NFA

The National Futures Association is the self-regulatory organisation for the US derivatives industry, authorised by Congress and overseen by the CFTC. Membership is not optional: a firm registered with the CFTC as a Retail Foreign Exchange Dealer or Futures Commission Merchant must also be an NFA member, and individuals soliciting business must be registered Associated Persons.

What the NFA does that the CFTC does not

The CFTC writes the rules; the NFA audits compliance with them day to day. It examines member firms, reviews promotional material before and after use, arbitrates client disputes, and runs its own enforcement process with the power to fine, suspend and permanently bar individuals from the industry.

Its promotional material rules are unusually specific. Performance claims must be substantiated, hypothetical results carry mandatory disclaimers, and the quarterly profitability statistics each dealer must publish — the percentage of client accounts that were profitable — come from this requirement. That number is more informative about a broker's client outcomes than any figure it chooses to advertise.

BASIC

The NFA's Background Affiliation Status Information Center is the single most useful free tool in broker due diligence. Search a firm or an individual and it returns registration status, category, the full regulatory action history including CFTC and exchange actions, and any arbitration decisions. Nothing comparable exists in Europe, where enforcement records are scattered across separate regulator pages.

Check individuals as well as firms. A dealer whose principals have prior barred registrations at other firms is a different proposition from one whose do not, and BASIC shows that in a way a company register cannot.

What NFA membership does not provide

No compensation scheme. Retail forex is outside SIPC, and NFA arbitration can award against a solvent firm but cannot pay for an insolvent one. The protection is supervision and capital, not restitution.

Reading NFA claims

"NFA member" from a firm not registered with the CFTC is a contradiction, since membership follows registration. ProForexBrokers.com verifies both in BASIC rather than accepting either claim on its own.