Major Canadian financial institutions are revising their internal conduct policies to restrict employees from participating in prediction markets. These updates aim to prevent the use of confidential data to wager on economc events or Bank of Canada decisions.
RBC and Scotiabank lead the crackdown on event-based wagers
The response across Canada's banking sector varies from total bans to targeted reminders. According to the report, the Royal Bank of Canada has explicitly prohibited employees covered by its personal trading policies from placing bets on prediction markets. Scotiabank has taken a similar stance, noting that its existing policies against speculating on financial markets, companies, or indexes likely encompass these new types of contracts.
Other institutions are applying more surgical restrictions .. National Bank has introduced specific limits for employees within its capital markets division, while Toronto-Dominion Bank issued a reminder that its general code of conduct and confidentiality obligations apply to any prediction market activity. Manulife has gone a step further by creating a dedicated guidance section, which forbids employees from betting if the answer to a market question is tied to information they acquired through their employment.
Meanwhile, Bank of Montreal and Canadian Imperial Bank of Commerce (CIBC) are relying on their current frameworks. CIBC stated that its code requires employees to act with integrity and is reviewed regularly as market conditions shift.. As reported, these restrictions primarily target staff in high-sensitivity roles, such as asset management, wealth management, and investment banking.
The danger of betting on Bank of Canada decisions
Prediction markets differ from traditional stock trading because they allow users to wager on the outcome of specific events, such as shifts in economic data or policy decisions made by the Bank of Canada. The primary concern for banks is that employees may possess material non-public information that gives them an unfair advantage over other bettors.
Adam Garetson, a partner at Gowling WLG who leads the firm's blockchain and digital assets group, suggests that the core issue is whether an individual has information that provides a competitive edge. Garetson argues that existing laws and internal policies are designed to stop employees from using such advantages for personal gain , regardless of whether the transaction looks like a traditional security trade or a bet.
Patrick Augustin, a finance professor at McGill University, describes this as a proactive move. Because financial institutions move massive amounts of capital and hold sensitive data, the risk of confidentiality breaches is inherently higher, making clear rules essential before these markets become mianstream.
Lessons from Polymarket and the Google engineer scandal
The Canadian shift mirrors a trend already unfolding in the United States, where platforms like Polymarket and Kalshi have surged in popularity. in the U.S., hedge funds and banks have already revised their codes of conduct after high-profile instances of misconduct. The report highlights that a U.S. Army soldier and a Google software engineer have both faced accusations of using confidential information to profit from prediction market trades.
This international precedent suggests that prediction markets are not merely novelty tools for forecasting, but are becoming viable venues for insider trading. By implementing these rules now, Canadian banks are attempting to avoid the regulatory and reputational fallout seen in the American market.
How Canadian compliance teams will monitor non-traditional trades
Despite the new rules, significant questions remain regarding enforcement. While the report mentions that institutions are reviewing "surveillance procedures," it is unclear how a bank can realistically monitor a staff member's activity on a third-party betting platform that may not report data in the same way a brokerage account does.
Furthermore, the source mentions that one specific platform in Canada currently permits a limited set of contracts involving financial and environmental forecasts, but it does not name the platform. It remains to be seen whether Canadian regulators will eventually classify these platforms as securities exchanges, which would bring them under much stricter government oversight and mandatory reporting requirements.
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