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SEC seeks public information regarding online trading

Securities Fintech Federal Register Agency Rule-Making & Guidance SEC


On August 27, the SEC announced a request for information and public comments regarding the use of digital engagement practices by broker-dealers and investment advisers, such as behavioral prompts, differential marketing, game-like features (gamification), and other design elements or features designed to engage with retail investors on digital platforms, as well as analytical and technological tools and methods (collectively “digital engagement practices” or “DEPs”). The SEC issued the request to better understand the market practices related to firms' use of DEPs and intends “to learn what conflicts of interest may arise from optimization practices and whether those optimization practices affect the determination of whether DEPs are making a recommendation or providing investment advice.” The request is also intended to provide a forum for market participants to provide their perspectives regarding the use of DEPs, including the potential benefits that DEPs provide to retail investors, and protection concerns related to potential investors. The request will assist in the Commission's assessment of existing regulations and consideration regarding whether regulatory action may be required to continue the Commission's mission. A statement by SEC Chair Gary Gensler noted that though “new technologies can bring us greater access and product choice, they also raise questions as to whether we as investors are appropriately protected when we trade and get financial advice.” The public comment period for the request will remain open for 30 days after publication in the Federal Register.

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