Through a campaign, the Cyprus Securities and Exchange Commission (CySEC) is trying to use a protection shield against “finfluencers” and “gamification” who are trying to manipulate young people in risky investments.
The watchdog issued a public statement advising retail traders to be cautious when engaging so-called “finfluencers” and conduct serious due diligence on any prospective partners. It says those promoters must be licensed to give financial advice, or are authorised representatives of advisers.
Launching the campaign, Dr. George Theocharides, Chairman of CySEC, said: “Rapid technological development, uncertain market conditions and the COVID-19 pandemic have all contributed to a significant increase in online retail trading in recent years. CySEC is concerned at the growing participation of younger inexperienced investors, and the proliferation of material on social media and online platforms to promote complex products that are not always what they seem. It is particularly worrying that already low financial literacy levels are also declining and this has exacerbated the risk of young people not fully understanding the unique characteristics and risks that trading in these products can carry and many will get in over their head.”
The campaign also focuses on the tactics that some brokers use to keep consumers engaged, alleging that it encourages them to use their platforms through what it calls “gamification.”
These warnings were in response to a rise in unregulated trading offers on online forums, and a concern that retail investors are not aware of the risks associated with following such tips.
