The Best Forex Brokers in Canada 2021
Are you looking for the best forex brokers in Canada? Then you’ve come to the right place. We understand that choosing a Canadian forex broker can be challenging, but we’re here to help.
Our experts have navigated the tricky regulatory situation of forex in Canada to bring you a complete list of the best brokers to trade with. In doing this, we reviewed hundreds of sites and put each broker we came across through our rigorous testing process.
You can use this page to find a trustworthy and safe Canadian forex broker with ease. Our recommended brokers are all properly regulated, offer CAD accounts and fair-trading fees. They also offer competitive spreads on CAD currency pairs.
Check out our table of top forex brokers in Canada below, or read on to learn about:
- How Canada regulates the forex market
- What you will need to open an account with a Canadian forex broker
- The benefits and limitations of Canadian forex brokers
Our list of the best forex brokers in Canada are:
- Vantage FX
Best and most trusted forex brokers in Canada January 2021
How we find the best Canadian forex brokers for you
Finding a reliable forex broker in Canada can be a difficult task. You want to work with a trustworthy broker that offers you advantageous conditions as a trader. However, you also want to make sure they comply with all Canadian regulations governing forex trading, which are quite complicated.
Luckily, our team of experts has done all the hard work for you. We’ve analyzed a significant number of brokers to find the best ones.
Each forex broker has been subjected to intense scrutiny through our rigorous testing and evaluation process. Any forex broker in Canada on this list is, therefore, a professional and outstanding firm.
We developed our review process after years of professional forex trading. We also make sure that our methodology remains current and in tune with the market with annual updates.
Our team investigates each broker using 200 points across 10 essential categories, from licensing to their reputation.
We understand that different areas matter to differing degrees. Therefore, not every category carries the same weight in our final score. For example, licensing and regulation contribute far more to the final score than education.
In the sections below, we highlight how our forex review team checks for various aspects that will appeal to you as a Canadian trader.
- Regulation – In Canada, fifteen different authorities regulate forex trading at the federal and provincial levels. A forex broker in Canada needs to register with the Investment Industry Regulatory Organization of Canada (IIROC), and the regulatory body of the province they are in. We make sure every broker we recommend has the appropriate licences.
- Localized payment methods – Deposits or withdrawals made using Canadian payment methods will be faster and cheaper for you. All the Canada forex brokers we recommend offer a variety of handy payment methods, including Visa/Mastercard debit/credit cards, Interac E-transfer, and PayPal.
- Great spreads on important currency pairs – As a Canadian trader, we understand that you might prefer to focus on trading what you’re most comfortable with. This is why all the Canadian brokers we recommend not only offer a variety of CAD-based pairs but offer attractive spreads on those pairs too. Not only will you be able to trade all the major CAD pairs, but you will also have access to exotic ones that are important to the Canadian economy, such as the CAD/CNY, the CAD/MXN, and the CAD/KRW.
- A favorable portfolio of tradable assets – We also only recommend forex brokers in Canada who offer lots of tradable assets, including assets you would be more familiar with. We make sure these brokers offer stocks from large Canadian companies, such as Imperial Oil and The Woodbridge Company, but also Canadian indices like the S&P/TSX Composite Index or the S&P/TSX 60 Carbone Efficient Index.
- Accounts in Canadian dollars – Our team only adds a firm to the list of the best forex brokers in Canada if they offer accounts in Canadian dollars. You’ll find that it’s much easier to trade when your account’s base currency is one that you know well.
How is the forex market regulated in Canada?
Canadian forex brokers must abide by the rules and regulations laid out by the Investment Industry Regulatory Organization of Canada (IIROC) if they want to work with traders from Canada. This means that when you sign up with one of our recommended online forex brokers that operate in Canada, you’re guaranteed to be working with a company that adheres to the standards of the IIROC.
The IIROC carries out certain important activities to supervise the financial services industry, such as:
- Conducting regular reviews of registered firms to make sure they are providing the right advice, sticking to recommended trading-desk requirements, using the right procedures, and maintaining compliance with all rules and regulations.
- Developing regulations to ensure the financial industry maintains the highest standards.
- Screening employees to make sure registered service providers only employ people of good character who have good training and have gone through relevant educational programmes and courses.
