Foreign Exchange Regulation and CFTC

Forex is an extremely profitable and purely legitimate market but faces a negative reputation because of so many scam Forex service providers. As a result, genuine Forex brokers and traders face a lot of problems and fail to do business effectively. In this regard, various Forex regulatory services especially the CFTC has been founded in order to check the activities of illegal Forex brokers and protect legitimate brokers and traders from their mischiefs.

Most of the Forex companies exploit human beings’ greed for money. No one can deny this fact of life that such companies try to aggravate this greed by offering immediate and effortless profits by running extensive and aggressive campaigns. Obviously, no industry or business in the world can offer outrageous profits without doing any hard work and therefore, all these promises are false beyond any doubt. Therefore, these companies have contributed a lot to put Forex in the same list of industries known for negative activities.

The Forex Exchange Regulation Agencies is one of the systems to counter such companies. These companies formulate rules and regulations in an attempt to eliminate those companies that do not meet their standards or abide by their rules. The Commodity Future Trading Commission commonly known as CFTC is one such Forex regulatory authority.

Founded in 1974, CFTC is future services regulatory agency and its mandate has been revised and increased on number of occasions. Last time, it was done through the Commodity Futures Modernization Act passed in 2000. The CFTC became an independent entity by the support of Congress that also granted it the authority to regulate future, options and commodities market in United States of America. Since then, CFTC has been doing a great job to keep these markets fair and free of opportunists.

During early years of CFTC, it was the agricultural sector that was dominating the futures trade market.  However, the trend has changed over the years and now the finance market is controlling the futures trade with other industries receiving their due share. As a result, CFTC has transformed its focus to these industries as well.

According to CFTC’s mission statement, their aim is to “assure the economic utility of the futures markets by encouraging competitiveness and efficiency, protecting investors from fraud, manipulation, and abusive trading practices.” In addition, CFTC has also taken necessary measures to ensure that licenses are awarded to various futures service providers through a transparent process.  

CFTC is a major agency when it comes to regulating US future markets and its subsidiaries including Forex and commodities. It is also true that these markets enjoy greater freedom as compared to Stock market. However, this extra freedom has enabled fraudulent to take the general public in by making false and empty promises. This is why it is very important to regulate the Forex market as well. In this regard, the CFTC has a major role to play in order to regulate various markets including Forex so that they treat their customers fairly and provide equal opportunities to everyone to trade effectively and profitably.