List of Brokers with CFTC/NFA Regulation
The CFTC is an independent government agency responsible for oversight of futures and options market regulations in the US. They are also tasked with protecting consumers who trade in forex and commodities, and cryptocurrencies. On the other hand, NFA is a subsidiary of CTFC that regulates all brokers, futures traders, commodity pool operators, swap dealers, exchanges, commodity trading advisors, and retail foreign exchange dealers that transact in the futures market.
| Established | : | 1975 |
| Country | : | United States |
| Website | : | https://www.cftc.gov |
| Total Brokers | : | 8 |
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Advantages and Disadvantages of Trading in CFTC Regulated Brokers
CFTC has been known as one of the most respected forex broker regulators in the world. Strict registration requirements, data transparency, and thorough supervision are the quality assurance of CFTC regulated brokers. To be able to obtain CFTC regulations, forex brokers must have a business capital of at least 20,000 USD, be willing to audit regularly (daily, weekly, quarterly, annually), place customer funds in segregated accounts, and promote honestly.
On CFTC regulated broker promotion material, it is common if we find the words "Forex trading is a high-risk activity. (Numbers of) traders experience losses when trading on this broker". That is a requirement of the regulator. That way, prospective traders will be more aware of the risks of forex trading. On the other hand, the broker will make maximum efforts to provide education to traders so that their reputation is good. This policy is also useful to dismiss the notion that the broker earns income from the trader's losses.
The disadvantage of trading at a CFTC broker lies in its less flexible trading conditions and the limited promotion. Maximum allowed leverage is 1:50, hedging is not allowed and FIFO rules apply. CFTC also prohibits its brokers from accepting clients from outside the United States, so many CFTC regulated forex brokers have alternative regulations. Also, registering on CFTC regulated brokers requires complicated data and client examinations, compared to off-shore brokers that simpler and newbie-friendly. However, those steps needed to ensure the client's fund safety.
FAQ
What does CFTC regulated mean?
Being regulated by CFTC means operating under the standards of the United States financial regulator. To acquire a CFTC license, forex brokers must have a business capital of at least 20,000 USD, be willing to be audited regularly (daily, weekly, quarterly, annually), place customer funds in segregated accounts, and promote honestly.
What are the CFTC rules?
As one of the most respected forex broker regulators, CFTC enforces strict registration requirements, data transparency, and thorough supervision to its registered brokers.
Maximum allowed leverage is 1:50, hedging the same currency pairs at the same time is not allowed as the FIFO rule is in effect. CFTC prohibits its brokers to accept non-US clients, and registering with a CFTC regulated broker requires a series of complicated data and client examinations.
What is the main purpose of CFTC?
According to the Commodities Exchange Act, the CFTC is tasked with fostering open, transparent, competitive, and good markets, avoiding systemic risks and protecting market participants, clients, and their funds from fraud, manipulation, and other crime.
What are the powers of CFTC?
The form of punishments imposed on violators of the CFTC regulations is divided into several levels, ranging from fines, freezing of activities, to permanent termination.
If you are interested to open an account in one of the brokers in the list above, make sure to try the forex demo account before proceeding to register in the live account.
Additional FAQ
What are some brokers regulated by NFA and CFTC?
Usually, US brokers are regulated by both CFTC and NFA. Some notable examples of NFA and CFTC brokers are:
- TD Ameritrade: Regulated by NFA (license number: 0313199) and a member of CTFC.
- IG Broker: A member of the CTFC and regulated by NFA (license number 0509630).
- OANDA: OANDA is regulated by NFA (license number 0325821) and is a member of the CFTC.
- AMP Global: Regulated by NFA (license number: 0412490) and a member of CTFC.
- Interactive Brokers: Regulated by NFA (license number 0258600) and a member of CTFC.
Continue Reading at The Two Major US Regulatory Agencies You Should Know
What are NFA's primary tasks and responsibilities?
Its primary tasks and responsibilities include:
- Registration and Membership: Specific entities and individuals engaged in derivatives trading must undergo registration with the CFTC.
- Rulemaking: Self-regulation entails identifying industry best practices and implementing them as mandatory standards.
- Enforcement and Registration Actions: NFA takes disciplinary actions against Members when appropriate.
- Member Education & Resources: NFA offers various educational opportunities to assist its members.
- Arbitration: NFA provides a cost-effective and streamlined arbitration program.
- Investor Protection: NFA provides various resources to aid investors in conducting due diligence before making investment decisions.
- Outreach Programs: NFA provides training, as requested, to regulators, exchanges, and self-regulatory organizations from across the globe.
- Market Regulation: NFA delivers regulatory services to designated contract markets (DCM) and swaps execution facilities (SEF).
Continue Reading at The Two Major US Regulatory Agencies You Should Know
How much does it cost to get broker license in US?
The US trade market is strictly regulated by several different authorities. With a registered capital of USD250,000 and the brokerage license costs that possibly reach USD1,000,000, getting everything approved and signed off can take up to 1.5 years in total.
Continue Reading at Top Countries to Apply for Brokerage Licenses
If a broker is regulated by the CFTC and NFA, what does it mean?
Having these two characteristics means all US forex brokers operate under a very strict regulatory environment.
People even say that the environment is so harsh nowadays, that it becomes the main reason for the shutdown for over 90% of forex brokers who used to operate there before 2010.
Continue Reading at Comparing US and Offshore Forex Brokers
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