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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesThe headline is outdated and misleading. ASIC’s 22 August 2019 consultation proposed banning the sale of over-the-counter binary options to retail clients and restricting, rather than banning, retail contracts for difference (CFDs).
The consultation has since produced two separate outcomes: binary options are banned for Australian retail clients, while CFDs remain available under strict conditions. Those conditions include leverage caps, margin close-out protection, negative-balance protection and a ban on many account-opening incentives.
This distinction matters if you are checking whether a trading platform can legally offer these products in Australia, or if a broker is asking you to become a “professional” or wholesale client.
What ASIC actually proposed in 2019
ASIC published Consultation Paper CP 322 on 22 August 2019. The consultation closed on 1 October 2019 and was made under ASIC’s product-intervention powers in Part 7.9A of the Corporations Act 2001.
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The proposal had two different parts:
- A prohibition on issuing and distributing over-the-counter binary options to retail clients.
- Conditions on issuing and distributing over-the-counter CFDs to retail clients.
So the original proposal was never a proposal to impose the same blanket ban on both products. Headlines that combine “binary options and CFDs” into one ban lose that crucial distinction.
Binary options are now banned for retail clients
ASIC’s binary-options prohibition took effect on 3 May 2021. The relevant instrument is ASIC Corporations (Product Intervention Order—Binary Options) Instrument 2021/240, which the Federal Register of Legislation lists as in force.
The ban prevents the issue and distribution of over-the-counter binary options to retail clients. ASIC later extended it, so it remains in force until the end of 1 October 2031, unless revoked earlier.
Binary options may be marketed using names such as:
- all-or-nothing options;
- fixed-return options; and
- digital options.
The typical structure is simple but hazardous: the client receives a fixed amount if a specified event occurs and loses the entire investment if it does not. Contracts can last only minutes. ASIC reported that one provider’s average contract duration was less than six minutes.
Why ASIC intervened
ASIC found that roughly 80% of retail clients lost money trading binary options. In the period examined before the ban:
- 74% to 77% of active retail clients lost money;
- retail accounts suffered aggregate net losses of $14 million;
- loss-making accounts lost $15.7 million in total; and
- profitable accounts made only $1.7 million in aggregate profits.
ASIC also pointed to the products’ all-or-nothing payoff, very short durations and negative expected returns. In practical terms, a platform can offer an apparently attractive payout while structuring the odds so that the expected value of the trade is negative for the customer.
The ban does not apply to wholesale clients
The binary-options order is aimed at retail clients. It does not prohibit wholesale clients from trading these products.
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That does not make a wholesale classification safe or suitable for an ordinary investor. ASIC’s MoneySmart service warns that some firms may encourage clients to open a “pro account” or otherwise qualify as wholesale. A wholesale client may lose protections that retail clients normally receive, including:
- access to internal dispute resolution and the Australian Financial Complaints Authority (AFCA);
- a Product Disclosure Statement (PDS); and
- a Financial Services Guide (FSG).
ASIC reported that approximately 68% of wholesale client accounts lost money in the relevant post-ban period. A request to change your client classification should therefore be treated as a significant legal and financial decision—not as a routine account upgrade.
CFDs were restricted, not banned
CFDs remain available to Australian retail clients. However, an issuer cannot issue a retail CFD unless it complies with the conditions in ASIC Corporations (Product Intervention Order—Contracts for Difference) Instrument 2020/986.
The CFD conditions took effect on 29 March 2021. They apply to CFD issuers and also cover certain businesses arranging or acquiring CFDs for retail clients.
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Current retail CFD leverage limits
The order sets minimum initial margins. The margin requirement determines the maximum effective leverage:
| Underlying asset | Minimum initial margin | Maximum leverage |
|---|---|---|
| Major currency pair | 3.33% | 30:1 |
| Major stock-market index, minor currency pair or gold | 5% | 20:1 |
| Minor stock-market index or commodity other than gold | 10% | 10:1 |
| Crypto-asset | 50% | 2:1 |
| Other underlying asset | 20% | 5:1 |
For example, a 30:1 limit means a $1,000 margin deposit could provide exposure of up to approximately $30,000, subject to the broker’s own requirements and the trade’s size. Leverage magnifies losses as well as gains. A 3.33% adverse move against a fully leveraged position can consume approximately the initial margin before costs and execution effects are considered.
A major currency pair consists of any two of the Australian dollar, British pound, Canadian dollar, euro, Japanese yen, Swiss franc and US dollar. Major indices listed in the order include the S&P/ASX 200, S&P 500, NASDAQ-100, FTSE 100, DAX, CAC 40, Dow Jones Industrial Average, EURO STOXX 50 and Nikkei Stock Average.
Margin close-out protection
A CFD provider must generally close one or more covered positions when the client’s net equity falls below the relevant close-out protection amount. That amount must generally be at least 50% of the aggregate initial margin required for the open CFDs.
