The Canadian Securities Administration (CSA) – the body unifying all regional financial markets and services regulator – has published for comment a “National Instrument” intending to ban trading in binary options altogether. The document, entitled “Prohibition of Binary Options” would prohibit advertising, offering, selling or otherwise trading a binary option to an individual.
The proposed instrument can be found on CSA members’ websites. The organization encourages comments by May 29, 2017.
Currently binary options are not explicitly forbidden in Canada, but the brokers offering trading in such instruments must be regulated by the respective provincial financial watchdog. According to the CSA, there are no regulated binary options allowed to operate in Canada, which in essence means all binary options brokers offering their services to Canadian residents are operating in violation of the law.
“We are deeply concerned by the increasing number of investor losses and complaints resulting from binary options,” said Louis Morisset, Chair of the CSA and President and Chief Executive Officer of the Autorité des marchés financiers. “The proposed ban is critical to our efforts to help stop binary options fraud in Canada.”
The Canadian provincial regulators often publish warnings against various binary options brokers who are scamming people out of their money, but usually to no avail. This has prompted the CSA to form a task force to address the growing threat to investors, while earlier this year Quebec’s financial regulatory body, the Autorite des Marches Financiers (AMF) said it is intending to formally ban the sale of binary options to residents of the province.
By doing so Canada would join the growing list of countries imposing certain restrictions or prohibiting the sale of binary options altogether. Israel, for example, has forbidden the offering of binary options to Israeli residents last year and is currently looking into shutting the down the call centers of the binary options brokers operating out of the country.
France has prohibited the advertising of forex, CFD and binary options products through electronic communications, while Belgium has entirely banned the sale of such products in the country.
Canada’s southern neighbor – the USA – has a different approach to binary options and permits only the sale of exchange traded products. This, of course, does not stop the binary options brokers from targeting and scamming US residents.