Contracts for Difference Trading in Canada

CFDs in Canada

CMC Markets Canada has been selling contracts for difference in Canada for years but only to accredited investors - informed individuals who passed the criteria established by provincial regulators; these would be individuals who have $1 million in financial wealth (real estate doesn't count) or a salary of $200,000 over the past 3 years. However, approval to sell the product to retail investors in Ontario and Quebec was given in October 2009, three years after CMC Markets had originally approached the Ontario Securities Commission and Industry Regulatory Organization of Canada for permission.

Regulators have imposed a number of conditions for investment firms looking to offer CFDs to retail investors in Canada. Issuers of contracts for difference must be registered as investment dealers and regulated by the Investment Industry Regulatory Organization of Canada (IIROC). They must also disclose the risks of contracts for difference and evaluate clients' past investment knowledge and trading experience. Finally, CFD issuers must establish cumulative loss limits for each client's account.

Thus, retail investors in Ontario and Quebec now have access to CFDs provided they understand the risks of margin trading and CMC is still actively pursuing regulatory approval in other provinces. So far, CMC Markets is the only dealer to seek and receive such permission.