SEC to Propose New Rules for Online Brokers' Game-Like Features

The U.S. Securities and Exchange Commission plans to propose new rules this year to crack down on the behavioral prompts and data analytics used by some online stock brokerages and investment advisers.

The agency’s bid to impose restrictions on trading and investing apps popular with retail traders follows a review by the SEC of “digital engagement practices,” which critics refer to as the gamification of investing.

Wall Street’s main regulator said last August that it was concerned that game-like features are putting investors at risk by encouraging excessive trading.

The rule plan, which was announced this week in a calendar of upcoming regulatory actions, could pose significant challenges for online brokerages and advisers.

Under SEC rules, if a firm is offering investment advice or recommending securities it can face conduct standards that require putting clients’ interests first.

Since taking over in April 2021, SEC Chair Gary Gensler has raised concerns with how features closely associated with the mobile phone apps offered by brokers such as Robinhood Markets Inc. and Webull Financial can impact trading.