Why Composer isn't in Canada

We have thousands of Canadians on a waitlist hoping to use Composer, and many of them periodically ask a very reasonable question: If Composer is headquartered in Canada, why can’t anyone in Canada use it? I want to use this post to finally explain why and also propose some policy suggestions that could make Composer for Canadians a real possibility.

Composer currently operates as a broker-dealer in the United States under FINRA oversight. However, Canada has its own national regulatory body, the IIROC (recently consolidated into CIRO). There is no harmonization or recognition of U.S. broker-dealers by IIROC, which means that applying for a Canadian brokerage license is an entirely separate process.

Furthermore, Canada does not have a single federal securities license. A broker-dealer must register with each province’s securities agency one by one (e.g., Ontario via the OSC, Quebec via the AMF, British Columbia via the BCSC, etc.). That’s why, at times, certain brokers operate in some provinces but not all.

In addition to separate firm-level licenses, Canada also requires its own individual licensing. As a result, brokerage and compliance staff would need entirely new training specific to Canada. In some cases, this might mean hiring new personnel altogether.

Even if we obtained all of these licenses for both the firm and employees, we still couldn’t custody Canadian customer assets under our existing clearing and custody arrangements. IIROC regulations specify that all customer assets must be segregated and held at a bank under Canadian oversight—typically a Canadian financial institution. This would require partnering with a local clearing broker, which would be a cumbersome new integration process.

It doesn’t stop there: virtually every part of the fintech value chain has its own unique requirements in Canada. This includes new insurance requirements, KYC and AML standards, and so on. I am not aware of any aspect of operating as a broker-dealer or fintech in Canada that is harmonized with the U.S. or any other country.

One might read all of this and ask, “Why didn’t Composer get licensed in Canada from the start?” Even if we had focused all our energy on entering the Canadian market right away, it can take years to register as a broker-dealer in Canada, with no guarantee of receiving a license. There are accounts of Canadian brokers feeling compelled to buy existing brokerage businesses because it was unclear whether they could secure a license at all. Time-to-market is essential for an early-stage startup, and we wouldn’t have survived waiting that long—no startup could.

Furthermore, even if by some miracle we did secure a Canadian broker-dealer license, we would then have to duplicate all costs and efforts to operate in the U.S. or any other country, where the total addressable market is much larger. That’s why we decided to enter the U.S. market first four years ago, and, given the unchanged regulatory landscape, we would make the same decision if we were launching today.

While I’m not a policy or legal expert, I believe certain common-sense changes could make it much easier for a firm like Composer to enter the Canadian market:

1. Establish a mutual recognition agreement with U.S. regulators. A broker in good standing with FINRA and the SEC could be recognized by Canadian regulators, provided that broker also meets any Canada-specific requirements.

2. Create a single national securities regulator. This would eliminate the need for separate provincial approvals, making it far less cumbersome and expensive for new entrants.

3. Expand the international dealer exemption to cover retail clients. Currently, foreign institutional dealers are allowed in Canada via this exemption. Extending it to retail would allow U.S. brokerage firms to serve Canadian retail clients without registering separately with IIROC.

4. Streamline individual licensing. A U.S. employee holding a Series 7 or Series 65 could take a short exam on Canadian-specific rules, rather than starting the licensing process over.

5. Harmonize custody and capital requirements with the SEC/FINRA. Canada would recognize SIPC insurance to protect client accounts, and U.S. brokerages would no longer be required to segregate Canadian assets with local banks.

6. Establish an equivalence arrangement between Canada’s anti-money laundering agencies (FINTRAC) and the U.S.’s AML agency (FinCEN). This would end the need for wholly separate KYC/AML onboarding for U.S. brokers and fintechs.

These proposals aren’t just a matter of corporate self-interest. Complex, burdensome regulations mean Canadian consumers have far fewer choices than their neighbors to the south. The resulting lack of competition allows incumbents to charge higher fees, including indirect or hidden costs such as high exchange rates for purchasing popular U.S. securities. Ultimately, this leaves less money in the pockets of Canadian investors.

I have been appalled by the senseless tariffs enacted by President Trump, yet inspired by the calls for unity in Canada. By streamlining and eliminating these self-sabotaging regulations, perhaps we can find a silver lining in our current predicament. While it is only one piece of a much larger puzzle, encouraging competition and giving Canadian investors more options is an important step forward.

While we can’t open individual accounts for Canadians, we can work with US entities with Canadian beneficiaries. If you’re a Canadian with a US entity, or are interested in setting one up, please get in touch with us here.