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National Futures Association (NFA)

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The National Futures Association (NFA) is the industrywide, self-regulatory organization for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency (forex), and OTC derivatives (swaps).

Designated by the Commodity Futures Trading Commission (CFTC) as a registered futures association, NFA strives every day to safeguard the integrity of the derivatives markets, protect investors, and ensure Members meet their regulatory responsibilities.

NFA membership includes swap dealers (SD), futures commission merchants (FCM), commodity pool operators (CPO), commodity trading advisors (CTA), retail foreign exchange dealers (RFED), introducing brokers (IB), and the associated persons (AP) of FCMs, CPOs, CTAs, and IBs

It aims to maintain investor confidence by developing rules, programs, and services that safeguard market integrity. It also helps resolve consumer complaints.

What does the NFA do?

Registration Screening

NFA thoroughly screens CFTC registration and NFA membership applicants to ensure they meet stringent fitness and proficiency requirements.

NFA has the authority to deny, revoke, suspend, or restrict any firm or individual’s registration. The CFTC has delegated registration responsibility to NFA.

Compliance Rules

NFA adopts and enforces rules covering the business conduct of its Members including sales practices, recordkeeping, reporting, risk disclosure, discretionary trading, disclosure of fees, and minimum capital requirements.

NFA monitors its Members for compliance with its rules by performing risk-based examinations, reviewing Member filings, conducting financial surveillance and investigating customer complaints

Rule Enforcement

NFA takes disciplinary actions against Members who violate NFA rules and
CFTC regulations.

These actions range from Warning Letters for minor rule infractions to formal Complaints.

Penalties resulting from Complaints include expulsion, suspension, and fines up to $250,000 per violation.

NFA frequently collaborates with the CFTC, FBI and other law enforcement
agencies, to ensure full, comprehensive prosecutions

Member Education

NFA provides educational resources, including webinars, workshops and
reference materials to ensure Members understand their regulatory obligations.

Market Regulation

NFA provides regulatory services to designated contract markets (DCM) and
swap execution facilities (SEF), each of which has self-regulatory responsibilities to monitor trading on its platform.

Investor Protection

NFA offers a number of resources to educate investors. Before participating in the derivatives markets, investors should understand how the markets work and perform background checks of firms and individuals offering investments.

History of the NFA

In 1974, Congress established the Commodity Futures Trading Commission (CFTC).

The same legislation that established the CFTC also authorized the creation of registered futures associations, giving the industry the opportunity to create a self-regulatory organization.

NFA’s formal designation as a “registered futures association” was granted by the CFTC on September 22, 1981.

NFA began its regulatory operations in 1982.

NFA Board of Directors

NFA’s Board of Directors is its principal governing and policy development body.

The Board consists of both Member Directors and Public Directors. NFA’s Board is structured to ensure the representation of each membership category.

Member Directors are selected by the Members they represent through an election process.

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