The UK Financial Conduct Authority has stated that the trading celebration information and other functions within stock trading applications may lead amateur investors to make high-risk bets.
The UK financial regulatory authorities have issued warnings about the use of "game like elements" in trading applications, stating that this may lead consumers to take actions that are not conducive to their own interests. UK Financial Conduct Authority(Financial Conduct Authority)On Monday, it was stated that the stock trading app provides customers with "in-app points, badges, and trading celebration information", and those who use these features are more likely to "invest in products that exceed their risk preferences". It requires application operators to review their designs. In recent years, the so-called gamification has become a more prominent feature of trading applications, which has sparked anger among regulatory agencies in the United States and the UK after last year's "emoticon stock" trading frenzy. In this trend, bold amateur traders are organizing on social media to push upGameStopThe internal stock prices have led to retail investors speculating wildly. The remarks of the Financial Conduct Authority in the UK highlight the importance that the institution places on preventing transactions deemed speculative or gambling like by it. Sarah Pritchard, Market Executive Director of the organization(Sarah Pritchard)Some product design features may lead to problematic or even gambling like investor behavior Pritchard said, "We hope that all companies providing stock trading services to consumers can review their products and make appropriate improvements to their products The regulatory agency's research found that some design features in the application "give us reason to worry". The celebration messages or animated scraps that appear after the user completes the transaction attract attention, as well as points, badges, rewards, and user ranking rankings. The researchers at the institution wrote in a report: "We are concerned that these positive reinforcement measures may encourage people to trade more frequently or make investment choices they would not otherwise have made... Celebrating information and badges will guide people to take on more risks This study points out design choices that may lead traders to "pay attention to false information", such as frequent push notifications on smartphones, the list of stocks with the most recent price changes, and flashing red and green real-time price displays. The institution stated that the default settings of some applications imply high investment or leverage amounts, which concerns researchers as users tend to adhere to the default values. Information service companies for retail investorsFinimizeFounder and CEO of Max Rofaga(Max Rofagha)It is stated that the application encourages trading for financial reasons, as "most securities firms earn more by trading more, which is not a secret". He added, "Most retail investors are both anticipatory and wise about this, so simply banning certain design features will not solve long-term problems... Brokers need to eliminate jargon, clearly label risks, and integrate education into their business processes Before issuing a warning on gamification of applications, the UK Financial Conduct Authority had launched a multi-year action to encourage those who believed they held too much cash100More than ten thousand British people are investing. The regulatory agency has also identified a group of young investors who are involved in high-risk products such as cryptocurrencies and derivatives, for whom "emotions such as excitement and excitement are the main driving factors for investment". Pritchard said that the company needs to monitor any worrying consumer behavior to ensure that "they are providing support to customers, especially those who are vulnerable or have signs of problematic gambling behavior. |
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