The securities regulators in all Canadian jurisdictions other than British Columbia have banned the use of binary options.

Criticised as a mere bet and therefore an investment that has nothing to do with productivity, a binary option, or asset-or-nothing option, is type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money. The success of a binary option is thus based on a yes-or-no 'binary' proposition. It does not give the holder the choice to buy or sell the underlying asset.

The purpose of the Binary Options Rule is to protect would-be investors from becoming victims of binary options fraud and from an illegal promotion of extremely risky products. The regulators believe that their collectively issued instrument (Multilateral Instrument 91-102, entitled 'Prohibition of Binary Options,' which ministers in some provinces will have to sign to bring it into force therre) will achieve this goal by raising awareness among investors that the sale of these products is illegal and by disrupting the distribution (this includes the processing of payments) of these products, and banning advertising. To this end, the Instrument explicitly prohibits advertising, offering, selling or otherwise trading a binary option with or to an individual.

Regulators have received large numbers of complaints about the aggressive marketing of these products to individuals. Binary options are also called a variety of other names, including but not limited to:

• all-or-nothing options,
• asset-or-nothing options,
• bet options,
• cash-or-nothing options,
• digital options,
• fixed-return options, and
• one-touch options.

All are prohibited by the instrument.