Regulatory Agencies

Commodities Futures Trade Commission (CFTC)

In the United States, we like to call the CFTC... Big Brother.
This agency was developed in 1974 to protect individuals (average cool dudes like you and the FX-Men) in futures and commodities trading. Since futures include the currency market, the CFTC "naturally" protects forex traders as well.

From 1974 to the present, the CFTC has undergone many changes in hopes of improving trading conditions and creating a level playing field for everyone. The CFTC is also responsible for publishing the Commitments of Traders Report (COT) every Tuesday.

Five commissioners appointed by the President, the offices of the Chairman, and the agency's operating units make up the Commission. The Commission has 3 offices along with HQ located in Washington, D.C. - Chicago, Kansas City, New York.

Futures exchanges are also located in these cities. So if you have a problem with them, you can make your way over there and bust out your uzis and spray them. Just kidding. Don't do that - they're the good guys. They're here to help you.

Imagine if there was no organization out there to protect you. There would be a lot more scammers, and brokers would cheat their clients in a heartbeat. The CFTC provides order in a market that would otherwise be chaotic.

The mission of the CFTC is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options. In the "unregulated" forex market, this regulatory agency will help you determine if a forex company is reliable or trustworthy.
The CFTC's Website can be found here:

http://www.cftc.gov/index.htm
If you need to file a complaint or report suspicious activities:
http://www.cftc.gov/customerprotection/redressandreparations/index.htm

National Futures Association (NFA)

The NFA is an industry-wide self-propelling organization created in 1982 that regulates the futures market in the United States. By self-propelling, we mean that the NFA collects dues in order to sustain itself without having to rely on taxpayers' dollars.

If the CFTC is Big Brother, then we like to call the NFA....Little Big Brother. NFA's activities are overseen by the Commodity Futures Trading Commission (CFTC), the government agency responsible for regulating the U.S. futures industry.

The NFA's mission is to:

• Ensure futures industry integrity
• Protect market participants
• Enforce NFA members to meet their regulatory responsibilities

Virtually every firm or individual who conducts futures or options on futures business with the public must be registered with the CFTC and a Member of NFA. NFA performs the registration process on behalf of the CFTC.

NFA Member categories include: Commodity Trading Advisors (CTA), Commodity Pool Operators (CPO), Futures Commission Merchants (FCM) and Introducing Brokers (IB).

In order to conduct any business in the futures market, you would have to be a member of the NFA. To be a member of the NFA, an organization would have to pass a screening done by the NFA and comply with NFA standards and regulations.

These rules and regulations provide market integrity and a level playing field for all, and not just for investors.
Over time, they have been making significant progress. In order to resolve futures-related issues, the NFA began an arbitration method in 1983. In 1991, a mediation program was developed as a faster way to resolve disputes.

In late 2001, the NFA started to accept claims online. Members could also start registering online in 2002.

In 2004, the NFA started to submit digital images of fingerprint cards to the FBI enabling quicker background checks and shorter registration times. What an active organization! This goes to show that they keep up with the times. Who knows, they might just make their own iPad app. Ha!

Along with the CFTC, the NFA provides investors and individuals with security and protection from fraud and scams.

The NFA's website can be found at http://www.nfa.futures.org/index.asp.

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