Regulator urges firms to tighten controls as online platforms use gamification to drive trading
Retail investors are increasingly being nudged, prompted, and even gamified into making investment decisions—sometimes in ways that may not align with their best interests.
The Ontario Securities Commission (OSC) has published Staff Notice 33-760, spotlighting how digital engagement practices (DEPs) are reshaping the online investing experience and raising new compliance challenges for firms.
The OSC’s focused compliance examination found that DEPs—ranging from push notifications and rewards programs to trending asset lists and in-app games—are now common across online trading platforms.
While some DEPs help clients track savings goals, reinforce cybersecurity, and support financial literacy, others risk crossing the line into undue influence.
For example, the OSC observed notifications using “fear of missing out” language, scarcity claims, and social cues to drive trading activity, as well as contests and rewards tied directly to transaction volume.
These tactics can expose investors to unnecessary risks and fees, and may even amount to providing recommendations or advice without proper suitability assessments.
Transparency and disclosure emerged as critical issues.
The OSC found instances where important information about pricing and charges was hidden in lengthy documents or presented in complex language, making it difficult for clients to make informed decisions.
Similarly, asset rankings like “top traded” or “trending now” were sometimes presented without clear explanation, potentially encouraging herd behaviour based on incomplete information.
The OSC’s findings underscore the need for robust governance and oversight of DEPs.
Many firms had not addressed DEPs in their compliance policies, leaving gaps in controls and supervision.
The regulator recommends that firms develop clear procedures for the design, monitoring, and review of DEPs, ensure clients can easily manage notification preferences, and provide transparent disclosure of all charges before and after trades.
Not all digital engagement is problematic.
The OSC highlighted positive practices, such as using DEPs to promote investor education, support long-term financial planning, and encourage prudent cybersecurity habits.
However, the line between helpful engagement and undue influence can be thin—especially when business models benefit from increased trading activity.
As digital platforms continue to evolve, the OSC will maintain its scrutiny of DEPs, reminding firms that investor protection and market integrity must remain paramount.
Firms are encouraged to use the notice as a self-assessment tool and to review their practices in light of both regulatory obligations and the changing landscape of digital investor engagement.
