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The US forex market is probably the most heavily regulated one. US Forex brokers must be regulated by the National Futures Association (NFA) or the Commodity Futures Trading Commission (CFTC), and must meet strict requirements designed to protect local investors. Needless to say, the CFTC and NFA are quite strict in enforcing their regulations and guidelines. If a regulated company fails co comply with any of the legal requirements, the fines are pretty heavy.
First of all, they are subject to one of the highest capital requirements for financial services providers worldwide. US brokerages must maintain a net capital of at least $20 million to make sure that they are well-capitalized to protect investors from unfavorable events. By comparison, the minimum net capital requirement for Australian brokers is AUD 1 00 000, and for those in UK and Cyprus – EUR 730 000. The US market, however, does not tolerate small players.
Second, forex brokers in the USA are allowed to provide leverage up to 1:50 for majors and up to 1:20 for minor currencies. A number of financial regulators have introduced similar leverage caps due to the high risk of significant loss when using high leverage ratios, including those in Japan, Turkey and, most recently, the European financial authority, ESMA. However, many traders are tempted by the opportunity of quick profit on a small deposit, which higher leverage offers, and search for brokers that provide leverage up to 1:100 or more. On the other hand, the leverage restriction also results in lower trading volumes, and, respectively, smaller profit for the brokerages.
Another restriction US brokers are subjected to is the so called FIFO (first in, first out) rule. Simply put, this rule prevents traders from going long and short on the same pair at the same time. Where there are several open trades on the same pair and of the same size, a trader is required to close the oldest trades first. This also means that hedging is not allowed.
Similarly to the situation in other jurisdictions, US brokers have to meet certain reporting requirements. In addition to CFTC’s recordkeeping and reporting guidelines, they are required to provide their customers with access to certain transaction execution data (under the NFA’s rules on disclosure of transaction data).
Actually, most of the above-mentioned restrictions for forex brokers in the US were introduced by the Dodd–Frank Act in 2010. What’s more, this law practically prohibited foreign forex brokers from accepting US clients. According to the Dodd–Frank, forex brokers that are allowed to deal with US forex traders must be registered with NFA (and regulated by CFTC). US regulators keep threatening any broker that accepts US clients without US regulation and have spread their tentacles inside many foreign governments through a series of Memoranda of Understanding agreements. Thus, NFA & CFTC have effectively extended US regulation to cover US residents in countries that are parties to these agreements.
Considering the heavily regulated environment in the US, no wonder there are only a few forex brokers left legally operating there. Above is a list of those brokerages.
US Forex news
Joseph Anile, who was convicted of running a 75 million USD investment scam back is September will hear his sentence in a
CME Group, one of the major derivatives exchanges, based in Chicago, announced that it plans to launch options on its bitcoin futures
The Commodity Futures Trading Commission (CFTC) has start legal action against the California based Denari Capital, LLC, along with its owners Travis
A US layer goes on trial for his role in the OneCoin crypto scam. Mark Scott is accused of laundering some 400
Bitfinex crypto exchange says it is a “victim of a fraud” by Crypto Capital, a payment processing company that allegedly lost 880
Three men managed to squeeze out more than 100 million USD of gullible investors through three binary options websites in what appears
Former Israeli TV star Lissa Mel, who pleaded guilty to her role in a 145 million USD fraud, run through the binary
US prosecutors have accused the owner of Blackbox Pulse, branded as Unique Forex, Thomas Lanzana, 51, of running a 1.1 million forex
US prosecutors accused a 25 year old man for running a crypt exchange that converted some 25 million USD from fiat to
The North American Securities Administrators Association (NASAA), an organization of securities regulators in the U.S. and Canada, whose aim is to protect
United States will not be able to ban Bitcoin, US Senate Banking Committee Chairman Mike Crapo said during a Senate hearing last
Federal agents in the state of New York have arrested the principal of a crypto currency escrow company Volantis for allegedly stealing
Private data, including crypto wallet addresses from thousands of users of the crypto currency lending platform YouHodler were exposed, the cyber security
Trading.com, the new brand of Trading Point Group, which also operates one of the most popular forex and CFD brokers in the
M.Success FX is yet another clone firm that has been added to the long warning list of the Financial Conduct Authority in
The Financial Action Task Force (FATF) – the international anti money-laundering body, adopted a new set of rules according which all crypto