The United States Securities and Exchange Commission (SEC) says DailyFX, an IG Group-owned trading news portal, is not allowed to solicit investments from investors. While the US is the site's top source of traffic according to Similarweb, IG Group clarified that it is designated to European and Asian traders.

On March 7, the watchdog modified its list of Public Alerts: Unregistered Soliciting Entities, aka PAUSE, to include DailyFX. However, a Google search reveals that the addition of DailyFX to the page happened on February 8, 2023.

The SEC PAUSE Programme lists firms that try to gain investor confidence by falsely claiming to be registered, licensed and or located in the United States. According to the SEC, DailyFX operates from Chicago, Illinois, as an unregistered soliciting entity.

“The PAUSE Program also lists entities that impersonate genuine U.S. registered securities firms as well as fictitious regulators, governmental agencies, or international organizations,” the SEC wrote on the alert page.

DailyFX: "No Presence in the United States"

According to DailyFX's website, the platform, which is run by FX Publications (FXP) Inc., has no presence in the United States. Instead, the platform is run from offices in London, Tokyo, Singapore, Sydney, Krakow, and Johannesburg.

"[DailyFX] is no longer a registered Introducing Broker with the Commodity Futures Trading Commission and is no longer a Member of the National Futures Association (NFA) in the U.S. Any and all information provided by FXP is not intended for use by U.S. residents or individuals domiciled in the U.S. Information presented by FXP should be construed as market commentary, merely observing economical, political and market conditions," the website further states.

In June 2021, IG Group finalized its acquisition of tastytrade for $1 billion. tastytrade also owns a financial content network called tastylive, which is also a part of IG now.

Responding to the SEC's addition of DailyFX to the PAUSE Programme, IG Group noted that the company after acquiring Tastytrade redirected its "DailyFX resources to best serve clients in Europe and Asia." Alayna Francis, DailyFX's Global Head of Media Relations, told Finance Magnates that IG Group as a part of its post-acquisition US business model and strategy has been leading "with tasty's existing, robust content platform in the US."

Furthermore, an industry source told Finance Magnates that DailyFX does not undertake any regulated activity in the US and applied for de-registration with the NFA. The deregistration was finalized recently, the source said, noting that the inclusion in the PAUSE Programme confirms this.

Meanwhile, Finance Magnates approached the SEC for clarification on the inclusion of DailyFX to the PAUSE Programme but is yet to get a response as of press time. In the PAUSE alert, the US regulator did not state why an entity owned by IG Group, which is a registered online trading provider, was singled out despite giving up its NFA membership.

SEC's Actions against Trading News Providers

While most of the SEC's usual actions target platforms directly offering trading services, it is not a stranger to cracking down on trading news platforms. One of the prominent actions of the SEC in this area is its actions against Seeking Alpha, a leading community-led trading industry news platform where anyone can create an account and post content.

The SEC in 2013 charged Seeking Alpha for violating federal securities laws by allowing contributors to post articles containing false and misleading information about certain publicly traded companies. The regulator's allegations claimed that Seeking Alpha failed to ensure the information on its websites are accurate, allowing contributors to manipulate the stock markets.

Seeking Alpha had to pay a penalty of $75,000 to settle the charge. In addition, the regulator issued a cease-and-desist order against the news portal requiring it to take steps to prevent similar violations in the future. However, the content-generating models of Seeking Alpha and DailyFX are different.

While anyone can contribute on Seeking Alpha, DailyFX is a closed platform, and vetted contributors provide the news and analysis. Currently, DailyFX website lists nine names as the authors, whose role shuffles between Strategies and Analysts.

Although the commission's existing rules around trading news portals apply to DailyFX, most of these rules are designed to prevent insider trading and to ensure that information is disseminated to the public in a fair and timely manner. In 2013, the agency beefed up its trading news regulations, adding guidelines on the use of social media and other online platforms for disseminating information.

The Growing Demand for Financial Content

DailyFX was founded in 2002 by three experienced traders and analysts, Kathy Lien, Boris Schlossberg, and John Kicklighter. In 2008, FXCM bought DailyFX for an undisclosed amount. The ownership of the platform changed again when IG Group, an online trading provider operating in the industry since 1974, acquired DailyFX in 2016 for $40 million from FXCM.

Moreover, IG operates subsidiaries, such as online brokers IG and Tastytrade, prime broker IG Prime, online financial network tastylive, securitized derivatives exchange operator Spectrum Markets, and multi-asset service provider BrightPool.

The London-headquartered group's focus on financial content clearly became prominent with its acquisition of DailyFX and Tastytrade, which also provides extensive educational material about trading. Earlier, IG revealed that traders on its platforms increased their executions by 33 percent after interacting with IG content.

"Content plays an increasingly important role in our strategy, particularly in supporting client acquisition and retention. Our wide range and variety of content is designed to improve the knowledge of traders and investors, providing our clients with the tools to hone their skills and build the confidence needed to trade," the CEO of IG, June Felix, wrote about the H1 FY23 results of the group.

"Despite most coming to IG with considerable knowledge and experience already, our clients are voracious consumers of content, evidenced by more than 50 million unique views of IG video content across our brands during the half. Like our clients, we believe that you can always learn more about the markets to support responsible trading."

Arnab Shome contributed to this report.