Foreign Exchange trading (Forex) in Canada
Forex is foreign exchange trading—the buying of one currency while simultaneously selling another. Traders try to profit by speculating on the value currencies are likely to have in the future. Forex trading is very complicated, high risk, and typically not for the average investor.
Regulation of forex in Canada
Forex trading is generally regulated as trading in either a security or a derivative, and its regulation varies depending on provincial legislation. Either way, firms or individuals seeking to offer forex trading services must be appropriately registered in the province in which they intend to work and must also be a member of the Investment Industry Regulatory Organization of Canada.
Forex trading has proven to be a risky venture. It’s important to understand that forex trading is a zero-sum transaction where one party profits and the other loses. Even knowledgeable and experienced investors can realize substantial losses when and if market conditions change.
In the United States, the examination of existing Forex market operators by the United States Commodity Futures Trading Commission (CFTC) indicated many brokers and dealers lacked robust safeguards to protect consumers, while others were clear frauds.