In 2004, Gregory Blake Baldwin of Utah pleaded guilty to fraud after his firm, Sunstar Funding, accepted $228,500 from 33 investors for placement into the foreign currency market. The investors’ money was not placed in the foreign currency market but was used to pay some past investors and for personal expenses of Baldwin. § 5.3 Registration of persons engaged in retail forex transactions.


If you are a US-based trader of commodities and futures then you will need a CFTC broker. Inside we have compiled a list of the very best of these brokers, based on the quality of service, product, and reliability. In the alternative, the Member may hire an independent outside party with experience in this type of auditing.

CFTC Charges Florida-Based Entities and Individuals with Multi … – Commodity Futures Trading Commission

CFTC Charges Florida-Based Entities and Individuals with Multi ….

Posted: Mon, 07 Feb 2022 08:00:00 GMT [source]

The transactions would not be futures contracts under NFA’s proposal. Commodity Futures Trading Commission or CFTC together with NFA are two interdependent regulatory organizations that supervise US derivatives markets as well as Online Trading in the US. The CFTC’s mission is to establish market integrity to protect investors from abusive trading practices and fraud. The Commitment of Traders reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.


This amount is much higher than most other forex brokers in the world and goes to show just how strict and serious the CFTC is about large and competent Forex brokers. The CFTC was put in place to protect consumers, and this high operating capital can protect investors from broker bankruptcy and offers better liquidity for them as well. The Commodity Exchange Act requires certain firms and individuals that conduct business in the derivatives industry to register with the CFTC. CFTC regulations also require, with few exceptions, CFTC registered firms to be NFA Members. Each FDM must instruct each qualifying institution to report the balances in the FDM’s account to NFA or a third party designated by NFA in the form and manner prescribed by NFA on a daily basis.

To calculate the amount owed, add up the net liquidating values of each forex account that liquidates to a positive number, using the fair market value for each asset other than open positions and the current market value for open positions. An FDM, however, may not include positions at an affiliate or an unregulated person when calculating its net position for purposes of the capital charge. The Member’s trading system must also produce daily exception reports showing price adjustments and orders filled outside of the price range displayed by the system when the customer order reached the platform. The Member should review these reports for suspicious or unjustifiable activity. FDMs not using straight through processing must provide customers with a description of the mid-point spread cost in a form and manner required by NFA. The CFTC has delegated registration responsibility to the National Futures Association .

Difference between a CFTC Regulated and a CFTC Licensed Broker

I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up , with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.

The first exception is where the adjustment is done to settle a customer complaint in the favor of the customer. An FDM may also adjust orders even in the absence of individual customer complaints if the customer were adversely affected by a technical problem with the Member’s trading platform. However, an FDM may not adjust prices on customer orders that benefitted from the error and may not cherry-pick which account to adjust.

These requirements are only applicable for bulk liquidations and not when a customer’s position is being liquidated due to a lack of margin funds. Your firm may not assign open positions to an entity that is not an authorized counterparty. Other reasons for rejecting a proposed assignee are that the proposed assignee will not cooperate with your investigation, you cannot obtain adequate and reliable information, or you have any other reason to question the assignee’s motives or financial standing. Each firm’s AML program must require employees to promptly notify specified firm personnel of potentially suspicious activity.

Ongoing Customer Due Diligence (CDD) and Detecting and Reporting Suspicious Activity

A floor trader is a person who purchases or sells any futures contracts, options on futures or swaps on any contract market for such person’s own account. A Member’s AML program must also include systems and procedures designed to detect and report suspicious activity, such as transactions that do not appear to have a business or other lawful purpose, that are unusual for the customer, or that cannot be reasonably explained. Your firm and appropriate personnel should know the nature of the customer’s business and the customer’s purpose in entering into the transactions. Your firm should also provide employees with examples of activities that raise red flags. Each FDM must adopt written policies and procedures that describe the risk management program and those policies and procedures must be approved in writing by the firm’s governing body.


Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information.

Cline is currently incarcerated on charges stemming from his scam. Unfortunately, they are, and investors need to be on guard against these scams. They may look like a new sophisticated form of investment opportunity, but in reality they are the same old trap—financial fraud in fancy garb. In the investment field, the term is generally used to refer to institutional trading.

FATF adds Nigeria, South Africa to dirty money grey list

A written confirmation, including all offsetting transactions executed during the same business day and the rollover of an open retail forex transaction to the next business day. All Members that engage in forex activities with customers are subject to NFA’s forex requirements, although some of those requirements apply only to forex dealer members . A Member is an FDM if it acts as counterparty to or offers to act as counterparty to at least one customer.

