By Brianna Morris-Grant

Topic: Personal Finance

Australia's corporate watchdog, ASIC, reviewed online trading platforms and found issues for investors.

In short:

A review found retail investors are being offered incentives for 'high-risk' investments on online platforms.

Clients get fee-free trading or discounts, or can try sign-up questionnaires many times.

What's next?

ASIC may take action against some entities due to the review's findings.

Retail investors are offered cash vouchers and rewards to use online platforms, says ASIC.

ASIC reviewed nine online trading platforms, including Moomoo and Webull.

Some providers offer fee-free trading and incentives for 'high-risk' investments.

ASIC did not say which companies did what, and not all companies did everything wrong.

ASIC commissioner Simone Constant says platforms offer complex products that users don't fully understand.

'These products are hard to understand, but easy to lose money with,' she said.

'You can put a little money in a short-dated exchange trading option, but it's high-risk.'

'These products are not just complex, but also high-risk.'

Practices improved since the review

In some entities, the review found:

Two companies stopped taking new clients, and five improved their practices after the review.

One company left the Australian market entirely.

ASIC is considering more action due to the review's findings.

An expert says the watchdog could tighten rules to protect retail investors.

The expert also says investors could be required to prove their competency before investing.

There seems to be a gap in regulation and protection for retail investors, says the expert.

Increasing protections would make the area more in line with Australia's regulatory regime.

Ms Constant urges investors to be careful with the agreements they enter into.

'Don't invest just because it's easy or there's an incentive,' she said.

'Invest because it's a good investment that you understand,' she said.

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