Given the risks associated with options trading, there are heightened obligations for brokers when approving options trading for retail customers.

And of note to me, many inexperienced investors – perhaps not well-positioned to jeopardize their savings – began options trading earlier this year. In a speech, she said: “While some options strategies can help hedge an investor’s portfolio against losses, other options strategies can be incredibly risky and expose an investor to sudden and severe losses. This follows comments by Securities and Exchange Commissioner Caroline Crenshaw that “it may be that the options account approval rules are due for a review”. Ī spokesperson for FINRA − the Financial Industry Regulatory Authority, Wall Street’s self-regulatory body − said that it plans to publish a request for comment in coming weeks to solicit feedback from market participants about trading in options, the WSJ reported.

If that were to happen, it could negatively impact the revenue of trading platforms including Robinhood (NASDAQ: HOOD), Schwab (NYSE: SCHW), SoFi (NASDAQ: SOFI), Interactive Brokers (NASDAQ: IBKR), E*Toro (NASDAQ: FTCV), and Morgan Stanley (NYSE: MS) owned E*Trade, as well as exchanges Cboe Global Markets (BATS: CBOE) and CME Group (NASDAQ: CME). Recent comments by FINRA and the SEC suggest that regulators may consider restricting the ability of brokerages to promote options trading to retail investors.

Option trading