It can also have negative consequences for Canadian investors, because regulators in Canada do not have any control over brokers outside of Canada. This means that forex investors in Canada must be on their guard, as it increases their chances of exposure to fraudulent brokers or scammers. Therefore, it is advised that if you are a Canadian citizen, you stick to Canadian FX brokers to ensure you have the protection needed when trading in the forex market. Regulators in Canada must ensure that financial companies register and comply with regulations that protect consumers money before they can open any operations in Canada.

In order to do this efficiently, the Canadian financial market is broken up into separate divisions that are regulated by multiple regulatory authorities, enforcing individual regulations. Each regulatory agency has a different responsibility in terms of regulating firms. Here are some of the main Canadian regulatory bodies responsible for enforcing FX regulation in Canada:. As you might have just gathered, Canada has a massive amount of regulatory bodies. In fact, it has the biggest number in the world because there is no one authority that oversees registration or regulation. In the future, these regulatory bodies might all be unified under one roof.

The Canadian Government is in the process of conducting case studies and seeking advice from experts on how best to create a regulatory body that oversees all financial firms in the country. Currently, though, Forex brokers in Canada are regulated depending on where their operations are based in Canada. This authority, creates, monitors and enforces financial rules over the Canadian Forex market.

Its aim, as stated on its site, is to: Protect investors and support healthy Canadian Capital Markets. To find out if a broker is a member firm of the IIROC, first you must get the registered name which is usually located at the bottom of its website homepage. For example, CMC Markets key disclosure states:. This is kind of like qualifying as a professional trader in Europe because you will have to meet one or more of the following conditions:.

The Forex Market is highly susceptible to extreme volatility during times of economic turbulence. In the Financial Crisis, for example, we saw the effects rip through the globe like a tsunami, causing a loss of about 8. The Central Bank responded to this by cutting interest rates to a historical low, in an attempt to begin to repair the damage caused, which resulted in carry trades and strategies of the same thread performing differently post crisis. In the current Forex market, the Canadian dollar weakened , along with other currencies, against the USD Dollar, as investors grew more concerned about the economic impact of the coronavirus crisis.

The Federal Reserve took additional steps to ease the economic blow , which helped the Canadian dollar regain some strength. The Bank of Canada has also shown signs of potentially cutting interest rates more, in a bid to help.

Pressure has been mounting on the oil industry the past few weeks due to the increased demand from the coronavirus. This has caused a ruthless price war between Russia and Saudi Arabia, which could have very serious consequences. With jobs already being lost at a high rate, experts are predicting a potential loss of 37 million jobs. In comparison to the 8. With all of this information, you might be wondering why exactly some notable forex brokers stay away from Canada?

Legally, Forex Brokers can enlist investors in Canada without requiring a regulatory licence from that country. Even though firms will receive tax benefits and build customer trust from Canadian traders by doing so, the cost would be too much, in comparison to the small market size that Canada offers to entice companies to do so. Forex brokers in Canada adhere to different rules and regulations than forex brokers in the US. This rule restricts leverage offered to , in addition to not allowing hedging. Although many of the regulations do work to protect US citizens some are perceived to be too far against the investors freedom to choose.

Forex Leverage and Margin - Friedberg Direct

On the contrary, Canadian Forex brokers are required to adhere to any such restrictions. However, the policy is updated now and again to make sure that fraudulent behaviour is kept to a minimum. Furthermore, Canada is pretty relaxed about sending and receiving money from brokers internationally, so long as both parties adhere to the countries existing money laundering laws.

Again, when compared with the US as well as some other countries, where it is illegal for a trader to send funds internationally, this works in the traders favour. In addition, due to national security, traders are bound to strict regulations when sending payments internationally; this can make it difficult for traders in the US to move funds. Canada, on the other hand does not hold brokers to such strict regulations and, in doing so, traders can freely and easily move funds around, once the trader and broker keep statements and records of all transactions that took place.

Although Canadian citizens can choose to trade with any forex broker across the globe, there are distinct advantages to trading with forex brokers in Canada, including world renowned security of client funds. It is worth noting that the security of funds is the number one priority for investors worldwide, as extreme volatility increases the chances of brokers going bankrupt, compared to any other market.

With this in mind, choosing a top forex broker that is regulated in Canada makes sense for Canadian citizens.

Guide to Leverage

Many brokers want to make the forex market accessible to younger traders by allowing for a low initial deposit and offering a higher leverage. With this, there is no restriction on leverage offered to Canadian citizens which allows traders to take advantage of higher offers.

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That said, they should be used with caution as the higher the leverage the higher the risk. It is strongly advised that traders start off with a low leverage, and a higher initial deposit. Forex regulation in Canada is very thorough and detailed, providing clear guidelines to brokers which are updated as needed, in accordance with changing market conditions and research findings. The country looks to and takes inspiration from other regulatory bodies to help create a fair and respectable trading environment.

Although Canada does not have one overseeing regulatory authority, the ones that exist currently have proven to be authoritative and capable of regulating their jurisdictions. Even though brokers outside of Canada are not required to adhere to Canadian regulations, the Canadian Government really prioritizes educating and updating traders on the risks involved in Forex trading by the Canadian Government. This involves Canadian regulators highlighting all financial malpractices to keep investors updated.

Impressively, the Government also welcomes and encourages citizens to put forward any recommendations or concerns they have to help the concerned authority take the necessary action. You might have gathered by this article that yes, forex trading is legal in Canada. More importantly, it is also safe there, too.

Best Forex Broker in Canada

There are also no restrictions on forex trading, making it fully legal. In Canada, any profits made from trading forex will not be subject to income tax, but to a capital gains tax. It is advised that you seek professional guidance on this matter to make sure your tax returns are filed correctly. Almost all forex brokers offer a demo account to give traders the opportunity to practice trading on a virtual platform so you can test out the functions, and with virtual money and help ease you into the current trading environment.

Deposits are quick and simple to make so long as you have access to a debit or credit card, or some other electronic payment method.

Currency pairs

Withdrawals will be processed to the same source of the deposit. Most brokers try to make trading as easy and accessible for traders and one way of doing this is making sure traders can make a move on-the-go, at any and all times of the day. For this reason, most brokers offer an app version of their platform and have phone optimized websites. How safe and secure your trading journey is will depend on a couple different factors including where the forex broker is located and what regulations it adheres to, and how much experience you have. If you are a beginner make sure to check that your broker is in a jurisdiction that protects customers, and that you will have access to the appropriate support.

This lets you start forex trading without having to make an initial deposit. Just be sure to research the broker fully before signing up to anything and check where and by who the broker is regulated. Don't Miss a Single Story. Sign up for for the latest blockchain and FinTech news each week. By Tim Fries. Tim Fries. Reviewed by Shane Neagle. Shane Neagle.

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Top Canadian Forex Brokers. IG is the leading forex broker for traders in Canada. Visit Forex.

TD Ameritrade has committed to helping customers during times of volatility. Though there are many advantages, there are also some drawbacks. In the following section, you will discover how Canadian forex brokers function compared to firms around the world.