The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Regulation: An uneven regulatory playing field

CFTC and NFA are being inconsistent with the rules for futures and forex traders.

Back in 1974, when the US Congress established the Commodity Futures Trading Commission to regulate futures trading, there was no retail foreign exchange trading industry. Even as recently as 2000, when Congress enacted the Commodities Trading Modernization Act (CTMA), the question of who would oversee non-bank trading of FX, other than on the regulated exchanges, was not only unclear, it had probably not even been asked. A year later, Congress attempted to resolve the issue. In its Treasury Amendment, it stated that the CFTC had the mandate to protect retail customers trading in what it called off-exchange FX futures.

At the same time that the CFTC was created, Congress also authorized the formation of registered futures associations to give the futures industry the opportunity to regulate itself. This led to the formation of the National Futures Association, to which the CFTC effectively outsourced regulation.

As a result of the CTMA, all non-bank firms serving as FX market makers – retail platforms such as Oanda, Gain, FXCM and others – effectively came under the CFTC’s and NFA’s jurisdictions if they wanted to operate in the US.

According to Michael Stumm, founder and joint chief executive of Oanda, most of the NFA’s new forex dealer members welcomed the introduction of regulation.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree