FCMs are required to meet strict financial standards including capital adequacy requirements. On a regular basis, FCMs are required to submit financial reports to regulators. These standards are enforced by the NFA which has the right to fine firms and/or terminate an FCM's regulatory status for violations.

Also, as part of the reauthorization of the Commodity Futures Trading Commission (CFTC) in May 2008, Congress amended the Commodity Exchange Act to require forex solicitors, forex account managers and forex pool operators to register with the CFTC as Introducing Brokers, Commodity Trading Advisors or Commodity Pool Operators, respectively, and to become members of the National Futures Association.

Those firms that are not required to register are still subject to various anti-fraud, ethical conduct, and supervision requirements if they solicit forex customers, introduce customers to a forex counterparty, or manage forex accounts on behalf of customers.

CONDUCTING A BACKGROUND CHECK

When trading in the retail forex market, individuals should only deal with a CFTC-registered entity. Registration status and NFA membership status of a particular firm or individual can be easily and freely checked by using the Background Affiliation Status Information Center (BASIC) of NFA’s web site at www.nfa.futures.org/basicnet/