The Canadian Securities Administrators (CSA) issued a statement on Dec. 18 to remind dealers and investors of the inherent risks associated with products linked to cryptocurrencies, including futures contracts.
The CSA says that “while these contracts may be traded on regulated exchanges and may be cleared by regulated central counterparties, the fact remains that their high level of risk will not be suitable for all types of investors.”
Sudden and significant margin calls
"More specifically, the underlying value of these futures contracts is based on trading occurring on markets for cryptocurrencies which are largely unregulated," said Louis Morisset, CSA Chair and President and CEO of Quebec regulator, the Autorité des marchés financiers. "Therefore, there may be some circumstances such as price volatility in the underlying markets, which may lead to consequences such as sudden and significant margin calls in the futures market."
The CSA reminded dealers and advisers that they must perform their own due diligence on these cryptocurrency-linked products before recommending them to their clients.