NFA regulations require:
NFA requires foreign exchange dealers to set up chief compliance officers, and stipulates that individuals engaged in foreign exchange business must take off-site retail foreign exchange examinations. NFA's punishment measures are very strict, including general warning, fine and license revocation, as well as market ban. The NFA has very high capital requirements, stipulating that each foreign exchange dealer must keep the "adjusted net capital" equal to or greater than $20 million. NFA requires customers to isolate their funds, and the leverage of major currencies is limited to 100:3, which requires all foreign exchange dealers to set up physical offices.
The foreign exchange margin industry belongs to CFTC and NFA, and it is regulated according to the regulatory provisions of the futures industry. CFTC's role is more to arbitrate and claim for customers of relevant institutions, while NFA focuses on mediation. All futures professionals who need to register with CFTC can register only after thoroughly investigating their background to determine whether they meet the applicability standards stipulated by CEA.
There are currently two types of NFA licenses in the United States; One is a non-member and the other is a full member.
Difference: Non-members are exempt licenses with supervision numbers, which are displayed on the website. Registration time is fast and relatively cheap.
Full member: foreign exchange futures license with supervision number. The website shows the official members and related company information. The application cycle is slow, you need to take the NFA exam, the registration fee is high, and there are maintenance fees.
The main function of NFA is to make NFA members strictly abide by the federal laws and the rules formulated by CFTC and implement strict management. The NFA also has its own rules to monitor brokers' code of conduct towards traders and investors, so as to prevent traders and investors from cheating.
To become NFA members, futures agents (FCMS), recommendation brokers (IBS), commodity trading consultants (CTAS) and commodity joint venture fund managers (CPOS) can all become NFA members.
The responsibility of NFA
Supervise the futures and foreign exchange industries, protect investors and formulate regulatory rules. Arbitration of futures-related disputes
Securities firms regulated by NFA must strictly abide by all kinds of regulations formulated by NFA to protect investors' assets.
Brokers regulated by NFA cannot use clients' funds for company operations, and they must have sufficient funds to operate in the interbank market. Therefore, the economic entities regulated by NFA have sufficient funds.
A regulated broker shall report the financial status of the company to the NFA every week and conduct a comprehensive annual review every year.