Trading CFDs In Canada

Trading CFDs In Canada

Increasing demand for CFD trading in Canada has brought many online platforms to the fore. But in Canada, are CFDs legal, and if so, what are the tax considerations? When answering both questions, we would explain why Canada provides one of the most stable trading environments due in part to the relatively low leverage options.

What is CFD Trading?

A contract for difference (CFD) is a derivative instrument, which means you do not buy or sell the underlying asset. Instead, on a given market, you buy several units, such as FX, and swap the value difference between the open and close spots. Returns are determined by multiplying the number of CFDs purchased at each price transfer stage.

Online CFDs are available from stocks and shares to forex, services, and cryptocurrencies on many markets. The capacity to compete on leverage is also a part of the CFD appeal. Traders put down a deposit, called a margin, and then brokers are extending capital so investors can take out larger contracts, which can lead to higher profits and loss. But as we’ll explain below, due to strict regulatory oversight, the leverage available for trading CFDs in Canada is minimal.

Is CFD Trading In Canada Legal?

CFD trading is legal but heavily regulated in Canada. All brokers operating in Canada or opening accounts to Canadian citizens must comply with the regulations established by the Investment Industry Regulatory Organisation of Canada (IIROC). The IIROC is governed by The Financial Institutions Supervisory Committee (FISC).

Three other organizations at the local level monitor the financial markets:

  • The Ontario Securities Commission
  • The Autorité des Marchés Financiers
  • The British Columbia Securities Commission

Once you open a trading account with a broker, search at the bottom of the provider’s website for the risk report of the IIROC. Alternatively, all regulated brokers are listed on the IIROC ‘Dealers we regulate’ page. Accounts with Canadian controlled brokers will provide cash security of up to C$1 million in the event of a brokerage bust.

Another prerequisite before you can start trading with CFD in Canada is to check a variety of details, including:

  • ID & address
  • Age & occupation
  • Social insurance number
  • Marital status & dependants
  • Investment experience & knowledge
  • Income & investment goals
  • Source of account funds
  • Risk appetite

Leverage Limits

A major difference in Canada vs. other countries when trading CFDs is the limitation on leverage use. The IIROC Rule 100 document sets limits on margin criteria to reduce the risk exposure for traders. These limits mean you may fail to borrow as much in Canada as, for example, in Australia or the UK.

Trading Platforms

Canada’s best online CFD trading platform changes depending on who you ask. Having said that, top providers are providing easy to use the web and mobile applications. Traders should be able to test strategies, draw diagrams, and carry out technical analysis. Also, the best CFD day trading program offers detailed historical data and risk control tools. The MetaTrader 4 (MT4) and MetaTrader 5 (MT5) systems regularly appear in the top 10 CFD platforms.

Choosing a Broker

Brokers provide different services and assets, so choose the one that offers the best account support for the CFD markets in which you are involved. Check also for the competitive fees. Many brokers from DMA and ECN make money through the spread, but certain commissions and extra fees are paid. Aggressive, short-term CFD traders need to keep transaction costs small.

Canada’s best online CFD brokers arrange for prompt deposits and withdrawals. The additional education resources available are worth exploring too. Most providers provide a virtual trader platform where other users discuss how they can best conduct CFD trades in Canada. Customer service will be available during normal business hours.


Before you start day-trading CFDs in Canada, make sure you are aware of your tax obligations. You will need to keep a record of gains and losses and information on; instrument, date of purchase and sale, price, size, plus points of entry, and exit. With that information, you should be able to determine the operation category your trade falls into and, thus, whether returns should be reported as business profits or capital gains and losses.

The Canada Revenue Agency (CRA) demands that taxes be collected by the end of the tax year – December 31st. Late or non-payments can result in a CRA audit, which could issue fines and, in worst-case cases, up to five years in jail.

Last Word

CFD trade in Canada opens the door to many markets and platforms. Not only are CFDs legal, but the market climate is one of the world’s safest and most regulated. However, though a fairly safe market, CFD trading in Canada can prove challenging if you use high leverage ratios in your strategy.


What’s a Trading CFD?

A contract for difference is a derivative instrument enabling you to gamble on price fluctuations without owning the underlying property. When the market is shifting in your favor, the broker must pay you the price difference between your place open and close. If the market is shifting against you, then you owe the difference to the broker.

Is CFD trading legal in Canada?

Yes – Trading on CFDs in Canada is legal. Regulatory oversight by the Investment Industry Regulatory Organisation of Canada (IIROC) is among the world’s strictest.

Is trading CFDs a con?

CFD trading is not a con but a risky move. Consequently, it is necessary to sign up with a broker licensed with the Investment Industry Regulatory Organisation of Canada (IIROC).

How much money do I need to trade CFDs?

While minimum account deposits vary from broker to broker, you can start day trading CFDs with C$250 in Canada. It is worth shopping around for the best account as some brokers offer more enticing leverage options and tools for trading the more you spend.

Can you make a living from trading on CFD in Canada?

While a living CFD trading can be made in Canada, most traders would lose money. There must be open accounts of traders who have their eyes open to the risks.