The Australian Securities and Investments Commission (ASIC) found product governance, onboarding and disclosure gaps at nine online brokers today (Thursday). The review covered short-dated exchange-traded options, futures and fractional shares sold to retail investors.

Five firms improved their compliance practices during the review. Two stopped accepting new options clients while they worked on fixes, one provider later left Australia, and ASIC said it may take further regulatory or enforcement action.

For brokers, the findings put product design and client screening under scrutiny beyond the contracts for difference sector. “The products are complex but the responsibilities are simple,” ASIC Commissioner Simone Constant said.

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Nine Platforms Included in the Review

The surveillance ran from March through June. It covered Interactive Brokers Australia, Moomoo Securities Australia, Sharesies Australia, Stakeshop AFSL, tastytrade Australia, Tiger Brokers (AU), Totality Wealth, Trading 212 AU and Webull Securities (Australia).

ASIC did not assign any finding to an individual provider. The regulator also said the findings were thematic and did not apply to all nine entities.

Some target market determinations did not explain in enough detail how a product matched the likely objectives, financial situations and needs of clients, according to the ASIC release.

The regulator also found questionnaires that were not sufficiently tailored to a customer’s circumstances. Some onboarding systems allowed repeated or unlimited attempts to pass.

ASIC said firms must define target markets narrowly for complex products and monitor whether clients remain within them after opening an account. The obligation therefore continues beyond the initial questionnaire and includes product governance throughout the customer relationship.

Questionnaire design has previously triggered direct restrictions. ASIC issued interim stop orders against TMGM’s Australian entity in May 2024 over its CFD and margin forex onboarding controls.

Incentives Can Obscure Product Risk

ASIC said some providers promoted fee-free or discounted trading, cash vouchers or airline reward points. Such incentives can encourage impulsive decisions while drawing attention away from the potential for rapid losses, according to the regulator.

Short-dated exchange-traded options and futures use leverage. Options can lose value quickly as expiry approaches, while futures are settled daily and can force an investor to close at a loss.

Fractional shares carry a different set of concerns. ASIC found that some disclosures did not clearly explain costs, ownership arrangements, investor rights or whether a holding could be transferred to another platform.

Fractional trading lowers the amount needed to buy exposure to a share, but the investor may hold an interest through an intermediary instead of owning the underlying security directly. That structure can change voting, transfer and protection rights.

Unlimited questionnaire attempts have also appeared in enforcement cases. In March, a court imposed an AU$10 million (about $7 million) penalty on Binance Australia Derivatives after Binance admitted onboarding failures that included repeated quiz attempts.

ASIC Extends Its Product Distribution Push

The review extends ASIC’s focus from over-the-counter derivatives into exchange-traded and fractional products offered through online platforms.

In January, the regulator said a review of 52 licensed CFD issuers had secured nearly AU$40 million in refunds for more than 38,000 retail investors. ASIC reported that 44 issuers improved onboarding questionnaires and 39 changed their target markets.

ASIC’s data showed that 68% of Australian retail CFD investors lost money in the 2024 financial year. Losses exceeded AU$458 million, including AU$73 million in fees, according to the regulator.

Derivatives cases accounted for about 37% of ASIC’s AU$830 million civil penalty total in the 2025-26 financial year, FinanceMagnates.com reported in July.

ASIC has added four Moneysmart pages covering exchange-traded options, futures, fractional shares and micro-investing. It also revised its futures glossary.

The regulator did not identify which five firms changed their compliance practices, which two paused options onboarding or which provider left Australia.

This article was written by Damian Chmiel at www.financemagnates.com.RegulationRead More

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