determine the legality of trading with overseas brokers, and whether they are expected to trade the Forex markets only through iiroc regulated brokers. The basic currency trading unit is a futures contract to exchange a set amount of one currency for another currency at a specified future date and exchange rate. How To Choose The Best Canadian Forex Brokers. On the other hand, Canada does not have any such strict regulations, and traders are free to move their capital to any broker, provided that both the trader, as well as the broker, keeps accurate statements and records of transactions for future verification. Iiroc is responsible for supervising and regulating investment dealers, along with regulating the Canadian debt and equity markets. There is also no way by which a Canadian authority can impose sanctions on any other regulated broker, even if Canada has bilateral relations with that nation. Once the condo purchase is completed, the buyer closes out the contracts by buying two Canadian dollar futures contracts, which offset the ones in his account. Although the US authorities were responsible for lowering the leverage in Forex trading, iiroc took it down to another level by reducing the amount of leverage drastically. Investors in foreign stocks seek to remove exchange rate fluctuations from the investment equation. Apart from the investor protection fund, Canadian brokers also do not impose any stringent trading restrictions on investors, unlike some of the other regulators such as the NFA and the cftc. The Canadian Government has been contemplating the process of unifying all regulatory organizations under a single roof; however, the plan hasnt come to fruition yet.
Fennell: Understand how powerful leverage can. Iiroc is very straightforward in its broker regulation and expects its member firms to adhere to the regulatory guidelines imposed upon them by the iiroc. A majority of these brokers have an excellent reputation in the industry and are thoroughly committed to the welfare of their clients. Nevertheless, at present, Forex brokers in Canada are regulated according to the territory of operations. Canada is one of the very few developed nations in the world that allow its citizens to invest their money with overseas FX brokers without a valid Canadian regulatory license. Therefore, most mainstream FX brokers usually have a valid iiroc license or a Canadian financial license from any of its other provinces. A contract for a commodity such as oil might require collateral of 5 per cent to 10 per cent of the contract value, in other words a margin ratio of 20:1 to 10:1. Over the years, Canadian brokers have been unable to replicate that kind of popularity in the retail trading industry. Although it is possible to use a higher leverage, traders are recommended to exercise caution while trading the markets with higher leverage. This can be accomplished by holding the appropriate currency futures contract(s) to maturity and taking physical delivery of the contracted sum in Canadian dollars at the end of the contract. The iiroc is a relatively newer regulatory organization that was formed on June 1, 2008, and was established after a merger between the Investment Dealers Association of Canada and the Market Regulation Services Inc.