Best Forex Brokers in Canada 2020
FX trading in Canada progressed when currency trading was introduced. Forex brokers in Canada are quite different from other brokers in the world. Similarly Canadian forex market has different rules and regulations as compared to others. Trading forex (currencies) in international markets is popular among residents in Canada. This country has ten provinces along with three territories. It claims a stable and established foreign exchange market.
Is Forex Trading Legal in Canada?
Yes, Forex trading is legal in Canada. But it has some different and interesting rules. But it does not have a centralized National Authority. Canada has the heaviest number of regulatory bodies. But the Canadian government is trying to unite all these firms and make a single body to work as the National regulation organization of Canada.
Is Forex Trading Legal in Alberta?
Forex trading is legal, but you must qualify as an “accredited investor”.
You must have one of the followings
• A net income of at least $200.000 in the past 2 years
• Have at least $1.000.000 in your financial portfolio
• At least $5.000.000 invested in properties
Canadian Forex Market
- The Canadian dollar (CAD) is the world’s 5th largest reserve currency.
- The Canadian currency CAD is also known as a loonie.
- CAD is the sixth most actively traded currency of the world.
- USA is the biggest trading partner of Canada.
Can Canadian residents trade with overseas Brokers?
Yes, Canadians can trade with overseas brokers. You will shock to know this because other countries consider it illegal and punish the culprit for committing it. But Canadian governing bodies allow it. You are free to deposit your amount to the broker sitting in another part of the world.
Canada has the most number of regulatory bodies. However Canada does not have any regulatory forum on the national level. But each province has its own regulatory body. There are a total of 15 different regulatory organizations in the country that includes two federal and thirteen provincial.
- Investment Industry Regulatory Organization of Canada (IIROC) is the financial regulatory body in Canada.
- The Canadian Securities Administrators (CSA)
- The Financial Services Commission of Ontario
- The Alberta Securities Commission
- The British Columbia Securities Commission
- The Financial Transactions and Reports Analysis Centre of Canada
- The Mutual Fund Dealers Association
- The Canada Revenue Agency
- The Office of the Superintendent of Financial Institutions
- The Ontario Securities Commission
- The Autorite des marches financiers (Quebec)
The Canadian Securities Administrators (CSA) was founded in 2003. It regulates up to 580 small and micro-cap companies in Canada. Its headquarters are present in Toronto, Canada. One of its branch offices is also in Vancouver.
Its objective is to provide an efficient substitute for companies that want to access the Canadian public capital markets.
- The Investment Industry Regulatory Organization of Canada (IIROC) is a regulatory organization as the national registration department consisting of different regulatory bodies.
- It was established in 2008
- It has the same position in Canada as the
- Financial Industry Regulatory Authority (FINRA) in the United States has.
- The IIROC works according to Recognition Orders issued by the provincial and territorial securities commissions that form the Canadian Securities Administrators (CSA)
IIROC has its regional offices in
What IIROC Covers?
IIROC deals with
- Financial Brokers
- All Equity Markets
- Trading activities
- Investment dealers
Objectives of IIROC
Without a definite purpose an organization cannot be recognized. IIROC has also some of the main purposes or objectives which are described below.
- Maintain a fair and organized market.
- Regulate all investments and securities-related commerce within the country.
- Authorities of IIROC
The IIROC can enforce laws in the Canadian securities and trading markets by their mock-judiciary powers.
- It can fine or suspend any broker or financial firm to maintain a disciplinary environment
Functions of IIROC
IIROC performs well to maintain a good competitive environment for the brokers in Canada.
- Making rules and then implements them.
- IIROC has to release the performance-related reviews of brokers for the ease of people want to invest in Forex.
- It also works for the screening of employees that they fall on the merit or not. This screening is done by taking several tests.
- Setting the minimum capital requirements to make sure if the firms have adequate capital.
- Investigating the dealers about different things.
- IIROC also terminates the brokers who don’t follow their guidelines.
IIROC has not set up ta very restricted environment. Forex brokers in Canada are free to work as they want to.
- Each broker must be regulated by IIROC.
- IIROC limits leverage to 18:1
- an IIROC regulated broker have to be appropriately qualified
- Country may change its policies from time to time.
How to work with Canadian brokers?
