Canadian regulators block sports and entertainment prediction contracts

Canadian securities regulators said sports- and entertainment-related prediction contracts should not be treated as securities or derivatives, cutting CIRO dealer members off from those products. The Canadian Securities Administrators and CIRO issued the joint notice on 27 August.

The notice said CIRO does not consider it appropriate to approve or facilitate an application by dealer members to trade those contracts. It also said anyone trading or facilitating event contracts that are securities or derivatives must follow the relevant securities and derivatives rules.

Other event-contract categories remain under review, and the guidance said dealer members’ ability to facilitate event contracts may face further restrictions or changes. The Globe and Mail reported that, for now, CIRO-approved dealers are only permitted to offer contracts tied to economic indicators, financial markets and climate trends.

The Globe also reported that the two CIRO dealer members authorized to facilitate a limited set of event contracts are Wealthsimple and Interactive Brokers.

In an August 4 white paper, Wealthsimple argued that a contract on a soccer match and one on inflation are mechanically the same instrument, and that dividing oversight by subject matter is the wrong approach.