Google search “what is gamification?”:

noun, “the application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service”

What is DEP?

The internet is embedded in our lives.

Working out, choosing movies, social media,

we see points or “leaderboards” of likes and reactions, a meaningful image,

something that engages us to a digital screen.

This is what the SEC calls “digital engagement practice” or DEP.

Gamification is one such DEP.

Like digital nudges in a game that make you want to keep playing. Super Smash Bros. as an example, you beat up a character, you see the percentage go up, it keeps you engaged.

Digital nudges from your Netflix app algorithm? It affects what you watch.

Digital nudges from user-friendly stock trading apps like Robinhood? Could affect your financial investments.

Be it Robinhood or WeBull, specific names Bloomberg mentioned in SEC to Propose New Rules for Online Brokers’ Game-Like Features, these apps raise some questions in regards to their DEP, says the SEC.

Vlad Tenev and Jim Cramer talked about this, Vlad says Robinhood is just at the beginning of granting access to potential investors, like us!

Gamification is one such digital engagement practice (DEP) I know a bit about as it relates to Robinhood, especially as an instructor on PS-RTT, so I will stick to that for this post.

Why this matters?

One example of gamification is in Robinhood, when Robinhood discontinued animated confetti for some trades, a feature that helped gamify investing for young people and other vulnerable populations.

“For years now, I have struggled to explain the difference between a full-service broker and an investment adviser because in my view, the Commission has allowed brokers to do virtually everything that an adviser does.

Brokers are excluded from the definition of an investment adviser only if their advice is “solely incidental” to their brokerage business.

But now it seems that most if not all of the on-line discount brokers are influencing investor behavior with digital engagement practices (DEPs), which further blurs the line between providing investment advice and traditional brokerage service.

At some point, if the Commission fails to brighten the distinction between advisers and brokers, it will make little sense to regulate [with] two distinct regulatory models.”

Read more: SEC Investor Protection in the Age of Gamification

“Since taking over in April 2021, SEC Chair Gary Gensler has raised concerns with how features closely associated with the mobile phone apps offered by brokers such as Robinhood Markets Inc. and Webull Financial can impact trading. He’s also questioned whether big data in finance may create conflicts of interests for brokers and advisers, and whether digital nudges on a trading app can amount to offering a recommendation. 

In a statement, Robinhood said it looked forward to engaging with the regulator and that “it’s important not to conflate gamification with simple, intuitive design” which has made investing more accessible. Webull didn’t immediately respond to a request for comment.”

Read more here: Gary Gensler SEC, Andrew Ross Sorkin DealBook

What should you do about it?

Well, one thing is be aware of DEP, or digital engagement practices, especially as it relates to financial instruments you purchase.

Oct 2021, Robinhood responded to the SEC’s “DEP” terminology, with some exhibits and screenshots of how they are educating more so that gamifying.

Long story short, they are trying to show themselves as educators and advisors to investors, not games with chat features or social network like and share features.

But digital nudges from user-friendly stock trading apps like Robinhood could affect your financial investing decisionmaking.

Be sure to be aware of when gamification or other DEP is affecting you and distracting you so you can stay focused.