ASIC Warns Retail Investors Over Risks of Complex Trading Products

The Australian Securities and Investments Commission (ASIC) has warned retail investors about the risks of complex and high-risk financial products offered by online brokers, following a targeted review that identified weaknesses in product governance, investor onboarding and risk disclosures.

ASIC’s surveillance examined nine entities offering short-dated exchange traded options (ETOs), futures and fractional shares to retail investors. The regulator found that some providers used incentives such as fee-free trading, discounts, cash vouchers and airline reward points to attract customers, potentially encouraging impulsive trading decisions without sufficient awareness of the risks involved.

ASIC Commissioner Simone Constant said products involving leverage, including short-dated options and futures, could result in significant losses within hours or days, while fractional shares may involve complex ownership structures that affect investor protections and transfer rights.

The regulator highlighted several concerns identified during the review, including insufficient target market determinations (TMDs), weak onboarding processes and unclear disclosures regarding the risks and costs of fractional trading.

ASIC found that some firms failed to properly assess whether their products were suitable for their intended customers. Certain onboarding systems allowed repeated attempts to pass suitability questionnaires, while some disclosures did not clearly explain potential losses and product limitations.

The review was conducted between March and June 2026 and covered:

• Interactive Brokers Australia Pty Ltd
• Moomoo Securities Australia Ltd
• Sharesies Australia Limited
• Stakeshop AFSL Pty Ltd
• tastytrade Australia Pty Ltd
• Tiger Brokers (AU) Pty Limited
• Totality Wealth Limited
• Trading 212 AU Pty Ltd
• Webull Securities (Australia) Pty Ltd

ASIC said the findings were not attributed to individual entities and did not apply to every provider reviewed.

Following ASIC’s intervention, five entities have improved their compliance practices, including two firms that stopped onboarding options clients while remediation work was carried out. One entity has also exited the Australian market.

ASIC said it will continue monitoring the sector and may take further regulatory or enforcement action where firms fail to meet their obligations, particularly when offering high-risk products to retail investors.