Australia’s securities regulator has warned online brokers over the way complex and highly leveraged products are being offered to retail investors, raising concerns about weak onboarding controls, poorly defined target markets and promotional incentives that may encourage impulsive trading.
The Australian Securities and Investments Commission said a targeted surveillance of nine online investment platforms found deficiencies in the distribution of short-dated exchange-traded options, futures and fractional shares.
The review was conducted between March and June and focused on Interactive Brokers Australia, Moomoo Securities Australia, Sharesies Australia, Stakeshop AFSL, tastytrade Australia, Tiger Brokers Australia, Totality Wealth, Trading 212 AU and Webull Securities Australia.
ASIC stressed that its findings were presented thematically and did not apply to every firm reviewed.
The regulator said some providers were using fee-free or discounted trading, cash vouchers and airline reward points to encourage customers to begin trading. ASIC warned that such incentives can make trading appear more attractive while distracting investors from the possibility of rapid losses.
Short-dated options and futures attracted particular attention because both can provide leveraged exposure to financial markets.
ASIC Commissioner Simone Constant said investors can accumulate substantial losses within hours or days when leverage magnifies relatively small market movements.
The regulator’s concerns extended beyond the products themselves to the systems brokers use to decide who should be permitted to trade them.
ASIC found that some target market determinations lacked sufficient detail about the objectives, financial circumstances and needs of customers for whom the products were considered appropriate.
Under Australia’s design and distribution obligations, issuers must identify a sufficiently narrow group of consumers for whom a financial product is likely to be suitable and take reasonable steps to distribute it within that market.
Some onboarding questionnaires also allowed customers to make repeated or unlimited attempts to pass suitability assessments.
ASIC said questionnaires should not become simple obstacles that users can eventually overcome by repeatedly changing answers until they qualify for access.
The regulator also found that some firms relied heavily on initial onboarding while doing too little to monitor trading behavior and customer outcomes after accounts had been opened.
For fractional shares, ASIC identified separate concerns around ownership structures, asset arrangements and disclosure. In one case, investor and corporate assets were held together despite disclosures indicating customer assets were separately pooled.
The surveillance has already prompted changes.
Five of the nine entities reviewed improved their compliance practices, while two stopped onboarding some options customers while remediation work was carried out. One firm has exited the Australian market since the review.
ASIC said it is continuing to engage with several entities and is considering further regulatory or enforcement action over issues identified during the surveillance.
Although the latest review did not focus specifically on contracts for difference, its findings have clear implications for Australia’s retail CFD industry.
CFDs share many of the characteristics ASIC is concerned about: leverage, rapid losses, complex pricing and products that are unlikely to be appropriate for a broad retail audience.
The regulator has already subjected CFD providers to a wider sector review covering 52 licensed issuers between October 2024 and December 2025.
That investigation led to almost $40 million being returned to more than 38,000 retail customers and forced dozens of CFD firms to revise their target markets, onboarding procedures, websites and ongoing customer-monitoring systems.
ASIC found that 68% of Australian retail CFD traders lost money during the 2024 financial year, with aggregate losses exceeding $458 million, including $73 million in fees.
The regulator has also demonstrated that deficiencies in target market determinations can lead directly to intervention.
In late 2025, ASIC temporarily prevented FXCM’s Australian entity from opening new retail CFD accounts after concluding that its target market inappropriately included investors with a medium risk appetite. The order was lifted after the broker changed its documentation.
ASIC’s latest warning therefore looks less like an isolated consumer alert and more like another stage in a continuing examination of how online platforms sell complex trading products to retail customers.
Sign-Up Bonuses Are Becoming a Regulatory Risk
The most interesting part of ASIC’s warning is not that leveraged products are risky. Regulators and brokers have been saying that for years.
What is changing is the amount of attention being paid to how those products are packaged and sold.
Online brokers increasingly compete using the same techniques that consumer apps use to acquire customers: free trades, referral bonuses, rewards points, cash incentives and simplified onboarding.
That works well when the product is a streaming subscription or food-delivery service.
It becomes more complicated when the reward is encouraging someone to open an account where they can lose their investment within hours.
The incentive itself may be small. A $50 voucher is unlikely to cause serious financial harm.
But its psychological effect can be much larger if it changes the customer’s first interaction with the platform from “Should I trade this product?” to “What do I need to do to receive the reward?”
That is exactly where target market determinations and onboarding questionnaires are supposed to create friction.
ASIC appears increasingly unwilling to accept systems that technically contain a suitability test but effectively allow almost anyone to pass it.
Unlimited questionnaire attempts are an obvious example.
If a customer fails an assessment demonstrating that they do not understand leverage and is immediately allowed to try again until the correct answers are selected, the test has stopped measuring suitability. It has become a tutorial for gaining access.
For Australian CFD brokers, the latest surveillance should therefore be read as a warning even though CFDs were not the principal subject of this particular review.
ASIC has already spent several years forcing CFD issuers to narrow target markets, rewrite onboarding questions and monitor what customers actually do after opening an account.
Now it is applying similar thinking across a broader collection of online trading products.
The next regulatory battleground could be promotional design.
Cashback, deposit bonuses and trading rewards have long been sensitive areas in leveraged trading, and ASIC’s comments suggest that incentives will increasingly be assessed according to whether they encourage customers to take risks they otherwise might avoid.
That does not necessarily mean every promotion will disappear.
It does mean brokers may need to demonstrate that marketing campaigns, onboarding systems and product governance all point in the same direction.
A firm cannot claim that a leveraged product is suitable only for a narrow group of experienced investors while designing its acquisition funnel to make trading feel effortless and universally accessible.
That contradiction is becoming much harder for regulators to ignore.
ASIC has already shown that it is willing to impose stop orders, force refunds and pursue major penalties when firms fail to meet their obligations.
The latest surveillance suggests the regulator is now moving further upstream.
Instead of waiting for customer losses to reveal a problem, it is looking at the incentives, questionnaires and product-design decisions that determine who starts trading in the first place.