On 19 November 2024, the International Organization of Securities Commissions (IOSCO) issued a new roadmap to enhance retail investor online safety.
The first wave of the roadmap comprises of three consultation reports:
- Consultation report on Finfluencers. The consultation report explores the evolving landscape of finfluencers, the associated potential benefits and risks, and the current regulatory responses across jurisdictions. It highlights that many finfluencers are not familiar with traditional financial regulatory frameworks and may operate outside them, posing challenges for enforcement and oversight. It also identifies potential gaps in regulatory coverage, particularly for unregistered individuals who influence retail investors without the professional qualifications or oversight required of registered investment advice professionals. Finally, it proposes a comprehensive set of good practices for regulators, market intermediaries, and finfluencers themselves. These proposed good practices aim to foster a more transparent and accountable environment in which finfluencers operate in alignment with securities regulations and investor protection standards.
- Consultation report on Digital Engagement Practices. The consultation report considers existing IOSCO work, members’ regulatory approaches to digital engagement practices (DEPs); and other international standards and guidance to identify potential issues and gaps, with a caveat that there is currently no global standard on how regulators and other stakeholders should consider addressing any challenges that may stem from the increased use of DEPs by market intermediaries.
- Consultation report on Online Imitative Trading Practices: Copy Trading, Mirror Trading, Social Trading. The consultation report focuses on copy trading which is the most popular imitative trading strategy. Copy trading is an imitative trading practice that may be described as the strategy that allows a trader (the copy trader) to copy trades executed by one or more other trader(s), who are usually characterised as “experienced” or “professional”. Trade execution is frequently automated to a certain extent, with trades opened and closed without manual intervention and without the copy trader necessarily being aware of each trade that is placed, though other models are possible. The consultation report aims to assist IOSCO member regulators to assess the adequacy of the regulatory requirements in their respective jurisdictions that apply to copy trading and to consider where amendments may be useful. In doing so, the consultation report proposes a set of Good Practices that regulators could consider, in accordance with their respective mandates and applicable laws and regulations to help mitigate risks that may arise from this type of activity.
Next steps
The deadline for comments on each consultation report is 20 January 2025.