Trading CFDs from Canada: What You Need to Know

cfd world

Contracts for Difference are over the counter (OTC) products that are designed to help you to trade instruments globally without actually owning them. They can provide you easy access to shares, forex pairs, indices, and other assets all over the world without having to register in different markets and exchanges.

Because of regulatory differences, not every broker offers CFDs in certain countries. Choosing a broker both suitable for you and eligible to provide services in your country might be a complex and confusing process. We will provide guidance and resources to help you in that, and also share some details concerning a number of countries.

First let’s take a look at the types of CFD brokers (with CFDs they are also called providers, as they provide the contracts for the traders as counteerparties).

Market Makers and Direct Market Access Brokers

The distinction between MM and DMA brokers is similar to the MM-ECN/DMA difference in forex trading. Market Makers pool their orders meaning they pair incoming short and long trades and don’t necessarily trade the underlying asset every time for the individual trades.

DMAs, on the other hand, are obliged to trade in behalf of the CFD holder, thus assuring matching the price of the CFD and the underlying.

The overwhelming majority of trading is conducted through MMs in the CFD market as the demand for DMAs is much lower than in the forex market.

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CFDs in Canada

Not all brokers provide CFDs for Canadian residents due to strict regulations, but it is not prohibited as opposed to US regulation. Notable brokers in the local market are CMC Markets and Oanda.

The best providers

Instaforex and FXCM and FBS are great providers of CFDs with comprehensive support for local traders including Malaysia, China, Indonesia, and Japan. If you want to trade CFDs in Singapore, Oanda or IG Markets might be the best choices for you.

Final Words

When choosing your CFD provider be sure to examine the offered products as there is much bigger variance between brokers than in the case of forex offerings  and if you would like to specifically trade local assets, you might find what you are looking for at the right provider.