FINRA To Seek Public Feedback On ‘Gamification’ Of Trading Platforms


Officials from the Financial Industry Regulatory Authority (“FINRA”) stated during the agency’s annual conference earlier this month that it will seek public feedback on the “gamification” used by some stock trading platforms.  
 
According to Law360, “gamification refers to the marketing tactics used by trading platforms, other online retailers or vendors to create a game-like experience for customers.”  On trading platforms, these tactics can include “so-called leaderboards highlighting the top traders of the day, Wheel of Fortune-like games promising trading incentives or digital confetti celebrating trades placed[.]”  According to a FINRA official quoted in Law360, while gamification has potential benefits, which include demystifying investing, educating investors, and encouraging people to save in “a way that’s more fun[,]” it can also be misused.  For example, as FINRA President and CEO Robert W. Cook explained in a recent statement before the Financial Services Committee of the U.S. House of Representatives, game-like features on trading platforms “may increase risks to customers by encouraging actions misaligned with customers’ investment objectives or risk tolerance, or distract customers from the financial consequences of trading decisions in favor of winning competitions or achieving social status.”
 
While FINRA has not finalized its approach for seeking input on gamification, it may use a notice or survey to gather industry feedback, which will be part of a broader FINRA effort to determine whether additional guidance or rules are needed to address these topics.  FINRA officials speaking at the conference “noted that any future rulemaking, guidance or regulatory actions would be pursued in lockstep with the U.S. Securities and Exchange Commission, which is taking its own measures to address the topic.”
 

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Katherine M. Lenahan is a Partner in the New York office of Faruqi & Faruqi, LLP and focuses her practice on securities litigation.

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