ASIC flags online brokers' sale of high-risk products to Australian retail investors

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ASIC flags high-risk broker sales

Highlights

ASIC's review of nine online brokers between March and June 2026 found deficiencies in product governance, risk disclosure, and onboarding for retail investors.
Five entities have improved compliance after ASIC's intervention, with two halting options onboarding and one withdrawing from the Australian market.
ASIC is considering further regulatory action and has launched four new Moneysmart webpages to educate investors about complex financial products such as exchange traded options and fractional shares.

Surveillance findings and regulator response

As reported by ASIC, a targeted review of nine entities offering short-dated exchange traded options, futures and fractional shares to retail investors found gaps in product governance, onboarding and risk disclosure between March and June 2026.

ASIC said some providers used fee-free or discounted trading, cash vouchers or airline reward points to encourage retail investors to begin trading on their platforms. The regulator found deficiencies in some target market determinations, including limited detail on how products met clients' needs, as well as onboarding processes with little tailoring of questions and repeated attempts to pass questionnaires.

It also identified unclear disclosures to clients that failed to properly explain the risks tied to fractional trading. Commissioner Simone Constant said leveraged products such as short-dated options and futures can magnify losses within hours or days, while fractional shares can involve complex ownership arrangements that affect investor rights, protections and transferability.

Sector impact and investor protection measures

ASIC said its intervention has already prompted changes across the sector, with five entities improving compliance practices. Two of those entities have stopped onboarding options clients while remediation work continues, and one entity has exited the Australian market since the review.

The regulator says it is still addressing concerns with some entities and is considering further regulatory or enforcement action. At the same time, ASIC's Moneysmart has launched four new webpages covering exchange traded options, futures contracts, fractional share trading and micro-investing to help Australians assess whether such products are suitable for them.

ASIC is urging retail investors to ask whether they understand a product, whether it is right for them, where their money is held and whether they can afford the potential loss. Constant said wider access to online investing should not come at the cost of selling complex or high-risk products to people who do not fully understand the risks.

Retail traders’ growing influence is running into a new set of transparency pressures, as our earlier coverage noted. We outlined how proposed shifts such as less frequent corporate earnings reporting, slimmer Federal Reserve communications, and paid premium access to market-moving social media feeds could widen the information gap between individual investors and institutions.

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