Link for list of US approved brokers

L

Lon Eagle

Apologies, but living this side of the pond I am not as aware as I should be of the US regulatory set up.

Could someone post the link for the site in the US that lists all approved FX brokers/delaers and their assets.

What protection do you get if one of these brokers files for Chapter 11 or similar?
 
Your best sources of info would be the websites of CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association). CFTC is a US Government agency, while NFA is an industry SRO (self-regulatory organization). There's lots of useful, relevant info to be found there on all aspects of forex, incl. an entire section dedicated to that at the NFA website.

Specifically, here's the latest financial snapshot data on every FCM registered with the CFTC:

http://www.cftc.gov/files/tm/fcm/tmfcmdata0507.pdf

And here's where you can search for background on any NFA member:

http://www.nfa.futures.org/basicnet/

As to Ch. 11, etc., great question. :cool: The short answer is -- choose your broker very carefully. Unlike, say, protection offered by SIPC for US stock investors, nothing of the kind exists in forex. Let me quote from an NFA publication Trading in the Retail Off-Exchange Foreign Currency Market - What Investors Need to Know:

"You are relying on the dealer's
creditworthiness and reputation

Retail off-exchange forex trades are not guaranteed by a clearing organization. Furthermore, funds that you have deposited to trade forex contracts are not insured and do not receive a priority in bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer goes bankrupt."
 
Quote from Lon Eagle:

Apologies, but living this side of the pond I am not as aware as I should be of the US regulatory set up.

Could someone post the link for the site in the US that lists all approved FX brokers/delaers and their assets.

What protection do you get if one of these brokers files for Chapter 11 or similar?
More...

There is no regulatory approval of fx dealing in the USA. It is unregulated. The CFTC prohibits entities and instruments within its reach -- USA entities and regulated products -- from dealing to, or being dealt to, persons who are not high net worth. That is an example. The key phrase is "entities and instruments within its reach."

There are exemptions which fx retailers have threaded through to avoid CFTC prohibitions, meaning that the retailers remain outside CFTC scrutiny and are not restrained from marketing to less sophisticated, less well-heeled persons, novices included. You need a expert, however, to explain the exemptions. Or you need to satisfy yourself that, after reading them, you understand the CFTC's notices and rules on the topic. They are available online.

Entities and instruments not within the CFTC's reach -- offshore fx shops and their quotes come to mind -- market to USA residents as if the CFTC does not exist, which is effectively true for all purposes. In view of the CFTC's limited ambit, that is true also of USA fx retailers like Oanda.

A USA retailer may voluntarily register as a FCM, although I have not read anything that shows how FCM registration (futures commission merchant, i.e., brokering) applies with any effect to dealing spot forex. Dealing fx is not brokering and is not futures (obviously).

In sum, it's the Wild West in the USA as much as anywhere else, and certainly more than in the UK, where the FSA has authority to regulate fx retailers and other shop-dealing like spread betting.
 
hi Lon Eagle, what is it like in the UK please? am about to sign up with a U.K. securities firm as my 'secondary prime broker'... wld be v.interested in any info. many thanks in advance
 
Not sure about your question, my fault.

Do you mean you are about to get a second broker in the UK or a second prime broker -ie someone who quotes you prices you can trade on or someone who will clear your trades carried out through an ECN. If the latter - why have a second one?

If you like PM me the name of the firm and I can let you know anything about them that I know.
 
hi, sorry i wasn't clear. what i mean is the U.K. broker that is going to offer me prime brokerage type services - will PM you - has itself a prime brokerage relationship (with RBS if i am not mistaken), thats why i was referring to them as a 'secondary' prime broker. i know i'm going to pay more comms (the broker's mark-up on the prime broker's fees) but its a trade-off thats worthwhile in my current situation (in short, RBS, UBS etc are not comfy dealing with me and my managed clients as a cash-pool that i can use to trade in blocks, unless i set this up as a proper fund, which is massive hassle & costs, whereas brokers can do it just like that!).

now obviously the broker's credit rating is a potential issue that i wldn't really have with RBS etc... hence my question re what happens if they go tits up in the U.K. (i'll ask for segregated accts but that will only protect a few of my clients' accts...)

thanks for any inputs!
 
and yes, the broker is going to clear my trades (via his 'prime', i guess) and deal with allocations etc, but the choice of the ECNs i can trade on is pretty much up to me, and of course the broker itself will be more than happy to let me hit his quotes as well. (hope this is clear)
 
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