ASIC Bans Binary Options for Australian Retail Clients

The Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term), announced today that it has decided to ban the sale of binary options to retail traders in Australia. During ASIC’s reviews in 2017 and 2019, the regulatory authority found that around 80% of retail clients lost money trading binary options.

According to the official announcement, the ban on the issuance and distribution of binary options to retail traders in Australia will take effect from Monday 3 May 2021. ASIC mentioned that binary options are likely to result in cumulative losses to retail clients because of their product characteristics.

“Binary options product characteristics make them incompatible with investment or Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term use by retail clients. ASIC’s product intervention order will protect retail investors from these harmful products at a time of heightened vulnerability,” ASIC Commissioner Armour said in the official announcement.

Finance Magnates earlier reported about ASIC’s enforcement of restrictions on the retail contract for differences (CFDs) trading in the country. According to the newly proposed CFD restrictions, brokers have to reduce the offered leverages.

Client Protection

ASIC highlighted the importance of client protection and added that the authority has imposed a ban on binary options to reduce losses of Australian retail clients. The commission mentioned that the order will remain in force for 18 months and the authority can make it permanent afterwards.

“ASIC estimates that retail clients’ net losses from trading binary options were around $490 million in 2018. The size of the market in Australia has since reduced significantly after ASIC issued a warning in April 2019 against providing unlicensed or unauthorized services to clients located in several foreign jurisdictions. Australian retail clients are estimated to have made net losses of more than $6.7 million in 2019. ASIC’s binary options ban brings Australian requirements into line with prohibitions in force in comparable markets and follows the commencement on 29 March 2021 of ASIC’s product intervention order imposing conditions on contracts for difference offered to retail clients,” the authority mentioned in the official announcement.