ASIC targets 9 brokers over onboarding gaps
- ASIC identified product governance, client onboarding, and disclosure gaps across nine online brokers following a targeted review.
- The regulatory scrutiny prompted five firms to improve compliance practices and two to suspend options for client onboarding.
- The corporate regulator aims to curb risks associated with complex retail products like short-dated options, futures, and fractional shares.
The Australian Securities and Investments Commission identified product governance and onboarding deficiencies at nine online platforms during a review covering short-dated exchange-traded options, futures, and fractional shares.
The surveillance ran between March and June across firms including Interactive Brokers Australia and Tiger Brokers (AU), contrasting with previous regulatory reviews that primarily focused on the contracts for difference sector.
"The products are complex but the responsibilities are simple," said ASIC Commissioner Simone Constant.
The regulator noted that target market determinations often lacked sufficient detail regarding client needs, while certain onboarding systems permitted unlimited questionnaire attempts.
Following the review, five entities improved their compliance practices, and two halted the onboarding of new option clients.
The federal regulator has expanded its oversight into exchange-traded and fractional instruments to address leverage and intermediary ownership structures that can affect retail investor rights.
ASIC previously reported that 68% of Australian retail investors lost money in contracts for difference during the 2024 financial year, recording total losses exceeding A$458 million.
