Swissquote contemplates social trading platform in the wake of ‘meme stocks’

Rick Steves

Now that Reddit has taken over the social trading space and the whole world witnessed the power of an army of retail traders against whales in the industry, everyone wants in on the action.

Swissquote has asked its trading community on Twitter how willing are they to start a social trading forum. The retail broker approached its customers in the wake of the recent meme stock trading frenzy which started with the GameStop short squeeze.

The r/WallStreetBets subreddit has become a driving force of what many have called the democratization of trading, although they have become ironically the enemy of neo broker Robinhood, whose sole mission is to democratize trading.

Swissquote invited its Twitter followers to answer “yes” or “no” to the following question: “Dear traders, what do you think about a digital platform/forum where we could endlessly discuss financial news and trading strategies?”

With 561 votes counted, nearly 60% of respondents are in favor of going forward with the idea. Interestingly, Swissquote once had a social network for traders, Pulse, and the broker decided to discontinue the platform after being live for three years and removed it from its Newsroom.

Swissquote was maybe ahead of its time. Now that Reddit has taken over the social trading space and the whole world witnessed the power of an army of retail traders against whales in the industry, everyone wants in on the action.

A number of brokers have stepped in and invited investors to open accounts with them with the promise their trades won’t be disrupted or restricted in any way regardless of the volatility in any instrument. Swissquote, on the other hand, wants to have its private social trading backyard. Again.

The retail broker’s proposal comes amid talks about how social media discussions could or not constitute market manipulation. A survey conducted by Acuiti found that only 19% senior executives believed “the trading activity and communications on Reddit to encourage position-taking” was definitely not market abuse. But most senior executives interviewed did not want regulators to take action and that the activity constituted a viable part of a free market, according to the study.

About the new trend of social media discussions, ESMA stated that “organizing or executing coordinated strategies to trade or place orders at certain conditions and times to move a share’s price could constitute market manipulation.”

“ESMA urges retail investors to be careful when taking investment decisions based exclusively on information from social media and other
unregulated online platforms, if they cannot verify the reliability and quality of that information”, said the document.

The regulator said ‘meme stocks’ are an increased risk for retail investors, and margin or derivatives trading exposes investors to even greater risks. Investors should understand those risks.


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