You are not logged in.

#1 08-04-2019 11:38:21

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2532

Non-standardised regulation undermines the forex industry in Canada

Non-standardised regulation undermines the forex industry in Canada

Canada, the home of ice hockey and Labatt's beer, has an interesting forex industry. Although it is only one country, it is divided into three territories and nine provinces, each with its own rules and laws. Bearing this, what does the forex sector look like over there?

According to the World Bank, Canada is the world's 9th largest nation as measured by GDP. And in its territories, Ontario stands out as the leading region in terms of economic strength, trailed behind by Quebec and Alberta.

Forex trading is well developed and stable in Canada. According to Mohsin Siddiqui, GM at OANDA North America, the sector is mature and features a good dose of competition (5-6 primary brokers have the lion's share of the market).

Some of the country's top brokers: OANDA, CMC, Friedberg Direct, TD Ameritrade, Interactive Brokers and GAIN Capital.

Siddiqui states: "Trading the markets is part of the current investing culture and is fully appreciated by Canadians. Typically, forex brokerages offer a wide range of securities that can be traded via CFDs."

Lately, the development of the forex has been stable. Instead of expanding their service offerings, brokers have focused on launching new tools that enable traders to develop effective trading techniques.

Canada's regulations

Canada's Canadian Securities Administrators (CSA) is the country's official regulatory agency. In addition, the Investment Industry Regulatory Organization of Canada (IIROC), is the main agency in charge of the forex industry (as it relates to retail traders).

However, regulatory agencies in Canada are also overseen at the provincial level, which means that brokerages must comply with additional sets of rules.

The Ontario Securities Commission, which oversees Toronto, the British Columbia Securities Commission for British Columbia and bordering areas, and the Autorité des marchés financiers (same name as France's regulator), which governs activities in Montreal and Quebec, are some of the country's other regulatory agencies.

Lately, both the IIROC and local agencies have committed to streamlining regulation. However, there are still inconsistencies in the nation's forex market and there is still work to be done in this area.

Do regulatory inconsistencies affect forex activities there?

"This would certainly be an important step for industry participants if the regulations were harmonized under IIROC's leadership across the country. It would also increase the choice of forex brokerages available to Canada's trading community in some of these provinces."

As to whether this is likely to happen in the future, he added: "In the 2018 Annual Report of the Chair of IIROC's Board of Directors, Marianne Harris stated - More needs to be done in this area to ensure that all investors from coast to coast receive a consistent level of protection - but it is not known whether a specific roadmap is in place at this time.

"That said, IIROC has made significant progress in protecting traders' interests over the past decade and we would welcome the decision to provide greater regulatory consistency across the country.

Trading activities in Canada

Canada is part of a "Commonwealth", but unlike its UK or Australian counterparts, Canadians are generally more cautions when investing or trading the markets.

According to Siddiqui, this cautious temperament is mainly caused by the fact that the IIROC has made the use of leverage more difficult over the last four years, which has tightened the screws for a majority of traders who might have a more adventurous trading style.

As one would guess, the exchange rate instrument that Canadians prefer to trade is their local currency - the CAD, also a leading currency. The most traded pair there is the USD/CAD, as locals are typically more in tune with what may affect the direction of their CAD.

Investors also trade other primary pairs such as the EUR/USD, the GBP/USD and the USD/JPY. Apart from currency-based instruments, Canada's traders like to invest in US and Canadian stock market indexes. This behaviour is largely consistent across the various provinces and territories.

"Anything worth having is worth going for - all the way." - J.R. Ewing



Board footer