ASIC takes action to protect ‘new wave’ of retail investors

Posted by Anton Murray Consulting on 12 Dec, 2023


Online trading providers are at risk of facing “strong regulatory action” by the Australian Securities and Investments Commission (ASIC) in relation to potentially harmful offers of financial products and services to retail investors. In a report published on Wednesday, the regulator observed that a “new wave” of retail investors had emerged from the COVID-19 pandemic, with a significant increase in retail investor participation in financial markets. As a result, the number of online trading providers offering trading in regulated investment products has grown. These firms now collectively possess more than 1 million retail clients and billions of dollars in client money and assets.

But ASIC noted that the average daily turnover in the retail securities market has fallen from a peak of $3.5 billion in February 2021 to $1.6 billion as at September 2023. “To broaden their revenue base, some online trading providers now offer, or are seeking to offer, high-risk products or services to retail investors. These products may be inappropriate for retail investors and result in poor investor outcomes,” the regulator said. During 2022–23, ASIC said that it ramped up its supervision of online trading providers and took a proactive and risk-based approach to its supervision of this group.

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