Regulators are shifting their focus from the products offered to retail investors toward the design of the digital platforms through which those products are traded. Digital platforms now rank as the second-highest concern in ESMA's latest Common Supervisory Action priorities, signalling intensified scrutiny of how trading apps influence investor behaviour.
The Financial Conduct Authority (FCA) advanced this agenda in April 2025 with empirical research on trading app design. Using real consumer transaction data linked to credit files across multiple UK trading platforms, the FCA found that the median user of a high digital engagement practice (DEP) app executed seven times more trades than the median user of a low-engagement app. Users of high-engagement apps were 4.8 percentage points more likely to incur a large realised loss exceeding 2% of annual net income.
The study also reported that users of high-engagement apps were almost twice as likely to exhibit potentially problematic engagement, defined as elevated, erratic or concerning trading behaviour modelled on problem gambling frameworks. The rate of financial distress among high-engagement app users was 5.1%, more than double the 1.9% observed on low-engagement platforms, and rose to 7.3% for CFD users specifically. None of the firms in the FCA sample had conducted internal testing of the causal impact of their digital engagement practices on consumer outcomes.
IOSCO sets global expectations on digital engagement
On 19 May 2025, IOSCO published its final report on digital engagement practices as part of its Roadmap for Retail Investor Online Safety, establishing a global regulatory benchmark. IOSCO, whose membership includes ESMA, the FCA, the SEC and most major financial regulators worldwide, addressed the gamification of trading websites and apps directly. The report highlighted features such as badges, rewards, celebratory messages and instant gratification tools, noting that these can influence investors' risk evaluation and potentially worsen outcomes.
IOSCO contrasted these developments with the traditional model in which investors placed trades via a broker, providing an intermediary able to mitigate risky behaviour. That buffer, the report noted, no longer exists in many digital trading environments.
ESMA action and emerging conflicts of interest
ESMA's Common Supervisory Action, already underway across all EU national competent authorities including CySEC and MFSA, explicitly lists digital platforms as its second priority. Parallel analysis by Surveill of 154 CySEC-regulated CFD and FX firms indicated that 90% had no policy language addressing how platform design choices might create conflicts between firm commercial interests and client outcomes.
The coordinated timing of regulatory activity is notable. Within a twelve-month period, three major regulatory bodies published or acted on digital engagement practices: the FCA in April 2025, IOSCO in May 2025 and ESMA through its ongoing Common Supervisory Action. This alignment represents regulatory convergence on digital engagement practices that has historically preceded enforcement actions, underscoring the need for retail trading firms to reassess how platform design influences investor behaviour and outcomes.
