Is your forex broker recognized by the CFTC as a Forex Broker? For individual forex traders, i.e. you manage your own forex trading account, the CFTC (U.S. Commodity Future Trading Commission) regulatory agency recommends that you only trade through forex brokers registered as a Retail Foreign Exchange Dealer (RFED). Under this definition, those that are not registered as RFED with the National Futures Association (NFA) are not considered full forex broker. You can and should do your own research about your forex broker through NFA website's Background Affiliation Status Information Center to see if and how your forex broker registered themselves.
Last year (effective October, 2010), the CFTC announced a set of new regulations for any firm who wishes to operate as a forex broker. The CFTC says "These new regulations require entities that wish to participate in the forex market to register with the CFTC and abide by regulations intended to protect the public." In an effort to protect the public, the CFTC strongly recommends traders and investors to check a broker or firm's registration before investing or trading through that company. If the company is not registered, investors should not put money with that company.
Is your forex broker recognized by the CFTC as a Forex Broker? According to ForexBlog.org, only 12 of 28 registered forex firms (forex brokers) are registered as RFED:
On January 26, 2011, with new authority from the 2008 Farm Bill and Dodd-Frank Act to regulate foreign exchange dealers, the CFTC sued 14 Foreign Currency Firms that aren't registered as a RFED and some not even registered at all. The CFTC says, "In all but two of the complaints…a defendant acted as an RFED; that is, it offered to take or took the opposite side of a customer’s forex transaction without being registered. In the remaining two complaints, ZtradeFX LLC and FXPRICE, the CFTC alleges that the defendant solicited customers to place forex trades at an RFED without being registered as an Introducing Broker."
The following are forex brokers sued by the CFTC on January 26, 2011:
EuroForex Development LLC, a Delaware LLC;
FIG Solutions Limited, Inc., a Delaware corporation;
ForInvest, a Delaware corporation;
FXOpen Investments Inc., a foreign entity with various business operations located throughout the United States;
FXPRICE, a Delaware LLC;
GIGFX, L.L.C., a Delaware company;
InovaTrade, Inc., a company with purported offices in Florida;
InstaTrade Corporation d/b/a InstaForex, a British Virgin Islands company;
InvesttechFX Technologies, Inc., a Canadian corporation located in Toronto;
J&K Futures, Inc., a company with purported offices in California and New York;
Kingdom Forex Trading and Futures, Ltd., a Nevada company;
Prime Forex, LLC, a Delaware LLC;
Wall Street Brokers, LLC, a Delaware LLC; and
ZtradeFX LLC, a Connecticut LLC.
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