Regulators are warning Canadians about a spike in websites promoting “binary options trading platforms” used to bet on how a stock or currency will perform over a short period of time.
The Canadian Securities Administrators warned Tuesday, “No business is currently registered or authorized to market or sell binary options in Canada” and added that while investors may see virtual gains on the websites, they are often unable to collect the profits because “they don’t exist.”
The CSA, an umbrella organization for Canada’s provincial and territorial securities commissions, warned that investors also risk identity theft as these binary options websites often request credit card information.
Louis Morisset, chair of the CSA and chief executive of Quebec’s Autorité des marchés financiers said Canadians who sign up “risk the threat of thousands of dollars in unauthorized withdrawals on their credit cards and of being stuck with high-interest payments for a non-existent investment”.
The CSA says that the binary options platforms often operate offshore.
In a statement Wednesday, the regulatory umbrella groups said, “CSA members are working together and with other regulators to share best practices in order to counter these widespread illegal activities”.