The National Stock Exchange has advised investors to refrain from dealing in unregulated products such as 'Contracts for Difference' and 'Binary Options' offered by unregulated online trading platforms
In a statement, the exchange said that it has noticed some unregulated platforms and websites offering trading in certain unregulated derivative products called 'Contracts for Difference' (CFD) and Binary Options.
It noted that investors falling prey to the promises of exorbitant returns by these websites and platforms may eventually lose money heavily.
"Hence, Investors are advised to refrain from dealing/investing in unregulated products such as Contracts for Difference (CFDs) / Binary Options offered by such unregulated Internet-based trading platforms," it said.
A contract for differences (CFD) is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade prices are cash-settled. There is no delivery of physical goods or securities with CFDs.
A binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise above or fall below a specified amount.