Canadian regulators clarify rules for sports and entertainment event contracts
The CSA and the CIRO have issued new guidance on prediction markets and certain types of event contracts.
Canada.- The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) have published a joint notice clarifying their approach to event contracts linked to sports and entertainment activities or outcomes. The bodies clarified that investors and market participants should be aware that such contracts are outside Canada’s securities and derivatives framework.
The CSA said such contracts should not be regulated under Canadian securities and derivatives legislation, while CIRO does not consider it appropriate for its dealer members to facilitate or approve applications to trade them.
CSA Chair and CEO of the Alberta Securities Commission Stan Magidson said the guidance is intended to clarify the role of Canadian securities regulators. “It is important for investors and market participants to understand that event contracts based on sports- or entertainment-related activities or outcomes should not be regulated within securities and derivatives legislation. This notice provides important clarifications regarding the role and responsibility of Canadian securities regulators when it comes to certain types of event contracts,” he stated.
The CSA coordinates securities regulation across Canada’s provinces and territories, while CIRO oversees investment dealers, mutual fund dealers and trading activity on Canadian debt and equity marketplaces.
Two CIRO dealer members have so far been authorised to facilitate trading in a limited set of event contracts. These must comply with terms and conditions established by CIRO in consultation with the CSA, while the activity could face restrictions or changes in the future. Companies and individuals trading or facilitating event contracts that qualify as securities or derivatives must continue to comply with applicable securities and derivatives legislation.
