A senior
Cyprus Securities and Exchange Commission (CySEC) official has called for the
European Union’s Savings and Investment Union to explicitly prohibit the
gamification of investing, warning that smartphone platforms and aggressive
marketing campaigns are already steering young, inexperienced investors into
speculative products they may not fully understand.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don’t!)
Panikkos
Vakkou, Vice Chairman of CySEC, made the argument in a piece published in the
Eurofi Magazine, the policy journal of the European financial services think
tank that convened its High Level Seminar in Nicosia this month. Writing for an
audience of regulators and industry executives, Vakkou drew a direct line
between the spread of mobile investing apps and the growing behavioural risks
facing retail savers across the EU.
The warning
builds on a position CySEC has held for several years. In 2022, the regulator
launched a dedicated investor protection campaign specifically targeting gamification and
the influence of so-called finfluencers, raising concerns about younger
investors being drawn into complex and risky products through social media
promotion.
“The
SIU should explicitly reject any gamification of long-term investing and demand
transparency from companies about how they make money and where their
incentives might work against the customer,” Vakkou wrote in the Eurofi
piece.
Young Investors in the
Crosshairs
The CySEC
Vice Chairman said that while smartphones and mobile apps have genuinely
widened access to financial markets, the same tools carry a darker side.
“While
smartphones and mobile apps have widened access to markets, they have also made
risk-taking easier, sometimes pushing investors towards speculative products
with little protection,” he wrote, adding that investors, “often
young and inexperienced,” are increasingly influenced by online messaging
platforms and aggressive marketing campaigns, framing them as a threat to the
very investor base the SIU is designed to serve.
His piece
calls for clear rules on ownership and custody of investment assets, high
standards for digital operational resilience, and technology that works
smoothly with existing banking and payment infrastructure. On financial
literacy, his position was direct: “strong consumer protection and
prioritising financial literacy are non-negotiable.”
CySEC is far from alone in drawing attention to these risks.
The FCA issued a formal warning to trading app operators in late
2022, citing research that linked extensive gamification to gambling-like
behavior and potential addiction among retail users. A June 2024 FCA study went further, finding a direct link
between game-like app elements and measurably riskier investing behavior among
retail participants.
ESMA has also spent years pushing for curbs on these
practices, with its chair Verena Ross warning that gamification techniques “may cause retail investors to
engage in trading behavior without understanding the risks involved”,
raising questions about whether the EU’s existing investor protection framework
is adequate for the app-first generation of market participants. The concern
runs deep enough that analysts have been tracking whether a full “degamification” of retail
trading is even possible without eroding the retail participation that
regulators simultaneously want to grow.
Europe’s €10 Trillion
Opportunity
Vakkou
anchored his technology argument in a number the European Commission has made
central to the SIU debate: European households currently hold more than €10
trillion in low-yield bank deposits and rarely access capital markets directly.
He argued
that digital platforms, tokenization, and distributed ledger technology could
collectively remove the friction that has historically blocked retail
participation across borders, by making long-term products easier to compare,
cheaper to onboard, and more accessible without sacrificing regulatory
standards.
On
distributed ledger technology specifically, Vakkou said faster settlement and
streamlined post-trade processes could lower operational costs and reduce
reconciliation errors, addressing the infrastructure layers where integration
has most consistently stalled.
He also
pointed to RegTech as a tool for supervisors, saying CySEC’s own systems allow
the authority to process large data volumes, spot irregularities early, and
take action before problems escalate.
“Technology
can accelerate the SIU, but only if we’re prepared for the risks,” he
wrote, in a formulation that captures both sides of a debate the regulator is
pushing to define.
CySEC highlighted
the European Commission’s targeted consultation on SIU capital market
integration last
April, inviting financial institutions to provide feedback on obstacles to
cross-border investing, DLT pilot regimes, and asset tokenisation. Vakkou’s
Eurofi piece is the latest signal from Nicosia that the regulator intends to
stay at the centre of that conversation.
Cyprus Pitches Innovation
With Guard Rails
Vakkou
pointed to CySEC’s Regulatory Sandbox as evidence that the jurisdiction is
prepared to engage with new models rather than simply police them. The
sandbox, launched in
June 2024 and opened to FinTech and RegTech applications the following month, gives fintech startups and crypto
service providers a supervised environment to test products before they reach
the full market. Vakkou said it also gives the regulator early visibility into
emerging risks, and deepens dialogue between supervisors and innovators.
The point
matters for the broader SIU agenda: CySEC oversees a significant share of
EU-passported CFD and forex brokers through Cyprus’s MiFID II framework,
meaning its regulatory posture has direct implications for a large portion of
the retail investment platforms operating across Europe.
