FTX’s Bankman-Fried assents knowledge tests for derivatives retail investors

The founder and CEO of cryptocurrency exchange FTX, Sam Bankman-Fried, has expressed support for knowledge tests and disclosures to protect retail investors.

Yet, Bankman-Fried said the test shouldn’t just be crypto-specific.

The idea was floated by the United States Commodities Future Trading Commission (CFTC) commissioner Christy Goldsmith Romero on Oct. 15.

Derivatives trading is when traders speculate on the future price of an asset, such as stock, commodities, fiat currency, or cryptocurrency through the buying and selling of derivative contracts, which can involve leverage. 

Bankman-Fried tweeted that he “100%” agrees with mandating disclosures and knowledge tests for all Future Commissions Merchants (FCMs) and Designated Contract Markets (DCMs) who face retail traders.

DCMs are CFTC-regulated derivate exchanges on which products such as options or futures are offered which can only be accessed through an FCM, which accepts or solicits buy and sell orders on futures or futures options contracts from customers.

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