The International Organization of Securities Commissions (IOSCO) has published a consultation report on neo-brokers, a subset of brokers which provide online-only investment services and do not operate physical branches. Neo-brokers rely on technology to facilitate their services, mainly providing access via mobile apps and websites, and have very limited or no human interaction with their retail customers. They have grown in recent years.
The consultation report sets out a series of findings from IOSCO members who reported on the activities of neo-brokers in their jurisdictions and also includes recommendations which member jurisdictions may consider applying. Two areas which require specific action are the potential risks of conflicts of interest, mainly due to business models inducing retail clients to trade more frequently and the need for solid IT infrastructure, given neo-brokers' online-only business models. The report lists a series of questions upon which feedback is welcomed, as well as any more general comments respondents may have on the proposed guidance in the report. Responses should be submitted on or before 12 May.
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