The Ontario Securities Commission (OSC) says the applications of artificial intelligence (AI) in the securities industry have grown rapidly, with many applications targeting retail investors.

“It is important that we are agile and able to harness these opportunities while ensuring investor protection remains at the forefront of how we regulate,” the OSC’s executive vice president of strategic regulation, Leslie Byberg, said in a statement about the release of new research from the OSC, entitled Artificial Intelligence and Retail Investing: Use Cases and Experimental Research.

The behavioural science experiment conducted by the OSC focused on the role of AI in supporting retail investor decision-making. Participants were asked to invest a hypothetical $20,000 when following instructions from a human financial services provider, an AI tool or a provider using an AI tool (blended approach). Results showed that participants receiving advice from the blended approach adhered to the investment suggestions most closely, but the OSC says the difference was not statistically significant.

No discernable difference 

“Notably, there was no discernable difference in adherence to investment suggestions provided by a human or an AI tool, indicating Canadian investors may be receptive to taking advice from an AI system,” they write.

The report looks at three use cases and at the benefits and risks stemming from each. The report also looks at scams and fraud. In testing adherence to advice, the study also varied whether the suggested asset allocations were sound or unsound. 

“Our data suggests that Canadians are trusting of investment suggestions generated by AI systems, as we did not observe any material difference in adherence between our human and AI conditions. This underlies the ongoing need to ensure that AI systems providing investment advice and recommendations are based on unbiased, high-quality data and ultimately enhance the retail investor experience.”