Despite industry opposition, Canada announces ban on binary options

Maria Nikolova

In the face of opposition from exchanges and industry lobbyists, the Canadian Securities Administrators (CSA) announced the implementation of the proposed ban on binary options.

More than five months have passed since the Canadian Securities Administrators (CSA), an organization which has amid its members the securities regulators from 10 Canadian provinces and 3 territories, published a proposal to prohibit binary options. Today, the CSA moved ahead with the implementation of the proposed regulatory mechanism.

Under the proposed instrument 91-102, the ban covers all sorts of “binary options”. It will apply to binary options, regardless of the specific name. This means that the prohibition will cover (list is not exhaustive) “all-or-nothing options”, “asset-or-nothing options”, “bet options”, “cash-or-nothing options”, “digital options”, “fixed-return options” and “one-touch options”.

The Proposed Instrument prohibits advertising, offering, selling or otherwise trading a binary option with or to an individual.

It is not yet clear whether the regulators have succumbed to the industry pressure and have amended some of the aspects of the proposal, especially with regard to allowing binary options to be offered by IIROC-regulated firms. Today’s announcement by CSA says that the new rules make it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual.

There has been some critical feedback as to the proposal. The Investment Industry Association of Canada (IIAC), which represents 130 Dealer Member firms regulated by the Investment Industry Regulatory Organization of Canada (IIROC), has insisted 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.

There have also been calls to allow trading binary options on-exchange, as this is allowed in the United States.

On the other side of the spectrum of opinions is the feedback by organizations like the Canadian Advocacy Council for Canadian CFA Institute Societies (the CAC), which has backed the binary options ban proposal and even went beyond it by questioning the status of OTC Forex.

The CAC has noted that binary options are commonly used as vehicles to commit fraud against individuals, often with no possibility of recovering the funds. More interestingly, the CAC stresses it is important that the CSA takes this measure in furtherance of the goal to prevent fraud and support better investor protection in the capital markets. The organization queries whether the sale of other such financial instruments to retail investors should also be restricted.

“In particular, instruments such as leveraged foreign exchange over-the-counter products may give rise to the same concerns expressed in the Binary Option Prohibition and consequently we query whether they ought to fall within the ambit of this proposal”, the CAC says.

Read this next

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

<