Trade Share CFDs for your favourite companies and 50+ U.S. stocks. Click here.
Refer a friend
Image placeholder


Venturing into Forex for the first time?
Explore the basic concepts of buying and selling.

Venturing into Forex for the first time?
Explore the basic concepts of buying and selling.

How is Forex Regulated?

There are several Forex brokers in the Forex market, and amidst those thousands of Forex brokers, it can become nothing less than challenging for traders to find the best brokers.

Only about 5% of the Forex brokers work under regulatory authority, leaving firms to take advantage of their clients and engage in abusive behavior as there is no fear of any consequence. This also increases the chances of illegal activities or outright fraud.

That is why, if you are getting into Forex trading, it’s crucial to understand how is Forex regulated and then look for Forex brokers that follow all the necessary regulations

US Forex Regulatory Bodies

The Commodities Futures Trading Commission (CFTC) created a special task force that deals with the problems of stiff Forex regulations in 2008 to protect the FX traders.

The Commodity Exchange Act permits only regulated entities to act as Forex transactions counterparties with the US retail customers. It requires that all Forex dealers online be registered and meet the financial standards enforced by the National Futures Association (NFA) – the premier independent organization providing efficient and innovative regulatory programs, safeguarding the integrity of the derivatives Forex market.

These supervisory bodies regulate the foreign exchange market by setting standards that all brokers must follow under their jurisdiction. These standards involve being registered and licensed with the regulatory body, setting leverage limits, having minimum capital requirements, undergoing regular audits, communicating changes of services at all points in time to their clients, and a lot more.

The NFA provides a robust verification system called Background Affiliation Status Information Center (BASIC) that verifies US-based Forex brokerage firms' status. They use their NFA ID, fir name, individual name, or pool name for the same.

How do US Authorities Regulate Forex Brokerage Accounts

The activities and tasks performed by the NFA are:

Providing necessary licenses to eligible and reliable Forex brokers after a robust screening process involving due diligence.

Enforcing adherence to the mandatory capital requirements.

Combating fraud and illegal activities.

Imposing and executing detailed record-keeping and reporting regarding all Forex transactions.

Provisions of the US regulations

The US regulations protect small investors by defining customers as individuals with less than $10 million assets and including most small businesses. High net worth investors are generally not covered under standard regulated Forex accounts.

Leverage is limited to 50:1 on major currencies. This saves under-educated investors from taking unprecedented risks.

Available leverage for minor currencies is limited to 20:1.

The short Forex options need the notional transaction value amount plus the option premium as a security deposit.

The extended Forex options require the entire option premium as the security.

The first-in, first-out rule prevents an investor from holding simultaneous positions in the same Forex asset. This implies no possibility of hedging while trading Forex since any current trade position is squared off for the opposite position in the same currency pair.

Regulations one should withhold as an individual

Utmost care should be taken to verify the ownership, status, and location of each Forex trading firm, website, or application before one signs up for a trading account. Many websites claim low brokerage charges and impossibly high leverage, but these websites are not as legitimate as we think they are.

Not all websites are authorized and approved by the host country's authority, especially if they are operated overseas. This is why it is imperative for an individual to carefully study and examine Forex trading platforms before signing up with one, considering its diligence, transparency, and approvals from the necessary authorities.

A few Forex brokerage regulators around the world are

Australian Securities and Investments Commission (ASIC), Australia

Cyprus Securities and Exchange Commission (CySEC), Cyprus

Federal Financial Markets Services (FFMS), Russia

Financial Sector Conduct Authority (FSCA), South Africa

Swiss Federal Banking Commission (SFBC), Switzerland

Financial Services Authority (FSA), United Kingdom

Final words

Market sanctity at all levels can only be attained through Forex regulatory bodies. Although not as strong as the regulations should be, there are specific rules and regulations the brokers and the brokerage firms must follow.

Blueberry Markets is one of the most transparent and trusted brokers in Australia.We provide trading plans and live foreign exchange charts with indicators for all types of major and minor currency pairs. With quick trades and even quicker withdrawals, we make Forex trading as easy as clicking a few buttons.

Sign up to get started as a Forex trader today!

Recommended Topics

What Is Gap Trading?

Gaps in the Forex market help traders identify price movement clues, entry and exit signals, and trend reversals. In simple terms, gap trading is a disciplined approach to buy and...

Top Swing Trading Indicators

Swing trading is all about profiting from market swings. It is a popular speculative strategy where traders tend to buy and hold their assets hoping to profit from expected market movement...

What are Support and Resistance Levels

Support and resistance levels in the Forex market allow traders to understand the market direction and predict future prices to consider in making trade decisions...

MT4 vs MT5: Which is Better?

MetaTrader is one of the most popular online trading platforms used globally and its two main versions are MetaTrader 4...

Hedging in Forex: How to Hedge Currency Risk

Hedging in Forex helps limit significant losses and survive falling markets as well as major economic downturns...

What is Forex?

The Forex market offers high liquidity and margin opportunities for you to trade and potentially profit off of exchange rates of currencies...

What is Margin trading

Margin trading is one of the most common derivative strategies used in financial markets...

What is Leverage in Forex

Leverage allows traders to hold large positions in the Forex market with fewer capital. With leverage trading, traders can borrow money from a broker and hold larger positions, which in turn could magnify returns or losses.

How To Set a Stop Loss Order in Forex Trading

A stop loss order is used to prevent extensive losses, especially during severe market dip situations. By placing a stop loss order, you can automatically close your position if the market moves against you. It frees you up from monitoring your portfolio constantly. In volatile markets, uncontrollable losses that could wipe out your entire account can be prevented with the use of a stop loss order.

MetaTrader 5: The Complete Guide

MetaTrader 5, the powerful automated trading platform, offers advanced tools for successful trading analysis and trades in the financial markets...

What is MetaTrader 4: The Complete Guide to MT4

An advanced trading platform, MT4 has become a norm for seasoned Forex traders as it helps them execute their trades even when their machine is off...

What is a Spread in Forex?

A spread is a cost built into the buying and the selling price of all the currency pairs. In most cases, Forex spreads depend on your Forex broker...

What is a Currency Pair in Forex?

The foreign exchange (Forex) market is the largest financial market in the world...

How do you trade forex?

Many people want to get into Forex trading and make quick profits, but only a few...

When Can You Trade Forex?

In case you are wondering is Forex trading profitable, the short answer is yes. But ...

Who trades forex?

Major players in the Forex market are financial institutions including ...

Why trade forex?

As the largest financial market globally, Forex trading is one of the most popular ...

Forex Margin & Leverage

Forex trading usually provides much higher leverage compared to other financial ...

Key steps to making your first trade in Forex.

Making your first trade in Forex successfully ...

Rollover rates

When you hold a currency spot position overnight, the interest you either earn ...

Tips for Forex trading beginners

In terms of trading volume, the Forex market is the largest financial market in the world...

Image placeholder


Have a basic understanding of Forex? Ready to level up? Move on to the intermediate course.

Go To Course

Guide to Forex Trading indicators.

Enter your details to get a copy of our free eBook

Thank you, please check your inbox for your ebook

Start a risk-free demo account

Create Demo Account

More Articles


Ready to trade at Blueberry Markets?

Your best trading experience is just a click away.