A senior
Cyprus Securities and Exchange Commission (CySEC) official has called for the
European Union’s Savings and Investment Union to explicitly prohibit the
gamification of investing, warning that smartphone platforms and aggressive
marketing campaigns are already steering young, inexperienced investors into
speculative products they may not fully understand.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don’t!)
Panikkos
Vakkou, Vice Chairman of CySEC, made the argument in a piece published in the
Eurofi Magazine, the policy journal of the European financial services think
tank that convened its High Level Seminar in Nicosia this month. Writing for an
audience of regulators and industry executives, Vakkou drew a direct line
between the spread of mobile investing apps and the growing behavioural risks
facing retail savers across the EU.
The warning
builds on a position CySEC has held for several years. In 2022, the regulator
launched a dedicated investor protection campaign specifically targeting gamification and
the influence of so-called finfluencers, raising concerns about younger
investors being drawn into complex and risky products through social media
promotion.
“The
SIU should explicitly reject any gamification of long-term investing and demand
transparency from companies about how they make money and where their
incentives might work against the customer,” Vakkou wrote in the Eurofi
piece.
Young Investors in the
Crosshairs
The CySEC
Vice Chairman said that while smartphones and mobile apps have genuinely
widened access to financial markets, the same tools carry a darker side.
“While
smartphones and mobile apps have widened access to markets, they have also made
risk-taking easier, sometimes pushing investors towards speculative products
with little protection,” he wrote, adding that investors, “often
young and inexperienced,” are increasingly influenced by online messaging
platforms and aggressive marketing campaigns, framing them as a threat to the
very investor base the SIU is designed to serve.
His piece
calls for clear rules on ownership and custody of investment assets, high
standards for digital operational resilience, and technology that works
smoothly with existing banking and payment infrastructure. On financial
literacy, his position was direct: “strong consumer protection and
prioritising financial literacy are non-negotiable.”
CySEC is far from alone in drawing attention to these risks.
The FCA issued a formal warning to trading app operators in late
2022, citing research that linked extensive gamification to gambling-like
behavior and potential addiction among retail users. A June 2024 FCA study went further, finding a direct link
between game-like app elements and measurably riskier investing behavior among
retail participants.
ESMA has also spent years pushing for curbs on these
practices, with its chair Verena Ross warning that gamification techniques “may cause retail investors to
engage in trading behavior without understanding the risks involved”,
raising questions about whether the EU’s existing investor protection framework
is adequate for the app-first generation of market participants. The concern
runs deep enough that analysts have been tracking whether a full “degamification” of retail
trading is even possible without eroding the retail participation that
regulators simultaneously want to grow.
Europe’s €10 Trillion
Opportunity
Vakkou
anchored his technology argument in a number the European Commission has made
central to the SIU debate: European households currently hold more than €10
trillion in low-yield bank deposits and rarely access capital markets directly.
He argued
that digital platforms, tokenization, and distributed ledger technology could
collectively remove the friction that has historically blocked retail
participation across borders, by making long-term products easier to compare,
cheaper to onboard, and more accessible without sacrificing regulatory
standards.
On
distributed ledger technology specifically, Vakkou said faster settlement and
streamlined post-trade processes could lower operational costs and reduce
reconciliation errors, addressing the infrastructure layers where integration
has most consistently stalled.
He also
pointed to RegTech as a tool for supervisors, saying CySEC’s own systems allow
the authority to process large data volumes, spot irregularities early, and
take action before problems escalate.
“Technology
can accelerate the SIU, but only if we’re prepared for the risks,” he
wrote, in a formulation that captures both sides of a debate the regulator is
pushing to define.
CySEC highlighted
the European Commission’s targeted consultation on SIU capital market
integration last
April, inviting financial institutions to provide feedback on obstacles to
cross-border investing, DLT pilot regimes, and asset tokenisation. Vakkou’s
Eurofi piece is the latest signal from Nicosia that the regulator intends to
stay at the centre of that conversation.
Cyprus Pitches Innovation
With Guard Rails
Vakkou
pointed to CySEC’s Regulatory Sandbox as evidence that the jurisdiction is
prepared to engage with new models rather than simply police them. The
sandbox, launched in
June 2024 and opened to FinTech and RegTech applications the following month, gives fintech startups and crypto
service providers a supervised environment to test products before they reach
the full market. Vakkou said it also gives the regulator early visibility into
emerging risks, and deepens dialogue between supervisors and innovators.
The point
matters for the broader SIU agenda: CySEC oversees a significant share of
EU-passported CFD and forex brokers through Cyprus’s MiFID II framework,
meaning its regulatory posture has direct implications for a large portion of
the retail investment platforms operating across Europe.
