Canadian FX Industry Plagued by Regulations
Canadian FX Industry rated the second safest country to live in, has an attractive foreign exchange market. Due to the one country is divided into three territories that become ten provinces, each area has its FX Regulations. Taking the different regulations of each territory into account, what has the Forex market space become in Canada?
Back in 2017, the country of Canada was ranked as the tenth largest GDP in the world. This information came out of the World Bank, but out of all the provinces in the country, it is Ontario that stands as the leader of economic growth and strength in Canada.
GDP of Canada provinces and territories
The Managing Director for Corporate Development for OANDA North America, Mohsin Siddiqui, had been quoted by Finance Magnates that the FX Market in Canada is stabled and well-developed. That the industry is mature with healthy competition amongst the seven major brokerage firms in the country.
The top brokers in Canada include CMC Markets, TD Ameritrade, Forex, OANDA, FXCM, Friedberg Direct and Interactive Brokers. Siddiqui, in his interview with Finance Magnates, stated “Trading the financial markets is part of the mainstream investment philosophy and is well accepted by Canadian consumers. Typically, most FX brokers offer a broader range of traceable asset classes via CFDs.”
The development of FX Markets in Canada has been steady and stable. The general trend for brokers in Canada isn’t to expand their product range but instead, introduce new tools that will assist their clients with the development of successful strategies for trading.
Canada’s Environment for Regulation
The Canada Securities Administrator, the head financial regulator in Canada, covers all financial markets in the country. The subsidiary regulator, the Investment Industry Regulatory Organisation of Canada, established in 2008 is in control of the regulation of retail companies in the FX Market. However, brokerages don’t just have to follow the rules put in place by these two federal regulators. As stated above, financial regulation is also applied on territory and provincial level. This means brokers must adhere to two sets of regulation law.
Three other regulators are based on a provincial level — the Ontario Securities Commission, which regulators over the great lakes province. There’s also the regulator that oversees Quebec, the Autorite Des Marches Financiers and finally, the British Columbia Security Commissions regulates the rocky mountain province.
During the last five years, these provincial and federal regulators have been combining their efforts with one another to create harmonised financial regulation. However, there have been some inconsistencies along the way, and there is still a lot of work that has to be done for the harmonised regulation to come into law.
OANDA & IIROC Comments on the Situation
Mr Siddiqui, speaking with the finance magazine “Finance Magnates”, said “It would certainly be a big step for industry participants if regulations were harmonised under IIROC’s guidance across the country. This would also increase the brokerage choices Canadian consumers have in some of these provinces.”
The Chair of the Board for the Investment Industry Regulatory Organisation of Canada, Marianne Harris, stated, ‘More work needs to be done in this area to ensure that all investors from coast-to-coast receive a consistent level of protection,’ however it’s unclear whether a specific roadmap is in place for this right now. That said, IIROC has made great strides in protecting the interests of traders over the last ten years, and we’d welcome the decision to offer greater regulatory consistency across the country.”
Trading Activity in Canada
The Commonwealth of the United Kingdom holds claim to the country of Canada. However, unlike other countries in the commonwealth like Australia, Canadians have become conservative with their approaches in investment.
The conservative approach has been credited due to the tight restrictions that have been placed on brokers, traders and investors over the last five years by the IIROC. This has instilled a trading style that is risk-controlled.
As to be expected, the most favoured currency for Canadians when trading under Forex is the Canadian Dollar or US Dollar. However, Canadians are more aware of the laws and regulation that influence them. Traders and brokers have also been known to use other major currencies such as the Euro or Great British Pound.