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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
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
Visa, Mastercard and PayPal will work together with Facebook for the launch of a new crypto coin, called Libra. Libra is designed
Guidelines on how national regulators should oversee virtual assets will be published on June 21 by the Financial Action Task Force (FATF)
Kraken, one of the biggest US crypto exchanges raised nearly 7 million USD in the first day of its fundraising campaign. The
Two Israelis formerly involved with the scam websites BinaryBook and BigOption have been charged by the United States Justice Department on online
The Commodity Futures Trading Commission (CFTC) in the US ordered 1pool Ltd and its founder and CEO Patrick Brunner to pay 990
Two pension funds in Virginia, US will take part in a new 40 million USD venture capital fund, focused on the crypt
IG Group officially introduced IG US – their new US subsidiary, after IG Markets left the US back in 2011, because of
The US broker brand of the well-known forex brokerage XM hopes soon to count itself among the members of the National Futures
The lack investor protection hinders the approval of Bitcoin exchange-traded funds (ETFs) said on Tuesday the Securities and Exchange Commission (SEC) chairman