14/12/2023
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published today a discussion paper on the digitalisation of retail investment services and related investor protection considerations. ESMA is seeking stakeholders input by 14 March 2024 on recommendations regarding online disclosures, digital tools, and marketing practices.
In the Discussion Paper ESMA explores the evolving landscape of retail investments. This includes examining the recent surge in the adoption of digital tools and social media by firms and retail investors following the Covid-19 pandemic, and an exploration of how technology impacts retail investor behaviour and decision-making.
Based on the supervisory experience of the National Competent Authorities (NCAs) and relevant academic literature, ESMA assesses both the opportunities and the potential risks linked to digitalisation.
ESMA's recommendations cover the following main topics:
- Layering and accessibility of information
- Digital marketing communications and practices
- The use of influencers
- Social features of investment apps
- Gamification
- Nudging techniques
- Dark patterns
Next steps
These insights will enrich ESMA’s view on how to foster investor protection while harnessing the benefits of innovation. ESMA will consider all comments received by 14 March 2024.
The feedback to this Discussion Paper will support ESMA’s convergence work and prepare it for potential mandates for technical advice/ standards in these areas.