NFA Regulated Brokers


NFA stands for the National Futures Association, one of the agencies that oversee the futures trading industry in the US. Specifically, the scope of NFA supervision includes retail and OTC (Over-the-Counter) futures trading. Everyone who does business with the public on US futures exchanges with more than 4,200 companies and 55,000 partners must comply with the same high standard of business professional ethics.

NFA is an agency that operates under the supervision of the Commodity Futures Trading Commission (CFTC), the government agency responsible for regulating the US futures industry. CFTC was formed in 1974 to regulate the futures and options markets. 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.

To become an NFA-regulated forex broker, a company must meet the strict requirements, both financially and in customer service. The initial capital for a brokerage company that wants to be regulated at NFA costs 20 Million USD. It is intended that brokers can anticipate the risks of market volatility and massive withdrawal requests. Retail forex brokers are also forbidden to accept deposits from credit cards.

Here is a list of NFA regulated brokers:

Broker Regulation Max Leverage Min Deposit General Rating
Forex.com
Australia
1999
CFTC/NFA 0339826
FCA (UK), 190864
FSA (Japan), 1539
IIROC, May 10, 2012
1:200 $250 Review
OANDA
British Virgin Islands
1995
CFTC/NFA, 0325821
FCA (UK) 54257
FSA (Japan), 1571
FSC (BVI), SIBA/L/20/1130
Kanto Local Finance Bureau (Japan), 2137
MFSA, 18.12.2020
1:50 $1 Review
Interactive Brokers
Australia
1977
ASIC 453554
Central Bank of Ireland, 23.12.2020
CFTC/NFA, 0258600
FCA (UK), 208159
Monetary Authority of Singapore, CMS100917
SEC (US), 8-47257
1:100 $10000 Review
IG
Australia
1974
CFTC/NFA, 0509630
FCA (UK), 195355
1:50 $1 Review
Ally Invest
United States
2009
CFTC/NFA, 0408077
1:50 $1 Review
FX Trading Pro
United States
2018
CFTC/NFA, 0509828
1:50 $20 Review
AMP Global
Cyprus
2018
BaFin 154811
CFTC/NFA, 0412490
CNMV (Spain), 4624
CONSOB (Italy), 4869
CySEC, 360/180
FCA (UK), 819311
1:50 $100 Review



Advantages and Disadvantages of Trading in NFA Regulated Brokers

NFA is a competent broker regulator, so NFA-regulated brokers have a good reputation in their class. Customer protection provided by NFA includes penalties for illegal activities, the obligation to apply segregated accounts, problem-solving, and transparency.

By accessing the BASIC (Background Affiliation Status Information Center), traders can find out the names of NFA-regulated brokers. Transparency is also demonstrated by the broker's obligation to report weekly transactions on the NFA. Annual audit reports are also required to ensure the company's financial health. Besides, NFA-regulated forex brokers have licensed staff and have undergone special training.

Aside from the many advantages above, NFA regulated brokers also have some disadvantages, especially in terms of trading conditions. The maximum allowable leverage is 1:50, hedging is unallowed, and there are FIFO regulations. Before registering with an NFA regulated broker, the client must fill out a series of questions that include the level of knowledge in the trading world, sources of funds, large income, etc.

US-regulated forex brokers usually implicitly or explicitly advise traders who are not located in the US to register through their entities in other regions, which means their trading accounts will not enter the US regulatory workspace. However, for many traders, even though they cannot register directly with the US-regulated forex brokerage entity, having a registered status at CFTC and NFA is usually considered sufficient as a guarantee that the broker is not a scam broker and runs his activities according to high standards.



FAQ

What does NFA regulated mean?

Being regulated by NFA (National Futures Association) means operating under the standards of a United States financial regulator. NFA is an agency that operates under the supervision of the CFTC, the government agency responsible for regulating the US futures industry.

To become an NFA-regulated forex broker, a company must meet a series of strict requirements. The initial capital for a brokerage company to be regulated under the NFA amounts up to 20 Million USD.


What are the NFA rules?

Although NFA regulated Forex brokers are known to provide the freedom of traders, brokers from the US have to conform to high standards of regulation meant to ensure the reduction in broker scams and financial malpractices:

  • NFA forex brokers are required by law to ensure the integrity of the financial markets by following safe and transparent market practices.
  • All advertising and promotional materials are required to represent real facts without any form of misrepresentation.
  • Brokers should maintain at least $20 million in operating capital.
  • Clients' funds should be held in segregated accounts.
  • NFA regulated companies should provide weekly financial statements to the NFA to ensure that all financials are in order.
  • In addition to the weekly financial statements, brokers should also submit yearly audit reports which will be published on the official NFA website.
  • It is mandatory to hire trained and knowledgeable staff. Even the customer support staff should have a fair amount of knowledge about the services and should be reliable in addressing their clients’ concerns.

What is the main purpose of NFA?

The NFA acts as an independent self-regulatory authority that watches over the regulation and supervision of all forex brokers in the United States. It is the sole authority responsible for the derivatives markets regulation and other related products such as ETFs, OTCs, and currencies.


What are the powers of NFA?

Only NFA Forex brokers are allowed to promote their services in the US. In other words, non-regulated companies are banned from entering the country to provide forex trading service.

In case of misbehavement from the broker part, NFA will dish out heavy penalties and sanctions. The agency is popular for its strict actions against broker scams as well as forex brokers that have a history of client manipulation.

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.



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