- Setting minimum requirements, such as minimum margin levels for forex trading.
- Investigation conduct issues, so, if a firm is not following rules and regulations, IIROC can penalize, suspend, fine, permanently ban or terminate their membership.
The Financial Institutions Supervisory Committee (FISC) oversees the IIROC. The FISC sets policy and coordinates the activities of Canadian financial institutions.
The Financial Transactions and Report Analysis Center of Canada (FINTRAC) is Canada’s financial intelligence unit. FINTRAC detects, prevents, and deters financial crimes, such as money laundering. It is also responsible for protecting personal financial information.
FINTRAC works with IIFOC, and other Canadian regulatory bodies to ensure that forex brokers are operating responsibly.
Provincial forex regulatory bodies
The IIROC regulates the forex trading market at the federal level. However, Canada also has 13 provincial regulatory bodies, each responsible for regulating forex trading on a provincial level. The regulatory bodies are:
- Alberta Securities Commission
- British Columbia Securities Commission
- Manitoba Securities Commission
- New Brunswick Financial and Consumer Services Commission
- Office of the Superintendent of Securities Service Newfoundland and Labrador
- Office of the Superintendent of Securities Northwest Territories
- Nova Scotia Securities Commission
- Nunavut Securities Commission
- Ontario Securities Commission
- Office of the Superintendent of Securities Prince Edward Island
- Autorité des marchés financiers Quebec
- Financial and Consumer Affairs Authority of Saskatchewan
- Office of the Yukon Superintendent of Securities
General rules in for forex brokers in Canada
A forex broker in Canada must:
- Have a minimum capital of $250,000 and enough operating capital for business activities. The latter is calculated on a case-by-case basis.
- Have already registered with the relevant provincial regulatory body, otherwise, they cannot register with IIROC.
- Provide regulatory authorities with regular financial reports.
- Submit to audits conducted by independent third parties.
Employee-related rules for Canada forex brokers
IIROC also has rules for the qualifications of the people working for the broker, such as:
- All company Executives must complete the Partners, Directors and Senior Officers Course administered by the Canadian Securities Institute.
- At least 60% of the company’s Executives must have IIROC-accepted experience in the financial services industry for a minimum of five years.
Rules for forex traders in Canada
While the tough regulatory environment is great for forex traders because scams and fraud are very unlikely, there are also drawbacks. Margin requirements and leverage are limited and differ based on the volatility of a currency pair.
For example, the US dollar and Canadian dollar currency pair (USD/CAD) is considered to have the lowest level of volatility. As a result, the margin requirement is only 2%, with a maximum allowable leverage of 50:1.
The South African rand and Japanese yen currency pair (ZAR/JPY) is one of the most volatile. Therefore, it has a margin requirement of 29% and a maximum allowable leverage of approximately 3:1.
For many retail traders, these leverage limitations are a good thing because they limit the losses you can incur, especially if you trade volatile pairs. It encourages you to stick to more stable currency pairs, resulting in a lower risk of loss.
Investor protection with Canadian forex brokers
The best forex brokers in Canada are members of the Canadian Investor Protection Fund (CIPF). This not-for-profit insurance program was established to protect investors and traders from brokers and investment firms going bankrupt.
Under this programme, investors and traders are covered for up to $1 million. It should be noted that the CIPF only covers traders from any losses they incur should their forex broker become insolvent. It is not meant to cover losses incurred from trading or unfortunate investments.
Opening an account with a forex broker in Canada
To open a live trading account with the best forex brokers in Canada, you will have to provide some personal information backed up with documents as proof.
The broker will ask for:
- Your name, address, date of birth, and Social Insurance Number.
- Details about your employment, including the name and address of your employer.
- Proof of identity and address.
In Canada, if the forex broker cannot verify your identity electronically, you might have to supply an original identification document. A commissioner of oaths or a guarantor must verify that your ID is valid.
A guarantor can be any person with the following profession:
- Dentist, medical doctor, chiropractor, judge, magistrate, lawyer, notary (in Quebec), notary public, optometrist, pharmacist, veterinarian, peace officer, paralegal licensee in Ontario, professional accountant (APA, CA, CGA, CMA, PA, RPA), professional engineer, nurse, or school principal.
