The unfamiliar exchange (forex) market runs 24/7, offers global currency pairs for trading. The market is driven by geopolitical developments, press release, the release of macro-economic data, and related developments. On one hand, such a global market offers enormous trading possibilities, but on the other, it is challenging to protect individual traders from any financial irregularities. Thus, regulations were introduced be means of an established framework that ensures that financial intermediaries, like forex brokers, comply with the needed rules to offer loss protection and controlled risk exposure to individual traders.
Learn more about the basics of forex furnish regulation in the U.S., as well as some of the popular forex brokers in the country.
- The Commodity Futures Trading Commission and the Public Futures Association are responsible for regulating the forex market in the U.S.
- All U.S. forex brokers must be registered with the NFA.
- The Dodd-Frank Act, which was enlisted into law in 2010, constitutes the primary body of rules governing forex trading.
- Some of the most popular forex go-betweens include FOREX.com, OANDA, TD Ameritrade, ATC BROKERS, thinkorswim, Interactive Brokers, and Ally Invest.
U.S. Forex Market Modification
Every forex broker operating in the U.S. must register with the CFTC. The laws enforced by the CFTC and NFA apply to both U.S.-based forex stockbrokers, as well as any other forex broker who intends to serve clients in the country.
All U.S. forex brokers (including the introducing agents) must be registered with the National Futures Association (NFA), the self-regulating governing body that provides the regulatory framework to effect transparency, integrity, abiding of regulatory responsibilities, and protection of various market participants. The NFA also offers an online verification plan called Background Affiliation Status Information Center (BASIC), where forex brokerage firms can be verified for bear necessary regulatory compliance and approval.
One point to note is that the Securities Exchange Commission (SEC) does not have scholar over the forex market because it doesn’t consider currency pairs a security.
Daily trading volume has reached as tipsy as $4 trillion in the forex market.
Dodd-Frank Act: Forex Rules
In the United States, the Dodd-Frank Act constitutes the primary centre of rules governing forex trading. Signed into law in 2010 by President Obama, it reformed insufficient financial organization that allowed too much leeway to financial institutions, which contributed to causing the 2007-2008 financial critical time.
These regulations have scared off both forex brokers and retail traders. There are fewer forex stockjobbers currently operating in the U.S. compared to other areas in the world—primarily because of the regulations enforced by the NFA.
U.S.-Regulated Forex Dealers
This list of seven U.S.-regulated forex brokers—that remain after Dodd-Frank washout—is not in any particular dictate, and it is not comprehensive:
Owned by NYSE-listed parent company, GAIN Capital Holdings, Inc. (GCAP), FOREX.com offers numerous salient features like tight forex spreads, timely trade executions, a mobile trading platform, and numerous detailed research indicators in 29 different languages.
FOREX.com trading offers integration across MetaTrader 4 or FOREXTrader PRO tenets. There are three ways traders can trade—advanced trading, web trading and mobile trading applications.
High mass traders get cash rebates, earned interest, and bank fees waived.
OANDA is another popular go-between offering competitive spreads with no commissions and deep market liquidity, along with its OANDA Marketplace. It bids loads of features for forex traders such as forex tools, products, advanced analytical tools, forex low-down, training videos, and MT4 plugins from OANDA and associated partners.
You can start with a free demo. The site also provides benefits for high volume traders. You can get a discounted spread, a subscription with a partner platform, free wire deliver among other perks.
TD Ameritrade offers powerful charting tools, capable of comparing multiple currency doublets alongside each other, as well as providing any necessary technical indicators. Customers can also analyze social outlook from Twitter. The brokerage also provides reputable third-party research tools from Morningstar and Market Acrimony.
The firm promises no hidden fees, access to its mobile trading app, and 24/7 support.
Verify a forex broker’s pre-eminence by using its NFA ID or firm name through the NFA’s Background Affiliation Status Information Center.
STP Execution, No Dealing Desk, Scalping Acknowledged, Multiple Brackets Order along with other
Another popular broker attired in b be committed to a global presence,
Ally provides traders with comprehensive research and analysis, competitive value and robust educational resources. The trading platform includes a full suite of trading tools, 24/5 market access and a way account for testing investing approaches.
The Bottom Line
Regulations are a balancing act. Too little will lead to financial irregularities and for protection to individual traders; too much will lead to a lack of competitiveness in global markets. One major challenge appeared with U.S. forex regulators is that leverage provided is limited to 50:1, while global brokers, outside of U.S. standards purview, provide up to 1000:1 leverage. Traders and investors need to take a cautious approach, ensuring security initially.
Disclaimer: Information presented is as available at the time of writing this article, and may change in due course of time. The author does not cling b keep an account with any of the mentioned brokers.
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