Regulated Commodity Trading Broker Guide
Commodity Trading Regulated Commodity Trading Brokers Regulation is one of the guideline of choosing a Trusted Commodity Trading Brokers to trade commodity with. As a new commodity trader your first challenge is to choose the right commodity broker. The best regulated commodity brokers are those that are regulated. This should be the type of commodity broker that you should choose: a Regulated commodity broker - Trusted Commodity Trading Broker.
It isn't as easy as it sounds to get a trusted commodity broker and the whole searching process of finding Commodity Trading Regulated Commodity Trading Brokers may leave you confused due to the huge competition among them, as they all offer different commodity platforms, services, execution and capabilities. The best criteria in choosing a regulated and trusted commodity broker is to find a regulated broker.
Regulated brokers have to submit all their transactions every year to the regulation authority for audit. This means that these companies cannot participate in any illegal activity such as money laundering. This is why your commodity broker asks for Identification documents and proof of residence from traders when they are registering, so when as a trader you are registering and you are asked for these documents when opening an account, you'll know why they are being asked for.
Some of These Commodities Trading Broker Regulatory Authorities are Listed Below:
National Futures Association ( NFA) - USA
The NFA regulates all us based financial firms, the official web site for NFA is https://www.nfa.futures.org/ where the list of USA commodity brokers are listed. NFA doesn't issue license to other international ones, unlike other regulatory authorities, NFA will only license US based firms. NFA just like CFTC have very overbearing regulation rules that are not favorable to the traders themselves. After these 2 NFA & CFTC introduced these rules many international commodity brokers closed down their America based branches, Those that did not have US branches were forced to close & transfer the trading accounts of USA citizens because CFTC threatened to sue any commodity based firms that is not from USA if they open trading accounts for USA Citizens. This is why most commodities brokers won't accept US Clients.
Commodity Futures Trading Commission (CFTC) - USA
CFTC regulates all US based financial firms, CFTC is Similar to NFA
Cyprus Securities and Exchange Commission (CySEC ) - Cyprus
The CySEC regulates all Cyprus financial firms, the official website is https://www.cysec.gov.cy where you can search for the registration and licenses number of those Commodities brokers licensed by this regulator. The CySEC regulates brokers operating within the European Union Jurisdiction of Cyprus Member Country.
FCA - Financial Conduct Authority as of 2013 - UK
NOW FSA has changed name FCA, & regulation details can bound from either FSA or FCA.
The FSA regulates all financial firms in UK, the official web site for FSA is https://www.fsa.gov.uk/ this site contains list of commodity companies licensed in the UK. FSA also registers other international firms & commodity based firms from other countries that have an operating office within the UK. To check whether the financial institution you're trading with is regulated in the UK just go to FSA Register.
German Federal Labor Market Authority (BaFin ) - Germany
The BaFIN regulates all German financial institutions, site for BaFin is https://www.bafin.de and BaFin is the Federal Supervisory Authority in German for Investment brokers and institutions operating within German.
Australia Securities and Investments Commission ( ASIC) - Australia
The ASIC regulates all firms in Australia
The Financial Futures Association of Japan ( FFAJ) - Japan
Regulates all Japan based firms
Swiss Federal Department of Finance (FDF ) - Switzerland
The FDF regulates all Swiss based firms
Canadian Investor Protection Fund (CIPF ) - Canada
The CIPF regulates all Canadian firms
MiFID, Markets in Financial Instruments Directive
MIFID is more of a Regulation Standard for European Union Brokers, than a Regulation Authority.
International Financial Services Centre (IFSC ) - Mauritius
The IFSC regulates all Mauritius firms
Above Regulatory authorities are the most trusted & the most famous regulatory authorities, it is best to open an account with a regulated broker that is licensed by one these regulatory authorities that are most popular regulators.
About USA Based Commodities Broker Regulations and America Regulatory Authorities
NB: One thing you should know about regulators is that you may not want to chose NFA or CFTC USA Regulators, who have these very strict rules:
- Max Commodity Trading Leverage 50:1
- First In First Out FIFO Trading (open trades in 123 order, must close then in 123 order, not 321, not 312, not 213 order)
- No Stop Loss Commodity Trading Order Setting
It is for the above rule that most traders won't open an account with USA brokers, most traders who traded with USA commodities trading brokers closed their trading accounts & transferred them overseas with introduction of this rules, this is around the year 2010.
In addition these regulators, will take to court any commodity financial firm which opens an account for USA citizens, this is why no commodity broker will open a trading account for an American, Only those brokers that are based in the USA can open a commodities trading account for An American Citizen. The only commodities brokers ones accepting clients from USA are only those brokers that are based in the USA.
