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It's not an insurance policy because you don't have to own the asset you're "insuring" (you can do the equivalent of taking out fire insurance on your neighbour's house for three times its value), and the "insurer" who sells it does not set aside regulatory capital for it.

It works like a bucket shop, in that you are placing side bets on exchange transactions. Bucket shops used to be illegal, for very good reason. Then the Commodity Futures Modernization(sic) Act happened.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 12th, 2012 at 03:37:16 AM EST
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