The Canadian Securities Administrators (CSA) has announced the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, thus making it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual. The measure comes in the wake of activities by the CSA’s Binary Options Task Force, set up in 2016 as a proactive means of tackling what the CSA describes as “this form of fraud”.
CSA leads fight against fraud
Louis Morisset, Chair of the CSA and President and Chief Executive Officer of the Autorité des marchés financiers, said:
Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering. 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.
Jason Roy, the Task Force’s Chair and Senior Investigator with the Manitoba Securities Commission, commented:
From day one, our job has been to find every avenue to protect Canadians from this particular fraud. This ban supports our efforts, which include working with credit card companies, tech companies and advertisers that binary options fraudsters rely on to carry out their schemes. It will all add up to fewer Canadians being exposed, and fewer Canadians being cheated.
Time up for binary options
Binary options have become increasingly popular as an easy way in for new traders. These instruments, however, take the form of a wager in which investors bet on the performance of an underlying asset, often a currency, commodity, stock index, or share. The timeframe on this bet is typically very short, sometimes hours or even minutes. When the time is up, the investor either receives a predetermined payout or loses the entire amount. In many instances, however, no actual trading occurs and the transaction takes place for the sole purpose of stealing money.
In addition, those who have provided credit or personal information to binary options sites frequently fall victim to identity theft. Binary options are sometimes marketed under other names, including “all-or-nothing options,” “asset-or-nothing options,” “bet options,” “cash-or-nothing options,” “digital options,” “fixed-return options” and “one-touch options.”
The CSA advises anyone who has invested with an offshore binary options trading platform to immediately contact their local securities regulator. More information regarding binary options fraud can be found here. The CSA also encourages all investors in Canada to check the registration of a person or company offering investment here.