The International Organization of Securities Commissions published a final report on online imitative trading practices, focusing on copy trading, and set out good practices intended to help regulators and market intermediaries mitigate retail investor harm. The report frames copy trading as an often automated service that can encourage short-term, higher-risk trading in products such as foreign exchange, contracts for difference and crypto-assets, with risks amplified by leverage, frequent trading costs and potentially misleading marketing. IOSCO highlights concerns including inadequate understanding by retail investors, mismatches with investors’ risk tolerance and capacity to bear losses, weak or unverified lead-trader credentials, conflicts of interest created by remuneration structures and platform economics, and the growing overlap with financial influencer activity that can blur the line between regulated advice and general information. The good practices call on intermediaries to assess whether their copy trading services constitute investment advice, individual portfolio management or other regulated activities requiring licensing; monitor marketing by both the firm and lead traders, including disclosures on remuneration and conflicts; implement procedures to select and remove lead traders; regularly review lead-trader conduct and copy-trader outcomes using technology where possible for enhanced surveillance; and assess conflicts of interest arising from fee and remuneration arrangements. The final report follows IOSCO’s consultation launched on 19 November 2024, which closed on 20 January 2025 and received seven responses from industry associations, market regulators and an exchange operator, with IOSCO reflecting the feedback in the final text, including additional specific risks and revised wording on technology-enabled surveillance.

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