The European Securities and Markets Authority (ESMA) has published a discussion paper on the digitization of retail investment services and related investor protection considerations。

The regulator noted the need to ensure that (digital) marketing practices and advertising comply with relevant regulations and that information is fair, clear and not misleading.。In particular, the wording and presentation of the investment company's offer should be clear and understandable, including financial instruments。

For example, a company that offers contracts for difference (CFD), structured retail products (SRP), or exchange-traded products (ETP) may market these products on the same page as "typical" stocks or bonds, listing them on the same label or page, including introducing them as the same or similar alternative products。

Stocks and CFDs for these stocks may be marked with the same or similar codes in the trading system。In this case, the customer is likely to make a mistake and buy the wrong financial instrument。In addition, the structure of marketing communications may not be conducive to distinguishing whether the instrument being marketed is a CFD, a retail structured product or its subject matter, as advertising or communications include only (or primarily) information about the stock or commodity that is the subject matter of the product being distributed。In fact, companies may market products that are not actually offered by them。

It is necessary to balance the information and clearly indicate all the necessary information。For example, if a company uses ambiguous language in an advertisement, such as "the possibility of choosing a stock investment strategy" or "getting an ETF investment," without explicitly stating that they are promoting CFDs, then this information provision is ambiguous and misleading.。In this case, the customer cannot directly see or understand the type of product offered。Not to mention understanding the risks associated with such investments。

At a more extreme level, the content of the information implies that less complex instruments such as stocks are being offered, when in fact options or CFDs are being sold。

Another example is when an investment firm pays affiliates / influencers for advertising。The firm's investment services should then ensure that the alliance presents the firm's services in a fair and balanced manner。

If an affiliate introduces a company's services only to praise the advantages of the company's services without fairly and prominently stating any associated risks, it violates the requirement that the information must be accurate, i.e., any potential benefits of investment services or financial instruments must always be fairly and prominently stated。

In any case, affiliates should mention in their publications that this is an advertisement。

ESMA is seeking stakeholder input on proposals for online disclosure, digital tools and marketing practices by 14 March 2024。