Regulatory programs to include retail over-the-counter forex contracts. Recently, the CFTC has seen an increase in fraud complaints from customers who deposited large sums with unregistered offshore forex dealers. The customers found these dealers through social media friendships or recommendations. However, when the customers tried to withdraw their money, the dealers were unresponsive or demanded additional payments.


In many cases, un offshore dealers have used popular trading software to provide a veneer of legitimacy, but have manipulated trade data to steal from customers. Compare prices with third-party sources to verify you are seeing legitimate market price movements and levels. Unless you are buying forex futures or options on a regulated exchange, you are trading “off-exchange,” or over-the-counter (“OTC”). This means you are not trading in an open market, you are trading only against your dealer. When you buy, your dealer is the seller; when you sell, your dealer is the buyer. Your dealer makes money when you trade more frequently, lose money, or pay fees, spreads, or commissions.

Limitations Of CFTC Regulated Forex Brokers On Traders

Again, in 2010, the Dodd-Frank Act expanded the CFTC’s regulatory power into the swaps markets. This act required the CFTC to impose various new guidelines on the brokerages governed by them. Now, in today’s current state of affairs, the CFTC’s main goal and responsibility is to create and maintain open, transparent, competitive, and financially stable markets.

A New York judge ruled that the use of money bag, stock chart, and rocket ship emojis by Dapper Labs amounted to financial advice in its class-action lawsuit. To enable the CFTC and other regulators to tackle crime in the digital assets industry more efficiently, U.S. lawmakers haveproposedlaws to define specific roles and delegate oversight powers clearly. The Responsible Financial Innovation Act, co-sponsored by Senator Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), will name the CFTC as the regulator in charge of digital assets classified as commodities. Fintech giant Revolut has reported its first full year of profit, with its delayed accounts showing that revenues tripled in 2021 as paid subscriptions and overall usage of its app grew sharply. The Commission also engages in cooperative enforcement work with state, federal and international regulatory and criminal authorities. The CFTC has enforcement teams in Washington, D.C., New York, Kansas City, and Chicago.

  • Safety is evaluated by quality and length of the broker’s track record, plus the scope of regulatory standing.
  • CFTC-regulated Brokers and Platforms must adhere to stringent requirements, offering unparalleled funds security backed by the assurance of US banks.
  • However, the futures industry became increasingly complex and now presents a wide variety of contracts.
  • Forex Trading Market is legal in the US, therefore is subject to strict compliance regulations by CFTC, ensuring that all activities meet legal requirements and stay under close supervision.

The Office of General Counsel provides legal services and support to the Commission and all of its programs. Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. From basic trading terms to trading jargon, you can find the explanation for a long list of trading terms here. “I’ll give you a break on my normal forex commission if you buy now—half off.” Be wary of high-pressure efforts to convince you to send or transfer cash immediately to the firm, via overnight delivery or the Internet.

What Is a Commercial Trader?

Each FDM must be able to properly account for all funds received from and owed to customers. FDMs should prepare a daily computation showing the total amount of customer funds on deposit, the total amount of customer open positions, and the total amount due to customers. An FDM must calculate the amount owed to forex customers and hold assets, solely of the type permitted under CFTC Regulation 1.25, equal to or in excess of the amount at certain qualified institutions. FDMs must take a capital charge on all uncovered proprietary positions, although the firm may net on-exchange and off-exchange positions when determining the firm’s uncovered position. Uncovered off-exchange proprietary positions are subject to a haircut charge that depends on the underlying currency.

The RMU must have sufficient authority; qualified personnel; and financial, operational and other resources to carry out the firm’s Risk Management Program. The RMU should report directly to the firm’s senior management, and must be independent from those employees involved in pricing, trading, sales, marketing, advertising, and solicitation activities of the FDM . Proceeds from subordinated loan agreements may be included in the firm’s capital if the agreement meets the requirements in CFTC Regulation 1.17 and has been filed with and approved by the firm’s DSRO.

Shaun has been consistently ranked among the top G10 forecasters in the world, including recognition from Thomson/Reuters, Bloomberg and The Technical Analyst magazine awards. In addition to the CFTC’s filing, today Singh entered a guilty plea as to commodities fraud and other charges in a separate, parallel action against him in the Southern District of New York. United States v. Nishad Singh, Crim No. 22-CR-673 (S.D.N.Y. 2023).

All while ensuring integrity by clamping down on manipulation, abusive trading practices, and financial fraud. Members must have policies and procedures that describe their administrative, technical, and physical safeguards for protecting customer records and information. The procedures should also address the Member’s policies for disclosing non-public, personally identifiable financial information and for notifying customers of those policies. The CFTC’s regulations restrict a Member’s right to disclose non-public, personally identifiable financial information about customers and other consumers.

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