyber Risk Management in the Financial Sector, October 2022, https://www.ecb.europa.eu/paym/pol/shared/pdf/October_2022-G7-fundamental-elements-for-third-party-cyber-risk-management-in-the-financial-sector.en.pdf.

[7] Regulated clearing agencies in Canada are subject to: National Instrument 24-102 Clearing Agency Requirements, https://www.osc.ca/en/securities-law/instruments-rules-policies/2/24-102.

[8] These changes can also help ensure resources collected from participants are more stable through the cycle.

[9] CDS, T+1 Is Here: Transforming Canadian Capital Markets, https://www.cds.ca/solutions/cds-key-initiatives/t-1?lang=en.

[10] BCBS-CPMI-IOSCO, Review of margining practices, September 2022, https://www.bis.org/bcbs/publ/d537.htm.

[11] BCBS-CPMI-IOSCO, Transparency and responsiveness of initial margin in centrally cleared markets: review and policy proposals, January 2025, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD783.pdf and CPMI-IOSCO: Streamlining variation margin in centrally cleared markets – examples of effective practices, January 2025, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD784.pdf.

[12] Post transition to T+1, the Continuous Net Settlement (CNS) failures to settle at the CDS have been holding at the low end of the historical average, which is a positive sign that the Canadian capital markets have adapted well to the shorter settlement cycle.

[13] Credit ratings are based on all published bond credit ratings collected by LSEG (e.g., Moody’s, Fitch, DBRS, etc.), except for S&P due to licensing restrictions.

[14] Bank of Canada, Financial Stability Report – 2024, May 2024, https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/.

[15] IOSCO, Policy Recommendations for Crypto and Digital Asset Markets, Final Report, FR11/2023, 16 November 2023, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD747.pdf.

[16] IOSCO, Final Report with Policy Recommendations for Decentralized Finance (DeFi), FR/14/2023, December 2023, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD754.pdf.

[17] IOSCO, Update to IOSCO 2023-24 Work programme March 2024 – March 2025 Workplan, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD764.pdf.

[18] Mercer, Mercer Investments’ AI integration in investment management 2024 global manager survey, 2024, https://www.mercer.com/insights/investments/portfolio-strategies/ai-in-investment-management-survey/.

[19] IBM, Canadian businesses saw uptick in AI Adoption in 2023 vs. global peers, January 2024, https://canada.newsroom.ibm.com/2024-01-10-Canadian-businesses-saw-uptick-in-AI-Adoption-in-2023-vs-global-peers.

[20] OSC, Artificial Intelligence and Retail Investing: Use Cases and Experimental Research, September 2024, https://www.osc.ca/en/investors/investor-research-and-reports/artificial-intelligence-and-retail-investing.

[21] OSC, Artificial Intelligence in Capital Markets: Exploring use case in Ontario, October 2023, https://oscinnovation.ca/resources/Report-20231010-artificial-intelligence-in-capital-markets.pdf.

[22] Bank of Canada (Tiff Macklem), Artificial intelligence, the economy and central banking, September 2024, https://www.bankofcanada.ca/2024/09/artificial-intelligence-the-economy-and-central-banking/?utm_source=alert&utm_medium=email&utm_campaign=SPTM240920.

[23] FSB, The Financial Stability Implications of Artificial Intelligence, 14 November 2024, https://www.fsb.org/uploads/P14112024.pdf.

[24] CSA, Staff Notice and Consultation 11-348: Applicability of Canadian Securities Laws and the use of Artificial Intelligence Systems in Capital Markets, 5 December 2024, https://lautorite.qc.ca/fileadmin/lautorite/reglementation/valeurs-mobilieres/0-avis-acvm-staff/2024/2024dec05-11-348-avis-acvm-en.pdf.

[25] As of December 2023. Includes only stand-alone prospectus funds. Source: OSC Investment Fund Survey.

[26] As of December 2023. Source: OSC Investment Fund Survey.

[27] Gross balance-sheet leverage is defined as long and short balance-sheet positions over total net assets. This calculation excludes derivatives notional values.

[28] Other types of prospectus-exempt funds include pooled funds, exempt money market funds, and flow-through LPs.

