IOSCO consults on measures to address risks arising from digitalisation of retail marketing and distribution

17 January 2022

Growth in digitalisation and use of social media is changing the way financial services and productsare marketed and distributed.

The Board of the International Organization of Securities Commissions (IOSCO) today published a
Consultation Report to assist its members in adapting their regulatory and enforcement approaches to
meet the challenges posed by recent technological developments and the rapidly evolving
digitalisation and online activities.

Growth in digitalisation and use of social media is changing the way financial services and products
are marketed and distributed. Domestic and cross border online offerings of financial services and
products provide new opportunities for firms to reach potential clients and for investors to access a
wide range of financial services and products more easily. But developments in digital offerings also
give rise to regulatory and investor protection challenges, spanning the whole distribution chain.
Social media increasingly influences the decisions of retail investors, as many share investment tips
and seek information from a wide variety of on-line sources, including influencers, while social media
networks analyse the data of the users for digital targeting purposes.

Similarly, various digital apps and online trading platforms use gamification techniques, which may
exploit behavioural biases to influence the retail investors’ trading behaviour.

The Consultation Report is part of IOSCO’s efforts to build trust and confidence in markets that are
facing these new and emerging opportunities and risks. The overarching objective is to enhance the
protection of retail investors who are the recipients of online offerings and marketing techniques.
The Consultation R eport analyses developments in online marketing and distribution of financial
services and products to retail investors in IOSCO member jurisdictions, both domestically and on a2

cross-border basis. It provides a variety of proposed measures that IOSCO encourages its members to
consider when determining their policy approach to retail online offerings and marketing. It also
proposes useful guidance on enforcement measures for IOSCO members to consider in effectively
addressing fraudulent online activity globally by leveraging innovative powers and proactive
technology-based detection and investigatory techniques.

The proposed measures could help reduce regulatory and supervisory arbitrage and increase
collaboration among IOSCO members and members with criminal authorities, other foreign and
domestic authorities and providers of electronic intermediary services, fostering credible deterrence.
Finally, the Consultation R eport also seeks feedback from market participants on the proposed
measures

IOSCO

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