The CSA has announced the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, which makes it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual.

“Binary options are the leading type of investment fraud facing Canadians today, and the impact of this kind of scam on individuals is staggering,” says Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers. “This ban […] conveys a clear message that these products are unsuitable for individuals because of their risky characteristics and that their trading is illegal.”

Read: CSA proposes ban on sale of binary options

The CSA’s binary options task corce was formed in 2016 as a proactive means to fight this form of fraud.

“This ban supports our efforts, which include working with credit card companies, tech companies and advertisers that binary options fraudsters rely on to carry out their schemes,” says Jason Roy, the Task Force’s chair and senior investigator with the Manitoba Securities Commission.

Read: Don’t let clients fall for binary options fraud

About binary options

Binary options take the form of a wager in which investors bet on the performance of an underlying asset, often a currency, commodity, stock index or share. The timeframe on this bet is typically very short, sometimes hours or even minutes, says CSA. And when the time is up, the investor either receives a predetermined payout, or loses the entire amount. In many instances, no actual trading occurs and the transaction takes place for the sole purpose of stealing money.

CSA adds those who have provided credit or personal information to binary options sites frequently fall victim to identity theft. Binary options are sometimes marketed under other names, including:

  • all-or-nothing options;
  • asset-or-nothing options;
  • bet options;
  • cash-or-nothing options;
  • digital options;
  • fixed-return options; and
  • one-touch options.

Read: Inform clients about these nefarious threats

The firms and individuals involved in the operation of binary options trading platforms are often located overseas, says CSA. Investing offshore is a common red flag of fraud, as it may be impossible for investors to get their money back if something goes wrong.

Anyone who has invested with, or has concerns about an offshore binary options trading platform can contact their local securities regulator.