Innovation has always been part of how capital markets evolve, and at its best, it produces genuine improvements for investors and the broader economy. The word “innovation”, however, is doing a lot of work lately. It is now routinely used by product manufacturers and distributors to justify pushing new and often complex products into the hands of retail investors, regardless of whether those products serve investor needs or contribute to healthy capital formation.
The issue is not innovation itself, but the assumption that anything bearing the label deserves regulatory approval. Regulators should not simply champion innovation; they should support it responsibly, which means requiring that new products deliver meaningful benefits, avoid unjustified risks to investors, and withstand a thorough, objective and transparent public-interest assessment.