January 16, 2024 by Jason Contant
Canadian financial services regulators have the emerging technology of quantum computing on their radar, but questions remain around its potential regulation.
“Regulating quantum computing, especially in the context of the insurance industry, is complex due to the technology’s novelty and potential impact,” Biren Agnihotri, EY Canada’s emerging technologies and AI & data leader, told Canadian Underwriter.
“To ensure security, privacy, fairness and transparency, a balanced approach is necessary, that fosters innovation and development while also implementing updating existing regulations and new frameworks specifically designed for the unique aspects of quantum technology.”
Last month, the Office of the Superintendent of Financial Institutions (OSFI) encouraged federally regulated financial institutions to complete a voluntary questionnaire asking about artificial intelligence/machine learning (AI/ML) and how prepared institutions are for quantum computing. The regulator will use the feedback (due by Feb. 19) to increase understanding of institutions’ involvement in quantum computing, inform policy and supervisory work, and assess the current state of quantum-readiness.
‘Many advantages’
OSFI told CU quantum computing could bring many advantages relative to conventional computing. “Potential use cases could range from AI/ML applications to fraud detection and portfolio allocation. Adoption of this technology is expected to yield greater efficiencies in time, effort and cost.”
The Financial Services Regulatory Authority of Ontario (FSRA) is also monitoring the development of quantum computing. FSRA told CU it is an active member of the Quantum Readiness Working Group at the Canadian Forum for Digital Infrastructure Resilience, and FSRA staff meet regularly to discuss emerging technology like quantum computing.
From OSFI’s perspective, regulation of quantum computing would include developing rules, interpreting legislation and regulation and providing regulatory approvals for certain types of transactions, balancing the goals of sound with the need for institutions to operate within a competitive marketplace.
Generally speaking, considerations and approaches to regulating quantum computing should include the following, Agnihotri says.
Feature image by iStock.com/Olemedia