What are the regulations governing derivatives market makers?

In California, derivatives market makers are required to comply with the Alternative Investment Law. This law seeks to protect the public from fraud, price manipulation, and other abuses that can occur in the derivatives market. The Alternative Investment Law requires market makers to register and comply with all applicable regulations. Market makers must go through extra steps to ensure that investors are not taken advantage of. This includes providing investors with disclosure documents that detail the terms of the transaction and any potential risks associated with it. Market makers must also have sufficient capital, have a compliance and risk management program in place, and establish procedures to monitor and enforce all applicable regulations. Additional regulations apply to market makers in California who trade in certain types of derivatives, such as options, futures, and swap contracts. These market makers are required to register with the Commodity Futures Trading Commission before they can conduct business. This registration process involves completing a registration application and providing certain financial information. Overall, the Alternative Investment Law provides California market makers with clear guidance and requirements. By following these rules and regulations, market makers can help ensure that investors are protected from fraud and other abuses that can occur in the derivatives market.

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What are the regulations governing derivatives market makers?

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