
Author:
Alexander Foster
Last Updated:
13/08/2022
CFD trading in Canada is entirely legal and exceptionally well-regulated. There are plenty of great broker options available to you and in this guide, we’re going to tell you everything you need to know about this popular investment opportunity.
We’ll start by explaining the licensing and regulation that applies to CFD trading in Canada. Then we’ll suggest a few steps you might want to take before you risk investing any money. We’ll also cover how we test the brokers we are reviewing and give you some tips on how to find the ideal CFD broker for you.
We would like to think that our guide to finding the best CFD broker in Canada will be useful for many different types of readers, irrespective of their level of CFD trading knowledge. Those who are complete beginners will learn plenty and even seasoned CFD traders are sure to find a few useful pointers along the way.
There is also value in reading our guide for traders in other countries too. For example, even if you are already engaged with CFD trading in New Zealand or actively seeking the best CFD broker in Malaysia, much of the advice we will give you for finding your ideal CFD broker is just as relevant, regardless of your location in the world.
Licensing and the regulatory guidelines for CFD trading in Canada are put in place by the Investment Industry Regulatory Organisation of Canada (IIROC). Most legitimate brokers display their licensing credentials on their own websites, but you can also find out more from the IIROC website by using the link to the ‘Dealers we regulate’ section, where all licensed CFD brokers are listed.
In addition, IIROC is overseen by The Financial Institutions Supervisory Committee (FISC), which ensures that all licensed CFD brokers implement suitable recompense for traders in the event that the brokerage should fail. This ensures that traders’ funds are protected up to $1 million.
Lastly, at provincial level, the Ontario Securities Commission, the British Columbia Securities Commission and the Autorité des Marchés Financiers (for Quebec), set further regulations for CFD trading in their respective provinces. If you intend to trade CFDs in Canada, it is your responsibility to ensure compliance with the regulations appropriate to your location.
In most countries, profits made from trading CFDs are taxable and although the exact rules for online CFD trading in Canada will be different to those applied to CFD trading in Germany, for instance, the implication is the same. You are required to provide detailed records of all CFD trading activity to the appropriate tax authority and present a profit and loss analysis at the end of each fiscal year.
You will see throughout this guide that certain subjects come up repeatedly. If that is the case, then it’s because they are absolutely vital composites which when combined, make the best CFD broker in Canada.
Although there are many different factors we cover in every broker review, to be added to our recommended CFD broker list for Canada, there are certain areas where brokers must be up to scratch and others where we allow some compromises. In practice, each of those areas contains a subset of questions we answer and rate against – the more boxes we can tick, the better the overall rating.
We are looking for a well-designed and highly functional website in this section. So, we consider things like page loading speed, ease of navigation, logical menu options and all links should be working. On some level we do consider aesthetics as well, but feel that is more a matter of personal choice than a necessity.
There is often a good deal of variation between different brokers. Some will have several different platforms available, especially if they offer a range of financial instruments. Others may have a single bespoke platform that’s designed to be multi-purpose. Whichever the options, we will ensure that they perform as expected and assess their suitability for different levels of trading experience.
As CFDs rely on company stocks as their underlying asset, theoretically the choices available are infinite. However, in reality, you’ll find that availability is not consistent between different brokers. We found that some CFD brokers take the global stock approach, others place more emphasis on Canadian stocks and in some cases, offer preferential fees for trading them.
CFD trading times correspond with the hours and days that global stock exchanges are live. In essence, this extends from Sunday evening, through to Friday evening. The best CFD brokers in Canada will therefore provide customer support throughout the entire period that trading is taking place. Ideally, we would hope to find at least one immediate contact method, either a phone number, or a live chat facility. It’s also ideal if there is an email address available for more complex enquiries. Naturally, we seek timely and professional responses as well.
Assuming that you have first checked out your broker’s licensing credentials and are also satisfied with the security protocols in place, there are other factors to consider that will help you track down the best online trading platform, as well as enhancing your CFD trading experience.
You will almost certainly find that not all brokers are equal. What one trader considers to be the best online CFD broker in Canada might have no appeal for another. There are two main points you should consider here. The first defining factor will be your level of experience and the second concerns your anticipated trading volume.
Whilst some trading platforms are ideal for beginners, others are incredibly complex. Our advice to anyone is to try several different options out and choose the one you feel most comfortable with using. Almost every broker offers a free demo account, which gives you the perfect opportunity to assess different types. Demos also have their positive side for those of you who are more experienced too, as they provide the perfect medium to hone your trading strategy without risk.
Due to the regulatory restrictions and tax laws applied to CFD trading in Canada, you will need a Canadian bank account to fund your trading activities and this is usually the only payment option available. The Canada Revenue Agency (CRA) scrutinises bank accounts to assess the “content and intent” of every trader and determines whether you are liable to pay capital gains tax or income tax on your profits.
You might want to give some thought to where you will be doing the majority of your trading. Whilst some traders might still prefer an office environment with a PC, there has been a huge increase in trading on the go using a mobile app. If you are one of those, make sure that any CFD brokers you are considering provide a suitable and reliable way to access your account from a mobile device.
On our website, you’ll find numerous CFD broker reviews for Canada. Every review we publish on our site will cover the same factors for each broker and will be laid out in an easy-to-read format. This provides you with a manageable way to compare any brokers that interest you before you make a final decision.
As well as CFD trading in Canada, a number of other financial instruments also come under the regulation of the authorities we mentioned earlier. So, if you want to extend your trading portfolio, you may wish to consider investing into the stocks themselves, or taking a look at these alternatives:
We hope that our guide has provided you with some useful and valuable information. Regardless of whether you want to trade CFDs in Canada, or you are looking for the best CFD broker in New Zealand, many of the principles of finding a good broker are exactly the same, irrespective of your location.
We do urge you to confine yourself to trading only with CFD brokers which are correctly-licensed and regulated for the Canadian market. There is a good selection to choose from and you’ll find plenty more help on our site to help you with that task.