Leslie Byberg speaks with Ada Garetson at the recent FSxT Connect: Regulatory Pulse event

At last week's FSxT Connect: Regulatory Pulse event, Leslie Byberg, Executive Vice President, Strategic Regulation at the Ontario Securities Commission (OSC), offered an inspiring vision for the 92-year-old regulatory body: "We can make rules. We can enforce rules. But we can also influence the conversation by being a credible voice at the table."

In conversation with Gowling WLG partner Adam Garetson, Byberg detailed how the recently formed Strategic Regulation division she leads is at the forefront of the OSC's drive to deepen stakeholder engagement, streamline the path to capital formation and have an ever-greater influence on the future of Canada's capital markets.

Drawing expertise from law, technology, policy, behavioral science and economics, the multidisciplinary team pursues a range of forward-focused activities, all with a view to ensuring the OSC can maintain a balanced approach to market oversight amid a rapidly changing investment landscape. "We need to be thinking about where things are going and make sure we are there to provide the protections and frameworks when necessary," she stressed.

An agile approach to emerging risk

Not surprisingly, this evolution in thinking is fueled in large part by the accelerating pace of technology. The sudden rise of cryptocurrency, in particular, was an eye-opening experience for the OSC. "I think crypto taught us that we need to move quickly and keep pace with what was going on."

In recent months, this understanding has guided the OSC's determined approach to artificial intelligence (AI), an increasingly urgent focus for the regulator. Byberg's team has been busy mapping the varied AI use cases for capital markets participants, conducting intensive research and engaging industry leaders to better understand the ways in which the technology can be both a tool for innovation and a catalyst for new or increased risks.

With respect to the latter, Byberg highlighted AI's worrisome potential to "turbocharge" fraud, noting that the sophistication of AI-enabled scams can make it difficult for even savvy investors to detect fraudsters. "The days of being able to spot the scammy offering because the spelling is bad and the logo doesn't look right are over."

Beyond AI, the OSC is closely monitoring the rise of "dark patterns" – practices that can mislead or coerce investors into making bad decisions – more broadly. Recognizing the significant risks such deceptive tactics pose, only amplified in the digital age, the OSC has redoubled its commitment to combatting these subtle forms of manipulation.

Listening, learning, leading

One of the most important pillars of the OSC's strategy, Byberg emphasized, is its resolve to adopt a more holistic approach to stakeholder engagement, particularly with sectors and industries it hasn't traditionally consulted. By expanding the conversation to include more voices, the OSC hopes to gain insights that will help it stay ahead of major developments. "Because we're trying to look around the corner, that means we want to talk to people who we might not typically have talked to before."

Crucially, the OSC is eager to assert itself not just as an enthusiastic participant in such timely discussions, but as a recognized thought leader – one with an instrumental role in advancing bold ideas, navigating transformation and shaping the discourse around emerging risks and opportunities.

This objective is presented plainly in the OSC's recent Strategic Plan: "In our information-driven world in which many sources compete for attention and misinformation spreads quickly, we must ensure that our voice is heard clearly above the noise… As such, we are committed to increasing our thought leadership, collaboration, and market presence to become a source of impartial information and learning for investors and other capital markets participants."

In keeping with the spirit of these words, before exiting the stage Byberg extended an open invitation to the audience, mostly comprising financial services and fintech professionals: "We want to have a conversation about where this is all going, and we would welcome hearing from many of you."

For more information on these developments, contact the author(s) or a member of our FSxT group.