Canada has a fragmented financial markets regulatory structure; banking, securities trading, and payment services are regulated on the provincial and national levels. The fragmentation leads to confusion, leading to traders wondering if forex trading is legal in Ontario.
Forex trading is completely legal if you live in Ontario, and we offer a comprehensive list of reputable Canadian forex brokers.
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Is Forex Trading Legal in Ontario?
Forex trading is entirely legal in Ontario as well as the rest of Canada. The Investment Industry Regulatory Organization of Canada or IIROC is the national regulatory body. Each region, province or territory of Canada also has its own local regulator. In the case of Ontario, the local regulator is the Ontario Securities Commission (OSC).
How is the forex market regulated in Ontario?
Several regulatory bodies and authorities are overseeing the financial markets in Canada. The IIROC is the national regular. The regional regulator has some degree of autonomy but still has to follow the national IIROC guidelines to ensure a high level of compliance and security throughout the country.
You can compare the structure in Canada to the European Union and the European Securities Markets Authority (ESMA). Each member state in Europe has a national regulator, but ESMA can set guidelines, and the local regulators such as CySEC or BaFIN decide how to implement and enforce them. In some cases, a national regulator might apply stricter rules than those set by the supranational regulator. For example, in Belgium, only professional traders can open a trading account, but that isn’t a law set by ESMA. The situation is very similar in Canada too.
Ontario Securities Commission (OSC)
The Ontario Securities Commission (OSC) is an Independent Crown corporation that regulates Ontario’s capital markets. The Commission’s rules have the same power as laws. The OSC regulates firms and individuals who sell securities and provide advice in Ontario. The Commission also regulates public companies, investment funds, and marketplaces, such as the Toronto Stock Exchange.
Investment Industry Regulatory Organization of Canada (IIROC)
The Investment Industry Regulatory Organization of Canada (IIROC) is the main body that regulates the forex markets in Canada. The IIROC is a national self-regulatory organisation (SRO) established as a non-profit corporation. The IIROC is recognised by the Canadian Securities Administrators (CSA). The IIROC must have licensed a forex broker operating in Canada.
IIROC vs OSC: What are the differences?
The IIROC oversees all investment dealers and their trading activity in Canada’s debt and equity markets; Its responsibilities are processed under Recognition Orders from the Canadian Securities Administrators (CSA).
The OSC is a part of the Canadian Securities Administrators; Its purpose is to protect investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in the capital markets, and to contribute to the stability of the financial system and the reduction of systemic risk.
Forex Trading in Ontario: Which brokers are available?
If a broker is regulated by IIROC, the national regulator, you will most likely be able to trade with it being a resident of Ontario. In cases where the IIROC does not regulate a broker, you may not be allowed to trade with the company. In fact, local regulators have the power to decide whether or not a broker who is not IIROC regulated may operate in their territory.
The regulatory situation in Canada can be confusing, and it might not be entirely clear which brokers you can trade with from Ontario. To make sure you don’t fall into the traps of an unregulated broker operating in Canada illegally taking advantage of the unclear regulations, we recommend checking our list of top 10 Canadian forex brokers.
How to open a forex trading account in Ontario
There are no special conditions required when opening a forex trading account from Ontario. The process is the same no matter where in Canada you’re based.
Thankfully, Ontario doesn’t have any special requirements before opening a forex trading account. Some Canadian provinces like Alberta require traders to obtain an Accredited Investor document to trade.
All you have to do is select a broker with the platforms, instruments and conditions you want to trade and operate in Canada. Next, open a demo account whether you’re confident or not. It’s common sense to check a brokers client zone, spreads and customer support before opening a live account and depositing real funds. If you’re satisfied, verify your account and deposit money to your live account.
If you ever find yourself lost or unsure about anything when opening a forex account in Ontario, you can refer to our tutorial on how to trade forex in Canada.
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