Canada is fast becoming a hot spot for derivatives trading and Gain Capital is the latest international broker to gain membership as a regulated entity offering FX trading to Canadian investors.
Forex Magnates was the first to report Gain Capital’s approval under the Investment Industry Regulatory Organization of Canada in May 2012. Gain Capital has officially started marketing locally to Canadian investors from its Toronto office where it has 5 staff members who are registered with the Securities Administration of Canada.
Canada, the world’s eleventh largest economy and a member of the G8, is traditionally a commodities based economy. Among mining, oil exploration in the Canadian oil sands is one of its leading products. Canada is the world largest net energy exporter.
The Canadian Dollar is currently trading at 1.004 against the greenback.
With the inclusion of Gain Capital there are a total of six regulated brokers offering margin FX and one broker offering spot FX and CFD’s in Canada. FX brokers include FXCM Canada Ltd which is offering FX under Freidberg Direct, Interactive Brokers Canada, Questrade (domestic player), Oanda, Trade Freedom Securities and Gain Capital. CMC Markets was the first broker to get approval as a licensed CFD broker, able to solicit retail Canadian investors.
CMC Markets has had a distinguished presence in Canada, its Toronto office was established in 2005 after it acquired Shorcan Index, one of Canada’s leading inter dealer broking and CFD firms. CMC has over 5,000 Canadian clients.
Canada’s regulatory environment is divided among provinces, British Colombia is the black sheep out of the 11 provinces as brokers who are registered with the British Columbia Securities Commission can only deal with clients from British Colombia. BC has a population of 4 million and residents have an average salary of $41,000 (USD).
The British Columbia Securities Commission has fined several brokers offering ‘illegal’ trading to residents in Foreign Exchange, FXCM a NYSE listed broker was fined by the commission in 2005 after the BCSC staff learned that the New York-based firm had opened and serviced accounts for 369 B.C. residents. Forex Capital Markets, LLC had agreed to pay $142,500 (Canadian) to the regulator. The Canadian regulators are very cautious and vigilant about financial services, BCSC was investigating Gold-Quest International in 2008, a private placement program, which offered investors returns in the region of 87.35%. The BCSC investigation found that the programme would invest client money in Foreign Exchange trading.
Canada has a relatively high proportion of retail participation in the equities market, the TSX figures show that around 38% of Canadian’s hold shares. The Canadian stock exchange is regarded as the 8th largest in the world and the third largest in North America.
The average daily trading volume on TSX is between $10 and $13 billion.
Canadian investors are protected up to $1 million (Canadian) under the regulations.
Canada is home to a hand full of unregulated brokers who may not accept Canadian clients.
It is interesting how this will affect the US market. Probably that would be the official death of US retail FX market…