In response to escalating binary options scams, provincial and territorial securities commissions across Canada have formed a task force and launched a new dedicated website to crack down on its aggressive marketing tactics, cloning and false claims of regulation.
In addition to the Binary Options Task Force, the Canadian Securities Administrators (CSA), comprised of the country’s thirteen key financial market regulators across their respective provinces, launched a new resource site, www.BinaryOptionsFraud.ca. The move is part of a campaign to educate Canadians about the binary options scams.
The initiative against binary options activities comes after the Canadian watchdogs received more than 800 reports and inquiries from investors in 2016 alone, saying the schemes have the become nation’s most widespread securities fraud targeting the general public, namely to retail investors.
Jason Roy, a senior investigator at the Manitoba Securities Commission who is heading the binary-options task force, said: “Binary options fraud is a leading type of investment fraud facing Canadians today. We want Canadians to know that there are no registered individuals or firms permitted to trade these products in Canada. We are seeing families of every demographic being affected by financial losses due to binary options trading. We want Canadians to understand the financial dangers associated with these products.”
Did COVID-19 Save the Forex Industry?Go to article >>
With that said, the CSA and the Canadian regulation community make it clear that it has no actual plan in place to begin the study of regulating the binary options market in Canada. Within the statement, the organization once again emphasized that there is no company currently registered in Canada to carry out such offerings to residents and labeled it as illegal in the country.
Regulators step up their efforts
Meanwhile, the CSA said investors are lured by ads on social media sites such as Facebook. Binary options products are often advertised via online platforms and are sold without investment advice which has resulted in significant detriment and loss to retail investors, it said. Based on this, the new task force has already contacted online advertisers and mobile companies to eliminate binary option advertising and mobile apps in Canada.
Although the Canadian regulator seems to have its hands tied when it comes to policing brokers operating in foreign jurisdictions, the CSA said that it is also co-ordinating efforts with global regulators and working with credit card companies and financial institutions to share information and track fraudulent activity, as well as disrupt funding mechanisms. Over the past few months, it has been reaching out to their counterparts in other countries in an effort to end fraudulent financial transactions that originate abroad.
The coordinated effort appears to be driven by a number of clients that have been the victim of the scams of binary options providers purporting to be legitimate and based in either Canada or other jurisdictions. The fact that the stance has been reached simultaneously shows that trading binary options is becoming more popular for Canadians despite its illegal status.
This status is something residents may not even be aware of, however, increasing awareness may be exactly what the regulators are trying to do with this latest effort.