Securities regulators consult on concerns over retail trading surge

The International Organization of Securities Commissions (IOSCO) has published a consultation paper identifying several concerns over the surge in retail trading.

The Australian Securities & Investments Commission (ASIC) has, with co-Chair the Central Bank of Ireland, led a Retail Market Conduct Task Force for IOSCO in reviewing evolving retail investor trends and their implications for market conduct.

The paper explores retail market conduct issues in the context of the rapidly changing retail investment landscape across the globe.

A number of driving forces were highlighted, including the increased gamification, widespread self-directed trading and the influence of social media on investor behaviour.

The Consultation paper builds on the short-term report published in December 2020 which identified some of the traditional tools and innovative and proactive approaches used by IOSCO members to combat misconduct during market stress.

Sean Hughes, ASIC commissioner, and task force co-chair, said, “This is a worldwide phenomenon, and likely to be an on-going challenge for regulators and the broader investment community, especially where the harm is digitally-enabled.

“Like ASIC, our counterparts around the world are observing common types of harmful behaviour include mis-selling, mis-labelling and misleading disclosure – all of which have the potential to undermine confidence and stability.”

Hughes added that the flexible and creative use of regulatory tools will be important to disrupt misconduct; he called on stakeholders, including retail investors and financial consumers to engage with the IOSCO consultation.

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