Canada is one of the largest binary options markets in the world so not surprisingly, nearly all binary options brokers accept Canadian traders. Since there are no specific binary options regulations in Canada, residents are free to trade with local and overseas brokers. At present, there are no Canadian-based binary options brokers in existence so those wishing to get involved in this increasingly popular activity need to look outside Canada. As the growth of binary options has been substantial in recent years, we may see the introduction of laws in the future but for now, Canadians are best advised to focus their attention on international brokers whose online reputation is solid and offer a variety of options to Canadian residents.
Best Binary Options Brokers In Canada
With no legalisation in place for binary options trading, Canadian residents are able to trade freely without restriction. Being unregulated by the local government means that Canadian traders should research and trade with the best brokers around.
While there is no regulation, the Canadian government does, however, oversee financial organisations and binary option brokers in Canada on two levels; provincially and nationally. Each province of Canada has its own regulatory agency for brokers and financial advisers. In Ontario (Toronto region) the regulator is the Ontario Securities Commission (OSC). Quebec (Montreal area) the Autorité des marchés financiers, and in British Columbia the British Columbia Securities Commission (BCSC).
On a national level is the Canadian Securities Administrators (CSA) agency, an organisation with the objective of streamlining the diverse capital markets in operation across the country.
However, although there is, as yet, no plan in place to start regulating binary options in Canada, the CSA does warn investors to exercise caution when considering investing in binary options, especially with brokers attempting to lure investors by making untrue or misleading statements about Canadian securities regulators’ oversight of binary options. Some of these platforms may not be registered to conduct business in Canada, therefore traders are encouraged to check this out before signing up.
Bearing this in mind, many Canadian traders will be asking the question as to whether trading binary options is safe in Canada. The answer is yes it is if investors only trade with brokers which are licenced in reputable jurisdictions such as in Europe. These countries would never licence brokers that offer fraudulent services.
Canadian traders can look to brokers who have licences issued by a specific European country such as those who are located in the UK and have a licence issued by the Financial Conduct Authority (FCA). There are also European brokers licenced by the Cyprus Securities and Exchange Commission (CySEC), which is also valid in the UK. Many of the leading brokers fall under CySEC’s jurisdiction which guarantees a trader peace of mind and provides legal protection and recourse should there be complaints against a broker. Similarly, there are other offshore regulated brokers that Canadian traders may safely trade with, including brokers who are holders of IFSC, CFTC, ASIC and NZ FSP licences.
In addition to regulated brokers, there are a large number of unlicenced offshore brokers in the industry offering their services to Canadian traders, but it is safer to choose a regulated broker in order to avoid exposing yourself to a company that is not controlled by any financial jurisdiction.
Canadian Binary Options Brokers With A Demo Account
The best way to decide on a suitable broker, an aspect which is especially important for Canadian-based traders dealing with overseas-based providers, is to test their platform with a demo account. Demo accounts enable traders, both novice and experienced, to test a strategy or trading signal system on their chosen broker’s platform before risking their own money on the live markets. All reputable binary options brokers recommend carrying out practice trades prior to trading with real money.
Traders will find that most binary options brokers offering their services to Canadian residents offer this service once an account has been opened and the trader has invested an initial minimum deposit with them. In some cases, a free demo account may be available where traders can try the platform out without even making a deposit, but these tend to be time-limited.
Binary Options Legal & Tax Considerations For Canadian Residents
Even as an unofficial trading instrument, binary options are taxable and while the laws vary according to a trader’s country of residence, in Canada, all profits must be properly completed on an income tax report.
Canadian binary options traders are obliged by law to file a tax return which means every trader is responsible for declaring taxes on their earnings. Generally, all binary options profits are taxed as capital gains and all profits generated have to be reported in the tax year within which the options expired.
Traders are advised to keep track of all transactions including deposits, withdrawals and all trades, regardless of whether they finish in the money or out of the money. It is also worth bearing in mind that with taxes on binary options in Canada, you are allowed to use all expenses related to your trading activities and claim them as deductions. However, in order for this to be accepted by the Canadian Revenue Agency (CRA), traders must have all receipts of items declared on their tax returns and be able to justify how each purchase was related to trading activities.
Generally speaking, filing tax returns on binary options in Canada is straightforward.
Nevertheless, it is always advisable to consult with an accountant for guidance.
Best Low Deposit Binary Options For Canadian Residents
To start trading binary options, all traders are required to make a deposit after opening an account. Most binary options brokers require traders to deposit a fairly substantial amount of money which can act as a deterrent to some traders. However, there are now more binary options brokers offering low minimum deposit requirements, giving traders the world over the opportunity to trade with a small investment.
These days, traders can expect to pay an average minimum deposit in the region of $250. However, this average is slowly decreasing as binary options trading becomes more popular and more providers open their doors to trading. Some brokers now offer minimum deposits as low as $10.
The advantage of using a low minimum deposit binary options broker is that they give traders on a low budget the opportunity to trade the financial markets. They are also an attraction to Canadian traders who wish to seek reassurance from a broker whom they have not traded with before.
It is worth remembering though, that the advantages of a larger deposit is that traders will receive a larger deposit bonus offered by the broker. Since most bonuses are based on the deposit amount made by the trader, if they register with a binary options broker with a low deposit, their bonus will also be lower. Effectively, what you put in, you get out and the amount invested will play a major role in any trader’s ability to achieve their financial goals.
Regardless of the minimum deposit offered, Canadian traders should always look out for brokers who provide a trading package that ticks all the correct boxes in terms of servicing Canadian clients and who possess a recognised financial trading licence.