FINRA

FINRA (the Financial Industry Regulatory Authority) is the primary self-regulatory organization for broker-dealers in the United States. It was founded in 2007, taking over from the National Association of Securities Dealers (NASD), and it oversees the licensing, conduct, and market activity of firms operating in US financial markets, including some that offer forex trading.

What FINRA Regulates

• Licensing and registration: FINRA registers brokerage firms and the individuals who work for them, requiring them to meet qualification and competency standards.
• Market surveillance: it monitors trading activity using automated systems to detect fraudulent or manipulative practices.
• Rulemaking: it sets rules that broker-dealers must follow to keep markets transparent and fair.
• Dispute resolution: it runs an arbitration and mediation process for disputes between investors and broker-dealers, as an alternative to litigation.

Limits of FINRA Oversight

• US-only jurisdiction: FINRA's authority stops at the US border, so it has no power over brokers based elsewhere.
• Compliance costs: meeting FINRA's requirements can be expensive, which can be a bigger burden for smaller broker-dealers.
• Arbitration criticism: some critics argue FINRA's arbitration process favors the industry over individual investors.

FINRA Compared to Other Regulators