With many people afraid of missing out on the chance to make easy money, Cypriot regulators are launching a campaign to educate its citizens on the risks involved when it comes to online trading.
The country’s financial regulatory body, the Cyprus Securities and Exchange Commission (CySEC) is behind the campaign, which warns of using colorful apps that make trading seem empowering instead of intimidating .
The CySEC said it launches its new campaign to tackle the increasing impact of social media influencers, or “finfluencers,” on financial markets. With social media playing a bigger role in influencing financial decisions, the watchdog is stepping in to protect investors from potential misinformation.
CySEC Chairman highlighted the risks posed by individuals and entities spreading misleading financial advice online, warning that such actions could violate EU regulations. The regulator also called on companies that collaborate with finfluencers to ensure their promotions are “transparent, neutral, and free from conflicts of interest.”
As part of the campaign, CySEC has introduced an Investor Guide titled “Unveiling the World of Finfluencers”, to help the public navigate financial content online. The guide sheds light on how these influencers operate and warns of the risks involved in taking advice from unauthorized sources.
CySEC’s campaign, which includes a series of social media posts, says those promoters must be licensed to give financial advice, or are authorised representatives of advisers. The same rules apply to influencers who earn affiliate commissions for referring their pages’ followers to online brokers, which also requires a licence to give such advice.
The regulator added that investment recommendations had to be produced in an objective and transparent way, so that investors could distinguish fact from opinions.
These warnings were in response to a rise in unregulated trading offers on online forums, and a concern that retail investors are not aware of the risks associated with following such tips.
The increase in media coverage and hype around so-called ‘meme stocks” and cryptocurrencies has aroused public interest. However, the public might use these as speculative tools without full understanding of their nature and potential risks.
Launching the campaign, Dr George Theocharides, Chairman of CySEC, said: “Social media plays a very important role in companies’ marketing strategies and that’s why we see everyone from celebrities and sports stars and to people who have no professional knowledge about investments, giving advice and promoting complex products. “
“Unfortunately, the lack of formal financial education and the rise of digital platforms has seen finfluencers fill a gap that has increased the risk of people making bad investment choices. Although there are also legitimate sources for investments on the internet, a great deal of content is putting investors at risk.”
