The Australian Securities and Investments Commission (ASIC) has now officially announced that they will be banning binary options to retail investors. This means that no company in Australia can offer these services to anyone who is not a professional investor, or those with significant experience trading in this type of financial instrument.
This decision is in line with the other countries who have taken similar measures, and it follows a study of binary options by ASIC. This research found that many Australian investors lost money when trading these financial products; nearly one quarter of them didn’t make back any at all. In addition to this, some people were paying more than they made for trades from brokers – which means their losses actually increased as time went on. The risk was too great for most Australians investing in binaries because there wasn’t enough protection if things go wrong.
The ban has been called “a win” for consumers by experts outside the industry, but some inside argue that banning binary options may just push the market underground or into unregulated areas where control efforts are difficult or ineffective.
A quick summary:
- The Australian Securities and Investments Commission (ASIC) has banned binary options
- ASIC Commissioner John Price said, “It is too easy for people to lose large sums of money through this type of trading”. He added that there are a number of risks associated with binary options including the risk of fraud, market manipulation, and other criminal activity
- Binary options providers have been given until March 21st to cease operations in Australia or face fines up to $220 million dollars
- They may also be required to repay any funds they have taken from Australians since October 2016
- If you are an investor who lost money due to fraudulent investment schemes involving binary options please contact ASIC at 1800 065 943 for assistance in recovering your losses
So, what are binary options?
Binary option trading is a form of investment where the value of an asset (usually shares) are predicted to go up or down by one predetermined amount. Binary options can be traded on any underlying market, such as currencies, commodities and stocks.
The investor will decide how much they want to invest in the trade and then select how long their contract lasts for- anywhere between 30 seconds up to 12 months. They also need to predict if the price of the asset will rise above or drop below a certain level before it expires.
How do binary options work and why are they risky?
Binary options work by predicting if the price of an asset will rise or fall by a predetermined amount. If they are correct, then their profit is fixed and known at the time they enter into the contract.
If they’re wrong, however-and prices go in the opposite direction to their prediction-they lose all of their money.
The reason that this type of trading can be considered risky is because it involves substantial risk for small rewards. For every winning trade there’s likely going to be many more losing trades which could mean investors incur significant financial losses on binary options trading before ever making any real gains.
Why is the Australian Securities and Investments Commission banning them
The Australian Securities and Investments Commission (ASIC) has taken a significant step in protecting investors from the dangers of binary options trading. Their decision was made largely because too many Australians have been ripped off by unscrupulous brokers.
This new ruling will prohibit any company that offers or advertises investments into binary option contracts on an Australian market from operating in Australia. This ban includes all companies regardless of where they’re based, but does not extend to overseas markets such as US-based financial exchanges like NASDAQ or NYSE Arca.
The legal implications of using binary options in Australia
Some of the legal implications of the ban will be far reaching. Brokers will no longer be able to use email, telephone or social media solicitation for potential investors in the country.
This new ruling is going help protect Aussie traders from these types of investments because it bans companies with bad business practices from soliciting customers via means such as marketing materials like emails, social media posts and phone.
What you can do if you've already invested in a binary option and want to recover your money
If you’ve already invested in or lost money investing in binary options, it is possible to recover your money.
First, you need to understand that binary options are not a regulated product in Australia; this means Australian regulatory authorities cannot offer investors any form of protection against fraud or scams when it comes to binary option trading.
To find out which company is legitimate and trustworthy, the best thing you can do is research on reputable platforms like ASIC’s website because they list all companies that are deemed as safe investment opportunities for Aussie traders.
Next, you can contact a professional recovery company like PayBack ltd, the world’s leading provider of investor recovery and support services for victims of investment fraud, with over 20 years experience in helping people who have lost money on investments they trusted or were recommended to them by binary options brokers.
Its important that you get your money back, so don’t delay. Reach out to PayBack today.