[29] FRED – Federal Reserve System (US), Hedge Funds; Total Net Assets; Asset, Level. October 11, 2024, https://fred.stlouisfed.org/series/BOGZ1FL622000003Q.

[30] Two approaches are used to measure hedge fund leverage. In both cases, total assets and total non-unitholder liabilities are included in the numerator and total net assets are the denominator. In the first approach (RHS), notional values from interest rate, FX and other derivatives are included. The second approach focusses on balance-sheet leverage only (LHS), including the market or fair value of all positions, but excluding the notional value of any derivative positions.

[31] OSC, Investment Fund Survey dashboard, https://public.tableau.com/app/profile/osc.ifs/viz/OSCInvestmentFundSurvey/Summary?publish=yes.

[32] Foreign hedge funds investing in Canadian fixed-income and derivatives markets may not be regulated by Canadian securities regulators, because they do not meet criteria for registration. For example, some foreign hedge funds may not have any Canadian investors, a key criterion for registration.

[33] Andreas Uthemann & Rishi Vala, How big is cash-futures basis trading in Canada’s government bond market?, Bank of Canada, June 2024, https://www.bankofcanada.ca/2024/06/staff-analytical-note-2024-16/.

[34] Statistics Canada, National Balance Sheet Accounts, Table: 36-10-0580-01, Chartered Banks, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610058001.

[35] IOSCO, Anti-dilution Liquidity Management Tools – Guidance for Effective Implementation of the Recommendations for Liquidity Risk Management for Collective Investment Schemes, December 2023, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD756.pdf.

[36] National Instrument 81-102CP Investment Funds, https://www.osc.ca/en/securities-law/instruments-rules-policies/8/81-102-81-102cp.

[37] Outstanding notional amounts are not available for commodity derivatives due to calculation complexities.

[38] OSC aggregation of public Canadian Trade Repository data.

[39] Bank for International Settlements, OTC Derivatives Statistics, https://data.bis.org/topics/OTC_DER.

[40] These numbers may be inflated due to the differences in calculation methodology between the BIS and the trade repositories, but the data still indicates an upward trend.

[41] OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting, https://www.osc.ca/en/securities-law/instruments-rules-policies/9/91-507.

[42] National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives and Related Companion Policy, January 2017, https://www.osc.ca/en/securities-law/instruments-rules-policies/9/94-101-94-101cp/national-instrument-94-101-mandatory-central-counterparty-clearing-derivatives-and.

[43] OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting, July 2024, https://www.osc.ca/en/securities-law/instruments-rules-policies/9/91-507/osc-notice-publication-amendments-osc-rule-91-507-trade-repositories-and-derivatives-data.

[44] National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives, September 19, 2024, https://www.osc.ca/en/securities-law/instruments-rules-policies/9/94-101-94-101cp/csa-notice-consultation-proposed-amendments-national-instrument-94-101-mandatory-central.

[45] Multilateral Instrument 93-101 Derivatives: Business Conduct came into force on September 28, 2024, https://www.osc.ca/en/securities-law/instruments-rules-policies/9/93-101/multilateral-instrument-93-101-derivatives-business-conduct.

[46] Private asset funds are prospectus-exempt funds that invest in private equity, private debt, real estate or infrastructure.

[47] CSA, Reports of exempt distribution, https://www.securities-administrators.ca/resources/reports-of-exempt-distribution/.

[48] International Monetary Fund, Global Financial Stability Report, October 2024, https://www.imf.org/-/media/Files/Publications/GFSR/2024/October/English/textrevised.ashx.

[49] CFIF-BATVN, CFIF-BATVN publishes an educational primer on Canadian Asset-Backed Commercial Paper, June 26, 2024, https://www.bankofcanada.ca/2024/06/cfif-batvn-publishes-educational-primer-canadian-asset-backed-commercial-paper/.

[50] DBRS, Canadian Securitization Market Overview, November 2024

[51] Bank of Canada, Indicators of financial vulnerabilities, January 7, 2025, https://www.bankofcanada.ca/rates/indicators/indicators-of-financial-vulnerabilities/.

[52] National Instrument 45-106 Prospectus Exemptions, https://www.osc.ca/en/securities-law/instruments-rules-policies/4/45-106.

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