In United States there is an independent and self-regulatory organization that takes care of the industries for commodities and futures there. NFA is involved in overseeing and protecting any fraudulent activity caused in case of commodities/futures. NFA was established in 1982 and has it’s headquarter in Chicago and is also involved in mediation as well as arbitration for resolving complaints of the consumers related to trading. NFA to safeguard the market integrity and protect the investors have developed programs and also offers several services. It helps their members to meet the regulatory responsibilities of trading and has been doing so from last more than 30 years.
When investors invest in the market it is very important that the derivative market is at success. The best way to get the confidence of his investors is to provide their customers highest level of integrity of the market participants and also their intermediaries. It is mandatory for the brokers in USA or anyone who is conducting business with the public in relation to the US futures exchange or the retail forex in the marketplace should adhere to the same standard of the professional conduct. The membership of NFA is also mandatory for the swap dealers and the participants of major swaps. NFA is a non-profit regulatory organization. They do not have any stake in the market or they do not operate any type of market. They are also not an association for any trade. They operate free of cost for all the taxpayer. The organization is financed for its running by the membership dues and also from the assessment fees.
CFTC stands for U.S Commodity Futures Trading Commission and is involved in options and futures markets. In 1974 the Commodity Futures Trading Commission Act was formulated and was aimed at creating Commodity Futures Trading Commission to replace the already existing US Department of Agriculture’s Commodity Exchange Authority. This is how CFTC an independent federal agency for regulating the industry for futures trading industry was formulated. The CFTC was created in the year 1974 as an independent regulatory agency by Congress.
CFTC as an organization has five commissioners all of whom are appointed by the President of USA. With the consent of the United States Senate the President of USA appoints one of them to serve as the Chairman of CFTC. Not more than 3 commissioners at one time can be from the same political party. The mission of the CFTC is to protect the users of the market and the general public from manipulation, fraud and any abusive practices which is linked to the sale of the futures, commodities and options. This will help open a competitive future and option market that is financially sound. CFTC is involved in investigating and prosecuting the fraud committed on commodities, fraud on foreign currency schemes, manipulating the energy and fraud related to hedge fund. It also works along with other agencies involved in bringing criminal and other criminal actions to book. The CFTC also involved in educating the public and participates in consumer groups along with providing the consumer advisories and educational materials. Though, these are separate entities their main aim is to protect the investors from being cheated when they make an investment in the financial market. These two agencies make sure that the investors’ money is safe with the broker and that in case of a dispute the rights of the investor as well as the broker are safe. Thus, it is always advised that the traders choose a broker which is registered with CFTC and NFA especially if it is a firm working in United States of America.