The industry does not seem ready to give up on binary options in the face of the rise in binary options fraud in Canada.
The Investment Industry Association of Canada (IIAC) is the first to make public its comment regarding the binary options ban proposed by the Canadian Securities Administrators (CSA). The consultation on the prohibition has already closed in Alberta and Quebec and continues in other Canadian provinces and territories. The IIAC had already opposed earlier plans by Quebec’s financial markets regulator AMF to impose a ban on binary options and the latest efforts by the Canadian authorities in this respect also faced the opposition of the industry body.
In its official response to the proposed regulatory changes, the IIAC, which represents 130 Dealer Member firms regulated by the Investment Industry Regulatory Organization of Canada (IIROC), reiterates its stance 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.
The IIAC also notes the CSA proposal to prevent retail investors from circumventing a trading ban by setting up a company or trust for the purpose of trading binary options. The IIAC argues that “any retail investor that will have the means to create a company or a trust in order to circumvent a trading ban should be considered a sophisticated investor”. Therefore, no protection would be needed for this type of investor.
The IIAC claims that the problem with binary options is in the way they are offered and not in their nature per se.
These statements run counter CSA’s stance that non-fraudulent binary options pose significant risks to individuals too.
Regarding fraudulent binary options offers, the IIAC urges CSA to keep warning investors of these scams, as well as about schemes that promise recovery of money lost to binary options trading. The IIAC also believes that the Royal Canadian Mounted Police should be involved in stopping international fraudsters. The RCMP should shut down the websites of fraudulent entities and try to prosecute the criminals with the help of international law enforcement agencies.
Earlier this week, the RCMP published a warning about binary options scams, noting a rise in complaints about this type of fraud. However, when it came to actually helping people, the RCMP advised those affected to contact the local securities regulator and the Canadian Anti-Fraud Centre. It seems that the police is also engaged to the degree of issuing warnings rather than taking action.