IIAC proposes allowing IIROC firms to legally offer binary options
The Investment Industry Association of Canada has called for an end to illegal binary options trading in a letter to Quebec regulator, the Autorité des Marchés Financiers (AMF). To achieve this goal, IIAC says regulators must consider allowing IIROC-regulated firms to offer binary options to investors.
Currently, no firms are registered to offer binary options trading in Canada for retail investors. However, Canadian investors are increasingly falling victim to fraud by using electronic platforms for binary options trading, which are most often rigged. Regulators have issued public warnings against trading in the derivative products through such platforms.
Prevent reputational damage
Despite such warnings, some retail investors, mistaking them for regulated Canadian brokers, are still using these platforms. In response to a request for comment from the AMF on the issue of binary options trading, IIAC said it believes permitting IIROC firms to offer binary options trading would not only help protect retail investors, but will also shield Canada’s investment industry from unfair reputational damage caused by scams.
The letter, dated Feb. 24, states that binary options trading is not a problem in itself. The problem is the fraudulent and illegal trading. The letter says regulators must consider the possibility of enabling regulated firms to legally trade this product, “without risk of fraud, within a strict regulatory framework that protects the investor.”
Eliminate the risk of fraud
In a newsletter published March 6, IIAC reiterated the message. “Dealing with an IIROC-regulated firm will ensure retail investors who wish to trade binary options properly understand the product as well as the significant risks involved. It will also eliminate the risk of fraud.”