Consultation on a proposed ban on binary options has finally come to an end in Quebec and Alberta – the two Canadian provinces. The proposition consisted of banning all advertising, promoting, offering and selling of binary options. This was drafted by the Canadian Securities Administrators (CSA) at the end of April of 2017.
The aim of the proposal was to protect traders from fraudulent activities and illegal promotion of an extremely high-risk product, as the CSA calls binary options. They have included in the proposal outline that binary options of all kinds do pose risks to unsuspecting individuals.
Back in 2016, Alberta had a first death connected to binary options trading, where 61-year old Fred Turbide from Edmonton, committed suicide after losing a large amount of his money by using the binary options platform called 23traders.com.
Quebec has also been very vocal about wanting a ban on binary products. Not only that, they have asked for a ban on binary options twice in the last year. In February 2017, AMF, which is the Quebec’s financial regulator opened a consultation regarding the ban. However, it ended in March with a strong uprise from the industry.
The Investment Industry Association of Canada stated that binary options are not the issue in themselves, but that the issue is the businesses which are unregulated and fraudulent. They have also proposed that instead of a direct and complete ban, Quebec would be better off if the brokerage firms are regulated by the Investment Industry Regulatory Organization of Canada (IIROC).
Montréal Exchange (MX) and Canadian Derivatives Clearing Corporation (CDCC) have already reacted to the news by asking for a reduced ban scope so that binary options can still be offered via an exchange authorized in Quebec.
It is not hard to imagine what kind of a reaction this ban proposal will trigger. Considering the previous replies to the first proposal, the industry will certainly not go down easily. It is still yet to be seen if the regulators will fall under the industry’s pressure and forgo the ban or will they stay on their course and continue to pursue the controversial ban in making.