Retail investors and derivative markets

Research shows that retail investors don't distort derivative market fundamentals but enhance price efficiency and liquidity

Vikram Limaye 

Vikram Limaye

Regulators all over the world, time and again, have expressed concern regarding the participation of unsophisticated small investors, either directly or through unconventional funds, in derivative markets.

For example, the US Securities and Exchange Commission in its public statement on pro-active regulation of derivatives issued on December 11, 2015, stated that “retail investors might find it challenging and difficult to comprehend and appropriately weigh the trade-offs posed by sophisticated and complex investment strategies”. The South Korean market regulator, Financial ...

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First Published: Sun, August 19 2018. 23:47 IST