ASIC Flags Onboarding and Disclosure Gaps in Nine-Broker Review

The Australian Securities and Investments Commission identified product governance, onboarding and disclosure deficiencies at nine online brokers, covering short-dated exchange-traded options, futures and fractional shares sold to retail investors. Five firms improved compliance during the review, two stopped accepting new options clients pending fixes, one provider later left Australia, and ASIC said it may take further regulatory or enforcement action. "The products are complex but the responsibilities are simple," ASIC Commissioner Simone Constant said.

The surveillance, conducted from March to June, included Interactive Brokers Australia, Moomoo Securities Australia, Sharesies Australia, Stakeshop AFSL, tastytrade Australia, Tiger Brokers (AU), Totality Wealth, Trading 212 AU and Webull Securities (Australia). ASIC did not assign findings to individual providers and noted the results were thematic. Some target market determinations lacked sufficient detail on how products matched client objectives, financial situations and needs. Questionnaires were not adequately tailored to customer circumstances, and some onboarding systems permitted repeated or unlimited attempts to pass. ASIC stressed that firms must define target markets narrowly for complex products and monitor clients after account opening.

ASIC also flagged that certain providers promoted fee-free or discounted trading, cash vouchers or airline reward points, which can encourage impulsive decisions and obscure the potential for rapid losses. Short-dated options and futures involve leverage, with options losing value quickly near expiry and futures requiring daily settlement. Fractional share disclosures failed to clearly explain costs, ownership arrangements, investor rights or transferability. The regulator noted that fractional trading offers lower entry but may involve holding an interest through an intermediary rather than direct ownership, altering voting, transfer and protection rights.

The review extends ASIC's focus from over-the-counter derivatives into exchange-traded and fractional products. In January, ASIC reported that a review of 52 licensed CFD issuers secured nearly AU$40 million in refunds for over 38,000 retail investors, with 44 issuers improving onboarding questionnaires and 39 changing target markets. ASIC data showed 68% of Australian retail CFD investors lost money in the 2024 financial year, with losses exceeding AU$458 million, including AU$73 million in fees. Derivatives cases accounted for about 37% of ASIC's AU$830 million civil penalty total in the 2025-26 financial year, according to a Finance Magnates report. ASIC has added four Moneysmart pages covering exchange-traded options, futures, fractional shares and micro-investing, and revised its futures glossary. The regulator did not identify which five firms improved compliance, which two paused options onboarding or which provider left Australia.