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The NFA (National Futures Association) is the organization that regulates the United States Futures industry. The NFA's goal is to provide services and introduce necessary regulations in order to guarantee the integrity of the futures industry.The NFA is also responsible for protecting investors/traders who participate in the market. The CFTC (Commodity Futures Trading Commission) is also responsible for regulating the futures industry and oversees the activities of the NFA. The NFA also provides regulation to several brokerage firms.
When trading with an NFA broker, this is the type of security offered to you as a trader.
- All brokers that are regulated by the NFA follow all the strict guidelines and operational procedures created by the NFA.This greatly increases the level of security a trader enjoys in relation to his/her assets.
- Legit business is guaranteed and backed up by the brokers credentials - all NFA brokers are companies that have become members of the NFA
- An NFA broker is prohibited from using an individual traders capital for their own operational purposes. Any positions a trader enters has to be backed up with the companies own capital or carry them to the Interbank market. This means that all NFA brokers are large companies with sufficient capital and valuable assets.The minimum an NFA broker is required to posses is $15,000,000 dollars in order to back up the positions of all of their clients. This amount will be $30,000,000 dollars as of May 2009.
- All account balances of any NFA registered Forex broker are reported to the NFA at the end of each week. On top of this, there are rigorous yearly audits that NFA brokers must submit to.
- All NFA registered Forex brokers must employ specially trained and licensed workers.
There are many benefits to choosing an NFA regulated broker over a broker who is not regulated. When comparing the two, the choice is quite obvious!
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