The Australian regulator has proposed an extension to its product intervention order banning the issue and distribution of binary options to retail clients, until 1 October 2031 or revocation.
The order came into effect on 3 May 2021 and will expire on 7 October 2022 unless it is extended.
ASIC imposed the ban on the sale of binary options to retail clients following its findings that binary options were likely to result in significant detriment to retail clients.
The Aussie watchdog’s analysis found that the ban has been effective in reducing the risk to retail clients resulting from binary options. According to the numbers, 13 months before the ban, between 74% and 77% of active retail clients lost money trading binary options, making net losses of $15.7 million compared with $1.7 million total net profits of profit-making retail client accounts.
As expected, retail clients have not made any losses (or profits) from trading binary options with licensed issuers since the product intervention order took effect.
The regulator pointed out that during the period of the ban, 68% of wholesale clients lost money trading binary options in that period as the ban does not apply to them.
Last year, ASIC took another measure, reducing CFD leverages offered to retail clients. The order was initially proposed for 18 months, but was later extended for five years until 23 May 2027.
Last year, the regulator published a four-year corporate plan outlining monitoring compliance for CFDs and binary options as a priority for ASIC.