The Canadian federal securities regulator has granted approval for two companies to commence trade in prediction markets as they cautiously test the waters of this highly controversial form of investing.
The CIRO (Canadian Investment Regulatory Organization) has granted Interactive Brokers Canada and Toronto’s Wealthsimple the right to start trading in event contracts, which will be settled by the U.S. Commodity Futures Trading Commission or CFTC (the regulator that oversees CFTC-licensed platforms like Kalshi, PolyMarket and Crypto.com).
CIRO is in charge of regulating investment dealers and creating rules for how to trade in event contracts. A separate aware Canadian Securities Administrators or CSA coordinate with our provincial securities regulators to ensure national uniformity in all of Canada.
Former CSA Chair Louis Morisset said in a statement:
Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering.
The CIRO has made it clear that there will be only a limited number of different kinds of contracts allowed – contract maturation dates must be at least 30 days away and can be based on economic, environmental or financial indicators. All of these contracts will be classified as derivatives, and therefore will be subject to the same rules and oversight from both CIRO and the participating provincial regulators that govern the trading of options.
Additionally, the CIRO stated that contracts with respect to elections, political nominations, referenda, or any other unlawful activity according to Canadian law will not be allowed to be created as event contracts. This follows in line with the CSA’s prior prohibition of short-term binary options that were also highly identified with fraud and damage to the investing public.
