Several Canadian provincial financial regulators have issued warnings regarding the binary options market, reminding that there are no entities authorized to provide trading in binaries within Canada.
A notice issued on Wednesday by the Canadian Securities Administrators (CSA), an umbrella organization of Canada’s provincial and territorial securities regulators, regarding binary options providers was widely circulated by the financial watchdogs, including the British Columbia Securities Commission (BCSC), the Autorite des Marches Financiers (AMF), and the Alberta Securities Commission (ASC). In the notice, the CSA said that the regulators are concerned with the increasing number websites promoting offshore binary options trading platforms that are targeting Canadians.
Any brokers and platforms that offer trading in binary options in Canada are doing it illegally.
“Canadians are exposing themselves to the high risk of identity theft and fraud when signing up for these platforms that often request their credit card information,” said Louis Morisset, Chair of the CSA and President and CEO of the AMF. “The CSA warns investors that if they deal with these platforms, they risk the threat of thousands of dollars in unauthorized withdrawals on their credit cards and of being stuck with high-interest payments for a non-existent investment,” he added.
In the online trading world, binary options are the closest thing to gambling. In this type of trading, investors guess whether the price of a certain instrument, would go upwards or downwards within a pre-determined time frame. Once the time is up, the option is deemed expired and the bet is settled. Depending on the outcome, a trader either collects a profit, or loses money. According to the Canadian regulators, even when investors see virtual gains from trading in binary options, they often cannot access these profits as they don’t exist.
In Canada, financial service markets fall under the regulation of provincial watchdogs and legislation rules may vary in the different provinces. There were 3,034 companies and 123,883 individuals registered in Canada and authorized to operate in the securities market last year, and neither one of them was in the binary options segment. Neither of the regulators has granted authorization to any binary options brokers to provide their services to local investors.
Canada is not the only country to restrict binary options. In the US, this type of trading is restricted to exchange-traded only and there are two binary option exchanges – the Nadex and Cantor Exchanges.
Investors can look up whether an entity or an individual is registered or not by visiting aretheyregistered.ca. Engaging with any entities that are not listed on the website presents high risks for investors’money.
March is Fraud Prevention Month and the regulators take the opportunity to inform and educate the public of their rights and the risks they face regarding their investments. Following are five tips that the CSA provides that investors need to know to minimize risks:
- Always check registration and enforcement history before investing.
- Be wary of giving out personal information (including credit card information) over the phone or internet.
- Don’t make a decision on the spot. Take some time to research the opportunity and review it with an independent third party.
- Ask to have written information about the investment sent to you.
- Make sure you fully understand an investment.
The CSA is the council of the 10 provincial and three territorial securities regulators in Canada. It co-ordinates and harmonizes regulation for the Canadian capital markets. The majority of enforcement activities are executed locally, but in some cases regulators of different provinces and territories work together to supervise market players and investigate possible misconduct.
We strongly advise you to only deal with regulated brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.