Canadian brokers are of great capabilities to work. Working with the forex brokers in Canada is beneficial for you. They are highly regulated. But also complex. They also offer a KYC rule that includes asking for your personal information and business or job information. But they also check your tolerance for risk, your knowledge, and experience. They will ask you why you are investing in forex. If you and your family are involved in any kind of crime you will not be eligible for it. You must also a citizen of Canada. A Proof of identity normally in the form of your passport is considered best.
And proof of your residence via utility bill or bank statement of the past three months. After these basic requirements you will be free to fund and trade on your verified account.
Advantages of Choosing Forex Brokers in Canada
Forex brokers in Canada are not bounded by the strict guidelines by IIROC as by FCA, NFA, CFTC, and ASIC. Forex trading in Canada is like a fun.
There are no restrictions in Canada like in America. In Canada, there is no restriction of Hedging, scalping, and no strict application of FIFO rule. Unlike other countries, Canada is allowed to trade with the other countries of the world. There is no prohibition on overseas Forex Trading. Currently a handsome number of persons are working with the overseas traders.
CIPF stands for the Canadian investor protection fund. CIPF is actually for the compensation. If a broker is bankrupted, the investor is bestowed with CIPF. Do you know how much amount is given to investors by CIPF? It is surprisingly more than the compensation fee of other stable countries like the US and the UK. The CIPF is 1 million Dollars. Almost more than 150 companies offer this fund. This fund will not provide you in case of your trading failures or if you are being victim of a forex scam.
Switching of a broker
If you are from Canada, you can easily switch your investments to a Canadian-based broker and you will enjoy a lot of benefits and make you are part of the CIPF program. But if you don’t have a large trading capital then you should not switch your broker.
Protection of Funds
Due to CIPF, Forex brokers in Australia protect your funds. They will not disappoint you.
Forex brokers in Canada accept money in various ways.
• All reputable and regulated brokers in Canada Debit and credit cards by Maestro, Visa, and Master card.
• Digital wallets are also acceptable. For example, Skrill.
• Payments can also be done by wires. But it takes some time like 3 to 4 working days.
• Cheques are also acceptable by Canadian Brokers.
• Online and web-based electronic payments are also allowed by some brokers.
Low scam ratio in Canada
Scams are not common at trustworthy Canada-friendly trading websites. Brokerages that invade the regulatory guidelines risk heavy fining and even license revocation. IIROC has the right to suspend them for a lifetime.
The minimum initial deposit for Forex trading in Canada starts from $1. Many brokers offer the traders to test the market by using a small initial capital and a higher margin requirement.
Leverages ratio varies among the traders. IIROC has limited 18:1 as leverage. But many brokers give you a chance to trade by the leverage of 1:3000. But as leverage increases the chance of risk also increases. The leverage for retail clients ranges between 45:1 and 50:1.
IIROC choose portfolio managers and brokers after taking a series of tests. Canadian brokers are one of the most qualified brokers of the World.
Drawback of working with Canadian FX
Although the Canadian forex market has not strict rules but due to the lack of regulations in Canada, there are also a few drawbacks of working in Canadian FX. When you trade overseas, the risk of scam also increases. So in case of a scam and fraud, obviously the Canadian government and IIROC will not responsible for it.
How to Choose Forex brokers in Canada?
Regulation with IIROC is a must. If not must be regulated by the three provincial agencies that regulate forex in Canada are:
• In Toronto, Ontario Securities Commission
• British Columbia brokers are regulated with British Columbia Securities Commission
• And in Montreal & Quebec, Autorité des Marchés Financiers
Types of Accounts
You must check how many types of accounts is the following. These accounts includes
Micro or mini account
This is best suited for beginners, initial deposit ranges from $100 to $250.
It comes with more assets. Initial deposit for standard account ranges from 500$ to 1000$.
Its initial deposit ranges from a 10,000 CAD to a million of CAD.
It should have the best platform that should behave the given traits in it.
- Charts & graphs
- Indicators and signals
- Proper Prices
- Risk management tool
- Automated and copy trading tools
- Additional tools
Like in MetaTrader4 and 5, there are a lot of custom indicators and almost 30 built-in indicators.
You must check about the minimum deposit requirements. Similarly you should also check out the margin and leverage requirements.
Try to work on the Demo account first to check out the capability of your broker.
It is your responsibility and right to know the commissions and charges of your broker.
Best Forex Brokers in Canada
Here is a list of best forex brokers in Canada
- Vantage FX
- CMC Markets
- Interactive Brokers
If you are willing to work the forex brokers of Canada and want to know more about them, contact us. We will provide you the best of them.