Key stock market indices on Monday issued advisories against trading in unregulated derivative products.
Accordingly, the two key exchanges – BSE and 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/platforms may eventually lose money heavily,” the 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.