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This is not a promise that positions will close at exactly 50%. The order requires action “as soon as market conditions allow”. Fast markets, gaps, liquidity problems and execution delays can affect the actual closing price.
Negative-balance protection
The CFD terms must limit the issuer’s recourse when a retail client incurs a liability. Generally, the issuer’s recourse is limited to money and property connected with the client’s CFD trading account.
Negative-balance protection does not mean the platform can never display a negative balance temporarily. It also does not automatically resolve every dispute about a transaction. It limits what the issuer can pursue under the order’s account-related rules.
Restrictions on CFD bonuses and inducements
A broker must not offer a prohibited benefit to induce a retail client or prospective retail client to:
- open a CFD account;
- deposit money into the account;
- provide client property; or
- acquire a CFD.
Prohibited benefits include gifts, rebates, discounts, trading credits and rewards. The order does allow some information services, educational or research tools, and discounts in costs or fees that are offered to all retail and prospective retail clients.
What is the current position on CFDs?
ASIC extended the CFD product-intervention order in 2022. It currently expires on 23 May 2027, unless it is remade or otherwise changed.
That expiry date does not mean CFDs are currently scheduled to be banned. In January 2026, ASIC said it would engage with industry during 2026 about the order’s future. It did not announce a blanket prohibition.
ASIC’s recent enforcement and supervision activity does show that the regulator remains concerned about the sector. Following a review of 52 licensed CFD issuers between October 2024 and December 2025, ASIC said nearly $40 million had been returned to more than 38,000 retail investors. ASIC also found that more than half the sector had contravened the CFD order by offering “margin discounts” to retail clients taking opposing long and short positions.
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ASIC said these arrangements could create excessive leverage, increase overnight funding costs, weaken the intended margin close-out protection and trigger sudden margin increases when one side of the trade was closed.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What this means if you use a trading platform
- Do not assume the headline is current. The proposed ban dates from 2019. Check the broker’s current Australian regulatory status and product terms.
- Do not expect to trade retail binary options through an Australian provider. The retail issue and distribution ban has been in force since May 2021.
- Check whether the product is actually a CFD. Marketing names can obscure the legal product. Read the PDS and understand the underlying asset, margin, fees, funding costs and close-out rules.
- Calculate exposure, not just your deposit. A $1,000 deposit attached to a 30:1 position can create exposure of up to about $30,000. A small market move can therefore have a large effect on your account.
- Be cautious about “professional”, “pro” or wholesale accounts. You may lose retail protections and dispute-resolution access. Do not change classification merely to obtain higher leverage or access to a product unavailable to retail clients.
- Question bonuses and margin discounts. Rewards for depositing or trading CFDs can breach the product-intervention rules, while margin-discount arrangements can change the risk profile of supposedly hedged positions.
Common claims checked
| Claim | Position |
|---|---|
| ASIC banned binary options and CFDs. | Incorrect. ASIC banned retail OTC binary options but restricted retail CFDs. |
| ASIC is proposing the ban now. | Outdated. The consultation was published on 22 August 2019. |
| The original consultation’s leverage figures are the current figures. | Incorrect. The final order uses, for example, 30:1 for major currency pairs and 20:1 for major indices, minor currency pairs and gold. |
| ASIC banned all options or every binary-style product. | Unsupported. The order targets OTC binary options issued or distributed to retail clients; it is not a general ban on exchange-traded options. |
FAQ
Can Australian retail investors trade binary options?
ASIC has banned the issue and distribution of OTC binary options to retail clients. The ban took effect on 3 May 2021 and is currently set to remain in force until the end of 1 October 2031, unless revoked earlier.
Are CFDs illegal in Australia?
No. CFDs remain available to retail clients, but providers must comply with ASIC’s conditions, including leverage limits, margin close-out protection, negative-balance protection and restrictions on inducements.
What is the maximum CFD leverage for crypto-assets?
The current retail CFD order sets a 50% minimum initial margin for crypto-assets, equivalent to maximum effective leverage of 2:1.
Can a broker ask me to become a wholesale client?
A firm may assess whether you qualify, but you should treat the change carefully. Wholesale clients can lose retail protections, including access to AFCA, a PDS and an FSG. Do not accept the classification simply to obtain higher leverage.
When does ASIC’s CFD order expire?
The current CFD product-intervention order expires on 23 May 2027 unless it is remade or changed. ASIC said it would engage with industry during 2026 about its future; that is not the same as announcing a blanket ban.
The Bottom Line
ASIC’s old proposal did not create a blanket ban on binary options and CFDs. The retail binary-options ban is already in force and runs to 1 October 2031. CFDs remain legal for retail clients, but they are subject to leverage caps, account protections and marketing restrictions under an order currently due to expire on 23 May 2027.
If a platform uses the old headline to pressure you into opening an account, depositing funds or becoming a wholesale client, stop and verify the product, the provider’s Australian licence and the protections you would give up.
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