Regulatory pilot lets firms trial novel tools under scrutiny, not on live clients
A new regulatory sandbox is giving CIRO-regulated firms a new way to test cutting-edge products and technologies under real-world conditions, but with regulatory guardrails firmly in place.
The Canadian Investment Regulatory Organization (CIRO) has launched InnovateSafe, which allows CIRO-regulated firms to test innovative products and technologies in a controlled environment under CIRO oversight.
The initiative responds to a rapidly evolving financial industry, where maintaining the trust of investors and the organizations and people CIRO regulates depends on keeping pace with change.
InnovateSafe reinforces CIRO's commitment to delivering efficient, effective regulation that responds to the evolving needs of investors, dealers and markets.
Alexandra Williams, senior vice-president of strategy, innovation and stakeholder protection at CIRO, said InnovateSafe is intended to support new products and technologies while keeping investor protection and market fairness central to the regulator’s approach.
InnovateSafe will support CIRO-regulated firms in building compliant solutions that are ready for full market deployment by granting temporary approvals and, where warranted, targeted exemptive relief.
The testing environment could help accelerate the adoption of transformative or novel products, services, ideas or technologies that could help position Canada as a global leader in financial innovation.
InnovateSafe would also enable CIRO to gather essential evidence and insights needed to provide regulatory clarity in areas that have not been previously addressed.
Williams said the initiative will give CIRO access to real-world data on new products and technologies, helping the regulator develop clearer positions on emerging issues and make more use of data in its oversight.
InnovateSafe will operate under CIRO oversight, with safeguards in place to protect investors.
Approved projects will have mandatory reporting requirements throughout the testing period, which include reporting deviations from the test plan and unexpected outcomes.
Key metrics and performance data reported by participants will also enable CIRO to generate regulatory insights that will help it better understand risks and their implications, as well as shape future policy development and supervisory approaches.