The commissioner of oaths or guarantor will fill out a form entitled “Verification of Individual’s Identity in Canada by Commissioner or Guarantor”, which you can then supply to the forex broker.
You will also have to verify your financial account. Canadian anti-money laundering rules require the forex broker to verify the source of your funds.
What documents can you use as proof?
While it might differ depending on the forex broker, you can find a list of generally accepted documents for each category below.
For proof of name and address:
- Utility bill (electricity, water, or telecommunications)
- Record of employment
- Canada Pension Plan (CPP) statement
- Benefits statement issued by a federal, provincial, territorial or municipal Canadian government body
For proof of name and date of birth:
- Insurance documents
- Canada Pension Plan (CPP) statement of contributions
- Original birth certificate
- Marriage certificate or government-issued proof of marriage (long form)
- Divorce documentation
For proof of name and financial account:
- Credit card statement
- Bank statement
- Loan account statement
- A cheque drawn from your chequing account at a Canadian bank (the amount can be as little as $1)
Once the forex broker has received all your documentation and verified its validity, you will be provided with a live trading account. You can then fund it and begin trading.
Know Your Client rules
A forex broker in Canada must abide by the “Know Your Client” rules. This means that the firm must verify your identity and various other personal details, including your net worth, income, and number of dependents.
The broker will also have to verify your risk tolerance and objectives, and your trading knowledge and experience. You also must reveal all third parties who have any form of interest in your finances to comply with anti-money laundering rules.
Canadian forex brokers vs other forex brokers
The best forex brokers in Canada are far more heavily regulated than many other brokers. Though there are many advantages, there are also some drawbacks. In the following section, you will discover how Canadian forex brokers function compared to firms around the world.
Do forex brokers in Canada follow the same rules as US brokers?
Forex brokers in Canada do not follow the same rules as US brokers. US brokers are regulated by the National Futures Association, while Canadian forex brokers are subject to the IIROC and the relevant provincial regulatory body.
While some US rules for brokers are similar to Canadian ones, at least in intent, they aren’t all the same. For example, in Canada, a forex broker only needs to have $250,000 in capital, whereas, in the United States, a firm needs at least $20 million.
Canadian and US forex brokers are similarly limited in the amount of leverage they can offer. However, the specifics differ.
In the US, leverage is limited to 50:1 for major currency pairs, and 20:1 for minor pairs.
In Canada, leverage is tied to margin. It also differs from one currency pair to another, though it can be as low as 3:1 for highly volatile pairs.
The benefits of Canadian forex brokers
Here are some of the biggest advantages of signing up with one of the best forex brokers in Canada:
- All Canadian forex brokers must register with the IIROC and the relevant provincial regulatory body. This means they are heavily regulated, which significantly reduces the risk of you being scammed or defrauded.
- The IIROC requires forex brokers in Canada to have specially trained employees, so you won’t be dealing with an outfit that has no idea what they’re doing.
- Canadian regulatory bodies’ authorities closely monitor forex brokers to ensure that they are operating properly. This includes annual audits by third parties. Therefore, the risk of broker insolvency is very low.
- If a Canadian broker goes bankrupt, you don’t have to worry about losing any money because you are covered by the CIPF up to $1,000,000.
- Canadian brokers also offer localized payments, meaning that you’ll get your money faster and pay lower fees.
- A good Canada forex broker provides accounts in Canadian dollars, which will make trading easier for you since you’ll be using a currency you’re very familiar with.
The limitations of Canadian forex brokers
Undoubtedly, you’ll be very safe when trading with the best forex brokers in Canada. These firms have some limitations, though, such as:
- Limited margin requirements and leverage. In Canada, forex brokers can offer limited leverage because of IIROC rules. Leverage differs from one currency pair to another, depending on volatility. The highest leverage you can get is 50:1, and the lowest is about 3:1.
- Hedging is not allowed. When trading with a Canada forex broker, you won’t be able to incorporate hedging into your strategy due to anti-hedging laws.
- IIROC and provincial regulators also impose limits on how much you can deposit in your live trading account based on your income and net worth.