NSE, BSE caution against unregulated derivatives trading

Key domestic stock exchanges on Monday advised against trading in unregulated derivative products.
Both the BSE and the NSE said they have noticed unregulated platforms offering trading in certain products called 'Contracts for Difference' (CFD) or 'Binary Options'.

"Investors falling prey to the promises of high or exorbitant returns by these websites or platforms may eventually lose money heavily," their advisory said.

"Hence, investors are advised to refrain from dealing or investing in unregulated products such as CFDs or 'Binary Options' offered by such unregulated internet-based trading platforms."

In this type of trading mechanism, no physical good or securities are delivered as the day's complete transaction is settled in cash and it depends on certain conditions.

"The two exchanges - NSE and BSE have warned of some unregulated platforms and websites offering trading in certain unregulated derivative products called 'Contracts for Difference' (CFD) or 'Binary Options'," HDFC Securities' Head of Retail Research Deepak Jasani said.

"These give promises of high or exorbitant returns. Trading on such websites or platforms is risky as they are largely unregulated, and may not be a SEBI registered entity."-IANS