H.R. 4685 — what changed

Trading Isn’t a Game Act

From Introduced in House to Reported in House. 1 section amended and 1 added between Introduced in House and Reported in House.

Section 1 Short title

added This Act may be cited as the “Trading Isn’t a Game Act”.

(a)

removed Study— The Comptroller General of the United States shall carry out a study on the impact of the gamification, psychological nudges, and other design techniques of online trading platforms, including the following:

(1)

removed How, and to what extent gamification, psychological nudges, and other design techniques are being used by online platforms in ways that are detrimental to investors.

(2)

removed How, and to what extent gamification, psychological nudges, and other design techniques are being used by online platforms in ways that empower, inform, and educate investors.

(3)

removed The various ways brokers use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail customers.

(4)

removed The various ways investment advisers, “robo-advisers”, or financial planners use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail customers.

(5)

removed The various ways in which brokers, investment adviser, “robo-advisers”, or financial planners incorporate “game-like” features and designs in their online trading applications used by retail customers.

(6)

removed Whether certain platform use of gamification, psychological nudges, and other design techniques, including “game-like” features, may constitute investment advice or recommendations under Federal securities laws and regulations, including Regulation Best Interest (17 C.F.R. 240.15l–1).

(7)

removed A comparison between the investment activity, habits, and risk tolerance of—

(A)

removed retail customers of firms that use gamification, psychological nudges, and other design techniques in marketing, or that incorporate “game-like” features and designs in their online trading applications; and

(B)

removed retail customers of firms that do not use, or have limited use of, gamification, psychological nudges, and other design techniques in marketing and that do not incorporate “game-like” features and designs in their online trading applications.

(8)

removed How, and how prominently, brokers, investment advisers, “robo-advisers”, or financial planners that use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail investors, or that incorporate “game-like” features and designs in their online trading applications, are disclosing the risks associated with leverage, complex products, or excessive or frequent trading.

(9)

removed The average customer demographic (including age and investment experience) of brokers, investment advisers, “robo-advisers”, or financial planners that use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail investors, or that incorporate “game-like” features and designs in their online trading applications.

(10)

removed The relationship between (and any correlation between) zero commission trading and gamification or investor susceptibility to “game-like” features.

(11)

removed The degree to which the types of retail trading activity that is incentivized by gamification (including the specific asset classes promoted via gamification) benefits, harms, or otherwise affects other market participants, and an analysis thereof.

(12)

removed The degree to which Securities and Exchange Commission’s Form BD and Form ADV can be revised to help the Commission better identify which registered firms use gamification, psychological nudges, and other design techniques.

(13)

removed Any data or legal challenges (e.g., so-called proprietary practices) that the Comptroller General encounters in preparing the report.

(b)

removed Investor testing authority— The Investor Advocate of the Securities and Exchange Commission is authorized to carry out investor testing as part of the study required under subsection (a).

(c)

removed GAO report— Not later than the end of the 270-day period beginning on the date of enactment of this Act, the Comptroller General shall issue a report to the Securities and Exchange Commission and the Congress containing all findings and determinations made in carrying out the study required under subsection (a).

(d)

removed Required consultation— In carrying out the study required under subsection (a), the Comptroller General shall actively consult with—

(1)

removed the Securities and Exchange Commission;

(2)

removed the Investor Advocate of the Commission;

(3)

removed the Office of Investor Education and Advocacy of the Commission;

(4)

removed the North American Securities Administrators Association;

(5)

removed the Financial Industry Regulatory Authority;

(6)

removed academics; and

(7)

removed investor advocacy organizations and experts.

(e)

removed Gamification defined— In this section, the term “gamification” means tactics or strategies used to engage customers and incentivize or nudge them to transact and spend time on an investment platform, including increased use of notifications, prizes, use of ladders and leader boards, psychological tools, and design elements to incentivize customers to spend more time on an investment platform, to increase rapid trading, and to increase the number of trades.

Sec. 2 GAO study on the gamification of investing

added

(a)

added Study— The Comptroller General of the United States shall carry out a study on the impact of the gamification, psychological nudges, and other design techniques of online trading platforms, including the following:

(1)

added How, and to what extent gamification, psychological nudges, and other design techniques are being used by online platforms in ways that are detrimental to investors.

