The National Futures Association or NFA is an independent non-profit regulatory organization serving the financial derivatives industry in the United States. It is not a trade association and does not operate in any markets.
Financial derivatives markets covered by the NFA include the exchange traded futures industry, the retail over the counter foreign exchange market, and the over the counter derivatives market.
As a non-profit, the NFA is financed by membership dues and fees and operates at no cost to the U.S. taxpayer. Membership in the NFA is mandatory, which ensures that all participants in U.S. futures exchanges and the retail forex market are held to the same standards.
Current membership in the NFA is 3,871 full members and 52,110 associates. As of April 30th, of 2017, the NFA had just two retail foreign exchange dealers listed on their website. That very low number gives a clear indication of the success that U.S. regulatory agencies, including the NFA and the CTFC, have had in discouraging retail forex trading in the United States.
When the United States Congress established the Commodities Futures Trading Commission in 1974, the same legislation allowed for the creation of registered futures associations.
In 1982, the NFA began operations as a self-regulatory organization for the financial derivatives industry within the United States.
Location and Jurisdiction
The NFA’s headquarters is located in Chicago, Illinois in the United States. In addition to its Chicago headquarters, the organization maintains an office in New York City, New York. The Association’s official website is situated at: https://www.nfa.futures.org.
The agency has jurisdiction on all persons and organizations that do business as futures professionals in the United States according to the Commodity Exchange Act. Therefore, all Commodity Trading Advisors or CTAs, Commodity Pool Operators or CPOs, Futures Commission Merchants or FCMs, Introducing Brokers or IBs, Swap dealers and Futures exchanges must be members of the NFA.
In addition to overseeing participants in the futures industry in the United States, the NFA is responsible for registration of, compliance of and arbitration among all companies and individuals conducting business in the futures markets. The agency has strict registration requirements and stringent rules of compliance, and it performs real-time surveillance of all U.S. futures markets.
In addition to its role as a regulator, the agency provides several resources, such as the Background Affiliation Status Information Center or BASIC, which is an open information source for members and the general investing public with data on its members. BASIC contains all CFTC registrations and NFA membership information, as well as futures related regulatory and non-regulatory actions.
The organization also has extensive investor information and a news center, which gives current information on NFA activities to the media, NFA members and other regulators. The news center also reports on speeches by NFA staff, as well as on enforcement and registration actions and rule submissions.
NFA in the News
On May 2nd, 2017, the NFA ordered Duet Asset Management Ltd, an NFA member commodity trading advisor and commodity pool operator located in London, England to pay a fine of $1 million. Here is the link to the NFA’s press release: