Online brokers are targeting retail investors with complex or high-risk products without clearly disclosing their risks or conducting proper onboarding, leaving Australians exposed to risky products that could see them lose their investments within hours.
The findings follow a targeted ASIC surveillance examining nine entities offering short-dated exchange traded options (ETOs), futures and fractional shares to retail investors.
Some of these providers offer fee-free or discounted trading, or incentives such as cash vouchers or airline reward points to encourage retail investors to start trading on their platforms.
In response to the findings, ASIC’s Moneysmart has released new information to help investors understand these products and is encouraging Australians to think carefully before engaging with complex products.
ASIC Commissioner Simone Constant said, ‘At ASIC we want to see Australians participating safely in thriving markets. But it is important Australians know that there is no such thing as easy money. While sign-up incentives can make trading more exciting, they can distract from investment risks and could encourage impulsive trading decisions.
‘Products such as short-dated exchange traded options and futures use leverage, meaning losses can be magnified and accumulate quickly, in a matter of hours or days. Big losses can accrue in very little time.
‘Other investments, such as fractional shares, can involve complex ownership arrangements that may affect investors’ rights, protections, and the ability to transfer their investments to another platform.
‘If you do not understand how a product generates returns, or how your money is held, do not invest until you do. Or choose other ways to invest that are simpler to understand and make sense to you and make sense for you.’
ASIC’s review of complex products
Conducted between March and June 2026, ASIC’s surveillance found:
- Deficiencies in the target market determinations (TMDs) of some entities, including insufficient detail on how products met the likely objectives, situations and needs of clients.
- Onboarding shortcomings, including limited tailoring of questions to client circumstances and repeated or unlimited attempts to pass onboarding questionnaires.
- Unclear client disclosure that failed to explain the risks and costs associated with fractional trading.
Commissioner Constant continued, ‘More Australians than ever are investing online, making it crucially important that greater access does not come at the expense of products being sold to investors for whom they are not suitable or who do not fully understand the risks.
‘Entities offering complex or high-risk products must ensure their products are distributed to the right target market, not only at onboarding but throughout the client relationship. The products are complex but the responsibilities are simple - they require effective product governance, including appropriate onboarding, ongoing client monitoring and clear disclosures that explain the real risks and costs involved.
‘Complex and high-risk products are unlikely to be suitable for many retail investors, and firms must therefore ensure their target markets are appropriately and narrowly defined. The right product for the right customers so that Australians can trust and have confidence when they invest.’
ASIC's intervention has already driven change across the sector:
- Five entities have improved their compliance practices.
- This includes two entities who have stopped onboarding options clients while remediation work is underway.
One entity has exited the Australian market since ASIC’s review.
ASIC is continuing to address concerns with some entities and is considering further regulatory or enforcement action in relation to matters identified in the review.
Moneysmart updates educational guidance
ASIC’s Moneysmart has created four new webpages to provide educational information to Australian investors about exchange traded options (ETOs), futures contracts, fractional share trading and micro-investing. The existing futures glossary page was also reviewed.
Short-dated ETOs are contracts that give investors a limited time to profit from market movements, often within days. They use leverage, meaning their value can change significantly. This can magnify both gains and losses. Their short time to expiry also makes them highly susceptible to time decay, which means investors can lose money quickly if the market does not move as anticipated. While they are sometimes marketed as a way to make quick gains, short-dated ETOs carry a high risk of rapid financial loss.
Futures are legally binding contracts to buy or sell a particular asset, currency or other index, for a specified price on a specified future date. They can be high-risk investments and are often unsuitable for retail investors as they involve high leverage - meaning they only require a small deposit for exposure to a large asset - and contracts are settled daily, which means that you can be forced to sell at a loss.
Fractional trading allows investors to purchase part of a share or other asset, by splitting the ownership or value of an asset among multiple investors or between an investor and an intermediary. This can make investing more accessible by reducing the amount of money needed to get started but has implications for ownership rights.
Before investing, retail investors should ask themselves:
- Do I understand this product? Complex or high-risk products can magnify gains, but also losses.
- Is this product right for me? If it is difficult to understand, it may not be suitable.
- Where is my money held, and do I own the underlying asset? Different products have different ownership structures. Do not assume all investment products offer the same protections.
- Can I afford the potential loss? Highly leveraged products can have a low barrier to entry, but they are not low risk. You could lose your entire investment within hours. Do not invest more than you can afford to lose.
‘Before investing, we encourage investors to visit the Moneysmart website to better understand new, complex or high-risk products and whether they may be right for you,’ Ms Constant continued.
Background
About ASIC’s surveillance
The nine entities reviewed were:
- 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, and
- Webull Securities (Australia) Pty Ltd
The surveillance findings are presented thematically and are not attributed to individual entities and did not apply to every entity reviewed.
Previous surveillances of complex products offered to retail investors
ASIC's surveillance findings are consistent with previous reviews of design and distribution obligations (DDO) compliance and high-risk product distribution practices. ASIC has previously published:
- Design and distribution obligations: Retail OTC derivatives (REP 770)
- Compliance with the reasonable steps obligation (REP 795) and
- Risky business: Driving change in CFD issuers' distribution practices (REP 828),
which set out examples of better and poorer distribution practices and ASIC's expectations for firms distributing products to retail investors.
ASIC has previously taken action against offerors of complex products, particularly contracts for difference (CFDs):
- In June 2026, ASIC secured more than $300 million in penalties against collapsed CFD issurer Union Standard International Group Pty Ltd (USG) for unconscionable conduct. Among other failures, USG failed to properly onboard its clients, allowing investors who were unsuited to complex products access to highly volatile CFDs (26-117MR).
- In March 2026, Binance Australia Derivatives, the trading name of Oztures Trading Pty Ltd, was fined $10 million over serious onboarding failures, including allowing clients seeking to be verified as sophisticated investors to make unlimited attempts at a multiple-choice quiz until they achieved a passing score for Binance to assess them as qualifying for sophisticated investor status (26-055MR).