Italy’s Companies and Exchange Commission (CONSOB) today issued a warning against online “video game” trading.
Consob is warning investors about the risks associated with offers, promoted on the web and social media, of exercises that simulate an online trading activity in a kind of financial video game with the aim of passing a skill test and making a profit.
The operating scheme – variously referred to by various names, including the shadow investment game, trade finance, trade finance accounts – consists of inducing network users to participate in online trading challenges, which in most cases involve enrolling in educational programs on payment. Those who pass the test have the opportunity to move from simulated trading to supposedly real trading with funds apparently provided by companies calling themselves prop firms.
To attract the “players”, they are given the opportunity to share some of the profits made.
Consob has received several reports from users who have subscribed to such offers. The complaints concern both the difficulty level of the tests, which are allegedly designed to force “players” to try again, and the failure to share the supposed winnings.
Similar warnings about the risks associated with these offers, which may lead to the loss of pledged amounts, have also been issued by the National Financial Market Regulatory and Supervisory Authorities in Belgium (FSMA) and Spain (CNMV).
Last month, the UK’s Financial Conduct Authority (FCA) said it was keeping financial trading apps “under review” over gambling concerns, following an online experiment it carried out with more than 9,000 consumers. The FCA found in its experiment that digital engagement practices (DEPs) used by trading apps, such as push notifications and prize draws, can increase trading frequency and risk taking.