CFTC — Commodity Futures Trading Commission
US federal derivatives regulator since 1974; 50:1 major FX cap, no retail CFDs
- Max retail leverage
- 1:50
- Compensation limit
- Not applicable
- Negative balance protection
- Not required
About the CFTC
The Commodity Futures Trading Commission was created by Congress in 1974 as the federal regulator of US derivatives markets, and its authority over retail off-exchange forex was confirmed and expanded by the Dodd-Frank Act. Anyone acting as a counterparty to a US retail forex customer must register with the CFTC as a retail foreign exchange dealer or futures commission merchant and become a member of the National Futures Association. The Commission writes the rules on capital, disclosure, recordkeeping and risk, while day-to-day member supervision and audits are delegated to the NFA as the designated self-regulatory organisation.
The US retail regime is restrictive in ways that surprise traders used to European or offshore brokers. Security deposit rules cap leverage at 50:1 on major currency pairs and 20:1 on everything else. Contracts for difference cannot be offered to US retail clients at all, because they are treated as off-exchange swaps that must be executed on registered venues. Positions in the same currency pair are offset first-in first-out, which means simultaneous long and short positions in one pair, known as hedging, are not available. Firms must also disclose the percentage of customer accounts that were profitable each quarter.
Protection against firm failure is weaker than the licensing bar suggests. There is no compensation fund for retail forex customers, and the Securities Investor Protection Corporation covers securities brokerage accounts, not forex. Retail forex customer funds do not receive the statutory segregation that applies to exchange-traded futures customer money, so the practical safeguard is the high adjusted net capital floor and daily financial reporting that keep thinly capitalised firms out of the market. Disputes can be taken through CFTC reparations proceedings or NFA arbitration, and the Commission pursues offshore firms that solicit US residents without registration.
Why we rate it tier 1
Federal statutory authority, minimum capital rules that exclude undercapitalised firms, daily financial reporting and aggressive enforcement against offshore solicitation. The lack of any customer compensation fund and of statutory negative balance protection are genuine limitations.
High minimum capital, enforced conduct rules, a public register that is genuinely policed, and an independent complaints or compensation route that pays out when a firm fails. These are the licences worth paying a wider spread for.
CFTC protections at a glance
| Full name | Commodity Futures Trading Commission |
|---|---|
| Jurisdiction | United States |
| Region | Americas |
| Established | 1974 |
| Maximum retail leverage | 1:50 |
| Leverage regime | Retail forex leverage is capped by CFTC security deposit rules at 50:1 on major currency pairs and 20:1 on all others. Contracts for difference are not permitted for US retail clients at all. |
| Investor compensation scheme | None |
| Compensation limit | Not applicable |
| Negative balance protection | Not required — There is no statutory negative balance protection for retail forex customers, although retail forex dealers must meet high capital requirements and many close out positions before an account goes negative. |
| Client-fund segregation | Retail forex customer funds must be held by the dealer as they are obligated to customers and reported daily to the regulator, but forex customer money does not receive the segregated account status granted to exchange-traded futures customer funds under the Commodity Exchange Act. |
| Complaints route | Complain to the firm, then use the CFTC reparations programme or NFA arbitration. Suspected fraud can be reported directly to the CFTC Division of Enforcement or its whistleblower office. |
| Public register | CFTC registration verified through NFA BASIC (nfa.futures.org/BASIC) |
What to check on the CFTC registration verified through NFA BASIC
- 1Look up the firm in NFA BASIC at nfa.futures.org/BASIC, which shows CFTC registration status.
- 2Confirm the registration category is retail foreign exchange dealer or futures commission merchant, not introducing broker alone.
- 3Check the registration is current and read any regulatory actions listed on the profile.
- 4Verify the firm is listed as a forex dealer member, which is required to face US retail customers.
- 5Check the CFTC RED list of unregistered foreign entities before dealing with any offshore website.
Register: nfa.futures.org/BASIC. Always navigate to the register from the regulator's own domain rather than a link supplied by the broker.
Brokers on PipDig regulated by the CFTC
None of the brokers currently reviewed on PipDig hold a CFTC licence. That is not a mark against the authority — our review coverage follows where readers actually open accounts, and it changes as we test more firms.
CFTC FAQ
Why can US residents not trade CFDs?
US law treats contracts for difference as off-exchange swaps that retail participants may only trade on registered exchanges, and no retail CFD venue has been established. The result is that US retail traders can access exchange-listed futures and options, and off-exchange spot forex through registered dealers, but not the CFD products marketed elsewhere in the world.
What happens to my money if a US forex dealer fails?
There is no compensation fund for retail forex customers. SIPC covers securities accounts, not forex, and retail forex funds do not get the statutory segregation that exchange-traded futures customer money receives. Protection comes from the minimum capital requirements, daily reporting and audits that keep undercapitalised firms out of the business.
What are the FIFO and no-hedging rules?
CFTC and NFA rules require that offsetting positions in the same currency pair at the same firm be closed on a first-in first-out basis. In practice you cannot hold simultaneous long and short positions in one pair at a US dealer. Traders who rely on hedged position structures elsewhere need to restructure their approach for US accounts.