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Brokers are required by law to "protect" traders from financially harming themselves by restricting the trades that can be made until the trader verifies that t
by tidepod12 6y ago
Brokers are required by law to "protect" traders from financially harming themselves by restricting the trades that can be made until the trader verifies that they know what they are doing. Some brokers will go as far as to personally call you up and give you an on-the-spot quiz about how options work before letting you trade them, for example.
Many brokers seem to have gotten very lax about this in recent years, and even Schwab/Ameritrade allowed me to trade options without verifying anything. My guess is that the recent Robinhhood/GME fiasco is going to see FINRA cracking down hard and reinstating some strict verification procedures.
- rrrrrrrrrrrryan 6y agoI was able to trade options with TradeKing in 2010 by just checking a box, claiming that I knew that I was doing. (I was still in college and did not know what I was doing, but fortunately only ended up losing a few hundred bucks.) This isn't new - it's how it's worked for a good long while.
- tidepod12 6y agoThe regulations, such as FINRA Rule 2111, were not in place until the early 2010s. FINRA/SEC implemented stricter requirements for the verification I mentioned in my first comment, but over the past ~5-7 years the brokerages have relaxed them. So yes, it is new relative to your experience in 2010.