Bankman-Fried '100%' supports knowledge testing for retail derivatives traders
The founder of FTX said a knowledge test for derivative retail clients "could make sense", but that it does not need to be crypto-specific.
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Founder and CEO of cryptocurrency exchange FTX Sam Bankman-Fried backed the idea of knowledge testing and disclosures to protect retail investors, but said it shouldn't just be crypto-specific.
Bankman-Fried tweeted his thoughts in response to an idea floated by Commodities Future Trading Commission (CFTC) Commissioner Christy Goldsmith Romero on Oct. 15, stating that creating a class of "commodity investors retail in households" for derivatives trading could provide greater consumer protection.
Romero said that because of crypto, more and more retail investors are entering the derivatives markets and called on the CFTC to separate these investors from professionals and high net worth individuals and to have " information written in a way that ordinary people understand or could be used when evaluating the rules on the use of leverage.”
Derivative trading involves speculating on the future price of an asset, such as stocks, commodities, fiat currency, or cryptocurrency, by buying and selling derivative contracts, which can involve leverage.
FTX Founder Says He “100%” Agrees with Mandatory Disclosure and Knowledge Testing of All Futures Commission Merchants (FCMs) and Designated Contract Markets (DCMs) who face retail traders, adding that it "might make sense".
He added, however, that it didn't "necessarily make sense" for disclosures and testing to be specific to cryptocurrencies, suggesting that they should apply to all derivatives.
DCMs are derivatives exchanges regulated by the CFTC on which products such as options or futures are offered and which are only accessible through an FCM, which accepts or solicits clients of buy and sell orders on futures contracts or futures options contracts.
Bankman-Fried's comments come as FTX.US, the US arm of FTX,...
The founder of FTX said a knowledge test for derivative retail clients "could make sense", but that it does not need to be crypto-specific.
New
Founder and CEO of cryptocurrency exchange FTX Sam Bankman-Fried backed the idea of knowledge testing and disclosures to protect retail investors, but said it shouldn't just be crypto-specific.
Bankman-Fried tweeted his thoughts in response to an idea floated by Commodities Future Trading Commission (CFTC) Commissioner Christy Goldsmith Romero on Oct. 15, stating that creating a class of "commodity investors retail in households" for derivatives trading could provide greater consumer protection.
Romero said that because of crypto, more and more retail investors are entering the derivatives markets and called on the CFTC to separate these investors from professionals and high net worth individuals and to have " information written in a way that ordinary people understand or could be used when evaluating the rules on the use of leverage.”
Derivative trading involves speculating on the future price of an asset, such as stocks, commodities, fiat currency, or cryptocurrency, by buying and selling derivative contracts, which can involve leverage.
FTX Founder Says He “100%” Agrees with Mandatory Disclosure and Knowledge Testing of All Futures Commission Merchants (FCMs) and Designated Contract Markets (DCMs) who face retail traders, adding that it "might make sense".
He added, however, that it didn't "necessarily make sense" for disclosures and testing to be specific to cryptocurrencies, suggesting that they should apply to all derivatives.
DCMs are derivatives exchanges regulated by the CFTC on which products such as options or futures are offered and which are only accessible through an FCM, which accepts or solicits clients of buy and sell orders on futures contracts or futures options contracts.
Bankman-Fried's comments come as FTX.US, the US arm of FTX,...
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