SEC investigating “gamification and behavioral prompts” in financial markets

These obvious admissions are ridiculously overdue, but public comments by the new Securities Exchange Commission (SEC) Chair Gary Gensler offer a glimmer of regulatory hope.

Gensler admitted this week that payment for order flow — the back-end payment brokerages receive for directing clients’ trades to market makers — has “an inherent conflict of interest”  and that banning the controversial practice is “on the table.”

Shares of the ironically named customer-abusing-trading platform Robinhood tumbled on the news. Still, the implications are far-reaching:  most major brokerages now collect billions selling their customer orders to predatory trading firms.

The Securities and Exchange Commission also said Friday it is stepping up its inquiry into so-called gamification and behavioral prompts used by online brokerages and investment advisors to prod people to trade more stocks and other securities, adding:

“investors can be misled by rosy projections of profit by technologies that, in reality, understate the risk of a particular investment or the odds of eye-popping returns”.

Do ya think??

 

This entry was posted in Main Page. Bookmark the permalink.