IOSCO report reveals threats to retail investors

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The Retail Market Conduct Task Force report, issued by the International Organization of Securities Commissions (IOSCO), identified several escalating threats to retail investors.

The report's recommendations are designed to help the Australian Securities and Investments Commission (ASIC) develop its strategic priorities to combat these threats.

Threats to retail investors include:

  • A steady increase in retail investor participation in capital markets

  • The growing influence of social media on retail trading decisions

  • The rising popularity of crypto-asset investments among retail investors

  • Inappropriate online marketing and "finfluencer" activities

  • Greenwashing

  • A surge in retail fraud and scams

  • Cross-border fraudulent activities

Recommendations by the taskforce include:

  • Enhance digital presence and online strategy to monitor and assess online marketing and distribution trends and disrupt harmful channels.

  • Employ advanced data analytics and behavioural science to identify and mitigate misconduct.

  • Enhance cross-border and domestic supervisory and enforcement cooperation frameworks.

  • Employ intervention powers to address cross-border crypto-asset fraud and theft to retail investors.

  • Establish rules for marketing high-risk products and create consumer helplines and anti-scam campaigns.

  • Use tools better to identify firms' compliance with climate disclosure standards and to detect greenwashing activities better.

ASIC chair Joe Longo commented, "Regulators need effective resources, practices, tools, and techniques to promote consumer protection and market integrity". The report recommends enhancing regulatory capabilities and cooperation to protect retail investors better.