A dummies guide to controlling derivatives trading
Mint reported: Want to trade in derivatives? Take an exam. Also, prove your net worth is high enough to stomach the risks. That, in essence, is what a possible entry barrier to derivatives trading could look like as regulatory concerns continue to play out over the risks of retail investors trading in futures and options contracts. Whenever we see ideas for regulating rampant speculation such as these, we wonder if history has taught us any lessons.
In my opinion, what all these new regulations do is either of these… One, increase mindless online disclosures that are done as part of the process. Like, every few months the broker asks us to confirm our net worth…and like robots we do check and confirm! I wonder if that helps the regulator achieve its purpose, or the broker…or even us! Two, boost income streams for bodies that conduct examinations required as part of various regulations. We think, if the exam is mandatory, then first, it needs to go way beyond theory, and second, perhaps, it needs to be free.
With investor protection fund coffers overflowing, this is a no-brainer. Either way, despite all the examinations for markets participants, we have still ended up where we have, i.e. the stock market has become a gambler’s den.
It’s time to think out of the box when it comes to regulation. Here are some top ideas for putting an end to this mindless gambling. First, intra-day futures and options (F&O) trading should be taxed punitively.
Second, brokers already decide who can trade, and to what extent. Since they are closest to the customer, you want them to carry all the liability (which they already do I guess) and more responsibility. So, if a broker is pushing the idea of trading, and say encouraging leverage beyond
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