The Canadian Securities Administrators (CSA) are on their way to propose a ban on the advertising, offering, selling and trading of binary options in Canada. The announcement comes after a slew of regulated and unregulated brokers have been illegally targeting clients in Canada for years.
Canadian authorities are proposing a document called “Prohibition of Binary Options”. The instrument has been provided in the country via aggressive sales tactics involving some Cyprus regulated firms and many unregulated binary brokers.
Commenting on the matter, the Chair of the CSA and CEO of the Canadian AMF said: “We are deeply concerned by the increasing number of investor losses and complaints resulting from binary options. The proposed ban is critical to our efforts to help stop binary options fraud in Canada.”
Canadians a Frequent Target for Binary Options Scams
Aggressive sales tactics have been used by many binary options brokers to try to convince Canadians to deposit funds into offshore entities. To their detriment, very few clients are able to fully recover their losses.
As the CSA notes: “The transaction takes place for the sole purpose of stealing money.”
“In addition, those who have provided credit or personal information to binary options sites frequently fall victim to identity theft,” an official statement elaborates.
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Canadian securities regulators have not at present authorized any company to offer binary options trading. While provincial regulators are regularly issuing warnings about binary options fraud, the country has been materially affected by fraudulent entities.
Canadian authorities are urging investors to visit http://www.aretheyregistered.ca/ to verify whether a certain party has the authorization to offer financial services. Individuals who have already invested funds with companies offering binary options are urged to contact their local securities regulator.
Binary Options Fraud
Numerous binary options firms have been aggressively selling their products in countries unregulated. Canadian authorities have set up a special website to inform clients about the risks of trading binary options: http://www.binaryoptionsfraud.ca/.
The chief regulator for binary options providers in the EU, the Cyprus Securities and Exchange Commission, has recently cracked down on the industry. The Cypriot regulator has been exerting pressure on companies to reign in their practices of cold calling and false advertising.
Industry Crackdown Continues
The binary options industry continues to attract regulatory attention, a trend that usually leads to major crackdowns on businesses. Earlier this year, the Israeli Securities Authority acted in conjunction with CySEC to force the companies that are operating from Israel to stop marketing abroad.
In addition, the Israeli Securities Authority (ISA) included in the law the ban on marketing binary options to Israelis, which has been in effect from March 2016 as a temporary order.
After pressure from the European Securities Markets Authority (ESMA), CySEC has also been more vigilant towards binary options providers. A major revamp of trading platforms last year was followed up with marketing and bonus offers restrictions. Unfortunately the measures are too little too late as the collateral damage caused by a number of brokers is materially damaging the whole industry.