Can Your Digital Platform Withstand Regulator Scrutiny?

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Jasmin and Ryan recently exchanged ideas about trading apps and new software that can help educate investors about key investment principles.

Ryan: Last August, the SEC announced an inquiry into gamification elements in trading apps. Why is the SEC so concerned about features that might seem to enrich the investing experience – what harms can come from things like contests, animations, badges, prizes, and real-time notifications when stocks dip or soar?

Jasmin: For sure, game-like features can make trading more inviting and enjoyable. The SEC should distinguish between gamification per se and how it is deployed. In other words, the focus should be on this question: What is gamification ultimately promoting? If it’s short-term risk-taking without full disclosure of the risks and potential conflicts – that’s a problem. But gamification can be turned in a positive direction if game-like features encourage long-term perspectives and sound trading strategies like saving for retirement, investing for compound interest, dollar-cost averaging, and diversification.