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Retail Participation in the Derivatives Market:

An Ontario Perspective

By: Alison Beer, Senior Legal Counsel, Derivatives Branch
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Disclaimer

The views expressed in this presentation are the personal 

views of the presenter and do not necessarily represent 

the views of the Ontario Securities Commission or 

Commission staff
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Overview of Presentation

1. Overview of the current regulatory framework for retail 

derivatives trading in Ontario

2. Cross-border insights regarding the retail derivatives 

market and recent market events

3. Regulated retail activity involving certain cryptoassets, 

including crypto-linked derivatives
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Regulatory framework

Retail-derivatives trading in Ontario
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Cross-border insights 

Retail-derivatives trading in Ontario

▪ Significant rise in the past decade in the number of online trading 

platforms offering derivatives products to retail investors

▪ Retail access to off-exchange transactions – in addition to leveraged 

equity products, retail investors can access over-the-counter derivatives 

known as contracts for difference (CFDs), forex contracts and similar OTC 

derivatives, including CFDs on single-name securities through regulated 

dealers

▪ Retail online dealer space is relatively consolidated for exchange-traded 

products (for the most part retail online brokerages are owned by the 

large Can banks), whereas there are a number of independent dealers 

offering OTC derivatives products at the retail-level

▪ Significant acceleration in the number of retail investors opening trading 

accounts throughout 2020

• younger demographic
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Cross-border insights 

Retail Derivatives Trading in Ontario 

▪ Trading information is being accessed through online social media channels, 

including through subreddit forums (both U.S. focused (e.g., “WallStreetBets”) 

and Canadian focused (e.g., “BayStreetBets”)

• Two-thirds of 18–34 year-olds, who invest, use social media as source 

of information about investing, including Youtube (29%), Instagram 

(28%), Reddit (21%), Snapchat (18%) & TikTok (Source: 2020 CSA 

Investor Index, Survey Report)

▪ The example of Blackberry:

• Amplification and cross-border effects - while much of the ‘meme’ trading 

activity is occurring in securities that are listed in the U.S., there are a 

small number of Canadian-listed securities that have seen notable price 

increases, including BlackBerry Limited which is interlisted on the NYSE and 

trades in Canada on the TSX under the symbol BB

• Impact on trading volumes - for a comparison of recent BB stock and 

options trading on U.S. based exchanges compared to Canadian, see Figure 

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• Note, Ontario retail investors can trade across certain markets in both the 

U.S. and Canada
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Figure 1 - BB trading volume on US exchanges compared to Canadian exchanges
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Figure 2
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Regulated activity involving crypto assets

▪ Ontario retail investors can currently trade the following 

products on a regulated basis:

• Bitcoin and ether-linked futures contracts (and Bitcoin 

options) on certain U.S. based exchanges through 

registered dealers

• Investment funds offering exposure to bitcoin and ether 

(closed-end) and an ETF linked to bitcoin

• Crypto rights contracts linked to bitcoin and ether through 

a registered dealer (registered in the category of restricted 

dealer)
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▪ In 2019 CSA, IIROC consulted on a proposed framework to regulate crypto asset 

trading:

“securities and/or derivatives legislation may apply to platforms that 

facilitate the buying and selling of crypto assets, including crypto assets that 

are commodities, because the user's contractual right to the crypto asset 

may itself constitute a security and/or a derivative”

▪ In 2020 the OSC (along with the CSA) issued guidance (CSA Staff Notice 21-327) 

on the application of securities law (and commodity futures law) to platforms that 

facilitate the buying and selling of crypto assets, including crypto assets that are 

commodities

• The CSA’s guidance is cited in a FN to the CFTC’s final interpretive guidance 

concerning retail commodity transactions involving certain digital assets

• Although some similarities covered in each respective guidance, on an 

outcomes basis there are important distinctions

▪ August 7, 2020, the OSC (and other CSA jurisdictions) through the CSA Regulatory 

Sandbox issued its first decision In the Matter of Wealth Simple Digital Assets Inc.

permitting the registration of a dealer operating a trading platform that allows 

residents in Canada to purchase, hold and sell Bitcoin and Ether through the 

platform (i.e., “crypto rights contracts”)

Regulated activity involving crypto assets

Crypto asset trading platforms
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Thank you