What is the National Futures Association?
National Futures Association (NFA) is an organization that provides information to investors in futures, commodities and foreign exchange markets. In the United States, the organization is considered to be the Futures and Forex markets. Brokers who wish to be included in the National Futures Association must follow certain rules and pay fees to become a member. Traders often look at brokers who are included in this group as safer than alternative brokers.
In 1982, the National Futures Association emerged from the commission of commodity futures, which resulted in the legal regulations of Congress. It is not a government body, but was created as a result of government legislation. Brokers in the US may decide whether they want to be included in the National Futures Association or not. Most brokers decide to be included in the group because they provide them with greater credibility in the field. Most investors are looking for brokers who are included in NFA,Because it gives them the impression of security.
If there is a dispute between a broker and an investor, the National Futures Association enters and mediates a dispute. He will hear both sides of the story and make a decision in the situation. This provides a certain level of protection for investors in the Futures and Forex markets.
Brokers who wish to be included in this organization must pay membership in the National Futures Association. These fees are generally passed on to broker customers. Many times the brokers will charge a specific fee with each store that is deposited to cover these expenses.
NFA has the final goal of protecting the trader. They achieve this by coming up with the rules that brokers should follow. Many times they also control how traders can place stores and what types of lever effect can be set up in the account. These rules apply to Futures markets, commodities and forex markets.
National Futures Association plays an essential role in the Forex market in the United States. For example, it lays down regulations to prevent traders and reduce the amount of lever effect that a trader can use. Many traders who want to avoid the rules stored by NFA have set accounts with brokerage in other countries that are not subject to the same rules.