From a more pragmatic libertarian perspective, one might also worry about the welfare claims that a person who is ill-equipped to make speculative investments and gets wiped out will make on society. One must also consider debts that they will fail to pay if they are forced to declare bankruptcy (one reason why stock exchanges never let you fund your account from a credit card—unlike coinbase). State-managed bankruptcy and welfare may be seen by some libertarians as incursions on liberty but they are also mechanisms that enable a higher degree of risk-taking and potential innovation from the same class of people who are restricted from some risky sorts of investing. Once you make these provisions you have to manage the costs, but its not clear that a classical libertarian prescription of eliminating state-involvement in bankruptcy and welfare and opening up speculative investments to all would improve class mobility.
The test to become accredited demonstrates that a person has the capacity to handle a failed speculative investment and is less likely to need to socialize their losses (obviously bank bailouts are a counter-example to the point I am making here, but that's just how schizophrenic our regulatory environment is).
SEC regulations are there to protect investors. If the rules for trading my nn regulated securities were dropped, then there would be much less reason for securities to go through the registration process, undermine my the whole regulatory system, but ncreasing risk for everyone including the country. After all these rules came out of the aftermath of the Great Depression.
Think of it on the same way as retail goods quality control standards. If you buy goods in a store they must comply with strict safety and quality controls, but if you’re a business or dealer those rules don’t apply, for extample if you’re buying the goods to scrap them, or bring them up to standard and then sell on. Different rules apply to retail purchasers and trade purchasers.
I would say yes. Well, he should be able, if he wants, but is it good for him, really? For example, options trading is useful for hedging large positions in stocks, so you can pay small amount to, um, hedge against corrections in a bull market. By hedging correctly, you can make some money in during correction while avoiding fees associated with selling your sizeable position and buying it back.
But options trading without having large positions in stocks? It's not trading, it's lottery. 1% chance of making 10x return and 99% chance of losing the whole bet.
I don't mind, but let's not pretend that options trading is opportunity in itself. Having ability to trade large sums is opportunity, access to options market is not.
That's a pretty naive statement. Have you ever traded options before? Because it sounds like you haven't. Options like most other securities allow you to chose your risk, everything from lottery type bets to mostly sure deals.
The amount of knowledge needed is on a whole different level.
You are technically correct, but again, we are talking about retail broker targeted to millenial audience. I would be very surprised if 1% of it's audience knows what straddle or butterfly means.
Accredited investor status is a very non-libertarian idea. By forbidding a class of risks to the lower and middle classes, it excludes them from the corresponding class of rewards. When the lower/middle-class investor can only take a subset of the risks another investor can take, it means his money is worth less. The accredited status works as a gatekeeper against class mobility. In some ways it seems similar to disenfranchisement (“pass a test to vote,” “pass a test to take this risk”).