The Australian Securities and Investments Commission (ASIC) today unveiled a proposal to extend its product intervention order banning the issue and distribution of binary options to retail clients, until it is revoked or sunsets on 1 October 2031.

The regulator banned the sale of binary options to retail clients, with effect from 3 May 2021, after finding that binary options had resulted in and were likely to result in significant detriment to retail clients. The product intervention order will expire on 7 October 2022 unless it is extended with the approval of the Minister.

In the 13 months before the ban:

• between 74% and 77% of active retail clients lost money trading binary options;
• loss-making retail client accounts made net losses totalling $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. By comparison, 68% of wholesale clients lost money trading binary options in that period as the product intervention order does not apply to them.

ASIC says it will continue to monitor for scams and prohibited offers of binary options in this jurisdiction and take disruptive action as appropriate.

ASIC welcomes feedback on its proposal about the ban extension by 20 June 2022.