What regulations govern the trading of options and futures?

In California, the trading of options and futures is regulated by the Alternative Investment Law. This law is designed to help protect investors while they trade these types of financial instruments. The law requires that all brokers, dealers, and third-party advisors who offer options and futures trading services register with the state and follow certain rules. The law states that brokers and dealers must provide investors with proper disclosure documents, including a description of the trade, a risk disclosure statement, a disclosure about fees and commissions, and a description of the financial instruments involved in the transaction. Third-party advisors must pass certain qualification tests and provide educational materials to the investors. The California Alternative Investment Law also requires that brokers and dealers maintain a certain net capital, file periodic financial statements, and abide by state anti-fraud regulations. It also sets limits on the amount of leverage a broker can lend to a client and requires that brokers and dealers only trade in futures and options approved by the California Department of Corporations. Finally, the law requires that all brokers and dealers provide customers with prompt delivery of cash or securities and report any transactions to the state. All brokers and dealers must also supervise and monitor accounts to ensure that customers do not exceed their trading limits and comply with all other applicable laws and regulations.

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What regulations govern the trading of options and futures?

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