NFA Forex Brokers
Introduction to NFA Regulation
Forex is an ancient industry with a lot of instruments. But at the end of twentieth century, this industry became stronger via internet. And day after day internet based investment industry become more independent, diversified, faster which in turn attract millions of people around the world to start their trading career online.
But there is a proverb that money create greed and greed brings devil. And the same thing happened to the Forex industry. A group of frauds started abusive practice with the clients. These frauds were both from broker & retailer ends & these fraudulent activities include scamming, manipulation, cheating with fund and so on.As a result, from the beginning of this century the stability of online money making industry became vulnerable & it causes a big global financial crisis on 2007 – 2008 including the financial market of United States of America. And that’s why shortly after the crisis, US finance experts decided to form an independent, powerful and transparent regulatory body which will ensure a strict supervision on Forex market.
And then, National Futures Association or NFA began their regulation on Forex brokers from 2008 which covers ETF’s, OTC’s, and currencies. Although this organization has been working in the market since 1982, they started regulating FX industry since 2008. And right now, there are almost 60,000 NFA regulated brokers brokers where 4,200 are firms and 55,000 are associates under NFA regulation. And by this huge popularity, it is now one of the most important and powerful regulator of whole US market.
If you’ve a good or even basic knowledge on FX, then you should know that there is a difference between the US financial market & the financial market around the world. It increased the responsibility and scope of work of NFA. However, we’ll focus on the following responsibilities:
- The core responsibility of NFA is not only to protect the rights of investors, but also to protect the rights of all financial entities including brokers, market makers & investment firm service providers etc. Therefore, they check each and every broker’s status individually and set rules on them before giving them the licenses to use the logo of NFA.
- NFA regulated forex brokers need to remain under constant supervision and they are bound to give all financial reports to the authority if necessary.
- NFA always works for maintaining the integrity of the market and investigating the violation of their rules and guidelines. And if any firm or individual are somehow convicted the punishment varied from warning to cancelation of the license.
- Another awesome responsibility is the education section. Although NFA generate a big amount from the fines imposed on broker, they try to educate the brokers so that they can show fair play in market and didn’t need to pay any fines.
- However, NFA’s focus is not only the broker and investment services firms but also they supervise the individuals and investors so that they can’t make any mess in market. And in their website there is a big section to learn trading for retailers. And if you are a retail trader, you can also subscribe their regular newsletter, announces and other learning materials through mail.
How does the NFA fight fraud and abuse and protects you
May be till now, you understood a bit of what is NFA regulation and the it’s range of responsibilities. And here is some more precise ways or reasons of how NFA fight frauds and protects you:
- NFA has the authority of instant crack down its members if they found and complain of cheating to retailers. It works very closely both CFTC & FBI. So, there is no way for a broker to escape from them.
- Sometimes, investors fall in danger due to their lack of knowledge or wrong attempts. In that case regulators have nothing to do. But NFA keeps this factor in mind and published a learning section for the money makers so that they can learn more about trading and can remain free of danger in those cases by themselves.
- Your investment will always have kept under individual account and the broker is not allowed to use it for their personal purpose. Even though, if they make any mistake or problem with your fund, they are obliged to compensate it.
- NFA collects everyday trading report from the brokers and analyse them with market report. As a result, frauds are automatically filtered out and the trade becomes transparent for both brokers and retailers.
These are the main point of your protection. Additionally, NFA has a research section which analyses the future market and find out the rule those are important and beneficial for the retailers.
Tips & Guidelines for NFA Regulated Brokers
To be a NFA regulated broker, every broker can check the following requirements as their guideline or tips for the journey to financial market:
- A broker must need 20 million USD operating capital to be a NFA regulated broker.
- The fund of a broker must be kept individually from the client’s investment. If somehow a broker makes mess between their own fund and client’s investment, NFA regulation will crack them down.
- NFA takes their guidelines very seriously. So, a single violation of guideline can fetch a broker to a serious problem.
- Every broker has to report NFA regularly and irregular brokers are brought under their custody.
- Finally, don’t take any attempts which hamper the integrity of market.
Verifying the Authenticity of NFA Regulated Forex Brokers
There is a list of NFA authorized brokers in their websites. You can easily check there by yourself. Besides, you can also subscribe Forex related forums to know the latest NFA updates or to know which will be most appropriate brokers among the brokers of this list.
NFA Regulation & Forex Brokers in USA
Right now, almost 60,000 firms are associated with NFA because NFA regulation also focuses the brokers interest. And hence, the brokers of USA who want to make money with good practice and manner always choose NFA as their regulator.
Frequently Asked Questions (FAQ)
What is NFA regulation?
NFA or National Futures Association is one of the top independent regulatory board of USA. And by means of a set of rules, it regulates the brokers around the US financial market. And this sets of rules and protocols are termed as NFA regulation.
How Is NFA Beneficial to A Consumer?
NFA regulation protects the rights of consumers and push the brokers to practice an ethical and integral trading practice. And these factors made the market friendly, safe and beneficial for a consumer.
Are NFA Regulated Brokers Reliable?
Yes, definitely. Because to be a NFA regulated broker, a broker has to pass through a consecutive step those proves their reliability, integrity and commitment.
So, I have A Complaint against an NFA Forex Broker, What Should I Do?
There is a section for the consumers in NFA official site. You can file your complains there. And for your kind information, NFA takes these complains very seriously. So, if you’ve one, don’t become hesitate to complain.
What does mean “for NFA REGULATED Broker” for a retail Forex trader?
For a retail trader NFA regulated broker means:
- It has a strong operating capital, transparent financial record and goodwill in market.
- The broker is always under the supervision of USA’s top regulators.
- The funds are safe under the financial act and there is a good compensation scheme for the retailers.
If a retailer falls under any danger or odd situation, NFA will fight on their side.