CFTC Regulated Forex Brokers

CFTC Regulated Forex Brokers

cftcThe U.S. Commodity Futures Trading Commission (CFTC) is the regulatory organization which was a product of the same law that setup the official regulatory agency in the US, the U.S. Commodity Futures Trading Commission (CFTC). The CFTC has been in operation for a very long time, and makes use of laws that date to 1936 when the Commodities Exchange Act was formulated.

The CFTC’s regulatory purview covers not just the forex market, but all the financial markets in the US and the brokers that do business in these markets.  The Commodities and Futures Trading Commission (CFTC) has the power to investigate and enforce the rules and regulations regarding brokerage business in the US, and also to prosecute offenders. As such, the CFTC mandates that all forex brokers operating the US must be registered with it and be regulated, thus bringing US Forex Brokers and Binary Options brokers  under the regulatory purview of the CFTC.

CFTC Forex Brokers 2017:

Here is a list of US-friendly CFTC regulated forex brokers for you to choose from. For more information please click on the review link below.

Broker Info Bonus US Traders Open Account
IBFX Spread: 2 pips
Leverage: 50:1
Minimum Deposit: $2,000
Demo Account: No
USA AllowedVisit BrokerRead Review
FXCM (Forex Capital Markets) Spread: 1 Pip
Leverage: 1:200
Minimum Deposit: $50
Demo Account: No
NA USA AllowedVisit BrokerRead Review
Interactive Brokers Spread: 0.2 pips
Leverage:
Minimum Deposit: $10,000
Demo Account: No
No Bonus Available. USA AllowedVisit BrokerRead Review
Forex.com Spread: 1-2 Pips
Leverage: 50:1
Minimum Deposit: $2,500
Demo Account: Open
Receive a Free Trading eBook and $50k Demo Account! USA AllowedVisit BrokerRead Review
MBTrading Spread: 0.1 pip
Leverage:
Minimum Deposit: $400
Demo Account: No
No bonus available USA AllowedVisit BrokerRead Review

 

Guidelines for CFTC Regulated Brokers

What does it take to become a CFTC regulated forex broker? Some of the revised rules for CFTC regulated brokers come from the provisions a 2008 law known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under this law, CFTC was empowered to provide revised rules which all CFTC regulated brokers operate so as to protect the investing public.

CFTC regulated brokers must:

a)    Be registered and be in good standing with the CFTC. A CFTC regulated broker must also state its CFTC registration number on their website.

b)    Proper recordkeeping, financial reporting and disclosure must be maintained and all necessary information provided to the CFTC on a regular basis. Such information will also include the extent of segregation of the funds of traders from that of the broker.

c)     All CFTC regulated brokers must be registered either as futures commission merchants (FCMs) or as retail foreign exchange dealers (RFEDs). This registration will also extend to all introducing brokers who claim to represent a brokerage brand that is CFTC regulated.

d)    Minimum Capital: Retail forex exchange dealers (RFEDs or forex brokers) must maintain a minimum net capital of $20 million plus 5 percent of the amount, if liabilities accruable to retail forex customers exceed $10 million.

e)    The FIFO Rule: The FIFO (first in, first out) rule which mandates traders to liquidate the oldest of multiple open positions on one currency pair when such trades are being closed, must be applied by CFTC regulated brokers.

f)     Hedging of forex trades is not permitted by the CFTC, and all CFTC regulated brokers are required to comply.

Assessing the Standing of a CFTC Regulated Broker

The CFTC maintains an education centre which educates members of the investing public on how to check the status of a CFTC regulated broker. You can also check a broker’s disciplinary history, as well as file complaints if you believe that you have been on the receiving end of a raw deal from a CFTC regulated broker.

It is very important to know all these facts so that you will prevent a situation where a broker tempts you into putting in money in their system, claiming to be a CFTC regulated broker. A situation like this arose in the binary options market when a broker from an unregulated jurisdiction in Europe claimed to have an office in the US, and put out sales pitches that insinuated that it was regulated in the US, only for the CFTC to put out a disclaimer that this broker was not a CFTC regulated broker.

The following are methods of assessing the standing of any broker that claims to be a CFTC regulated broker:

a)    You can get the information on the list of CFTC regulated brokers from the CFTC site directly. Else you can write an email to the CFTC and they will get back to you.

b)    You can have an online chat with the customer service desk of such a broker. The snapshot below shows an interesting conversation:

cftc brokers

You can directly challenge the customer service representative to provide their CFTC license number. Of course if the broker is not a CFTC regulated broker, you are likely to get the stuttering response provided.

c)     Better still, you can take a look at the comparison table that has been provided on the CFTC regulated brokers with which you can do business. This table is compiled with the latest information and will ensure that you do not put your money in the hands of any broker with a shady regulatory status.

Leave a Reply