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Jane Street barred from Indian markets as regulator freezes $566M

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518 points bwfan123 | 5 comments | 06 Jul 25 14:03 UTC | HN request time: 0.282s | source
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MichaelNolan ◴[07 Jul 25 00:02 UTC] No.44485321[source]▶
Anyone have any recommendations for books/papers/articles (math heavy is fine) that give a good steel man argument for why options and derivatives are beneficial?

I can wrap my head around why/how options for physical commodities give price stability for sellers and buyers. But at first glance I struggle to see how derivatives are beneficial in the equity markets. The argument is that derivatives increase market efficiency (more accurate pricing) over what just a simple buy/sell market would give you right? But how valuable is this increased efficiency? Obviously is super valuable to the people who work in finance, but how valuable is it outside of that context?

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throwaway2037 ◴[07 Jul 25 01:25 UTC] No.44485809[source]▶
As a start, separate "derivatives" (a huge category of products) into two simpler categories: listed options and futures. For many underlyings, like interest rates or commodities, it is very difficult to trade the underlying directly, so you use derivs to trade them indirectly.

Related: My biggest concern: There should be more gatekeeping around allowing retail traders access to derivs markets due to the implied leverage in the contracts. That said I don't know a good way to gatekeep. How about an exam?

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1. 0xDEAFBEAD ◴[07 Jul 25 02:05 UTC] No.44486053[source]▶
>Related: My biggest concern: There should be more gatekeeping around allowing retail traders access to derivs markets due to the implied leverage in the contracts. That said I don't know a good way to gatekeep. How about an exam?

In the US, investors need approval to trade options. https://www.investor.gov/introduction-investing/general-reso...

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2. throwaway2037 ◴[07 Jul 25 04:01 UTC] No.44486634[source]▶
I have gotten approval in a few different jurisdictions for retail derivs trading. The barrier to entry is pathetically low in all cases. Literally: Tick a box to agree if you accept risk and are "qualified".
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3. 0xDEAFBEAD ◴[07 Jul 25 05:17 UTC] No.44486987[source]▶
Honestly I bet it still helps.
4. greyw ◴[07 Jul 25 05:21 UTC] No.44487011[source]▶
IBKR makes you pass a quiz before you can trade derivatives
5. cess11 ◴[07 Jul 25 05:29 UTC] No.44487056[source]▶
My broker presents a form with questions that I need to get right before they allow me to dabble in the leveraged and tricky instruments. Don't remember how many exactly, it's a combination of questions like 'can you lose all your invested money' and technical ones that reflect the type of instrument.

I assume it's a compliance requirement, they get a record of me having said the right things at one time and don't really know if I got someone else to tell me what to answer. Still, I think it's actually keeping some people out, judging from some forum threads where they try to get help to pass and seemingly fail even though others are telling them basically what to respond with.