Invest
Retail clients will no longer dabble in binary options following ASIC ban
Invest
Retail clients will no longer dabble in binary options following ASIC ban
ASIC is cracking down on binary options by banning their sale to retail clients as of 3 May, after trading in this financial product cost retail clients an estimated net $490 million in 2018.
Retail clients will no longer dabble in binary options following ASIC ban
ASIC is cracking down on binary options by banning their sale to retail clients as of 3 May, after trading in this financial product cost retail clients an estimated net $490 million in 2018.
The watchdog’s decision is based on findings that suggest that binary options have caused significant losses for retail clients.
In fact, ASIC reviews in 2017 and 2019 found that approximately 80 per cent of retail clients lost money trading binary options because of the nature of these financial products, including their ‘all or nothing’ payoff structure, their short contract duration, and negative expected returns.
As such, as of 3 May, the issue and distribution of binary option to retail clients will be banned.
According to commissioner Cathie Armour, “Binary options’ product characteristics make them incompatible with investment or risk management use by retail clients.”
“ASIC’s product intervention order will protect retail investors from these harmful products at a time of heightened vulnerability,” the commissioner clarified.
Following ASIC’s warning in April 2019 against providing unlicensed or unauthorised services to clients located in several foreign jurisdictions, the size of the binary market in Australia is believed to have reduced significantly.
Australian retail clients are estimated to have made net losses of more than $6.7 million in 2019, compared with $490 million in 2018.
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 order will remain in force for 18 months, after which it may be extended or made permanent. Civil and criminal penalties apply to contraventions of the product intervention order.
What is a binary option?
A binary option is a cash-settled, over-the-counter (OTC) derivative entered into by two counterparties – the binary option issuer and the client.
The ‘all-or-nothing’ payout under a binary option contract is determined by the occurrence or non-occurrence of a specified event in a defined time frame. This can include an event related to movements in the price of a financial product or a market index or an economic event.
RELATED ARTICLES
About the author
About the author
Commodity
Gold's March tumble: Unpacking the dynamics behind the decline
In a month marked by unexpected volatility, gold experienced its steepest decline since June 2013, with prices falling by 12% to US$4,608 per ounce. This dramatic downturn in March was not driven by ...Read more
Commodity
Gold’s role in Australian portfolios amid economic uncertainties
As Australia grapples with resurgent inflation and the Reserve Bank of Australia's (RBA) decision to resume interest rate hikes, the spotlight is once again on gold's strategic role in investment ...Read more
Commodity
World Gold Council unveils initiative to transform digital gold landscape
In a groundbreaking move poised to reshape the digital gold market, the World Gold Council (WGC) has announced a new initiative aimed at building a shared infrastructure to facilitate the development ...Read more
Commodity
Gold shines as dollar weakens amid geopolitical tensions
Gold prices surged by 5% in February, reaching an impressive US$5,222 per ounce, driven by a combination of a weakening US dollar, softer US Treasury yields, and increased dip buying. This marks a ...Read more
Commodity
Gold’s rally surpasses US$5,000 amid bond volatility concerns
In an extraordinary start to the year, gold prices have surged past the US$5,000 mark, marking a significant milestone in the precious metal's market. January witnessed a remarkable 14% rally, closing ...Read more
Commodity
Gold ETF inflows soar to record highs amid market volatility
In a remarkable start to the new year, global gold exchange-traded funds (ETFs) have witnessed unprecedented inflows, pushing their total assets under management (AUM) and collective holdings to ...Read more
Commodity
Gold's remarkable surge in 2025 sets the stage for a volatile 2026
Gold has experienced a stellar year in 2025, achieving over 50 all-time highs and delivering a return exceeding 60%, making it one of the top-performing assets. This impressive performance has been ...Read more
Commodity
Scenic Eclipse launches fifth Antarctica season with new submersible, private jet transfers and helicopter experiences
Scenic Discovery Yachts has commenced its fifth Antarctica season, introducing new ultra-luxury experiences including private jet transfers, advanced helicopter excursions and a new Scenic Neptune ...Read more
Commodity
Gold's March tumble: Unpacking the dynamics behind the decline
In a month marked by unexpected volatility, gold experienced its steepest decline since June 2013, with prices falling by 12% to US$4,608 per ounce. This dramatic downturn in March was not driven by ...Read more
Commodity
Gold’s role in Australian portfolios amid economic uncertainties
As Australia grapples with resurgent inflation and the Reserve Bank of Australia's (RBA) decision to resume interest rate hikes, the spotlight is once again on gold's strategic role in investment ...Read more
Commodity
World Gold Council unveils initiative to transform digital gold landscape
In a groundbreaking move poised to reshape the digital gold market, the World Gold Council (WGC) has announced a new initiative aimed at building a shared infrastructure to facilitate the development ...Read more
Commodity
Gold shines as dollar weakens amid geopolitical tensions
Gold prices surged by 5% in February, reaching an impressive US$5,222 per ounce, driven by a combination of a weakening US dollar, softer US Treasury yields, and increased dip buying. This marks a ...Read more
Commodity
Gold’s rally surpasses US$5,000 amid bond volatility concerns
In an extraordinary start to the year, gold prices have surged past the US$5,000 mark, marking a significant milestone in the precious metal's market. January witnessed a remarkable 14% rally, closing ...Read more
Commodity
Gold ETF inflows soar to record highs amid market volatility
In a remarkable start to the new year, global gold exchange-traded funds (ETFs) have witnessed unprecedented inflows, pushing their total assets under management (AUM) and collective holdings to ...Read more
Commodity
Gold's remarkable surge in 2025 sets the stage for a volatile 2026
Gold has experienced a stellar year in 2025, achieving over 50 all-time highs and delivering a return exceeding 60%, making it one of the top-performing assets. This impressive performance has been ...Read more
Commodity
Scenic Eclipse launches fifth Antarctica season with new submersible, private jet transfers and helicopter experiences
Scenic Discovery Yachts has commenced its fifth Antarctica season, introducing new ultra-luxury experiences including private jet transfers, advanced helicopter excursions and a new Scenic Neptune ...Read more
