It has been several years since the first signs of trouble regarding binary options were flagged by Canadian watchdogs. Warnings started surfacing on the websites of the Ontario, British Columbia and Manitoba Securities Commissions.
The country’s complex financial regulatory system consists of 10 provincial and 3 territorial regulators that are tasked with enforcing consumer protection. Today, the supra-national regulator, after monitoring the extent of fraud that binary options brokers have committed on Canadian residents, decided to make trading binary options illegal.
What Will Change?
As already mentioned above, the new law comes several years after binary options brokers started aggressively targeting unsophisticated investors in Canada. The ruthless hot sales tactics that brokers have been employing have caused material damages to the financial situations of many individuals.
The main aspect of this new ban is that the Canadian Securities Administrators (CSA) officially prohibits the advertising, sales and trading of binary options.
The Chair of the CSA, Louis Morisset, claims: “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.”
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The problem with the ban is that binary options were actually never legal to offer and advertise in Canada. No company that has been selling the product in the country has been regulated or registered in Canada, hence the hollow action of the CSA comes as too little, too late.
“Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering,” commented Morisset.
Regulator to Work with Credit Card Processors
While unregulated brands have been storming the Canadian market for years, the CSA aims to limit their actions by engaging credit card companies, tech providers and affiliates.
According to the Binary Options Task Force Chair and Senior Investigator Jason Roy, the ban will lead to fewer Canadians being exposed and fewer Canadians being cheated. Several years in the making, the ban’s effective value is yet to be determined.
Canadian press has confirmed the heavy cost of the operation of the unregulated binary options industry in the country and the powerlessness of the regulators. A broker called 23Traders for example solicited CAD 200,000 from an individual who committed suicide after losing the money.
Canadian financial regulators have not detailed how they plan to enforce the ban. Finance Magnates has reached out for a comment on the details, but at the time of publication has not received an official response.