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LONDON, Feb 3 (Reuters) – Regulators are monitoring how a surge in retail investors and online brokers during the COVID-19 pandemic risks creating bubbles inflated by social media, France’s AMF markets watchdog said on Wednesday.
Robert Ophele, chair of AMF, said the trading frenzy, fuelled by posts on the Reddit forum and surge in bitcoin prices, has shown how technology and social media can combine to bring irrationality to financial markets.
In a far-reaching evolution, online brokers and chat sites offer new and younger retail investors cheap access to markets, Ophele said.
“Empowering customers with this almost direct access to markets is very welcome but raises many questions,” Ophele told an Afore Consulting webinar.
“It opens new ways to distribute very risky and leveraged products without the proper safeguards, a new way to manipulate markets using the social media dimension of many platforms.”
Few examples of U.S.