FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
Libertex information and reviews
Libertex
91%
HFM information and reviews
HFM
89%

Best US-Regulated Forex Brokers


In the United States of America the services of operating with derivative financial instruments, the underlying asset of which are currency quotations, contracted in the result of trading on the interbank FOREX market, are for the most part provided by futures brokers, licensed as futures commission merchants (FCM) and retail FOREX dealers with the retail foreign exchange dealer (RFED) license.

The main features of the US regulation of operating with derivative financial instruments have developed under the influence of the historically determined factors. On the issue of the US regulator of the derivatives market, it is necessary to take into account the great role of the Commission commodity futures trading (CFTC) and the self-regulatory organization - the National Futures Association (NFA), the jurisdiction of which extends for the whole futures market. FCM and RFED are licensed by the CFTC and become members of NFA self-regulatory organization.

An important feature of American companies’ operation is that upon concluding a contract the client is given the risk warning notice form, the text of which should be approved by the regulator. Besides the general prohibition of fraudulent activity there is a number of specific prohibitions in the USA relating to, for example, transactions at non-market prices, expansion of the spread between the bid and ask prices, as well as the direct prohibition on transactions without prior authorization received from the client. FCM and RFED are obliged to submit financial documentation and information on compliance with the regulations in the form of annual and periodic reporting, submitted to the appropriate CFTC and NFA departments. NFA, in turn, conducts annual audit of all FCM and RFED operations.

In addition to the standards and rules set by the regulators in respect of transactions in derivatives in the USA, the FORTRESS system is implemented (Forex Transaction Reporting Execution Surveillance System). This system documents all client transactions and functions as the unified register. Report on the results of trading operations contains all their main characteristics, such as time, quotations, on which the transaction was opened and closed, trading volume and others. This is the real advantage of the US regulation system that makes it possible for the regulator to find deviations from normal market conditions automatically. One more substantial benefit of the US regulation is that the US financial infrastructure is one of the most reliable in the world and all brokerage accounts in the United States are insured by the state. It is necessary to mention one more plus - the clients have accrued income on the free funds in the account, however, it is not high.

The permanent integral feature of the American system of regulation is the rule that sets a limit on the amount of leverage available to retail FOREX customers. We can assume that this restriction is one of the disadvantages of the system of the  US regulation, which leads to stagnation of this industry in the US, as the lack of great opportunities associated with margin lending, deprives the OTC FOREX of its main advantage and prevents it from being outlined in comparison with other financial markets. There may be indicated less comprehensive disadvantages of ownership of the account with a US broker. First, there can be fairly high commission and there are some restrictions on trade, depending on the amount of the trading account.

According to different estimates, at the moment the total amount of liabilities of companies offering retail clients trading on the OTC segment of the FOREX market to clients from the USA is about 800 million U.S. dollars. By far the greater part of this sum is formed by liabilities of the five largest companies, the number of active clients of which ranges from 20 to 100 thousand people. These companies are worthy of being called the top brokers offering US trading. The first place is taken by FXCM, then come Forex.com, OANDA, FXDD and others. However, every broker in the provision of additional services relies on a certain type of instruments: stocks, bonds, futures or options. The difference can also be found in investment geography.

To draw the conclusion we can say that investing in the USA stock markets, you should perfectly know – why are you doing this. Trading, based on news reports or on technical analysis data is also possible in Russia, but if there is a need for high liquidity of trading instruments (for scalpers), well-developed derivatives market infrastructure (options and futures strategies) or just the most conservative investments (U.S. government bonds), Uncle Sam is glad to welcome you.

by Julija Matovic

The above information is available at the time of publication and may become no longer accurate. The author is not the interested party and has no kind of relation to any of the said brokers.

Share: Tweet this or Share on Facebook


Related

Earnings Season - Meaning, How To Make Its Best Use?
Earnings Season - Meaning, How To Make Its Best Use?

Traditionally, the earning season is a favorite time of year for active traders. This is a time when the potential for making profits increases many times over...

The Dollar Index: What It Is, How It's Defined
The Dollar Index: What It Is, How It's Defined

Investors rely on a variety of tools in an attempt to determine the current and future state of the market. This set includes synthetic ones, such as stock indices...

What are penny stocks?
What are penny stocks?

Penny stocks, also known as “junk” stocks, are securities of small or problem-riddled companies that usually trade at a price of less than $5. They are not frequently-traded stocks...

Is CFD trading a better option in 2022/23?
Is CFD trading a better option in 2022/23?

It wasn’t so long ago that only the elite and wealthy had access to the global markets. Back then, a traditional trading account would require a deposit of at least...

What is stock split and stock split reverse?
What is stock split and stock split reverse?

Apple, Amazon and Tesla have all split their stocks in the past in order to make their shares more accessible to retail investors. In the following article you will learn what a stock split is...

How to be a value investor
How to be a value investor

Value investing is an investment strategy that focuses on stocks that are underappreciated by investors and the market at large. The stocks that value investors seek typically look cheap compared...

FXCM information and reviews
FXCM
87%
ActivTrades information and reviews
ActivTrades
86%
RoboForex information and reviews
RoboForex
85%
MultiBank Group information and reviews
MultiBank Group
84%
FxPro information and reviews
FxPro
83%
Vantage information and reviews
Vantage
83%

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.