The Australian regulator mentioned that the ban will take effect from 3 May 2021.
According to the official announcement, the ban on the issuance and distribution of binary options to retail traders in Australia will take effect from Monday 3 May 2021. ASIC mentioned that binary options are likely to result in cumulative losses to retail clients because of their product characteristics.
“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,” ASIC Commissioner Armour said in the official announcement.
Finance Magnates earlier reported about ASIC’s enforcement of restrictions on the retail contract for differences (CFDs) trading in the country. According to the newly proposed CFD restrictions, brokers have to reduce the offered leverages.
ASIC highlighted the importance of client protection and added that the authority has imposed a ban on binary options to reduce losses of Australian retail clients. The commission mentioned that the order will remain in force for 18 months and the authority can make it permanent afterwards.
“ASIC estimates that retail clients’ net losses from trading binary options were around $490 million in 2018. The size of the market in Australia has since reduced significantly after ASIC issued a warning in April 2019 against providing unlicensed or unauthorized services to clients located in several foreign jurisdictions. Australian retail clients are estimated to have made net losses of more than $6.7 million in 2019. 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 authority mentioned in the official announcement.
