The Australian Securities & Investment Commission (ASIC) announced Monday that it has extended its order banning the issue and distribution of binary options to Australian retail clients until October 1, 2031.
Binary options are over-the-counter (OTC) derivatives that allow speculation on whether a market event will occur. For example, it can be related to movements in the price of a market index, financial product, or an economic event such as central bank interest rate decisions.
The previous ASIC order came into effect on May 3, 2021, and was set to run for 18 months, ending soon. ASIC said the order ensures binary options protections in Australia are in line with those in comparable markets abroad. For example, binary options products have been banned in the United Kingdom, European Union, Israel, and many other countries.
The Australian regulator also released a report summarising the impact of its ban. Before the initial ban, ASIC stated that between 74% and 77% of active retail clients lost money trading binary options, with retail client accounts making net losses of $14 million in aggregate. In addition, they explained that loss-making retail client accounts made net losses of $15.7 million, with profit-making retail accounts only making net profits of $1.7 million.
Binary options are harmful, high-risk financial products resulting in millions of dollars in losses for retail investors before our ban. Extending our binary options ban until 2031 ensures this important protection for retail investors will continue,”
said ASIC’s Deputy Chair Karen Chester.