“Our goal is to support responsible innovation that benefits investors and market participants while addressing risks associated with the use of these systems,” said Stan Magidson, chair of the CSA and chair and CEO of the Alberta Securities Commission, according to a release.
The guidance in the notice addresses key considerations for registrants, reporting issuers, marketplaces and other market participants that may leverage AI systems.
The guidance notes that policies and procedures with respect to the deployment of AI systems by market participants should be designed in a way that accounts for the unique features of AI systems and the risks they pose.
The CSA noted that some of the policies and procedures may include having a “human-in-the-loop” to effectively monitor the input and/or output of an AI system and ensure that the AI system is fit for purpose prior to deployment.
“Market participants whose business activities are regulated under securities law are responsible for the decisions they make and for understanding the systems they use,” the CSA stated.
It noted that the use of AI systems that rely on certain types of AI techniques with lower degrees of explainability. also referred to as “black boxes,” may challenge the concepts of transparency, accountability, record-keeping, and auditability.
The note also asks stakeholders to comment on a number of related issues including whether there should be new or amended rules and/or guidance to address risks associated with the use of AI systems in capital markets.
Among other things, the CSA is also asking stakeholders to consider what level of transparency/explainability should be built into an AI system for an AI system’s outputs to be understood and explainable by humans.
The consultation is also asking for comments on whether there should be new or amended rules and/or guidance to address risks associated with the use of AI systems in capital market.
The comment period for the notice closes on March 31, 2025.
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