IOSCO publishes final reports on finfluencers, online imitative trading practices and digital engagement practices

The International Organization of Securities Commissions (IOSCO) has published final reports on finfluencers, online imitative trading practices and digital engagement practices, accompanied by a press release. These reports are part of IOSCO's Roadmap for Retail Investor Online Safety to enhance retail investor protection from fraud, excessive risk taking and misinformation, in the digital age.

The reports are structured as follows:

• The finfluencers final report examines the rise of finfluencers, highlighting both their potential to educate retail investors and the risks they pose. The report has also identified regulatory gaps—particularly as many finfluencers are not registered investment professionals which creates difficulties for enforcement and oversight. The report has proposed a set of good practices (e.g., regulatory clarity and oversight, enhanced disclosures and proactive investor and finfluencer education) and offers practical tips for retail investors that follow or engage with finfluencers.
• The final report on online imitative trading practices: copy trading, mirror trading and social trading explores the regulatory considerations, benefits and potential risks of imitative trading practices. These strategies allow retail investors to automatically replicate the trades of other, typically more experienced, traders. The report has also highlighted the growing overlap between imitative trading and finfluencer activity, which can blur the line between regulated financial advice and general information, increasing risks for retail investors. In response to these challenges, the report has identified good practices as guidance to strengthen investor protection.
• The digital engagement practices (DEPs) final report identifies both the benefits and risks associated with DEPs (such as notifications, nudges and gamification) which can enhance investor engagement but also potentially lead to investor harm. IOSCO has called for a common understanding of DEPs, a review of emerging techniques and associated conduct and retail investor protection issues and an understanding of the impact of increased used of DEPs on retail investors.

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