Regulator NFA


NFA – National Futures Association in the USA. Was established in 1976 and currently is one of the best regulators in the world (company is trusted like the British FCA)

Initially the organization was established as a self-sufficient structure to protect the rights of investors and financial institutions in the futures market of the United States. Later, the regulator has become a kind of an arbitration organization, which monitors compliance with the rights of ethics and morals among all participants in the financial markets, checks rules on the exchanges, monitors financial reliability. Controller function is very similar to the tasks accomplished by the financial regulators of the same level.

The organization is non-governmental, it has a developed structure of offices throughout the country.

Ways NFA deals with broker fraud:

  • complete (total, absolute) verification of brokers who decided to try their hand at the futures market of the country. Absolutely everything gets under the check: from financial statements (which can be seen on the organization’s website), ending with the origin of the capital of the broker and its organizational structure. Financial audit may last for several months, but the company will not be granted access to the foreign exchange and stock markets, until a full inspection;
  • the power of the regulator is to limit part of the rights of a broker when working on any futures exchange in the USA;
  • NFA cooperates closely not only with the CFTC, but also with the FBI;
  • or the slightest violation, the regulator can punish as a warning letter and also fines up to 250 thousand dollars, or revoke the license;
  • the regulator monitors, how the brokers inform their clients about the risks, constantly controls the level of broker company’s funds, monitors the ethics of the advertisement.

General goals are quite logical and obvious. Interesting methods, which confirm the reputation of the regulator. Here are some examples::

  • since 1993, the regulator fully controls the advertisement environment, that the brokers use. Before getting on TV, broadcasts, all advertising materials are agreed with the regulator, which inspects the accuracy of the information;
  • since the same year all the brokers are required to keep the records of conversations with clients and correspondence;
  • since NFA license was extended for internet-brokers of financial market and stock-exchanges, that has led to a significant increase in the level of consumer trust in Internet companies, offering services in exchange platforms of the USA;
  • since 2008 NFA restricted brokers on futures and Forex markets insurance transactions, hedge. One of the new rules states that the Forex broker has no right to open offsetting transactions. Payment of such orders is carried out according to the FIFO principle (first order open – the first order is closed).

All financial institutions licensed by the NFA are required to conduct activities for the annual performance review of their employees to improve their skills.

There are several interesting examples where NFA has shown its strength. In 2010 a fine of 459 thousand dollars got quite a famous broker in the USA. Among the claims there was also the adding of a plugin to MetaTrader platform that increased the re-quotes and contributed to slippage rates (techniques of Forex-kitchens). The second example is a fine of 200 thousand dollars to a subsidiary of a large Russian broker and compensation to customers. The penalty was assigned during the investigation, which showed that the broker  illegally cancelled successful transaction of the client.

There are also examples that NFA are not always on the side of customers. But, whatever it was, the big companies are not afraid to obtain a license for such a serious and fair broker, and this is a guarantee that the broker is trustworthy.

Official site of NFA:

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