Forex Regulators, Forex terminology

No overarching global agency is responsible for regulating the activity of FX markets. Regulation is left up to each country. Some countries take a hands-off approach to regulations. Others, like the USA and UK, have jumped in with both feet.

SFBC

SFBC is The Swiss Federal Banking Commission..

IDAC

IDAC is The Investment Dealers Association of Canada.

SFC

SFC is The Securities and Futures Commission.

FSA

FSA is The Financial Service Authority.

ASIC

ASIC This is the Australian Securities and Investment Commission.

CFTC and NFA

In USA, the Federal Reserve Bank monitors the banking system. CFTC (The Commodity Futures Trading Commission) has jurisdiction over futures and, recently, the FX markets.

The government agency CFTC monitors NFA (the National Futures Association’s) activities. The CFTC has limited regulatory authority over retail over-the-counter (OTC) Forex markets in the U.S. But although no single entity in the U.S. has direct regulatory oversight in the Forex market, the CFTC has effectively begun to take on that role.

CEA is (The Commodity Exchange Act) gave the CFTC the authority to regulate the sale of OTC Forex futures and options to retail clients only if the counterparty is a regulated entity. Regulated entities include banks, financial institutions, brokerdealers, and FCMs. By limiting the parties regulated entities can interact with, the CFTC has exerted some level of control. The CFTC has the authority to shut down unregulated Forex entities— specifically, FCMs. "Also, the CEA has a provision for any violation regarding antifraud and antimanipulation connected with OTC FX transactions in the retail market."

In spite of the reputation that markets dislike regulation, this has not been the case with Forex. Most Forex firms have embraced the new regulatory authority because it gives them legitimacy and helps weed out fraudulent players in the Forex markets.

NFA

Since the CFTC is a government agency, it doesn't issue actual rules for FX transactions. It gave that right to the NFA. The NFA is a USA.-based, industry-wide, self-regulating organization. NFA was formed to provide regulatory programs, oversight, and market integrity primarily to the futures market but has now entered Forex trading world as well. Basically the NFA makes the rules that govern the Forex market—but remember, rules are not laws.

And now,today, anyone who participates in the Forex markets should deal only with firms that have some level of NFA designation. Despite of the NFA has done an impressive job of convincing a majority of the industry to register with the organization, not all firms are members. Technically, these firms are unregulated, so I advise you to avoid them. Determining whether a firm complies with the NFA should be an elemental part of your background research.