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DIY trading platforms should warn against risks of ‘impulse trading’: OSC CEO

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DIY trading platforms should warn against risks of ‘impulse trading’: OSC CEO


The head of Canada’s top securities watchdog says the “do-it-yourself” investment industry has a key role in educating new investors on the risks of impulse trading.

“While they can’t on the discount channel give advice, it’s still appropriate to warn investors in periods of volatility,” Grant Vingoe, chair and CEO of the Ontario Securities Commission said in a broadcast interview Wednesday. “I believe the industry as well as the regulators have a responsibility to temper impulse trading and the tendency towards what’s being referred to as ‘gamification,’ where people are jumping on trades without much reflection.”

Vingoe said the conditions are there for the retail investor boom, which has been behind the volatility in so-called “meme stocks” like GameStop this year, to be a long-term phenomenon.

“A large portion of these investors are young and tech-savvy and I think in time the industry and the individual investors will see the benefits of long-term trading perspectives and advice channels in the industry,” he said. “I’m hopeful that they convert to less impulse trading … being more circumspect about crypto assets. But I think they’re here to stay.”

He said that retail activity has subsided somewhat in the stock market, but that some of that can be attributed to investors moving into cryptocurrencies. The price of Bitcoin was swinging wildly on Wednesday after falling as much as 30 per cent in a heightened bout of volatility.

“[The crypto space] is a challenge because it’s a global market and it’s grown exponentially,” he said. “Regulators around the world are trying to find the most effective way of regulating the sector.”

Vingoe said the OSC and the other Canadian Securities Administrators are in a position to rein in crypto trading platforms should they fail to comply with its regulations.

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