Market News

Canada explicitly bans binary options

Sep 28 2017
By Jonathan Smith , Find me on Google+

The Canadian Securities Administrators (CSA) – the body unifying all regional financial markets and services regulators – has announced the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options. This makes it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual residing in Canada.

Until now, in order to offer its services, a binary options broker had to have a license from the respective provincial regulator in the country. There were no licensed brokers, but this did not mean trading in binary options was explicitly forbidden, nor did it stop various scam companies to defraud Canadians.

“Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering,” said Louis Morisset, Chair of the CSA and President and Chief Executive Officer of the Autorité des marchés financiers, quoted in a CSA official statement. “This ban positions the CSA among the world leaders in fighting back against binary options fraud and represents an important step in protecting Canadians. It conveys a clear message that these products are unsuitable for individuals because of their risky characteristics and that their trading is illegal.”

The news of the prohibition is not very surprising, as plans of this were announced earlier this year as a result of the investigation and activities of the CSA Binary Options Task Force that was formed in 2016 as a proactive means to fight this form of fraud.

“From day one, our job has been to find every avenue to protect Canadians from this particular fraud,” said Jason Roy, the Task Force’s Chair and Senior Investigator with the Manitoba Securities Commission. “ This ban supports our efforts, which include working with credit card companies, tech companies and advertisers that binary options fraudsters rely on to carry out their schemes. It will all add up to fewer Canadians being exposed, and fewer Canadians being cheated.”

Despite the Canadian provincial regulators being among the most actively warning of fraudulent binary options brokers, it did not stop them from scamming clients. Most likely the new ban will not stop them either.

The binary options regulation varies in the different countries. In the USA, for example, are allowed only exchange-traded binary options and the exchanges are subject to tight regulation. There are two such exchanges – Cantor and Nadex.

In the UK the binary options providers are regulated by the Gambling Commission, unlike the forex brokers who are regulated by the Financial Conduct Authority.

Israel has forbidden the offering of binary options within the country and is currently going after the binary options brokers operating their call centers from there, while earlier this year media reported that the Cyprus Securities and Exchange Commission is also considering to ban binary options.

France, on the other hand, has passed a law banning the advertising of forex and binary options products via electronic means.

TAGS: canada csa binary options ban

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