The SEC has requested the public’s opinion on the “gamification” of stock trading, amid rising concerns that some online apps such as Robinhood are nudging retail investors to take on risks that may not be fully disclosed.
On Friday, the SEC issued a press release calling on the public to provide their opinion on the persuasive features that some discount brokerage platforms use to keep users engaged in trading. According to SEC Chair Gary Gensler, the tactics could be be classified as stock market recommendations, which would be subject to more stringent regulation. “In many cases, these features may encourage investors to trade more often, invest in different products or change their investment strategy,” Gensler said.
“In the last few years, we’ve seen new brokerage apps, wealth management apps that give us investing advice, along with robo-advising,” Gensler explained in a separate video on his Twitter account. “While these new technologies can bring us greater access and product choice, they also raise questions as to whether we as investors are appropriately protected when we trade and get financial advice.”
The latest request for the public’s opinion marks the first milestone in what could be significantly tighter controls of digital trading apps, many of which have faced heightened scrutiny following a historic rally in meme stocks such as GameStop and AMC. Robinhood in particular, has come under fire by regulators over its use of gamification nudges, such as emojis and confetti whenever users complete trades.
Information for this briefing was found via the SEC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.