(2)

added How, and to what extent gamification, psychological nudges, and other design techniques are being used by online platforms in ways that empower, inform, and educate investors.

(3)

added The various ways brokers use gamification, psychological nudges, and other design techniques in marketing strategies that attempt to attract retail customers.

(4)

added The various ways investment advisers or “robo-advisers” use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail customers.

(5)

added The various ways in which brokers, investment advisers, or “robo-advisers” incorporate “game-like” features and designs in their online trading applications used by retail customers.

(6)

added Whether certain platform use of gamification, psychological nudges, and other design techniques, including “game-like” features, may constitute investment advice or recommendations under Federal securities laws and regulations, including Regulation Best Interest (17 C.F.R. 240.15l-1).

(7)

added A comparison between the investment activity, habits, and risk tolerance, including a comparison between the stated preference of retail investors and their actual trading activity, of—

(A)

added retail customers of firms that use gamification, psychological nudges, and other design techniques in marketing, or that incorporate “game-like” features and designs in their online trading applications; and

(B)

added retail customers of firms that do not use, or have limited use of, gamification, psychological nudges, and other design techniques in marketing and that do not incorporate “game-like” features and designs in their online trading applications.

(8)

added How, and how prominently, brokers, investment advisers or “robo-advisers” that use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail investors, or that incorporate “game-like” features and designs in their online trading applications, are disclosing the risks associated with leverage, complex products, or excessive or frequent trading.

(9)

added The various customer demographic categories (including age, net worth, and investment experience) of brokers or investment advisers, or “robo-advisers” that use gamification, psychological nudges, and other design techniques in marketing strategies that target or include retail investors, or that incorporate “game-like” features and designs in their online trading applications.

(10)

added The relationship between (and any correlation between) zero commission trading and gamification or investor susceptibility to “game-like” features.

(11)

added The degree to which the types of retail trading activity that is incentivized by gamification (including the specific asset classes promoted via gamification) benefits, harms, or otherwise affects other market participants, and an analysis thereof.

(12)

added The degree to which Securities and Exchange Commission’s Form BD and Form ADV can be revised to help the Commission better identify which registered firms use gamification, psychological nudges, and other design techniques.

(13)

added Whether gamification, psychological nudges, and other design techniques have created investment activity or interest in the capital markets by women and minority groups.

(14)

added Whether gamification, psychological nudges, and other design techniques have targeted women and minority groups or created particular risks for them.

(15)

added Any data or legal challenges (e.g., so-called proprietary practices) that the Comptroller General encounters in preparing the report.

(b)

added Investor testing authority— The Investor Advocate of the Securities and Exchange Commission is authorized to carry out investor testing as part of the study required under subsection (a).

(c)

added GAO report— Not later than the end of the 270-day period beginning on the date of enactment of this Act, the Comptroller General shall issue a report to the Securities and Exchange Commission, the Investor Advocate of the Commission, and the Congress containing all findings and recommendations made in carrying out the study required under subsection (a).

(d)

added Consultation— In carrying out the study required under subsection (a), the Comptroller General shall consult with—

(1)

added the Securities and Exchange Commission;

(2)

added the Investor Advocate of the Commission;

(3)

added the Director of the Office of Investor Education and Advocacy of the Commission;

(4)

added the North American Securities Administrators Association;

(5)

added the Financial Industry Regulatory Authority;

(6)

added academics, including gamification and behavioral psychology experts; and

(7)

added investor advocacy organizations and experts.

(e)

added Report and recommendations of the Investor Advocate— Not later than the end of the 90-day period beginning on the date that the Investor Advocate of the Commission receives the report issued under subsection (c), the Investor Advocate shall—

(1)

added review the report; and

(2)

added issue a report to the Congress containing any regulatory (including rules and policies of Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board) or legislative recommendations the Investor Advocate may have.

(f)

added Gamification defined— In this section, the term “gamification” means tactics or strategies used to engage customers and incentivize or nudge them to transact and spend time on an investment platform, including increased use of notifications, prizes, use of ladders and leader boards, psychological tools, and design elements to incentivize customers to spend more time on an investment platform, to increase rapid trading, and to increase the number of trades.