Consultation on binary options prohibition closes today in Manitoba and Saskatchewan
In Quebec and Alberta, where the consultation closed a month ago, there is still no clarity on whether the ban will be implemented as a law.
The comment period for a proposed ban on all sorts of marketing and offering of binary options to individuals expires today in two Canadian provinces – Manitoba and Saskatchewan.
Under the proposals, outlined in April by the Canadian Securities Administrators (CSA), an organization which has among its members the securities regulators from 10 Canadian provinces and 3 territories, all advertising, offering, selling or otherwise trading a binary option with or to an individual will be prohibited.
There is still no clarity whether the proposed ban will get into effect, as the securities regulators in Quebec and Alberta, where the consultation on the ban closed a month ago, have not published any statements on the progress of this proposal’s implementation. However, Quebec’s financial regulator AMF has made public a set of comments on the proposal, including ones from the Investment Industry Association of Canada (IIAC) and North American Derivatives Exchange, Inc. (Nadex).
The IIAC, which represents 130 Dealer Member firms regulated by the Investment Industry Regulatory Organization of Canada (IIROC), insists that the ban must apply only to illegal binary options trading offered by unregulated binary options firms. According to the IIAC, its members should be allowed to offer binary options to retail investors.
Nadex, in its turn, said the ban should apply to so-called fifty/fifties which have commonly become identified with the term “binary option” but these should be considered not as an option but as a financial instrument with the characteristics of a fixed odds bet. The Exchange argues that the offering of volatility binaries, like vanilla put and call options or other legitimate financial instruments, should be allowed if the offeror is regulated and applicable requirements (client onboarding, risk disclosure, etc) are met.
While the ban is in the works, Canadian residents continue to lose money due to binary options. Data from the Manitoba Securities Commission (MSC), released on April 26, 2017, shows the body has received 17 reports from binary options scam victims over the last four months. In April this year, a man from Portage La Prairie said he had been defrauded of $130,000 to an offshore binary options firm, whereas a Southern Manitoba man had lost more than $300,000 for similar reasons.
The regulator notes that in 2015, there were four complaints from Manitobans about unregistered binary options firms, whereas in 2016, that number spiked to more than 58.