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October 4, 2021

Better Markets Urges SEC to Protect Investors From Predatory Trading Platforms

Washington, D.C.  –  Stephen Hall, Legal Director and Securities Specialist for Better Markets, issued the following statement on the filing of a comment letter to the Securities and Exchange Commission (SEC) in response to their Request for Information (RFI) on digital engagement practices (DEPs) and the gamification of investing through online trading platforms and mobile apps:

“We commend the SEC for taking a close look at these increasingly popular technologies.  They have the potential to help a larger, younger, and more diverse population of investors participate in the stock market in ways that could enhance their long-term financial health.   But they also pose serious risks that the SEC must address.  The reality is that some of the dominant platforms and apps are designed simply to maximize broker revenue regardless of the damage done to investors.   They manipulate investors by bombarding them with constant prompts and rewards for trading, urging them to trade and often luring them into complex and risky products including options and margin accounts.  Brokers can sell that retail trading volume to other firms—it’s called “payment for order flow”—and reap huge profits.  This is not about democratizing finance, as some have claimed, it’s about exploiting retail investors for profit.

“A distinctive feature of these platforms, and one that can be especially harmful to investors, is the “gamification” of investing.  This strategy involves the design and deployment of addictive, game-like features for the purpose of triggering more trading, more often, and more thoughtlessly.  As we explain in our comment letter, that type of trading actually leads to suboptimal results and disproportionately high trading losses.

“In our letter, we also expose some of the misconceptions surrounding these platforms and apps.  For example, while they may constantly push out all sorts of “information” to their users about the markets and particular stocks, that’s not bona fide investor education.  That’s the information used as a prod, intended to induce even more trading, largely through the fear of missing out.  We also argue that the SEC can and should apply existing rules, including Regulation “Best Interest,” to help curb the powerful conflicts of interest that drive these platforms.  And we urge the SEC to consider any new rules that may be necessary to make sure that these platforms serve rather than exploit investors. As Chair Gensler has rightly said, harnessing new technologies while protecting investors means bringing those innovations within a strong regulatory framework.  That’s what the SEC must now do.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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